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Global M&A Activity Pressured by Market Volatility, Geopolitical Uncertainty, Report

April 03, 2019, 08:55 AM
Filed Under: Mergers & Acquisitions
Related: Mergermarket

Mergermarket, a provider of M&A data and intelligence, has released its Q1 2019 report with financial and legal advisor league tables. According to the new research, after a peak in the M&A cycle during the first half of 2018, greater market volatility, geopolitical tensions between the US and China, Brexit anxiety in Europe, as well as strengthening economic headwinds precipitated a slowdown in M&A activity in the beginning of the year. Only 3,558 transactions worth a total $801.5 billion were registered in 1Q19, a 15% decrease in value compared to 1Q18 (5,085 deals worth 943.5 billion).

Large cross-border deals, which propelled M&A activity in the past five years, have almost disappeared. Only nine mega deals (above USD 10bn) have been struck so far this year, down from 14 in 1Q18.  All but two, Newmont’s acquisition of Canada-based Goldcorp for USD 12.8bn and Saudi Aramco's acquisition of Saudi Basic Industries Corporation (Sabic) for USD 70.4bn were the result of US-based corporates taking out competitors in their home market.

The largest deal of the year so far - Bristol-Myers Squibb’s USD 89.5bn bid for Celgene - illustrates the continued appetite for transformative deals in the Pharma, Medical & Biotech (PMB) sector.

Cross border M&A accounted for only 30.8% global M&A in 1Q19 (USD 246.9bn) compared to 38-40% on average between 2015 and 2018. Outbound M&A from China and Hong Kong was particularly subdued, reaching its lowest level since 3Q14, at USD 12.1bn over 56 deals in 1Q19. In Europe, only 17 deals were struck by acquirers from China and Hong Kong for a total value of USD 2.3bn, the lowest quarterly value recorded since 4Q13.

“With pockets of consolidation in some particularly hot sectors, vigorous private equity activity and a healthy domestic deal flow in the US should give hope to dealmakers for the rest of 2019,” commented Beranger Guille, Global Editorial Analytics Director at Mergermarket.

JPMorgan led the financial advisor rankings by value having advised on 56 deals worth $322.4 billion up 33.3% by value compared to $241.7 billon in 2018.

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