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Global M&A up 5.1 per cent in first half 2010

Global mergers and acquisitions totalled USD858.8bn in the first half of 2010, up 5.1 per cent from the first half 2009, according to a report by mergermarket.

Deal count was also up by 10.3 per cent at 4,895 announced deals.

Despite the strong start to the year, the second quarter only saw USD393.3bn worth of deals, the lowest Q2 period since 2004.

The largest deal announced in Q2 was CenturyLink’s agreement to acquire Qwest Communications (both US based companies) for USD22.2bn. The largest deal so far this year remains Novartis’ 52 per cent stake acquisition in Alcon from Nestle for USD26.3bn.

Cross border transactions between regions made up 26 per cent of global M&A by value in H1 2010, the highest half year percentage since H1 2008.

Emerging markets saw USD230.7bn worth of deals announced in H1 2010, up 51.9 per cent compared to H1 2009.

The average Ebitda multiple across global M&A for H1 2010 was 14.6x, the highest since 2008. The average premium paid was 20.4 per cent, the lowest since 2007.

Goldman Sachs once again topped the global M&A financial advisory tables by deal value, as it did in Q1, having worked on USD207.8bn worth of deals. Credit Suisse and Morgan Stanley followed in second and third place.

Private equity backed buyouts maintained a steady upward trend in H1 2010: activity was up 38.8 per cent from H1 2009 at USD74.2bn. However this is well off the H1 peak achieved in 2007 of USD570.7bn.

There were 37 buyout deals announced in H1 2010 with a deal value greater than USD500m, compared to 39 for all of 2009. The largest buyout in H1 2010 was the consortium bid led by Blackstone Group, Paulson and Centerbridge Partners, for Extended Stay valued at USD3.9bn.

Business services was the most active sector for buyouts with 17.2 per cent of all deals. The financial services and energy, mining and utilities sectors were the only sectors to see reduced activity.

Average debt financing on buyouts has increased to 37 per cent of total funding in 2010, up from 33 per cent in 2009 but still well below the peak of 60 per cent in the buyout heydays.

Private equity exits via trade sales and secondary buyouts in H1 2010 were up 224 per cent from the lows seen in H1 2009, at USD76.6bn. The largest exit of H1 2010 was KKR’s sale of East Resources to Royal Dutch Shell for USD4.7bn. Secondary buyouts were also up, with activity increasing by 164.3 per cent compared to H1 2009, at USD53.9bn.

European M&A increased during H1 2010 by 21.7 per cent compared to H1 2009 to reach USD235.9bn. Q2 alone was up 52.4 per cent compared to Q2 2009.
 
US M&A in H1 2010 was down 17.3 per cent from H1 2009, with a total of USD324.4bn worth of deals announced in the period. It was the lowest H1 period since 2003.

Asia-Pacific announced USD135.3bn worth of deals in H1 2010, up 9.8 per cent from H1 2009. Deal count is also up by 17.4 per cent.

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