M&A at a Glance (August 2015)

The global and U.S. M&A markets remained strong in July 2015, marking sustained high activity for the last three months as measured by both global and U.S. deal volumes.  U.S. volume reached a record monthly high of $261.75 billion (a 3.9% increase over June 2015).  Global volume was $460.49 billion in July 2015, a slight 1.3% decrease from June 2015, but still near the highs since the inception of this publication in April 2012.  Average deal size in the U.S. reached $715.20 million in July 2015, marking the second-highest month since February 2014 and the fifth consecutive month that average deal size in the U.S. exceeded $500 million.  Although global average deal value and the number of global and U.S. deals declined slightly in July 2015 (by 4.89%, 0.13% and 7.11%, respectively), the M&A market as a general matter  continues to be poised to attain record highs by year-end.  Figure 1.

Healthcare regained its position in July 2015 as the most active U.S. target industry by volume ($108.34 billion), followed by Insurance ($36.38 billion) and Oil & Gas ($27.89 billion).  Healthcare continues to be the most active U.S. target industry by a wide margin for the last 12 months.  As measured by the number of deals, however, Computers & Electronics was the most active target industry in June 2015 and also for the last 12 months.  Figure 2.

Crossborder M&A activity, as measured by volume, increased significantly as compared to June.  Inbound U.S. crossborder volume increased by 104.3% to $86.26 billion.  Outbound U.S. crossborder volume increased by 239.4% to $37.84 billion.  Global crossborder volume increased significantly, by 84.4% to $195.28 billion.  The average value of global crossborder and both inbound and outbound U.S. deals also increased considerably in July 2015 (by 62.9%, 107.4% and 151.2%, respectively).  The only crossborder metric to sustain a decline in July 2015 was the number of inbound U.S. deals, declining 4.9% to 135 deals.  Figure 1.

With respect to inbound U.S. crossborder transactions in July 2015, Israel was the most acquisitive jurisdiction by deal volume ($40.51 billion), driven largely by the Teva Pharmaceuticals Industries Ltd. offer to purchase Allergan plc's generic drug business unit, Allergan Generics.  Canada maintained its lead for both inbound and outbound U.S. crossborder transactions when measured by number of deals (43 and 38, respectively).  The United Kingdom once again was the leader for outbound U.S. crossborder transactions by deal volume ($6.45 billion).  Figure 3.

The average target and reverse break fees in July 2015 were 3.4% and 5.3%, respectively, remaining consistent with their respective 12-month averages.  Figure 7.  No U.S. merger used cash election as the form of consideration in July 2015, compared to 12.4% of mergers over the last 12 months.  Figure 9.  The incidence of tender offers as a percentage of U.S. public mergers remained at 15.4% in July 2015, compared to 23.5% for the past twelve months.  Figure 11.  Finally, we note that the incidence of hostile/unsolicited offers dropped to 7.1% in July 2015, compared to the 12-month average of 12.7%.  Figure 12.