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| U.S. M&A activity rises slightly; UK activity falls |
Eagan, Minn., USA, Oct 17, 2012 - (ACN Newswire) - Global M&A activity fell in the third quarter to its lowest level in years, according to the latest M&A Trends & Insight for Lawyers report from Thomson Reuters Business Law Advisor-M&A. Globally, deal volumes fell to their lowest level since 2005, declining 8 percent from the second quarter. The total value of the deals also declined, hitting its second-lowest level since mid-2010. The largest deal of the quarter was CNOOC's agreement to acquire Nexen for approx US$15.1 billion.
Activity in the U.S. was relatively strong, with cumulative deal value up slightly from the second quarter to US$287 billion, while domestic deal volumes were up 3 percent. The largest domestic deal of the quarter was Aetna's US$7.2 billion deal to acquire Coventry Health Care. Cross-border deals declined by 8 percent, largely due to a steep 25 percent decline in outbound transactions.
The British M&A market failed to live up to the signs of life exhibited in Q2. Hampered by continuing concerns regarding the European debt crisis, both domestic and cross-border deal volumes fell to three-year lows, with domestic volume dropping 33 percent from the previous quarter and cross-border volumes dropping 26 percent. The 29 percent quarter-over-quarter drop in total deal volume marked the largest decline since Q1 2009, and total deal value of US$38.8 billion flirted with the lows seen in Q2 2011 and Q1 2010.
Private-equity funds continue to be active and are growing their share of overall M&A deal activity. Though private-equity buy-side values increased 25 percent in the third quarter, year-to-date activity slightly trails the pace set last year. On the sell-side, values declined by 20 percent from the second quarter. Year-to-date sell-side deal values are similar to those of 2011. Despite the decline in deal values, private-equity deals have constituted 26 percent of global deal value thus far in 2012, the second-highest level for the first three quarters of a year since 1990. Carlyle Group was one of the most active, announcing three multibillion-dollar deals in the quarter, including its acquisition of the performance-coatings business of DuPont for US$4.9 billion.
Private-equity buyers continue to seek reverse break fees in the vast majority of deals, with fees appearing in 83 percent of Q3 deals. After softening somewhat on the issue in Q2, strategic buyers were again aggressive in demanding reverse break fees, with such fees appearing in 38 percent of the strategic buyer acquisitions in Q3.
"Ongoing worries about the state of the global economy are causing potential buyers to think twice before engaging in acquisitions," said Steve Obenski, general manager, Business Law Solutions at Thomson Reuters. "Despite access to cash and free-flowing debt markets, corporate leaders are asking themselves whether to take a risk on an acquisition or if there isn't some better way to provide value to shareholders. So, while full-blown mergers and strategic acquisitions continue to move slowly, one notable trend we're seeing is the increased prominence of asset purchases and interest consolidations, as compared to large transformational deals."
For a copy of the M&A Trends & Insight for Lawyers report from Thomson Reuters Business Law Advisor-M&A, go to: http://store.westlaw.com/business-law/special-reports/
Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs approximately 60,000 people and operates in over 100 countries. For more information, go to www.thomsonreuters.com .
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Source: Thomson Reuters Corporation via Thomson Reuters ONE
Topic: Press release summary
Source: Thomson Reuters
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