According to MergerMarket’s Monthly M&A Insider Report, global M&A activity continued to wane throughout May 2016, maintaining the trend reported on earlier this year. May 2016 resulted in a total of 1,054 deals worth an aggregate of US$224.5 billion, down from the 1,410 deals valued at US$372.5 billion in May 2015. Energy, Mining & Utilities, the sector with the strongest showing, lead with 80 deals worth US$40.5 billion, representing a 66.8% increase in value (but a 17% drop in the number) from deals in this sector in May 2015.
The report highlighted the following regarding global M&A activity:
- The 350 North American deals in May 2016 were worth an aggregate of US$108 billion, representing a 49.4% decrease in value compared to May 2015. The Business Services sector led the way with 48 deals valued at US$31.0 billion, representing a 400.1% increase in value from the same period in 2015. The sharp decline in cross-border M&A (which saw an 80.4% decrease in in-bound activity as compared to May 2015), however, indicate that 2016 is on pace to be the lowest-value year for M&A activity in North America since 2013.
- M&A activity in Central & South America continues to struggle. Energy, Mining and Utilities was the top performing sector in this region, with three deals valued at $1 billion (representing a decrease of 27.1% from May 2015). Earlier this year, we reported on the political turmoil and faltering economy in Brazil that have helped depress M&A activity in this country, ordinarily a top performing economy in the Latin American region. These factors, in addition to worldwide commodity prices and currency devaluations, continue to influence M&A activity in Brazil and negatively impact the region as a whole, and foreign investments in particular, where in-bound activity fell 99.5% from May 2015 levels.
- The decline of M&A activity in Europe in May 2016 was not as steep compared to other regions around the world. May 2016 resulted in 377 deals worth US$44.3 billion, representing a decrease of 4.7% in value from the same period in 2015. In-bound interest and investments from Chinese firms continued to be strong. The top performing sector, Industrial and Chemicals, lead the way with 89 deals valued at US$10.2 billion, one of the largest of which was the acquisition of robotics maker KUKA AG by Midea (a Chinese-based manufacturer). The high levels of interest from Chinese investors in German automation, semiconductor and chemical companies is expected to continue throughout 2016.
- Deal value in the Middle East and Africa peaked in May 2016 with 20 deals valued at US$4.4 billion, representing a 127% increase in value from May 2015. The four deals in the Energy, Mining and Utilities sector had a combined value of US $4.0 billion (an 806.5% increase from May 2015) and it is predicted that the oil and gas and gold spaces in this region will continue to attract interest throughout 2016.
- In Asia-Pacific (excluding Japan), a total of 234 deals with a value of $52.6 billion was announced, representing a 45.3% decrease in value from May 2015. China was the top-performing country in this region, accounting for 112 transactions worth US$35.7 billion. Japan had a strong beginning to the year, however, where the 168 deals valued at US$29.8 billion represented a 67.2% increase year to date from the same point in May 2015.
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