April 2018, Issue 73

Transcription

1 April 2018, Issue 73 M&A activity gained momentum in, capping the strongest opening quarter in the history of this publication. In the U.S., deal volume returned to January levels, increasing by 109.6% to $ billion, and the number of deals increased by 2.9% to 751. Globally, deal volume increased by 49.9% to $ billion, and the number of deals increased by 4.0% to 2,838. As described below, the one notable exception to the overall trend was a decrease in sponsor-related deal volume. Strategic vs. Sponsor Activity The increases in deal volume were reflective of a strong month for strategic transactions. In the U.S., strategic deal volume by dollar value increased by % to $ billion while the number of deals decreased by 0.7% to 566. Globally, strategic deal volume increased by 74.3% to $ billion with the number of deals increasing by 3.0% to 2,468. Figure 1 and Annex Figures 1A 4A. As for sponsor-related activity, U.S. deal volume decreased by 32.4% to $19.48 billion while the number of deals increased by 15.6% to 185. Global sponsor-related deal volume decreased by 23.2% to $57.33 billion while the number of deals increased by 10.8% to 370. Figure 1 and Annex Figures 1A 4A. Crossborder Activity 1 U.S. inbound deal volume increased by 154.9% to $30.20 billion while the number of U.S. inbound deals remained flat at 117. U.S. outbound deal volume decreased by 34.6% to $36.11 billion, and the number of U.S. outbound deals decreased by 1.6% to 120. Figure 1 and Annex Figures 5A 7A. Globally, crossborder deal volume increased by 46.9% to $ billion and the number of crossborder deals decreased by 4.9% to 654. In U.S. inbound activity for the month of March, France was the leading country of origin by dollar value ($15.29 billion), and remained the leading country of origin by number of deals (37). also remained the leader for U.S. inbound activity over the last 12-month period, both by dollar value ($67.16 billion) and number of deals (401). The U.K. was the leader in U.S. outbound deal volume in March ($14.99 billion) and retained its lead over the last 12-month period ($87.53 billion). The U.K. was also the leader in the number of U.S. outbound deals in March (28), and took over the 12-month lead from the U.K. (252). Figure 3. U.S. Deals by Industry Driven in large part due to Cigna Corp. s announced acquisition of Express Scripts Holding Co. for $53.92 billion, healthcare was the most active target industry by dollar value both in ($76.88 billion) and over the last 12-month period ($ billion). Computer & Electronics remained the most active target industry by number of deals in March (239) and over the last 12-month period (2,846). Figure 2. U.S. Public Mergers As for U.S. public merger deal terms in, average target break fees (3.4%) were near their 12-month averages (3.6%). Average reverse break fees (4.6%) matched the 12-month low, a full percentage point below the average over the last 12-month period (5.6%). Figures 6 and 7. For the second month in a row, no public mergers in included a go-shop provision. Figure 8. The use of cash consideration in decreased to 42.9%, below the average of 57.9% over the last 12-month period. Figure 9. The incidence of tender offers as a percentage of U.S. public mergers was 14.3%, below its average of 18.0% over the last 12-month period. Figure 11. Finally, the incidence of hostile offers in was 22.2%, above the average of 11.1% over the last 12-month period. Figure 12. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 1

