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Big-ticket M&A on track for record-breaking year

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Meeus Dirk
Dirk Meeus

Partner and Global Co-Head, Corporate

Brussels

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09 October 2015

M&A values look set to exceed pre-financial crisis levels as corporates, strategic investors and PE funds remain resilient to macro-economic factors that many expected would derail confidence.

According to data from Mergermarket, M&A values rose by 19% (USD1.047 trillion) in Q3 when compared with last year. Volumes were down, however, by 13% (3,697 deals in Q3, 2015 v 4,467 deals in Q3, 2014), which has been a consistent trend throughout the year, despite the market enjoying a record-number of large, strategic deals.

Financial Services transactions made a strong return this quarter, up by 68% year-on-year. So far this year, deal values in the sector, which are at USD301.6 billion, already exceed the total value of deals done in 2014 and 2013. Activity is mostly driven by consolidation in the insurance sector and U.S. banking transactions.

Strategic deals in the drinks industry caused excitement this quarter for the consumer sector, which saw fewer deals than last quarter but much higher values. One of the standout consumer deals for the quarter was the transformational alliance agreed between three separate bottling companies to create the world’s largest independent Coca-Cola bottler.

Ed Barnett, Corporate partner at Allen & Overy, who was one of the lead partners on the transaction, commented: “This deal was typical of the kinds of transactions we’ve seen dominate this year where you have corporates that have been thinking about doing a complex strategic deal for some time but have been waiting for the optimal conditions before making their move.”

“For many, that time is now and we will continue to see more strategic deals in the near future,” he adds.

The TMT sector had a slightly quieter period than the first half but still saw a number of significant transactions, including VimpelCom’s merger of 3 Italia S.p.A. and WIND Telecomunicazioni S.p.A.

One area within the TMT sector where Allen & Overy partners expect to see growth is in the payments space, which is starting to heat up as it becomes increasingly overcrowded with Fintech start-ups looking for ways to reach critical mass in a fast-changing market with strong potential.

Simon Toms, Corporate partner at Allen & Overy commented: “The Fintech sector is one to watch as we’re starting to see increasing funding flow for companies seeking to expand rapidly, which is a good indicator of likely M&A in the near and mid-term.”

This quarter also saw PE funds become increasingly aggressive as high levels of confidence and the right available assets created a combined force for funds to deploy their rich stockpiles and pursue buyouts after many quarters focusing mostly on exits. A number of PE deals were announced in Q3 and the signs are promising for a strong end to the year.

Please click here to view the latest edition of M&A Insights.

For further information, please contact Lauren Fragapane at Lauren.Fragapane@allenovery.com or on +44 (0)20 3088 3141.

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