02 November 2012

Snapshot of the latest US blockbuster deals

In case you missed it, there has been a flurry of announced blockbuster merger and acquisition (M&A) deals targeting companies based in the US at the end of October. A total of 910 deals worth USD 113,573 million were recorded during the month, according to Zephyr, the M&A database. In the last week alone, from 24th October to 31st October, a total of 166 transactions valued at USD 17,720 million involving US-based targets were signed off, accounting for almost a fifth of the month’s total volume and 15 per cent of total value.

The largest of these recently announced M&A deals is the surprise USD 4,050 million purchase of Lucasfilm by the Walt Disney Company on 30th October; the House of Mouse is indeed now pouncing on the entire Star Wars empire after paying USD 3,920 million for Marvel in 2009 and USD 7,400 million for Pixar, the animation company known for the Toy Story trilogy and which started out as a Lucasfilm unit in 1979 before being spun out in 1986.

Chairman, founder and veteran film maker George Lucas is handing over the entirety of Lucasfilm, including its operating businesses in live action film production, consumer products, animation, visual effects, and audio post production. However, the acquisition also includes the magic words Star Wars enthusiasts everywhere are keen to hear: there will be a seventh film in the series, and it will hit the box office by 2015. Disney is not stopping there either, revealing plans to capitalise on and grow the saga by releasing a new movie every two to three years.

While Disney may rule the roost in terms of the entertainment sector grabbing headlines, PVH paved the way for the clothing sector, swooping in to pick up fellow designer Warnaco for USD 2,900 million in a take-private deal which will bring all Calvin Klein-branded apparel under one roof by early 2013. The announcement, made on the 31st October, revealed the New York-headquartered suitor is tabling a cash-and-stock bid valued at USD 68.43 apiece in order to turn itself into USD 8,000-million pro forma revenue entity owning a portfolio of iconic and heritage labels such as Tommy Hilfiger and Van Heusen.

It is worth mentioning there were six announced deals worth USD 1,000 million or more involving US-based targets in the last week of October, including McKesson acquiring PSS World Medical for USD 2,100 million and Clean Harbors taking over Safety-Kleen for USD 1,250 million. In terms of rumoured M&A deals targeting US-based companies in the last week of October, Reynold & Reynolds takes first place after Reuters reported the US software provider is considering a leveraged buyout worth a cool USD 5,000 billion. According to the news provider’s sources, a few unnamed private equity players may battle it out for the Ohio-based developer of platforms designed to support automobile dealers in North America and Europe.

This is just a tiny snapshot of dealmaking activity targeting US-based companies and should be put in context of the year-to-date.  A total of 9,039 deals worth USD 702,692 million were signed by US-based targets between 1st January 2012 and 31st October 2012, according to Zephyr. Compare this with the 8,687 deals valued at USD 869,362 million recorded for the same period in 2011 – value has declined by almost a fifth. However, do not despair as global M&A activity is poised to become more robust, according to recent press reports.

© Zephyr