The M&A market cooled significantly in October 2014 by all measures, except for the number of domestic U.S. transactions. Global volume, as measured by total dollar value, experienced its lowest month since January 2014, declining for the fourth consecutive month to $221.1 billion (a 24.2% decrease from September 2014). U.S. volume by total dollar value also declined substantially for the third consecutive month to $90.5 billion (a 30.4% decrease from September 2014).
The number of transactions also declined globally in October 2014, but was up slightly in the U.S., increasing 4.2% over September 2014. This increase resulted in another high watermark for the number of U.S. transactions for the last 19 months. Figure 1.
Oil & Gas took over as the most active U.S. target industry by volume in October 2014. Healthcare was the second most active U.S. target industry by volume in October 2014, and maintained its lead as the most active U.S. target industry by volume for the last 12 months. Figure 2. Cross-border volume and the average value of deals were also down substantially. Inbound M&A was down by over 78% and outbound was down by over one-third. Canada retook the top position for inbound U.S. crossborder transactions by deal volume in October ($5.65 billion), but lost its top spot by deal number to the U.K, which posted 27 transactions compared to Canada's 23 during October. The U.K. also had a strong October for outbound U.S. crossborder transactions, with $5.58 billion in volume. Figure 3.
Looking solely at U.S. public mergers valued at $100 million or higher, the largest U.S. public merger in October 2014 was the offer for CareFusion Corp. by Becton, Dickinson and Company ($11.80 billion). Figure 5. The average target break fee declined slightly in October 2014 to 3.2% of equity value. Average reverse break fees declined to 4.1% in October 2014, compared to 4.9% over the last 12 months. Figure 7. The incidence of tender offers in October 2014 was low (7.7%) relative to the 12-month average (25.3%). Figure 11. Finally, we note that approximately 13.3% of offers were hostile/unsolicited as compared to 17.3% over the last 12 months. Figure 12.
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