According to Mergermarket’s December insider, November 2015 was a record setting month for M&A activity. By the end of the month, global M&A value reached US$3.9tn which surpassed the 2007 full year record by almost 6%. This record came on a drop in volume by 1,228 transactions which further cements 2015 as the year of the mega deal. The top sector was Pharma, Medical & Biotech (PMB) with 84 transactions representing US$201.3bn. The driver behind this sector was the record breaking US$183.7bn Pfizer Inc.’s bid for Allergan PLC. This represented over 90% of PMB’s total deal value and set helped solidify the record breaking year.
The North American market followed suit and also set a new record for annual deal value (US$1.9tn) surpassing the 2007 mark by US$400bn with a month still remaining in the year. The Pfizer/Allergan deal helped propel the highest outbound deal value ever at US$455.1bn. Even more surprising is that inbound value was the second highest ever, falling US$40bn short of the 2007 record. The top performing sector was the financial services sector with 44 deals worth US$30.4bn a new record for the sector and an increase of 450% over November 2014. Overall 2015 was a very strong year for M&A activity in North America and there are no signs of slowing down in 2016.
Europe was not to be left behind in the record setting year. With a deal value of US$369.2bn, November 2015 was Mergermarket’s highest ever recorded for Europe and a 400% increase over 2014. However, over 80% of the value came from two mega deals: the previously mentioned US$184bn Pfizer/Allergan deal and a US$120.3bn acquisition of SABMiller PLC by Anheuser-Busch InBev NV. While these deals provided a much needed boost (over 470% over 2014) of inbound M&A to Europe the outbound value dropped almost 55% compared to November 2014. The cause is likely to have been the strong devaluation of the Euro due to the latest round of Quantitative Easing in Europe. Nevertheless 2015, was still a strong year for Europe with a 17% increase over 2014’s US$897.4bn in deal value with a considerable total of 1,190 less deals.
By comparison, M&A in Central & South America showed much weaker signs. Total deal value was down 67.6% and the number of deals was cut in half compared to 2014. This is due in part to deteriorating economic forecasts, and increasing political risks associated with certain emerging markets. While this may not bode well for traditional commodity investors, the consumer sector has been on the rise. Total deal value rose 705% to $2.2bn over the previous year, thanks in large part to the US$1bn acquisition of Brazilian consumer goods company Hypermarcas SA by US based Coty Inc. Interestingly Mexico is slowly becoming the best performing emerging economy, mainly due to growing trading opportunities, and decreasing unemployment.
2015 saw much needed success for Japan. Deal value to date has hit US$52.9bn, up 73.4% compared to YTD 2014. November saw US$6.1bn worth of deals which is a significant rise of 22% over November 2014. A strong sign for the economy was that the financial services sector was the top sector with 3 deals accounting for 66% of total deal value in November. Another strong sign is Japan’s outbound M&A transactions continually ramped up even after exceeding the 2014 annual total earlier this September. Overall Japan still has a long way to go in its economic recovery; however, a rejuvenating domestic market has made 2015 a new momentum year for M&A.
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