Quarterly Deal Performance Monitor Q2 2016

Transcription

1 Quarterly Deal Performance Monitor Q A study by Cass Business School for Willis Towers Watson Monday 04 July

2 Key PR Messages Following a slow start of the year (5.3pp for Q1 2016), acquirers closing deals in Q posted an outperformance of 5.8pp (7.3pp) over the Index compared to 8.1pp in Q The quarterly volume of deals was the lowest since Q2 2014, currently at 211 (182) deals mainly due to a drop in North America. The market for mega-deals (over $10 billion) was up in Q with 11 (10) deals, following an aggressive year of mega deals, and is at an all time high since our analysis began in Asia was once again the outstanding performer this quarter, followed by an outperformance of Europe and North America. The Asian acquirers maintained their performance and continued to dominate their peers consistently, and posted a performance of 22.5pp (22.8pp) above their regional index. The performance of acquirers in Q are on the rise for Domestic, Intra-regional and Cross-sector, as compared to Q

3 Overview Acquirers outperformed the Index in the second quarter of 2016, with 5.8pp (7.3pp) above the Index. The three-year rolling average performance for global acquirers is currently at 5.9pp (6.1pp) (this is due to the high outperformance in the last three quarters of 2015 and Q1 2014) with the performance since the start of the QDPM in Q currently at 4.1pp. The analysis of acquirer performance using adjusted total returns also shows a performance of 6.5pp above the Index for Q Following a slow start in the number of deals closed last quarter, Q has only 211 (182) deals closed which is reasonably low compared to the number of deals closed for a Q2 compared to the corresponding quarter in year 2014 and Asian acquirers have maintained the top spot in the performance league in the quarterly analysis since Q1 2014, with their outperformance of 22.5pp (22.8pp) above their regional index which is insignificantly higher than last quarter. Acquirers from Europe show an outperformance of 7.0pp (5.9pp) above their regional index but on a decline compared to the last three quarters, followed by North America, which is outperforming their index, currently at 1.5pp (2.2pp). In the three year rolling analysis, Asia-Pacific acquirers are also in the top spot, with 24.3pp above their regional index followed by European and North American acquirers which have outperformed their regional index over the same period by 4.2pp and 3.5pp respectively. In the industry analysis, we find the Consumer Staples, Energy and Power and Telecommunication sector are underperforming their respective index whilst the rest of the industries which are underperforming their respective index are Consumer Products and Services, Financial Services, Healthcare, High technology, Industrials and Materials. Note the data size issues for industry categories. The performance of Domestic, Intra-regional and Cross-sector acquirers significantly increase compared to last quarter, whilst quick deals are significantly higher than last quarter and the corresponding quarter last year. Acquirers buying large deals (over $1bn deal value) are outperforming the market and currently at 7.3pp while mega deals resurfaced this quarter with and all time high of 11 deals. This study focuses on deals which were completed during the second quarter of In order to perform a comparative analysis, data from Q and Q has been included. The sample is global and all deals have a value of $100 million or above. In addition, all merger-of-equals deals and minority and remaining purchases have been excluded, as well as those in the Real Estate sector. The analysis has been conducted from the point of view of the acquirer and share price performance compared to various MSCI indices (world, industry and region). Percentage changes in share prices are measured from six months before the announcement date to the end of the corresponding quarter post-completion. Medians have been used throughout. 3

4 Percentage Points M&A Quarterly Analysis The line below (4.1pp) shows the median-adjusted performance of all acquirers throughout the period. The red line below (5.9pp) shows the median-adjusted performance of all acquirers over a three year rolling period NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. 4

5 Number of completed deals per quarter M&A Quarterly Analysis Volume (number) NB: Q includes data until 14 December only. 5

6 Percentage Points M&A Quarterly Analysis Regional Performance North America Acquirer Returns Adjusted to the MCSI Regional Index The line below (2.0pp) shows the median-adjusted performance of all acquirers throughout the period The red line below (3.5pp) shows the median-adjusted performance of all acquirers over a three year rolling period NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 6

