18 March 2013

Snapshot: M&A 2013 so far

As the end of first quarter of 2013 edges closer, the thoughts of analysts must be turning to whether global mergers and acquisitions (M&A) activity is showing signs of revival after a number of high profile USD 10,000 million-plus blockbuster deals were announced recently. The total value of global M&A reached USD 586,101 million, at the time of writing, up 14 per cent from USD 513,959 million recorded for the same period in 2012, according to Zephyr, the M&A database published by Bureau van Dijk.

Surely caution must be exercised ahead of popping the champagne corks, as it is always a good idea to get a wider overview. There was a similar burst of deal-making activity in the first quarter of 2011 with 17,416 deals worth a combined USD 978,109 million signed off over the three months, but this uptick was short-lived as any signs of green shoots were trampled down by the crisis in the European debt markets (Q2 2011: USD 871,996 million; Q3 2011: USD 774,915 million; Q4 2011: USD 744,951 million). These jitters remained into 2012 and it was only in the last quarter of the year that value started to return to global deal-making, jumping to USD 1,066 million from USD 693,409 million in Q3.

Turning back to 2013, companies based in North America received the lion’s share of M&A investment in the year-to-date, according to Zephyr. Hardly surprising really when you consider the top four deals by value, which all broke the USD 10,000-million barrier, were based in the US. The value of deals targeting the region amounted to USD 260,555 million, up by two thirds on the USD 156,999 million recorded for the same ten weeks in 2012. However, despite the seeming uptick, value was still down from USD 274,689 million over the comparable period in 2011.

Meanwhile, the value of European deal-making was only marginally up at USD 129,890 million, at the time of writing, from USD 121,747 million over the same period in 2012, but both were significantly lower than the same timeframe in 2011 (USD 163,697 million) and 2010 (USD 163,162 million). Increased investment in targets based in regions such as Eastern Europe, Africa and MENA came at the expense of companies based in Far East and Central Asia, South and Central America and Oceania, among others.

How about those all-important BRIC countries? Volume and value on the rise? Wrong. Could some of the fizz possibly have gone out of M&A targeting companies based in Brazil, Russia, India and China? Would you be surprised to find out that, according to Zephyr, BRIC-targeted M&A value amounted to USD 63,023 million so far this year, down 26 per cent from the same comparable period in 2012 (2012: USD 85,281; 2011: USD 141,983 million)? In fact, based on Zephyr data, the start of 2013 is the worst in terms of value since 2006 when there were 1,365 deals worth a combined USD 44,165 million, though the start of 2009 came close as M&A amounted to USD 67,616 million.

These are just figures and cannot account for renewed M&A optimism. Everything can change in a blink of an eye and, after all, this is only the beginning of 2013.

© Zephyr