Similarly to American M&A in the first half of 2015, the first half of 2015 was remarkably active on the global mergers and acquisitions front. According to a recent Mergermarket report, total deal value topped US$1.7 trillion. This represents an increase of 15.2% over the first six months of 2014, and only 15.4% behind the record-setting first half of 2007, when US$2.1 trillion worth of deals were completed. With 7,136 transactions, it is interesting to note that total deal volume actually decreased by 15.7% compared to the same time period last year, but higher valuations explained the market's overall growth. Technology, Media and Telecommunications (TMT) represented the most active sector, accounting for 22.8% of worldwide M&A activity on the back of 1,332 transactions totalling US$396.5 billion.
The North American market drove global growth, accounting for 46.6% of total deal value in the first six months of the year. With 2,301 transactions worth US$774.3 billion, the region grew by 21.1% compared to the same period in 2014. Rather remarkably, 3 of the top 10 deals occurred within the specialized semiconductor industry, causing TMT to lead the way in terms of sector-specific activity. With a total value of US$238.1 billion, the sector grew by 45.5% over the previous year. Of further note, Canada's 266 deals for US$52.9 billion were vastly overshadowed by performance in the US and accounted for only 6.8% of M&A activity across the continent.
The European market bucked the global trend, with its 2,556 deals worth US$454.1 billion, representing a 7.2% decrease in value compared to the first half of 2014. These soft numbers can largely be attributed to ongoing problems with respect to the Euro, as the currency's lower value negatively impacted European firms' capacity to undertake foreign acquisitions. Nonetheless, inbound activity grew by 1.2% over 2014 on the back of continued Chinese and Japanese acquisitions, which grew by 28.7% and a whopping 445%, respectively. With a total deal value of US$104.9 billion, Energy, Mining and Utilities was the most active sector, while the United Kingdom's 567 deals worth US$201.5 billion made it the busiest country with 44.4% of the region's activity.
In Japan, there was a large spread between inbound and outbound M&A. With outbound activity worth US$54.1 billion, the first half of 2015 has already exceeded the annual outbound total from 2014. Within outbound deals, Financial Services was the leading sector with 14 deals totalling US$14.5 billion. However, inbound activity fell substantially, with 15 fewer deals representing a decrease of 52.8% compared to 2014. This poor performance can be ascribed to a lack of confidence by foreign investors in the Japanese economy's halting recovery.
In the rest of the Asia-Pacific region, growth was particularly strong. There were 1,563 deals valued at US$408.4 billion, which was a 42.2% increase over 2014. On a national level, these notable results were supported in large part by the Chinese market, which accounted for 63.8% of total activity with US$257.5 billion worth of deals. In addition, the region also saw 9 megadeals, each worth in excess of US$5 billion, for a total of US$148.5 billion. Growth was spread out across many sectors, with the Consumer and Real Estate sectors each growing by more than 100%, while Energy, Mining and Utilities grew by 78.6% and Technology grew by 68.1% over 2014.
Meanwhile, Central & South America and Africa & the Middle East both experienced historically poor first halves of the year. The former region had its weakest year start in 10 years, with 205 deals worth only US$24.1 billion, while the latter region had 179 deals valued at US$18.9 billion, which was a 29.4% decrease over 2014 and its weakest performance since 2009.
The author would like to thank Brian Peebles, summer student, for his assistance in preparing this legal update.
Norton Rose Fulbright Canada LLP
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