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1 Ratio of enterprise value to EBITDA, trailing 12 months. This statistic is calculated using a smaller subset of deals for which this data is available.2 Global crossborder transactions are those where the acquirer and the target have different nationalities. Nationality is based on where a company has either its headquarters or a majority of its operations. U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer (“Outbound”) or the target (“Inbound”) has a U.S. nationality.3 Industries categories are determined and named by Dealogic. 4 See box on p. 5 for treatment of Dell Inc. offers.
Figures 1-3 were compiled using data from Dealogic, and are for the broader M&A market, including mergers of any value involving public and/or private entities. Figures 4 and 5 were
compiled using data from FactSet MergerMetrics, and are limited to mergers involving public U.S. targets announced during the period indicated and valued at $100 million or higher
regardless of whether a definitive merger agreement was reached and filed or withdrawn. All data is as of February 10, 2014 unless otherwise specified. “Last 12 Months” data is for the
period from February 2013 to January 2014 inclusive. Data obtained from Dealogic and FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss.
By Volume (US$B)
January 2014
Last 12 Months
By Number of Deals
January 2014
Last 12 Months
$0 $50 $100 $150 $200 $250 $300
Construction/Building
Healthcare
Food & Beverage
Computers & Electronics
Telecommunications
$16.03
$11.62
$6.29
$79.51
$17.50
$0 $50 $100 $150 $200 $250 $300 $350
Oil & Gas
Real Estate/Property
Healthcare
Computers & Electronics
Telecommunications $259.20
$125.17
$122.94
$115.42
$86.01
0 500 1,000 1,500 2,000 2,500
Oil & Gas
Finance
Healthcare
Professional Services
Computers & Electronics 154
142
69
57
41
0 500 1,000 1,500 2,000 2,500
Real Estate/Property
Finance
Healthcare
Professional Services
Computers & Electronics 1,924
1,393
975
680
487
3,000
January 2014 Global +/- From Prior
Month
U.S. +/- From Prior
Month
Total
Volume (US$B) 248.37 15.71 158.91 72.03
No. of deals 2,748 (458) 844 73
Avg. value of deals (US$mil) 212.3 78.6 690.9 376.1
Avg. deal multiple1 12.5x 0.0 15.7x 1.7
Strategic Transactions
Volume (US$B) 147.66 (36.19) 71.10 18.61
No. of deals 2,442 (393) 682 64
Avg. value of deals (US$mil) 138.1 21.4 376.2 136.5
Avg. deal multiple1 12.5x (0.2) 17.5x 2.3
Sponsor-Related Transactions
Volume (US$B) 100.71 51.90 87.81 53.42
No. of deals 306 (65) 162 9
Avg. value of deals (US$mil) 997.1 701.3 2,141.7 1,538.4
Avg. deal multiple1 12.5x 3.1 10.5x 1.0
Crossborder Transactions2
Volume (US$B) 77.03 6.36 Inbound
33.81 Outbound
16.11
Inbound
12.73 Outbound
6.68
No. of deals 706 (34) Inbound
120 Outbound
132
Inbound
11 Outbound
(3)
Avg. value of deals (US$mil) 249.3 67.1 Inbound
663.0Outbound
366.1
Inbound
293.1 Outbound
218.8
Avg. deal multiple1 13.3x (0.7) Inbound
19.7x Outbound
12.1x
Inbound
5.5 Outbound
2.1
Figure 1 Figure 2 - Most Active U.S. Target Industries3 4
February 2014, Issue 23M&A Activity
P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P 1
A T A G L A N C E
M&A Activity (Continued)
P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P 2
A T A G L A N C E
Figure 3 - Top 5 Countries of Origin or Destination for U.S. Crossborder Transactions
Inbound U.S. Crossborder Transactions for January 2014 Inbound U.S. Crossborder Transactions for the Last 12 Months
By Volume (US$B) By Volume (US$B)
By Number of Deals By Number of Deals
Outbound U.S. Crossborder Transactions for January 2014 Outbound U.S. Crossborder Transactions for the Last 12 Months
By Volume (US$B) By Volume (US$B)