7 Number of completed deals per quarter M&A Quarterly Analysis Regional Volume (number) North America NB: Q includes data until 14 December only. 7

8 Percentage Points M&A Quarterly Analysis Regional Performance Europe Acquirer Returns Adjusted to the MCSI Regional Index The line below (3.1pp) shows the median-adjusted performance of all acquirers throughout the period The red line below (4.2pp) shows the median-adjusted performance of all acquirers over a three year rolling period NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 8

9 Number of completed deals per quarter M&A Quarterly Analysis Regional Volume (number) Europe NB: Q includes data until 14 December only. 9

10 Percentage Points M&A Quarterly Analysis Regional Performance Asia-Pacific Acquirer Returns Adjusted to the MCSI Regional Index The line below (14.4pp) shows the median-adjusted performance of all acquirers throughout the period. The red line below (24.3pp) shows the median-adjusted performance of all acquirers over a three year rolling period NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 10

11 Number of completed deals per quarter M&A Quarterly Analysis Regional Volume (number) Asia-Pacific NB: Q includes data until 14 December only. 11

12 Percentage Points M&A Regional Analysis Q and Q Acquirer Returns 50.0 Acquirer Returns Adjusted to the MSCI Regional Index Q Q Q Q North America Europe Asia-Pacific North America Europe Asia-Pacific NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 12

13 Percentage Points M&A Regional Analysis 2015 and 2016 Acquirer Returns Acquirer Returns Adjusted to the MSCI Regional Index North America Europe Asia-Pacific North America Europe Asia-Pacific NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. 13

14 Percentage Points M&A Industry Analysis Q and Q Acquirer Returns Q Q NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 14

15 Percentage Points M&A Industry Analysis Q and Q Acquirer Returns Adjusted to the MSCI Industry Index Q Q NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. (Note Media and Entertainment and Retail are excluded due to non-availability of the respective index) 15

16 Percentage Points M&A Industry Analysis 2015 and 2016 Acquirer Returns NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 16

17 Percentage Points M&A Industry Analysis 2015 and 2016 Acquirer Returns Adjusted to the MSCI Industry Index NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. (Note Media and Entertainment and Retail are excluded due to non-availability of the respective index) 17

18 M&A Deal Type Analysis Q Q Q Mega deals (over or equal $10bn) Large deals (over or equal to $1bn) Medium-sized deals (under $1bn) Domestic Cross-border Intra-regional Cross-regional Intra-sector Cross-sector Quick deals Slow deals NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. Quick deals refer to those transactions which had a median time to completion of less than 70 days, whereas slow deals are those which had a time to completion more than or equal to 70 days for the period. Note that the sub-sample analyses for which the data points have grey coloured font include fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 18

19 Appendix A: Data Descriptives: Q2 2015, Q and Q Q Median Deal Median Deal Median Deal Q Q Value ($m) Value ($m) Value ($m) All Asia-Pacific Europe North America Rest of the world ,267 Consumer Products & Services Consumer Staples Energy & Power Financials Healthcare High Technology Industrials Materials Media & Entertainment , ,691 Retail Telecommunications Domestic Cross-border Asia-Pacific Europe North America Rest of the world ,618 Intra-regional Cross-regional Asia-Pacific Europe North America Rest of the world ,618 Intra-sector Cross-sector Asia-Pacific Europe North America Rest of the world Quick deals Slow deals Large deals (over or equal to $1bn) Mega deals (over or equal to $10bn)

