Although the financial markets were generally strong during Q3 2017, global M&A activity decelerated, with 3,857 announced deals worth US$673 billion reflecting a 14 percent decrease in value compared to Q2 and a 24 percent value decrease as compared to the same period in 2016.
The slump also showed in deal volumes which decreased by 16 percent compared to Q2 and by 14 percent compared to the same quarter in 2016. A significant drop-off in Chinese acquisitions in the US was notable this quarter, reflecting significantly increased scrutiny of Chinese deals by regulators and increasing protectionist rhetoric.
US share of global value spikes up
With four out of the five largest global deals happening in the US, the region’s share of global deal values increased sharply compared to the prior quarter and year, although the decrease in deal volume was consistent with the overall decline in activity.
A drive for consolidation within the competitive aerospace sector resulted in the largest deal of the quarter: the aviation systems company Rockwell agreed to be acquired by industrials giant United Technologies for US$30 billion. The deal follows another large aerospace deal from July, in which Vector Aerospace, a subsidiary of Airbus that provides maintenance repair and overhaul services, agreed to be acquired by private equity firm Veritas Capital.
Energy on the up
But it was the energy, mining and utilities sector that achieved the highest deal value of the quarter. A flurry of summer deals included Sempra’s US$9.45 billion agreement to acquire Energy Future Holdings, 80 percent owner of Oncor Electric (taking into account the 20 percent of Oncor that Energy Futures doesn't own and Oncor’s debt, the actual transaction price is more than US$18 billion); Total’s US$7.45 billion takeover of Denmark's Maersk Oil; and a consortium led by Energy Capital Partners agreeing to buy Houston-based power producer Calpine for an equity value of approximately US$5.6 billion (US$17 billion in enterprise value).