2 M&A Activity Figure 1 Figure 2 Most Active U.S. Target Industries 2 Global +/- From U.S. +/- From Prior Prior Month Month Total Volume (US$B) No. of deals 2, Avg. value of deals (US$mil) Strategic Transactions Volume (US$B) No. of deals 2, (4) Last 12 Months Avg. value of deals (US$mil) Healthcare Computers & Electronics Oil & Gas Insurance Construction/Building $30.68 $17.94 $16.68 $8.48 $76.88 $100 $200 $300 $400 Sponsor-Related Transactions Volume (US$B) (17.30) (9.33) No. of deals Avg. value of deals (US$mil) (171.6) (222.1) Healthcare Computers & Electronics Oil & Gas Telecommunications Real Estate/Property $ $ $ $ $ Crossborder Transactions 1 Volume (US$B) Inbound No. of deals 654 (34) Inbound Avg. value of deals (US$mil) Inbound ,245.1 Inbound (19.11) Inbound 0 (2) Inbound $100 $200 $300 $400 Computers & Electronics 239 Healthcare 84 Professional Services 74 Construction/Building 36 Finance ,000 1,500 2,000 2,500 3,000 Last 12 Months Figures 1-3 were compiled using data from Dealogic, and are for the broader M&A market, including mergers of any value involving public and/or private entities. Figures 4 and 5 were compiled using data from FactSet MergerMetrics, and are limited to mergers involving public U.S. targets announced during the period indicated and valued at $100 million or higher regardless of whether a definitive merger agreement was reached and filed or withdrawn. All data is as of April 10, 2018 unless otherwise specified. Last 12 Months data is for the period from April 2017 to inclusive. Data obtained from Dealogic and FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss. Computers & Electronics 2,846 Professional Services 1,153 Healthcare 960 Finance 543 Construction/Building ,000 1,500 2,000 2,500 3,000 1 Global crossborder transactions are those where the acquirer and the target have different nationalities. Nationality is based on where a company has either its headquarters or a majority of its operations. U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer ( ) or the target ( Inbound ) has a U.S. nationality. 2 Industries categories are determined and named by Dealogic. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 2

3 M&A Activity (Continued) Figure 3 Top 5 Countries of Origin or Destination for U.S. Crossborder Transactions Inbound U.S. Crossborder Transactions for Inbound U.S. Crossborder Transactions for the Last 12 Months France $15.29 $67.16 Germany $6.75 France $39.07 Japan $2.52 Japan $37.84 Macao.93 Germany $21.93 Taiwan.87 $19.83 $30 $60 $90 $120 $150 $30 $60 $90 $120 $ Japan 169 Japan Australia 9 France 102 France & India³ 8 China U.S. Crossborder Transactions for U.S. Crossborder Transactions for the Last 12 Months $14.99 $87.53 Ireland $14.28 Ireland $14.79 Israel $4.06 $13.56 Austria.87 Germany $ Israel $8.07 $30 $60 $90 $120 $150 $30 $60 $90 $120 $ Germany 8 Germany 106 South Africa 7 Australia 85 Israel 6 Netherlands Each of France and India was the country of origin for eight transactions in. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 3

4 M&A Activity (Continued) Figure 4 Average Value of Announced U.S. Public Mergers (in US$mil) $35,000 $30,000 $25,000 $29,414.8 $26,194.1 $20,000 $16,660.8 $15,000 $10,000 $5,000 $8,130.1 $3,871.5 $3,051.3 $1,586.5 $7,171.8 $2,232.9 $5,387.6 $4,819.3 $1,674.5 $1,762.4 $8,020.2 $7,368.9 $3,559.0 $3,194.4 $9,146.3 $10,391.8 $10,964.6 $3,960.6 $3,935.8 $5,838.1 $1,374.5 Average Value of Five Largest U.S. Public Mergers Average Value of U.S. Public Mergers Figure 5 Five Largest U.S. Public Mergers Equity Value (US$B) Express Scripts Holding Co. ~ Cigna Corp. $53.92 (March 8, 2018) Microsemi Corporation ~ Microchip Technology Incorporated $8.11 (March 1, 2018) RSP Permian, Inc. ~ Concho Resources, Inc. $8.01 (March 28, 2018) CSRA, Inc. ~ CACI International Inc $7.26 (March 18, 2018) MuleSoft, Inc. ~ salesforce.com, inc. $6.00 (March 20, 2018) $20 $40 $60 $80 $100 $120 $140 Last 12 Months Equity Value (US$B) QUALCOMM, Inc. ~ Broadcom Ltd. $ (November 6, 2017) (Offer withdrawn March 14, 2018) Aetna, Inc. ~ CVS Health Corp. $67.98 (December 3, 2017) Twenty-First Century Fox, Inc. ~ The Walt Disney Company $54.72 (December 14, 2017) Express Scripts Holding Co. ~ Cigna Corp. $53.92 (March 8, 2018) Rockwell Automation, Inc. ~ Emerson Electric Co. $28.91 (October 31, 2017) (Offer withdrawn November 28, 2017) $20 $40 $60 $80 $100 $120 $140 PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 4