20 Appendix B: Data Descriptives: 2015/ Average Deal Median Deal Average Deal Median Deal 2016 Value ($m) Value ($m) Value ($m) Value ($m) All 1,041 1, , Asia-Pacific Europe 180 1, , North America 488 1, , Rest of the world , Consumer Products & Services 66 1, Consumer Staples 64 1, , Energy & Power 119 1, , Financials 131 1, , Healthcare 131 2, , High Technology , Industrials , Materials , Media & Entertainment ,731 1,344 Retail 36 1, Telecommunications 42 2, , Domestic 721 1, , Cross-border 320 1, , Asia-Pacific Europe 131 1, ,566 North America 116 1, ,461 Rest of the world ,215 Intra-regional 826 1, , Cross-regional 215 1, , Asia-Pacific Europe 72 1, ,131 North America 88 1, ,707 Rest of the world ,573 Intra-sector 675 1, , Cross-sector , Asia-Pacific Europe 44 1, ,029 North America 138 1, ,745 Rest of the world Quick deals Slow deals 634 1, , Large deals (over or equal to $1bn) Mega deals (over or equal to $10bn)

21 Appendix C: Sample Restrictions All deals completed between 01 April 2016 and 30 June 2016, with a value of at least $100 million, were downloaded from the Thomson One Banker database. Note that all deals where the acquirer owned less than 50% of the shares of the target after the acquisition were excluded, hence no minority purchases were considered. All deals in which the acquirer held 50% or more of the target shares prior to the acquisition were removed, hence no remaining purchases were considered. All deals where the acquirer did not have a recognised Datastream code for the download of share prices were removed, hence the sample includes only public acquirers (a total of 218 deals). All deals which were announced before 1 January 2014 were removed. All merger-of-equals deals (when identified as merger-of-equals by the database) were removed. All deals for which Datastream did not have a share price for the acquirer share six months prior to the announcement or where the share price did not move over the period of the analysis were removed (7 deals). All deals in which the acquirer or the target were from the Real Estate sector were removed. The final sample is made up of 211 deals. Note that descriptive statistics (slide 19 and 20) for Q and YTD 2016 only include completed deals up to and including 30 June 2016 whereas the statistics for Q and YTD 2015 include all of the completed deals in the quarter. Note that the Quick vs Slow deals are defined as follows: Quick deals are transactions which completed in under 70 days from the day of announcement, whereas Slow deals are those which completed in 70 days or more from the same day. 21

22 Date Announced Appendix D: Top 25 Deals by Value of Transaction Q Date Effective Acquirer Name Target Name Value of Transaction ($ mil) Share Price Return Adj. Share Price Return (World Index Return, pp) Adj. Share Price Return (Industry Index Return, pp Adj. Share Price Return (Regional Index Return, pp) 26/05/ /05/2016 Charter Communications Inc Time Warner Cable Inc 55,638 26% /08/ /06/2016 Shire PLC Baxalta Inc 30,952-5% /11/ /06/2016 Visa Inc Visa Europe Ltd 21,355 13% /10/ /05/2016 Western Digital Corp SanDisk Corp 16,124-53% /12/ /04/2016 Newell Rubbermaid Inc Jarden Corp 15,435 18% /11/ /04/2016 China Yangtze Power Co Ltd Sanxia Jinsha River Chuanyun 14,011 3% /08/ /04/2016 Schlumberger Ltd Cameron International Corp 12,766-7% /08/ /05/2016 Coca-Cola European Partners Coca-Cola Enterprises Inc 11,876-7% /03/ /05/2016 Charter Communications Inc Bright House Networks LLC 10,790 33% /11/ /05/2016 Air Liquide SA Airgas Inc 10,630-19% /02/ /04/2016 Frontier Communications Corp Verizon Commun Inc-Wireline 10,500-23% /04/ /06/2016 AbbVie Inc Stemcentrx Inc 9,794 16% /02/ /05/2016 Apollo Global Management The ADT Corp 6,943-26% /08/ /05/2016 Coca-Cola European Partners Coca-Cola Iberian Partners SA 5,968-7% /01/ /06/2016 Progressive Waste Solutions Waste Connections Inc 5,932 37% /01/ /06/2016 Qingdao Haier Co Ltd General Electric Co-Appl Bus 5,600-36% /05/ /06/2016 Pfizer Inc Anacor Pharmaceuticals Inc 5,541 6% /10/ /05/2016 Liberty Global PLC Cable & Wireless Commun PLC 5,419-31% /09/ /04/2016 Fengfan Stock Ltd Co China ShipBldg Ind Corp-Asts 5, % /12/ /04/2016 Global Payments Inc Heartland Payment Systems Inc 3,709 36% /01/ /04/2016 Microchip Technology Inc Atmel Corp 3,434 12% /08/ /05/2016 Coca-Cola European Partners Coca-Cola Erfrischungs 3,160-7% /12/ /06/2016 QNB Finansbank AS 3,083-9% /02/ /04/2016 Stryker Corp Sage Products LLC 2,775 17% /01/ /04/2016 Total System Services Inc TransFirst Inc 2,350 21%

