In the first quarter of 2019, global deal value totaled USD$798.6 billion, a 9% rise quarter-on-quarter, but nearly 15% below the same period the year before. Meanwhile, volume figures fell by more than 30% quarter-on-quarter to 3,557 deals.
The trend for cross-border activity was slightly less encouraging on the value front. The total declined by 12%, to US$244.1 billion, compared to Q4 2018. However, value figures were stopped from falling further by a rise in megadeals, both quarter-on-quarter and year-on-year. The largest cross-border megadeal saw US-based Newmont Mining announce plans to purchase Canadian precious metal mining company Goldcorp for US$12.8 billion.
Industrials and pharma out in front
Two sectors stood out in terms of value—industrials and chemicals registered US$157.2 billion and pharma, medical and biotech (PMB) scored a total value of US$153 billion. The PMB sector also saw the largest deal of the year so far, Bristol-Myers Squibb’s US$89.5 billion planned acquisition of biotech firm Celgene.
One of the largest pharma deals in history, the deal would allow Bristol-Myers Squibb to become a leader in oncology and give it access to a promising new treatment, CAR-T, through Celgene’s acquisition of Juno Therapeutics the year before.
Two other PMB deals made it into the top ten largest deals of the quarter, including US conglomerate Danaher agreeing to acquire the biopharma business of GE Healthcare Life Sciences from GE for US$21.4 billion.
Domestic US activity boosts global figures
Last year saw domestic US M&A activity reach post-crisis highs. The first quarter of 2018 had the highest quarterly volume total on record (1,337 deals registered), worth a total of US$357.6 billion. This year also saw a strong start for US domestic dealmaking, with seven of the top ten deals of the year being domestic US deals. Value was up 1%, to US$361.9 billion.
Cuts to the corporate tax rate have left US companies with extra cash to invest. The US economy is still growing, albeit at a slower pace than expected. Ongoing trade tensions with China and geopolitical tensions in Europe around Brexit have also meant that domestic dealmaking has looked more compelling to US firms.
European M&A takes the backseat
Against a backdrop of ongoing confusion surrounding Brexit, M&A activity in Western Europe dropped substantially. Transactions involving targets based in Western Europe totaled US$113.4 billion, less than half the US$251.7 billion in total deal value in Q1 2018.
The largest European deal so far in 2019 was the US$6.4 billion take-private of German online classifieds portal Scout24 by PE firms Blackstone and Hellman & Friedman.
Striking deals in a downturn
With signs pointing to a potential global economic downturn, and trade and geopolitical issues ongoing, M&A figures for the coming quarters are unlikely to hit the same heights as the three previous, record-setting years.
But the US Federal Reserve is unlikely to raise interest rates in the near term, leaving acquisition finance relatively easy to access, and private equity is still sitting on record levels of dry powder, which will likely lead to ever-higher valuations for good assets. Changing consumer habits and the continued need for digitalization across all industries, too, will mean companies are likely to continue to attempt to add value through dealmaking.