By Number of Deals By Number of Deals
$0 $10 $20 $30 $40 $50 $60
France
Italy
United Kingdom
China
Japan $16.08
$5.22
$3.83
$3.65
$1.82
0 50 100 150 200 250 300 350 400
Australia,Germany and
Japan
France
United Kingdom
Canada 36
17
9
65
$0 $10 $20 $30 $40 $50
Brazil
Taiwan
France
United Kingdom
Netherlands $10.78
$1.50
$1.13
$0.67
$0.70
0 50 100 150 200 250 300 350 400
Australia
Brazil and Germany
United Kingdom
Canada 19
16
10
7
6
$0 $10 $20 $30 $40 $50 $60
Netherlands
China
United Kingdom
Japan
Canada $43.86
$30.06
$23.06
$16.75
$7.07
0 50 100 150 200 250 300 350 400
Germany
France
Japan
United Kingdom
Canada 365
168
115
51
55
$0 $10 $20 $30 $40 $50
Netherlands
Canada
Ireland
France
United Kingdom $39.30
$28.95
$22.69
$17.46
$18.02
0 50 100 150 200 250 300 350 400
Germany
Brazil
Australia
United Kingdom
Canada 299
248
94
86
85
5 Each of Australia, Germany and Japan was the country of origin for six transactions in January 2014.
6 Each of Brazil and Germany was the country of destination for 10 transactions in January 2014.
January 2014
Equity Value (US$B)
Last 12 Months
Equity Value (US$B)
$3,000
$9,000
$15,000
Average Value of Five Largest U.S. Public Mergers Average Value of All U.S. Public Mergers
Janu
ary 20
14
Decem
ber 2
013
Novem
ber 2
013
Octobe
r 201
3
Septem
ber 2
013
Augus
t 201
3
July
2013
June
2013
May 20
13
April 2
013
March 2
013
Febr
uary
2013
$3,411.7
$2,910.0
$1,748.3
$4,534.3
$11,355.5
$5,465.1
$1,958.6 $1,866.8
$7,895.3
$3,510.4
$6,059.2
$2,423.9
$895.0$1,383.9
$2,521.1$1,576.9
$3,519.1
$12,908.2
$2,439.2
$9,605.8
$4,304.1
$623.9
$442.2 $840.1
$21.08
$23.25
8
$0 $10 $20 $30 $40 $50
Omnicom Group Inc. ~ Publicis Groupe S.A.(July 28, 2013)
Dell Inc. ~ Management Led Buyout(February 5, 2013)
Sprint Nextel Corporation ~ Dish Network Corporation(April 15, 2013) (Offer withdrawn June 18, 2013)
H.J. Heinz Company ~ Investment Group(February 14, 2013)
Time Warner Cable Inc. ~ Charter Communications, Inc.(January 13, 2014)
$20.96
$16.98
$37.35
$0 $10 $20 $30 $40 50
CEC Entertainment, Inc. ~ Apollo Global Management, LLC(January 16, 2014)
Texas Industries, Inc. ~ Martin Marietta Materials, Inc.(January 28, 2014)
Riverbed Technology, Inc. ~ Elliott Management Corporation(January 8, 2014)
Beam Inc. ~ Suntory Holdings Limited(January 13, 2014)
Time Warner Cable Inc. ~ Charter Communications, Inc.(January 13, 2014) $37.35
$13.67
$0.95
$2.75
$2.06
Figure 4 - Average Value of Announced U.S. Public Mergers (in US$mil)7
Figure 5 - Five Largest Announced U.S. Public Mergers
7 See box on p. 5 for treatment of Dell Inc. offers. 8 According to the 8-K filed by Dell Inc. on February 5, 2013, Silver Lake Partners and Michael Dell, Dell’s Founder, Chairman and Chief Executive Officer, are partners in the Management Led Buyout reported by FactSet MergerMetrics.
M&A Activity (Continued)
P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P 3
A T A G L A N C E
9 Based on the highest target break fees and reverse break fees payable in a particular deal. 10 Only three transactions in January 2014 involving financial buyers had reverse break fees. 11 Only three transactions in January 2014 involved financial buyers.12 Only two transactions in January 2014 had go-shop provisions.13 Only two transactions in January 2014 involving financial buyers had go-shop provisions.14 No transactions in January 2014 involving strategic buyers had go-shop provisions.
M&A Terms
6%
10%
Avg. Reverse Break Fee as % of Equity ValueAvg. Target Break Fee as % of Equity Value
Janu
ary 20
14
Decem
ber 2
013
Novem
ber 2
013
Octobe
r 201
3
Septem
ber 2
013
Augus
t 201
3
July
2013
June
2013
May 20
13
April 2
013
March 2
013
Febr
uary
2013
$2,000
$4,000
$6,000
Average Value of All U.S. Public Mergers with Definitive Agreements
5.1% 5.1%
4.5%
3.1%
3.1%3.7%
7.1%
3.7%3.9%
3.6%
3.4%3.5%3.9%
3.5% 3.4%
3.1%
5.4%
6.6%
$442.2
$962.2
$1,546.0
$863.6$914.1
$1,392.8
$2,286.1
4.1%
6.9%
$1,958.6
(US$mil)
5.3%
5.8%
5.2%
$5,038.3
$1,866.8$1,803.0 $1,748.3
8.6%
Figure 6 - Average Break Fees as % of Equity Value9
Figure 7 - Average Break Fees as % of Equity Value
January 2014 Last 12 Months
Target Break Fee for All Mergers 3.9 3.6
January 2014 Last 12 Months
Reverse Break Fee for All Mergers 4.5 5.6
Reverse Break Fee for Mergers Involving Financial Buyers10
6.4 6.8
Reverse Break Fee for Mergers Involving Strategic Buyers
3.7 4.8
January 2014
Last 12 Months
% of Mergers with Go-Shops 14.3 14.4
% of Mergers Involving Financial Buyers with Go-Shops11
66.7 33.3
% of Mergers Involving Strategic Buyers with Go-Shops
0.0 9.5
Avg. Go-Shop Window (in Days) for All Mergers with Go-Shops12
24.5 32.3
Avg. Go-Shop Window (in Days) for Mergers Involving Financial Buyers with Go-Shops13
24.5 31.4
Avg. Go-Shop Window (in Days) for Mergers Involving Strategic Buyers with Go-Shops14
N/A 33.1
Figure 8 - U.S. Public Merger Go-Shop Provisions
Figures 6-12 were compiled using data from FactSet MergerMetrics, and are limited
to select mergers involving public U.S. targets announced during the period indicated,
valued at $100 million or higher and for which a definitive merger agreement
was reached and filed (unless otherwise indicated). Data obtained from FactSet
MergerMetrics has not been reviewed for accuracy by Paul, Weiss.