5 M&A Terms Figure 6 Average Break Fees as % of Equity Value 4 (US$mil) 12% $15, % $11, % $10,000 6% 5.1% 5.8% 5.3% 5.8% 6.0% 5.8% 5.4% 4.6% 4.6% 4.5% 4.6% $5, % 3.6% 3.4% 3.4% 3.4% 3.3% 3.4% 3.2% 3.3% 3.5% $5,000 $3,051.3 $3,903.0 $4, % $1,700.5 $2,349.6 $1,714.2 $1,762.4 $1,292.6 $2,261.6 $1, % Target Break Fee Reverse Break Fee Average Value of U.S. Public Mergers (in US$mil) Figure 7 Average Break Fees as % of Equity Value Figure 8 U.S. Public Merger Go-Shop Provisions Last 12 Months Last 12 Months Target Break Fee for All Mergers % of Mergers with Go-Shops Last 12 Months Reverse Break Fee for All Mergers Reverse Break Fee for Mergers Involving Financial Buyers 5 Reverse Break Fee for Mergers Involving Strategic Buyers % of Mergers Involving Financial Buyers with Go-Shops 6 % of Mergers Involving Strategic Buyers with Go-Shops Avg. Go-Shop Window (in Days) for All Mergers with Go-Shops Avg. Go-Shop Window (in Days) for Mergers Involving Financial Buyers with Go-Shops N/A 36.8 N/A 41.3 Figures 6-12 were compiled using data from FactSet MergerMetrics, and are limited to select mergers involving public U.S. targets announced during the period indicated, valued at $100 million or higher and for which a definitive merger agreement was reached and filed (unless otherwise indicated). Data obtained from FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss. 4 Based on the highest target break fees and reverse break fees payable in a particular deal. 5 One transaction in involving a financial buyer had a reverse break fee. 6 One transaction in involved a financial buyer. Avg. Go-Shop Window (in Days) for Mergers Involving Strategic Buyers with Go-Shops N/A 34.3 PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 5

6 M&A Terms (Continued) Return to Summary Figure 9 Form of Consideration as % of U.S. Public Mergers % Figure 10 % of Partial and All Stock Deals That Have a Fixed Exchange Ratio Last 12 Months % 28.6% Cash Only Figure 11 Tender Offers as % of U.S. Public Mergers 7.1% Stock Only 14.3 Last 12 Months % 10.9% 57.9% 7.7% Last 12 Months Cash & Stock Only Choice (Cash Election) Other Figure 12 Hostile/Unsolicited Offers as % of U.S. Public Mergers Last 12 Months Due to rounding, percentages may not add up to 100%. 8 This data includes both announced transactions for which a definitive merger agreement was reached and filed and those for which a definitive merger agreement was never reached and filed (including withdrawn transactions). Paul, Weiss is a leading law firm serving the largest publicly and privately held corporations and financial institutions in the United States and throughout the world. Our firm is widely recognized for achieving an unparalleled record of success for our clients, both in their bet-the-company litigations and their most critical strategic transactions. We are keenly aware of the extraordinary challenges and opportunities facing national and global economies and are committed to serving our clients short- and long-term goals. Our Mergers & Acquisitions Practice Our M&A Group is among the most experienced and active in the world. We represent publicly traded and privately held companies, leading private equity firms, financial advisors, and other financial institutions and investors in their most important mergers and acquisitions, joint ventures and other strategic transactions. Our expertise advising corporations and private investors in a broad range of sophisticated transactions enables us to identify new opportunities for our clients to realize value. We have particular experience in guiding clients as they engage in proxy battles, company-altering and market consolidating transactions or capital markets transactions. Recent highlights include advising: CSRA in its $9.7 billion acquisition by General Dynamics; Xerox in its $18 billion combination with Fuji Xerox, a joint venture between Xerox and Fujifilm; Bioverativ in its $11.6 billion acquisition by Sanofi; ADP in its successful proxy contest against Pershing Square; Qualcomm in connection with a $130 billion unsolicited offer from Broadcom; Kate Spade & Company in its $2.4 billion acquisition by Coach; Qualcomm in its approximately $47 billion pending acquisition of NXP Semiconductors; Agrium in its $36 billion merger of equals with Potash Corp. of Saskatchewan; funds affiliated with Apollo Global Management and Protection 1 in their $15 billion acquisition of ADT Corporation and Alere in its $5.3 billion acquisition by Abbott Laboratories. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 6

