M&A at a Glance (February 2015)

Following months of almost uninterrupted strength in the M&A market, January 2015 continued December's lackluster performance.  Global volume, as measured by total dollar value, decreased from the previous month to $241.3 billion (a 18.6% decrease).  U.S. volume decreased by 21.3% to $76.1 billion, and the average value of U.S. deals also dropped by 18.6% to $286.2 million, both hitting lows not seen since March 2014.  Bucking the downwards trend, the volume of U.S. strategic transactions increased by 15.5% to $65.1 billion. 

Compared to past Januaries, the M&A market in January 2015 was significantly stronger than that in 2013, but slightly less robust than in 2014.  Global volume in January 2015 was 60% higher than in January 2013, but 2.8% lower than in January 2014, and U.S. volume was 19.5% higher than in January 2013 and 52.1% lower than in January 2014. 

Utility & Energy was the most active U.S. target industry by volume in January 2015 ($21.2 billion), followed by Healthcare ($12.8 billion) and Forestry & Paper ($10.8 billion).  This is the first time Forestry & Paper has been in the top-five most active U.S. target industries by volume since June 2013, its strong performance due to the $8.2 billion offer for MeadWestvaco Corporation by the Rock-Tenn Company.   Healthcare continues to be the most active industry ($313.8 billion) by a wide margin over the last 12 months.  Figure 2. 

January 2015 saw a significant decline in both global and U.S. crossborder transactions: global crossborder transactions declined by 22.7% to $65.8 billion compared to the previous month, while U.S. inbound crossborder transactions declined 38.7% to $16.3 billion over the same period.  Figure 1. With respect to inbound U.S. crossborder transactions, Canada took the top position by deal volume ($8.8 billion) and number of deals (36) in January 2015.  The United Kingdom maintained its top position for outbound U.S. crossborder transactions with $2.1 billion in volume.  Figure 3. 

The largest U.S. public merger in January 2015 was the $11.05 billion offer for Regency Energy Partners LP by Energy Transfer Partners, L.P.  Figure 5. Average reverse break fees decreased to 3.7% in January 2015, compared to 4.9% over the last 12 months.  Figure 7.  The percentage of U.S. mergers using cash as the only consideration fell to 33.3% as compared to 50.7% for the last 12 months.  This decrease was offset primarily by an increase in the percentage of cash election mergers, increasing to 33.3% as compared to 12.8% for the last 12 months.  Figure 9. The incidence of tender offers in January 2015 increased to 33.3%, more than 10% higher than the 12-month average.  Figure 11.  Finally, we note that no U.S. public mergers in January 2015 had a go-shop provision.  Figure 8.