23 Date Announced Appendix E: Top 25 Deals by Value of Transaction YTD 2016 Date Effective Acquirer Name Target Name Value of Transaction ($ mil) Share Price Return Adj. Share Price Return (World Index Return, pp) Adj. Share Price Return (Industry Index Return, pp Adj. Share Price Return (Regional Index Return, pp) 08/04/ /02/2016 Royal Dutch Shell PLC BG Group PLC 69,445-26% /05/ /05/2016 Charter Communications Inc Time Warner Cable Inc 55,638 26% /05/ /02/2016 Avago Technologies Ltd Broadcom Corp 37,849 65% /08/ /01/2016 Berkshire Hathaway Inc Precision Castparts Corp 31,595-5% /08/ /06/2016 Shire PLC Baxalta Inc 30,952-5% /07/ /01/2016 ACE Ltd Chubb Corp 28,534 2% /11/ /06/2016 Visa Inc Visa Europe Ltd 21,355 13% /12/ /01/2016 BT Group PLC EE Ltd 18,797 12% /10/ /05/2016 Western Digital Corp SanDisk Corp 16,124-53% /12/ /04/2016 Newell Rubbermaid Inc Jarden Corp 15,435 18% /11/ /04/2016 China Yangtze Power Co Ltd Sanxia Jinsha River Chuanyun 14,011 3% /04/ /02/2016 Nokia Oyj Alcatel Lucent SA 13,780-18% /08/ /04/2016 Schlumberger Ltd Cameron International Corp 12,766-7% /08/ /05/2016 Coca-Cola European Partners Coca-Cola Enterprises Inc 11,876-7% /03/ /05/2016 Charter Communications Inc Bright House Networks LLC 10,790 33% /11/ /05/2016 Air Liquide SA Airgas Inc 10,630-19% /02/ /04/2016 Frontier Communications Corp Verizon Commun Inc-Wireline 10,500-23% /04/ /06/2016 AbbVie Inc Stemcentrx Inc 9,794 16% /10/ /02/2016 Al Noor Hospitals Group PLC Mediclinic International Ltd 9,280 25% /11/ /02/2016 Weyerhaeuser Co Plum Creek Timber Co Inc 8,462-5% /02/ /05/2016 Apollo Global Management The ADT Corp 6,943-26% /04/ /03/2016 Exelon Corp Pepco Holdings Inc 6,829 28% /04/ /03/2016 Exor SpA PartnerRe Ltd 6,715 11% /11/ /01/2016 Shire PLC Dyax Corp 6,557-26% /07/ /03/2016 Centene Corp Health Net Inc 6,150 19%