7 This publication is not intended to provide legal advice, and no legal or business decision should be based on its content. Questions concerning issues addressed in this memorandum should be directed to: Matthew W. Abbott Scott A. Barshay Angelo Bonvino Ariel J. Deckelbaum Jeffrey D. Marell Taurie M. Zeitzer Counsel Frances Mi and associates Ryan D. Blicher, Edy Glozman, Vincent P. Iacono, Paul A. Nolle III, David Okada, Yae Na Woo and Michael N. Wysolmerski contributed to this publication. Our M&A s Matthew W. Abbott Adam M. Givertz Xiaoyu Greg Liu John M. Scott Edward T. Ackerman Neil Goldman Jeffrey D. Marell Tarun M. Stewart Scott A. Barshay Angelo Bonvino Jeanette K. Chan Ellen N. Ching Ariel J. Deckelbaum Ross A. Fieldston Brian P. Finnegan Bruce A. Gutenplan Justin G. Hamill David M. Klein David K. Lakhdhir Stephen P. Lamb John E. Lange Brian C. Lavin Alvaro Gomez de Membrillera Galiana Judie Ng Shortell Kelley D. Parker Carl L. Reisner Kenneth M. Schneider Robert B. Schumer Ramy J. Wahbeh Steven J. Williams Betty Yap Kaye N. Yoshino Tong Yu Taurie M. Zeitzer NEW YORK BEIJING HONG KONG LONDON TOKYO TORONTO WASHINGTON, D.C. WILMINGTON PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP PAULWEISS.COM 2018 Paul, Weiss, Rifkind, Wharton & Garrison LLP. In some jurisdictions, this publication may be considered attorney advertising. Past representations are no guarantee of future outcomes. 7

8 A N N E X M&A Activity 12-Month Trends Figure 1A U.S. Deal Volume (US$B) $400 $300 $ $200 $100 $ $90.09 $28.61 $94.59 $99.06 $96.35 $48.88 $64.62 $60.01 $45.71 $34.44 $36.34 $ $78.06 $58.58 $93.03 $85.80 $80.51 $57.13 $12.52 $28.66 $ $75.25 $32.36 $ $40.20 $ $ $64.97 $83.06 $54.25 $28.82 $ $ $19.48 Strategic Sponsor Total Figure 2A Global Deal Volume (US$B) $600 $500 $ $ $400 $300 $ $ $ $ $ $ $ $ $ $ $ $ $200 $100 $ $60.02 $ $80.86 $74.51 $ $ $ $95.66 $85.70 $ $ $ $65.92 $62.42 $57.04 $ $85.05 $87.01 $ $74.63 $57.33 Strategic Sponsor Total PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP A-8

9 A N N E X Figure 3A U.S. Number of Deals 1, Strategic Sponsor Total Figure 4A Global Number of Deals 4,000 3,200 2,400 3,066 2,716 3,516 3,589 3,120 3,260 3,420 3,045 3,307 2,948 3,618 3,228 3,337 2,944 3,067 2,702 2,939 2,626 3,338 2,920 2,729 2,395 2,838 2,468 1, Strategic Sponsor Total PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP A-9

10 A N N E X Figure 5A Inbound U.S. Crossborder Transactions $ $50 $40 $30 $20 $ $32.58 $11.80 $14.60 $20.48 $15.20 $15.75 $13.34 $49.88 $21.92 $39.30 $11.85 $ Figure 6A U.S. Crossborder Transactions $ $80 $60 $ $20 $6.62 $6.65 $13.89 $27.58 $8.08 $15.47 $8.69 $5.58 $13.45 $16.00 $55.22 $ Figure 7A Global Crossborder Transactions $250 $200 $ ,000 $ $50 $84.33 $49.40 $78.35 $ $66.66 $96.64 $ $79.58 $ $88.76 $96.75 $ PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP A-10