P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P 4
A T A G L A N C E
Our Mergers & Acquisitions PracticeThe Mergers & Acquisitions Group at Paul, Weiss is among the most experienced and active in the world. We represent publicly traded and privately held companies, leading private equity firms, hedge funds, financial advisors, and other financial institutions and investors in their most important mergers and acquisitions, joint ventures and other strategic transactions.
Our expertise advising corporations and private investors in a broad range of sophisticated transactions enables us to identify new opportunities for our clients to realize value. We have particular experience in guiding clients as they engage in proxy battles, company-altering and market consolidating transactions or capital markets transactions.
A sampling of recent engagements includes: advising the Board of Directors of Health Management Associates in its $7.6 billion merger with Community Health Systems; representing William Morris Endeavor, along with Silver Lake Partners, in their acquisition of IMG Worldwide, a leading sports and media talent agency; advising Fifth & Pacific in its sale of Lucky Brand to LBD Acquisition Company; representing the buyer group, led by Vincent Viola, CEO of Virtu Financial, in its acquisition of the Florida Panthers of the National Hockey League; and representing Tencent Holdings, Inc., China’s largest Internet company, in its strategic investment in Sogou Inc., a China-based leader in search,
mobile and Internet services.
15 Due to rounding, percentages may not add up to 100%.16 This data includes both announced transactions for which a definitive merger agreement was reached and filed and those for which a definitive merger agreement was never reached and filed (including withdrawn transactions).
Cash Only
Stock Only
Cash & Stock Only
Choice (Cash Election)
Other
Last 12 Months
January 2014
42.9%
3.4%
65.1% 15.8%
15.8%
21.4%
35.7%
January 2014 87.5
Last 12 Months 89.1
January 2014 28.6
Last 12 Months 23.3
Figure 11 - Tender Offers as % of U.S. Public Mergers
Figure 12 - Hostile/Unsolicited Offers as % of U.S. Public Mergers16
January 2014 23.5
Last 12 Months 16.0
© 2014 Paul, Weiss, Rifkind, Wharton &
Garrison LLP.
In some jurisdictions, this publication
may be considered attorney advertising.
Past representations are no guarantee of
future outcomes.
M&A Terms (Continued)
NEW YORK BEIJING HONG KONG LONDON TOKYO TORONTO WASHINGTON, D.C. WILMINGTON
5
Paul, Weiss is a leading law firm serving the largest publicly and privately held corporations and
financial institutions in the United States and throughout the world. Our firm is widely recognized for
achieving an unparalleled record of success for our clients, both in their bet-the-company litigations and
their most critical strategic transactions. We are keenly aware of the extraordinary challenges and
opportunities facing national and global economies and are committed to serving our clients’ short- and
long-term goals.
ContactsAriel J. Deckelbaum Partner New York 212-373-3546
Frances Mi Counsel New York 212-373-3185 [email protected]
Associates Elana D. Bensoul, Joseph S.
Friedman, Samuel J. Welt and Jonathon
A. Zytnick and law clerk Yashreeka Z.
Huq contributed to this publication.
Figure 9 - Form of Consideration as % of U.S. Public Mergers15 Figure 10 - % of Partial and All Stock Deals that Have a Fixed Exchange Ratio
A T A G L A N C E
Note on the Treatment of the Multiple Dell Inc. Offers: For Figure 2, with data reported by Dealogic, the “Last 12 Months” category includes the February 2013 management buyout of Dell Inc. by
Michael Dell and Silver Lake Management LLC, reported at $21.07 billion, and two March 2013 offers for Dell Inc., one from The Blackstone Group LP, reported at $25.68 billion, and one from
Icahn Enterprises L.P., reported at $18.90 billion. For Figures 4, 5 and 12, with data reported by FactSet MergerMetrics, February 2013 includes the management buyout of Dell Inc. by Michael
Dell and Silver Lake Management LLC, reported at $20.96 billion, and March 2013 includes two subsequent offers, one from The Blackstone Group LP, Insight Venture Partners and Francisco
Partners at $24.90 billion (offer withdrawn April 19, 2013), and another from Icahn Enterprises L.P., reported at $18.24 billion (offer withdrawn September 9, 2013). Excluding the March 2013
offers, the Average Value of all U.S. Public Mergers for March 2013 would be $863.8 million, and the Average Value of Five Largest U.S. Public Mergers for March 2013 would be $1,116.2 million.