Last minute flurry of M&A deals sees 2012 end on a high
LONDON, Tuesday 15 January 2013 th The last two weeks of 2012 saw an unprecedented number of M&A deals* and contributed to the highest volume of completed deals globally (268) in one quarter since Towers Watson's Quarterly Deal Performance Monitor ("QPDM") began in January 2008.
(Media-Newswire.com) - LONDON, Tuesday 15 January 2013 – The last two weeks of 2012 saw an unprecedented number of M&A deals* and contributed to the highest volume of completed deals globally ( 268 ) in one quarter since Towers Watson’s Quarterly Deal Performance Monitor ( “QPDM” ) began in January 2008. As a result, full-year deal volumes for 2012 were also healthy with the second highest number of deals completed ( 768 ) since inception of the research.
The Towers Watson research, run in partnership with Cass Business School, shows the number of deals completed in Europe in the last quarter of 2012 increased by over 60 per cent, from 19 in mid-December to 31 by News Year’s eve. It also shows that Asian companies increased the gap with Europe - in terms of M&A deals per quarter - to its highest ever margin ( 37 ), largely by completing 22 deals in the last two weeks of the year to reach a total of 68. In addition, the number of North American M&A transactions also jumped significantly in the last two weeks of 2012, from 115 to 154.
“We are used to seeing a surge in activity at this time as companies try to push through deals before the New Year, but the scale of completed deals in the last two weeks of 2012 was bigger than anything we’ve seen before,” said Steve Allan, M&A Practice Leader for EMEA at Towers Watson. “There are likely to be a number for reasons for this, but the US fiscal cliff crisis and potential for instability early in the new year would certainly have encouraged many boards on the cusp of a deal to push forward or risk being scuppered by market turmoil.”
Towers Watson’s top five predictions for the M&A market in 2013:
Late 2012 surge proves to be a blip. Despite the large number of transactions completing in the final few weeks of the year, this is more likely to be a rush to the finish line for existing deals rather than signalling an upward trend. Volumes in Q1 2013 are therefore likely to suffer as a result. European deal volumes to remain subdued. 2012 was bad for European acquirers and 2013 volumes are unlikely to show much improvement. Whilst we remain optimistic that confidence may start to slowly return in the second half of the year, we would not expect this to be strong or fast enough to see a significant uptick in completed deals. North American deal activity to remain stable. Stability will be the watchword for M&A in North America during the first half of 2013, after which we may find a surge in activity as the economic conditions continue to improve and confidence grows. Asian market continues to fly. Led by Chinese and Japanese firms, Asia-Pacific acquirers will continue to grow in confidence, branching out to do deals further afield as the region continues to assert its recently acquired dominance over Europe in terms of M&A transactions. Chinese firms to enter the European mega-deal market. The conditions could be right this year for Chinese firms to enter the European M&A market in a big way. Expect some big-name companies to be targeted by cash-rich Chinese organisations. Steve Allan said: “We feel that this is the year in which Chinese companies enter the European takeover market in a big way. Current economic conditions in Europe will continue to restrain confidence, so buyers with healthy balance sheets are going to find a market populated with willing sellers but relatively few competing bidders. We have seen the continued growth of the Asian M&A market recently but while Japanese corporations have been notable in their cross-border activity the Chinese have tended to be much more domestically focused.
“Our expectation is that this could be the year when this changes and Chinese buyers will spread their wings and take advantage of the opportunities Europe presents. This means we could see some big name European brands being snapped up by Chinese giants and I wouldn’t be surprised if these form several of the top 25 biggest deals of the year for the first time in 2013. Acquirers should remember though that while there is still value to be had in Europe, carefully planned integration is required for success, and that cross-border deals in particular can raise significant challenges.”
* Completed M&A deals with a value of at least $100 million.
Notes to editors: Towers Watson Quarterly Deal Performance Monitor Methodology
All analysis conducted from the perspective of the acquirer Share price performance within quarterly study measured as percentage change in share price from six months prior to the announcement date to the end of the quarter. All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered. Deal data sourced from Thomson One Banker About Human Capital M&A Towers Watson’s Human Capital M&A Practice advises clients around the human capital aspects in a deal situation. This ranges from key elements of a financial due diligence through to the integration of the workforce post completion.
About Towers Watson Towers Watson ( NYSE, NASDAQ: TW ) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the Web at towerswatson.com. Media contacts Jamie Kilduff +44 20 7227 2939 jamie.kilduff@towerswatson.com
James Morgan, MHP Communications +44 20 3128 8533 james.morgan@mhpc.com
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