South Africa saw a total of 28 M&A deals valued at USD3.4bn in the first half of 2009, a decrease of 46.9 per cent by value and 65 per cent by volume from the same period in 2008, a
South Africa saw a total of 28 M&A deals valued at USD3.4bn in the first half of 2009, a decrease of 46.9 per cent by value and 65 per cent by volume from the same period in 2008, according to a report by mergermarket.
Activity is down 55.6 per cent from the second half of 2008 (from 63 deals) with deal value down 54.1 per cent (from USD7.4bn).
The first half of 2009 has seen domestic activity decrease as a percentage of total South African M&A involvement (61.8 per cent) compared to the same period last year (65.2 per cent).
The first half of the year has been volatile seeing the lowest and highest domestic activity as a percentage of total South African M&A involvement, since the beginning of 2004 with 42.1 per cent in Q1 and 86.7 per cent in Q2.
The largest slice of the South African M&A activity for H1 2009 still comes from the energy, mining and utilities sector, with a total value of USD1.6bn from five transactions. Compared to the same period last year, this represents a 44 per cent increase in value and 67 per cent decrease in volume.
Meanwhile, the real estate sector has seen a 40 per cent and 33 per cent increases in value and volume respectively from H1 2008, with four transactions totalling USD1.3bn.
South African financiers and advisers have become somewhat more active in the past two to three months with M&A related mandates. Indications have been that share-structured deals are the most popular format considering the current climate. The majority of interest in acquisitions, as well as larger consolidation-type mergers, is among firms of equal size looking to grow or cut costs by taking advantage of the cheaper asset prices of some of their industry counterparts. Trade buyers, or those looking to grow within their own industry rather than diversify, appear to be more likely to make acquisitions at present.
The report by mergermarket also found that Deutsche Bank has jumped 12 places from the year end 2008 and takes top spot in the financial adviser value tables with a total value of USD1.6bn and three deals. The German bank is closely followed by Goldman Sachs and UBS Investment Bank, both in second place with a value of USD1.3bn and one deal each. All three banks advised on the largest South African deal of the year, Paulson’s USD1.3bn stake acquisition in AngloGold Ashanti.
South African Nedbank tops the volume tables with four deals with a total value of USD152m. In terms of value Nedbank ranks eighth, up four positions compared to 2008. While Nedbank has improved its position in value and volume tables, its domestic counterpart, Rand Merchant Bank has dropped to 11th from ranking number one in the 2008 year end value tables.
Morgan Stanley, which ranked second in 2008, is not in the top 20, neither in terms of value nor volume.
The top spot in the legal adviser league tables is shared by Clifford Chance, DLA Piper and Herbert Smith/Gleiss Lutz/Stibbe, all having advised on one deal valued at USD300m. South African law firm Edward Nathan Sonnenbergs tops the volume table with six transactions worth a total of USD159m. Werksmans, ranked number one in 2008 in both value and volume tables, has dropped to 13th and third respectively, with a total value of USD234m advising on two transactions.
