Cheap finance and pressure on firms to consolidate helped drive up the value of global mergers and acquisitions (M&A) last year, although the deal number fell for the first time since 2010.
The value of M&A deals in 2018 rose 11.5 per cent to US$3.53 trillion (S$4.81 trillion) from 2017, making it the third-largest year on record since 2001, according to deal intelligence service Mergermarket yesterday.
The average deal size of US$384.8 million was at its second-highest, just below the US$400.3 million peak attained in 2015.
This was in part due to the presence of 36 mega deals - those larger than US$10 billion in value - last year, six more than in 2017.
Companies under pressure to consolidate often found themselves competing for targets of the highest quality, pushing up valuations, the report noted.
"Comcast's eventual US$51.5 billion Sky takeover was a case in point, where the Pennsylvania telecommunications giant ended up paying considerably more than its starting offer in an effort to beat rival bidder 21st Century Fox," the report stated.
Other notable mega deals included Takeda Pharmaceutical's US$79.7 billion takeover of British-listed Shire, and T-Mobile's US$60.8 billion merger with Sprint Corporation.
Another key factor in the mega frenzy was the continued availability of cheap financing due to historically low interest rates. This provided the capital needed to fund bidding wars, particularly in the private equity space, the report added.
Two sectors in the spotlight were energy, mining and utilities, with a value of US$673 billion, and construction, which hit a new decade high of US$116.5 billion, driven by private equity plays and infrastructure bids.
That said, 2018 also saw the number of deals struck fall for the first time since 2010 to 19,232 after rising steadily for close to a decade.
"With so many market-moving factors fluctuating throughout the year, M&As have understandably had a somewhat ambivalent 2018," noted Mergermarket research editor (Americas) Elizabeth Lim.
"Intensifying trade tensions, political instability and increased regulatory scrutiny took their toll over the year."
Closer to home, activity in the Asia-Pacific ex-Japan was robust last year, with the region recording 4,036 deals for a combined total of US$717.4 billion, a 2.6 per cent increase in deal value but 42 fewer than in 2017.
The largest regional deal was the US$16 billion acquisition of Indian online retailer Flipkart by retail giant Walmart.
Additionally, Asia-Pacific outbound M&A was buoyant, while inbound M&A experienced mild growth. The value of outbound transactions reached US$160 billion last year, posting a 52.4 per cent increase over 2017.
Foreign investment into Asia-Pacific ex-Japan reached US$122.5 billion, or a 4.4 per cent increase from the preceding year.
Industrials and chemicals was the most attractive sector last year by both value and volume, while the pharmaceutical, medical and biotech sector was also in focus with a dramatic uptick in the fourth quarter to help the sector reach an annual value of US$41.3 billion, up 63.8 per cent from 2017.
Private equity firms remained active, despite buyout activity dipping, with 514 deals worth US$124.1 billion in 2018 - a 3.4 per cent decrease by value from a year ago.
This was largely due to a weak fourth quarter when value and deal count both shrunk.
The largest buyout deal last year was the US$14 billion acquisition of Chinese payment company Ant Financial by a consortium led by GIC.