The number of global M&A deals announced in Q1 to Q3 2009 is the lowest since Q3 2003, while deal values are at their lowest since Q1 2003, according to a report by mergermarket.
Activity to date is at 5,914 transactions valued at USD978.9bn, a decline of 41 per cent and 48 per cent respectively for the same period in 2008.
In Europe, the 2,248 transactions valued at USD236.2bn announced so far this year is a decrease of 70 per cent by value and 48 per cent by volume from the same period in 2008, in which 4,308 deals with a total value of USD776.7bn were announced.
European M&A activity makes up 24 per cent of global activity by value and 38 per cent by number of deals announced so far this year, compared to 42 per cent and 43 per cent respectively for the same period last year.
Over 40 per cent of the total value of European M&A so far this year – including six of the ten largest European deals this year – has taken place in the energy, mining and utilities sector, up from 20 per cent in for the same period last year.
The UK & Ireland continues to dominate the region, representing close to 20 per cent of European M&A by both value and number of deals.
In Europe, Goldman Sachs is still the most active financial adviser by deal value, advising on 63 transactions valued at USD113.5bn so far this year. The firm has an impressive USD35bn lead over second placed Credit Suisse. Citigroup, Bank of America Merrill Lynch and JPMorgan round off the top five positions.
Private equity M&A investments in Europe continue to be extremely low. European buyout activity is down a massive 85 per cent by value and 58 per cent by volume for the first nine months of 2009 compared to the same period in 2008 – only 378 transactions were announced valued at USD17.8bn.
The report says that one area of interest for private equity activity could be the Russian consumer retail sector, where it is expected that private equity firms and not European trade players will be looking to invest in profitable Russian retailers in need of capital injections.
In North America, 1,896 deals have been announced so far this year with a combined value of USD471.5bn, a drop of 41 per cent and 34 per cent in volume and value terms respectively when compared to the same period last year.
The average number of deals per month stands at approximately 217 for 2009 to date, the lowest level since 2002 which saw an average of 206 deals per month and far from the peak of 432 deals per month achieved in 2007.
However, recent deal activity seems to be signalling a welcome return to merger Monday’s. In what is usually a slow month for M&A, the last two Mondays in August accounted for USD16.2bn worth of deals including Walt Disney’s USD3.9bn buy of Marvel Entertainment and Baker Hughes’ USD5.5bn deal for Delaware’s BJ Services.
The trend looks set to continue as this week started off with Dell’s USD3.8bn takeover of Perot Systems; a week after Adobe Systems splurged USD1.6bn on online business optimization software provider Omniture.
The report says announced deals will continue to be centered in sectors such as energy, technology, and pharmaceuticals. Caution seems to be the order of the day, with deals taking longer to execute despite improving credit markets and a seemingly recovering economy. Yet a healthy pipeline indicates a busy winter for the advisory community.
The top end of the financial advisory league tables remains largely unchanged from the previous quarter. The top three firms by both value and volume remain the same with Goldman Sachs continuing to top both the value and volume tables with 73 deals worth a total of USD243.5bn. Morgan Stanley and JPMorgan have however managed to close the gap, with Morgan Stanley trailing Goldman in the value table with 72 deals worth USD190.7bn, and JPMorgan equalling Goldman’s deal count but with a total deal value of USD172.6bn.
Asia-Pacific M&A activity continues to fare better than in other regions, with 1,359 transactions announced with a total value of USD210bn – a drop in both value and volume of approximately 25 per cent on the same period in 2008, as opposed to global drops exceeding 40 per cent.
The upward trend in the region’s contribution to global deal-making also continues, accounting for 21 per cent of global M&A value and 23 per cent of global M&A volume this year to date, up from 15 per cent and 18 per cent respectively for the first three quarters of 2008. Aggregate deal value in Asia-Pacific exceeds that in Europe for the second quarter running.
More transactions in the energy, mining and utilities sector have lapsed in 2009 than any other sector. During the first nine months of 2009, the region has seen the lapsing of 18 deals worth USD25.6bn in the sector – making up 66.8 per cent of the total value of lapsed Asia-Pacific deals of USD38.3bn.
Most of the deal-making in Japan took place in the financial services sector, which provided USD24bn of the total Japanese M&A deal value of USD45.2bn announced so far this year. Three of the top ten announced deals in Asia-Pacific this year are Japanese financial services deals.
