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Cross-Border M&A Activity on the Upswing

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Cross-Border M&A Activity on the Upswing

After reaching a low point in 2013, the percentage of M&A deals involving acquirers and targets from different countries is on the ascent. Specifically, an examination of global merger and examination data this year indicates that the proportion of cross-border M&A deal volume accounts for over one-fifth of all deal volume.

To date in 2017, of the 8,119 announced worldwide M&A deals, 1,709, or 21.1%, were classified as cross-border transactions. That’s up from the year-ago period when 19.3% of the 8,307 announced worldwide M&A deals were designated as being cross-border transactions. Should the early results for cross-border M&A activity carry forth for the remainder of 2017, it would stand as the highest proportion of deals being cross-border transactions since 2008 when, of 41,419 announced worldwide M&A deals, 10,023, or 24.2%, were cross-border deals.

This year’s activity finds the information technology sector with the largest number of cross-border MA& deals at 271. That’s followed by industrials with 258 deals, and real estate with 254. With regard to deal value, of the $465 billion in announced worldwide M&A activity so far in 2017, $173.4 billion, or 37%, is classified as cross-border. Among specific sectors, healthcare ranks first with $41.3 billion, followed by consumer discretionary with $30.9 billion, and consumer staples with $24.9 billion.

The top cross-border M&A deal to date this year is U.S.-based Johnson & Johnson (NYSE:JNJ) entering into a definitive transaction agreement to acquire Swiss biotech firm Actelion Ltd (SWX:ATLN) for $30.2 billion on January 26, 2017. That was followed by U.K.-based Reckitt Benckiser Group plc (LSE:RB) signing an agreement to acquire Illinois-based Mead Johnson Nutrition Company (NYSE:MJN) for $19.7 billion on February 10, 2017. The third-largest announced cross-border M&A deal this year involved French lens company Essilor International SA (ENXTPA:EI) entering into an agreement to acquire a 61.9% stake in Italian eyewear Luxottica Group S.p.A. from Delfin S.a.r.l. for approximately $17 billion on January 15, 2017.

Had the recently cancelled proposed $143 billion acquisition of Unilever PLC by The Kraft Heinz Company been realized, it would have ranked as the second-largest cross-border M&A deal ever, with Great Britain’s Vodafone AirTouch’s November 1999 announcement of a $179 billion acquisition of Germany’s Mannesmann AG standing as the largest cross-border M&A deal ever.

Table 1: Percentage of Cross-Border M&A to Total Announced Worldwide M&A

Year Worldwide M&A Deals Cross-Border M&A % Cross-Border Deals
2000 16,346 4,003 24.49%
2001 18,464 4,637 25.11%
2002 15,460 3,593 23.24%
2003 16,855 3,800
2004 20,293 4,841 23.86%
2005 30,706 7,740 25.21%
2006 41,080 10,327 25.14%
2007 46,691 12,012 25.73%
2008 41,419 131,620 24.20%
2009 35,640 7,080 19.87%
2010 46,436 9,300 20.03%
2011 51,419 10,224 19.88%
2012 52,632 9,967 19.03%
2013 51,701 9,549 18.47%
2014 56,202 10,738 19.11%
2015 59,264 11,435 19.30%
2016 58,643 11,864 20.23%
2016YTD 8,309 1,607 19.34%
2017YTD 8,119 1,607 21.05%

Source:S&P Global Market Intelligence