The M&A market was relatively flat in June 2015 as compared to May 2015. Notwithstanding the announcement of two large U.S. public mergers, each valued at approximately $47 billion, U.S. M&A volume increased by only 0.1% to $247.87 billion month-over-month, as a 15.2% increase in the number of U.S. deals was offset by a 19.7% decline in average deal size. Global M&A activity showed similar trends with total volume increasing from May to June by only 4.9% to $459.76 billion, with a 7.8% increase in number of deals globally being offset by a 4.3% decrease in average deal size. One segment that declined significantly (over 55%) was U.S. sponsor-related transactions, where volume decreased from $68.02 billion in May to $30.21 billion in June. Figure 1.
Oil & Gas was the most active U.S. target industry by volume in June 2015 ($75.19 billion), followed by Healthcare ($67.23 billion) and Computers & Electronics ($26.45 billion). Figure 2. The strong performance by the Oil & Gas and Healthcare industries was primarily due to the offers for The Williams Companies, Inc. by Energy Transfer Equity, L.P. and Cigna Corporation by Anthem, Inc., respectively. These transactions are now two of the five largest announced U.S. public mergers in the last 12 months. Figure 5. Healthcare continues to be the most active U.S. target industry by a wide margin for the last 12 months. Figure 2.
While there was a significant increase in inbound U.S. crossborder activity in June 2015, outbound U.S. crossborder volume declined substantially. Inbound U.S. crossborder activity increased by 177.9% to $42.21 billion. In contrast, outbound U.S. crossborder volume declined by 83.4% to $11.27 billion, as did global crossborder volume, which fell by 10.3% to $105.83 billion. The average value of global crossborder and outbound U.S. deals also dropped considerably by 19.3% and 86.5%, respectively, in June 2015. Figure 1.
With respect to inbound U.S. crossborder transactions, Canada took the top position by deal volume ($21.92 billion), while also maintaining its top position for the highest number of deals (40). The United Kingdom took top position for outbound U.S. crossborder transactions by deal volume ($2.56 billion), while Canada had the highest number of outbound U.S. crossborder transactions (29). Figure 3.
The average target and reverse break fees in May 2015 were 4.2% and 4.8%, respectively, which are comparable to their respective annualized averages. Figure 7. Meanwhile, the incidence of mergers with go-shop provisions (30.8%) was significantly higher that its annualized average (10.5%). The use of cash-only consideration increased to 61.5% in June 2015, substantially higher than the May 2015 figure (40.0%) as well as the average for the last 12 months (50.3%). Figure 9. Finally, we note that the incidence of hostile/unsolicited offers rose to 23.5% in June 2015, compared to 13.9% for the last 12 months, while the incidence of tender offers as a percentage of U.S. public mergers dropped to 15.4% compared to 23.4% for the past twelve months. Figure 12.
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