24 No of completed deals per quarter M&A Quarterly Analysis Volume (Number) Large/Mega Deals > $1bn > $10bn 24

25 Nuber of completed deals per year M&A Yearly Analysis Volume (Number) All Deals M&A Yearly Analysis (Volume (Number)

26 M&A Quarterly Analysis Percentage of Quick v/s Slow 100% 90% 80% 70% 42% 45% 44% 52% 51% 48% 51% 48%49% 51% 47%47%49% 48% 42% 58% 59% 56% 59% 59% 55% 54% 54% 54% 48% 52% 49% 58% 61%60%61%61% 63% 64% 60% 50% 40% 30% 20% 58% 55% 56% 48% 49% 52% 49% 52%51% 49% 53%53%52% 53% 58% 42% 41% 44% 41% 41% 45% 46% 46% 46% 52% 48% 51% 42% 39%40%39%39% 37% 36% 10% 0% Slow deals Quick deals NB: Q includes data until 14 December only. 26

27 M&A Quarterly Analysis Percentage of Intra v/s Cross-Regional 100% 90% 20% 18% 13% 22% 22%22%21% 27% 24% 22% 20% 15% 27% 25% 28%27% 24%25%22% 25%24%24% 21% 21%21% 19% 20% 21% 17% 20% 18% 26% 26% 25% 80% 70% 60% 50% 40% 80% 82% 87% 78% 78%78%79% 73% 76% 78% 80% 85% 73% 75% 72%74% 76%75%78% 75%76%76% 79% 79%79% 81% 80% 79% 83% 80% 82% 74% 74% 75% 30% 20% 10% 0% Cross-Regional Intra-Regional NB: Q includes data until 14 December only. 27

28 M&A Quarterly Analysis Percentage of Intra v/s Cross-Sector 100% 90% 80% 23% 17% 29% 25% 18% 23% 22% 28%30% 25%26% 29% 27% 25% 33%32% 26%25% 27% 24% 28% 31% 26%27% 33% 26% 30%30% 27%29% 42% 40% 31% 34% 70% 60% 50% 40% 30% 77% 83% 71% 75% 82% 77% 78% 72%70% 75%74% 71% 73% 75% 68%68% 74%75% 73% 76% 72% 69% 74%73% 67% 74% 70%70% 73%71% 58% 60% 69% 66% 20% 10% 0% Cross-Sector Intra-Sector NB: Q includes data until 14 December only. 28

29 Total number of deals M&A Quarterly Analysis Percentage of Intra v/s Cross-Sector Q % % 80% 29% 16% 19% 14% 30% 37% 22% 22% 33% 31% % 63% 53% 60% % 40% 30% 71% 84% 81% 86% 70% 63% 78% 78% 67% 69% % 10% 37% % % 0 Percentage of Cross-Sector Deals Percentage of Intra-Sector Deals Total Number of Deals NB: Q includes data until 14 December only. 29

30 Total number of deals M&A Quarterly Analysis Percentage of Intra v/s Cross-Sector Q % % 80% 70% 45% 29% 29% 19% 14% 20% 58% 52% 40% 50% 30% % % % 40% 30% 20% 10% 55% 11 71% 71% % 31 86% 80% % 26 48% 31 60% 10 50% 6 70% 10 66% % 0 Percentage of Cross-Sector Deals Percentage of Intra-Sector Deals Total Number of Deals NB: Q includes data until 14 December only. 30

31 Total number of deals M&A Analysis Percentage of Intra v/s Cross-Sector YTD % % 80% 70% 57% 29% 23% 19% 14% 26% 46% 52% 32% 33% 32% 32% % % 40% 30% 20% 10% 43% 71% % 81% 77% 74% % 56 48% 50 68% 67% 68% 68% % 0 Percentage of Intra-Sector Deals Percentage of Cross-Sector Deals Total Number of Deals NB: Q includes data until 14 December only. Note that the sample analyses for which the number of transactions are fewer than 25 deals, i.e. below our significance level, and should, therefore, be viewed as indicative. 31

32 Percentage Points M&A Quarterly Analysis (UK) United Kingdom NB: The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise. 32

33 Number of deals M&A Quarterly Analysis Volume (United Kingdom and Europe) NB: Q includes data until 14 December only. United Kingdom Europe 33