Cross-border mega deals 'almost disappeared' in Q1: Report

The largest deal so far this year is Bristol-Myers Squibb's US$89.5 billion bid for Celgene, which the report says shows a continued demand for "transformative buyouts in the pharmaceutical, medical and biotech sector".
The largest deal so far this year is Bristol-Myers Squibb's US$89.5 billion bid for Celgene, which the report says shows a continued demand for "transformative buyouts in the pharmaceutical, medical and biotech sector".PHOTO: REUTERS

Volatile markets, trade tensions, Brexit anxiety weigh on M&As

Mergers and acquisition (M&A) activity across the world fell in the first quarter on the back of volatile markets, trade tensions, Brexit anxiety and stronger economic headwinds, a report said yesterday.

It noted that deal values dropped 15 per cent to US$801.5 billion (S$1.1 trillion) in the three months to March 31 from US$943.5 billion in the same period last year, while transaction numbers plummeted 30 per cent, from 5,085 to 3,558.

"Large cross-border deals, which propelled M&A activity in the past five years, have almost disappeared," said the report from data firm Mergermarket.

Only nine mega deals - those above US$10 billion - have been struck this year, down from 14 in the first quarter of last year.

Only one - Newmont's acquisition of Canada-based Goldcorp for US$12.8 billion - was cross-border. And all but two, the Newmont deal and Saudi Aramco's acquisition of Saudi Basic Industries Corporation for US$70.4 billion, were the result of United States-based firms taking out competitors in their home market.

Total cross-border M&As accounted for 30.8 per cent or US$246.9 billion of global activity in the first quarter, compared with 38 to 40 per cent on average between 2015 and last year.

The report added that outbound M&A from China and Hong Kong was "particularly subdued", reaching US$12.1 billion over 56 deals in the first quarter, its lowest level since the third quarter of 2014.

In Europe, only 17 deals totalling US$2.3 billion were struck by acquirers from China and Hong Kong, the lowest since the fourth quarter of 2013.

The largest deal so far this year is Bristol-Myers Squibb's US$89.5 billion bid for Celgene.

Mergermarket said this shows a continued demand for "transformative buyouts in the pharmaceutical, medical and biotech sector".

In the Asia-Pacific, excluding Japan, M&A activity "nosedived" in the first quarter to 666 deals worth US$119.9 billion amid economic headwinds and the unresolved US-China trade war.

Industrial and chemicals remained the busiest sector in both value and volume in Asia totalling US$21.5 billion in 132 deals, an 11.3 per cent drop in value on last year.

Private equity firm buyouts dropped to 66 deals worth US$8.7 billion, the lowest since the first quarter of 2013.

Despite the first-quarter slowdown, Mergermarket sounded optimistic: "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 deal-makers for the rest of 2019."

A version of this article appeared in the print edition of The Straits Times on April 04, 2019, with the headline 'Cross-border mega deals 'almost disappeared' in Q1: Report'. Print Edition | Subscribe