M&A at a Glance (January 2016)

Following the trend from past years, M&A activity, both globally and in the U.S., slowed down during the holiday season.  In the U.S., the total volume of transactions dropped 51.91% to $167.26 billion, the number of deals declined 9.74% to 695, and average deal size fell 44.21% to $595.2 million in December 2015.  Each of these figures represents a decline not only from the robust activity in November 2015, but a drop from October numbers as well.  Both sponsor-related and strategic transactions contracted in volume, number and average deal value in the U.S. in December 2015, with sponsor-related activity declining to its lowest total volume since March 2015.  The global market was not much stronger, falling by 30.12% in total volume (to $402.05 billion), by 7.14% in number of deals (to 2,716), and by 28.42% in average deal size (to $258.1 million).  Despite such contracting activity relative to recent months, both global and U.S. merger statistics in December 2015 were generally higher than in December 2014.  Figure 1.

After a strong showing in November 2015, both U.S. inbound deal volume and U.S.-sourced outbound deal volume contributed to the overall decline in December.  While the largest U.S. inbound deal in November was valued at $37 billion, no U.S. inbound transaction in December topped the roughly $14 billion deal between Keurig Green Mountain Inc. and an investment group including Mondelez International Inc., BDT Capital Partners LLC and Agnaten SE.  Canada continued to be the greatest source of U.S. inbound deals over the previous 12 months with total deal volume ($130.78 billion) 72.72% greater than the U.K., Canada's closest competitor in 2015.  The overall decline in the market was further reflected in the absence of any especially large transactions in U.S.-sourced outbound activity.  The largest recipient market of U.S. outbound activity in December 2015 was Taiwan at $4.03 billion, a far cry from the U.K.'s $32.15 billion in November.  Figure 3.

Chemicals surged to the top spot in target industries by total transaction volume in December 2015 ($73.40 billion) having not appeared in the top five industries since September 2014.  This was largely due to the $61.72 billion deal between E.I. du Pont de Nemours and Company and the Dow Chemical Company.  Healthcare maintained its position as the leading industry of the last 12 months ($574.65 billion) by a significant margin, while Computers & Electronics maintained its lead in number of deals both in December (173) and over the past 12 months (2,809).  Figure 2.

Tender offers accounted for only 7.69% of public mergers announced in December 2015, falling from 32% in November and well below the 12-month average of 22.6%.  Figure 11.  Cash-only and stock-only deals each made up 38.5% of deals, while cash and stock deals nearly doubled to 15.4% in December 2015, a figure more in line with the 12-month average of 19%.  Figure 9.  Average break fees, reverse break fees and level of hostile activity remain in line with their 12-month averages as well.  Figures 7 and 12.