GLOBAL STATISTICAL UPDATE – XBMA Quarterly Review for Third Quarter 2011

Executive Summary/Highlights:

  • Global M&A volume in Q3 was relatively sluggish at US$507 billion, marking the second consecutive quarterly decline, but aggregate global volume for 2011 year-to-date is still 4% higher than volume for the first three quarters of 2010.
  • Cross-border transactions have rebounded somewhat since 2009, with 36% of 2011 global M&A involving an acquirer and target in different jurisdictions, up from the low of 27% in 2009 and continuing apace with 2010 figures.
  • Stock market volatility, fear of a “double dip” and concerns over European sovereign debt have put a number of deals on hold – but would-be acquirers’ considerable cash stockpiles, strengthened balance sheets, access to attractive financing (for many investment grade borrowers), and need to expand into new markets are continuing to drive acquisitions, particularly in market segments and regions where target valuations remain attractive.
  • So-called “megadeals” have been more prevalent than last year, with eight deals in 2011 exceeding US$15 billion in value (including three deals in the third quarter – Express Scripts / Medco Health Solutions, United Technologies / Goodrich, and BHP Billiton / Petrohawk Energy), as compared to just four “megadeals” during all of 2010.
  • Spinoff activity has picked up, as companies seek ways to create shareholder value in volatile markets.
  • Distressed deals have declined sharply to US$50 billion globally so far this year.
  • Energy & Power was the most active sector for both domestic and cross-border transactions over the last 12 months, with the Materials and Financial sectors coming next.
  • The decline in deal volume in Q3 was most pronounced in Europe (37%), presumably because of sovereign debt concerns, with a relatively modest decline in the United States (12%).  While deals driven by emerging markets continue to grow, the United States and Europe accounted for 68% of deal volume in Q3, with five of the ten largest deals announced in Q3 involving both a U.S. target and a U.S. acquirer.

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