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Global M&A rebounds on strong US domestic activity, corporate simplification push

  • US deal activity up 14.6% year-on-year
  • Domestic M&A accounts for two out of three deals
  • 2Q19 global PE buyout value increases on past two quarters

Down 11% on 1H18 but up 17% on 2H18 by value, global M&A activity would appear to have found its post-peak cruising speed in 1H19, recording USD 1.80tn worth of deals (across 8,201 transactions), according to Mergermarket’s Global & Regional M&A Report. But beneath the surface and the headline numbers, deep currents affecting the global economy have started to shift M&A trends in new directions.


Perhaps the most significant shift lies in the geographical distribution of dealmaking. At 53.2% so far this year, the US takes its largest share of global M&A value on Mergermarket record. This has as much to do with strong levels of activity in the US – up 14.6% by value (USD 957.3bn) from the comparable period last year – as with the weak performances of both Europe (USD 391bn) and Asia (USD 259.1bn) – down 38.8% and 34.2% respectively.

In fact, all but one - AbbVie’s [NYSE:ABBV] USD 86.3bn acquisition of Allergan [NYSE:AGN] - top 10 deals struck in 2Q19 have targeted US-based companies and six of those were the result of domestic consolidation among US-based corporations.

Amid heightened geopolitical risks and rising protectionism globally, domestic M&A accounted for 67% of the overall activity in 1H19 compared to a yearly average of 61.3% since 2010. Worth a combined USD 5.9bn over 43 deals in 1H19, Chinese outbound investment into the US and Europe was particularly subdued, reaching lows not seen since 2009.

Perhaps a sign that de-globalisation forces are starting to permeate corporate strategies, several large companies, sometimes under activist pressure, are using M&A to strengthen their grip on their home markets or focus on their core businesses.

Global demergers reached their third-highest value on record, with 11 deals worth USD 98.3bn in 1H19. Chief among them is the USD 63.2bn split of chemicals conglomerate DowDuPont [NYSE:DWDP] into three separate specialised companies more than three years after the merger of Dow Chemical and El du Pont de Nemours.

In April, Swiss pharmaceutical group Novartis [SWX:NOVN] finalized the spin-off of Alcon almost ten years after it bought the US-based eye care business from Nestlé [SWX:NESN]. In May, Nestlé itself sold Nestlé Skin Health, the unit it created after buying outL’Oréal’s [EPA:OR] stake in their Galerma joint venture in 2014, to a consortium led by EQT and the Abu Dhabi Investment Authority(ADIA) for USD 10.1bn.

The search for scale presided over the largest deal in 2Q19. United Technologies’ [NYSE:UTX] USD 88.9bn merger with Raytheon[NYSE:RTN] will create the third-largest Aerospace and Defence company by sales, behind Boeing [NYSE:BA] and Airbus [EPA:AIR]. It could also lead mid-tier players such as Mercury Systems [NASDAQ:MRCY], Kratos [NASDAQ:KTOS] and Curtiss-Wright [NYSE:CW] to consider M&A to better compete for large government contracts.

While the merits of breaking up Big Tech are debated, M&A in the Technology sector reached new highs, driven by private equity and the growing demand for data analytics and cloud services from business of all sizes. In June, Salesforce [NYSE:CRM] bought Tableau Software [NYSE:DATA] for USD 15bn just a week after Alphabet [NASDAQ:GOOG] announced its USD 2.6bn acquisition of Looker. With 1,307 deals so far this year, the Technology sector globally was responsible for 15.9% of deal activity by volume in 1H19, its highest half-yearly share on record. The sector has notably become private equity’s favourite hunting ground, accounting for 23.2% of all global buyouts so far this year, up from only 12.8% in 2013.


Although not reaching 2Q18 record levels (USD 180.1bn), at USD 133.6bn, global buyout value in 2Q19 surpassed that recorded in the previous two quarters (USD 111bn in 4Q18 and USD 111.5bn in 1Q19).

Three mega-buyouts have already been struck in the US so far this year - the same number as for the whole of 2018 – including two large cross-border take-private deals in 2Q19: the USD 14.2bn acquisition fiber networks operator Zayo Group [NYSE:ZAYO] by a EQT/Digital Colony Partners consortium and the USD 10.2bn acquisition of midstream oil and gas pipeline operator Buckeye Partners [NYSE:BPL] by Australian IFM Investors.

In a persistently low interest rates environment globally, megafunds are being raised on both sides of the Atlantic and Goldman Sachs[NYSE:GS] is reportedly planning a big push in the private equity space - all factors pointing towards private equity taking an ever-larger share of global M&A activity in the coming quarters.

Beranger Guille Editor EMEA Mergermarket
Beranger Guille Editor EMEA Mergermarket

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