In the first half of 2018, megadeals (deals worth $10 billion or more), allowed global deal making to reach a record breaking $2.5tn.
According to Scott C. Hopkins, M&A partner at Skadden, Arps, Slate, Meagher & Flom, the average deal value increased by 19.6 percent in 2018 as compared to 2017, but an overall decline in the number of deals in 2018 suggests some buyers may have been more cautious entering into M&A activity.
In 2019, trade wars, political circumstances and economic uncertainty have impacted deal activity, meaning levels in the UK are now similar to those during 2009’s financial crisis. The prospect of a no-deal Brexit is a key factor in the significant drop in M&A activity in the UK.
Globally, the US-China trade wars are also impacting M&A activity this year. Increased market volatility and new legislation will impact how cross-border deals are done.
The top three industries with the most highly-valued M&A deals of 2019 are energy, healthcare and technology.
Tech deals account for over 40% of transactions between the US and UK, and nearly a third of deals between the UK and the rest of Europe. The technology sector has more than doubled its share of the overall M&A market in the past decade, from 6% in 2007 to 17% in 2018.
According to the Office for National Statistics, here are the figures for M&A activity in 2019 compared to 2018:
• The value of inward M&A (foreign companies abroad acquiring UK companies) was £6.3 billion in Quarter 1 2019, a sizeable decrease on the value recorded in Quarter 4 2018 (£38.8 billion).
• Outward M&A (UK companies acquiring foreign companies abroad) was valued at £5.4 billion in Quarter 1 2019, a notable fall of £5.1 billion when compared with £10.5 billion during Quarter 4 2018.
• The value of domestic M&A (UK companies acquiring other UK companies) in Quarter 1 2019 was £1.4 billion, a £4.2 billion decrease on the value recorded in Quarter 4 2018 (£5.6 billion).
Below is a selection of 2019’s biggest M&A deals in the UK and US in terms of value and impact:
1. Chevron, the second-largest US energy company, agreed to acquire Anadarko Petroleum, one of the world’s largest independent oil and natural gas production companies for $33 billion. Under the agreement, Chevron will acquire all of the outstanding shares of Anadarko at $65 a share. (April)
2. A huge inward M&A transaction this year was Coca-Cola’s acquisition of Costa Limited from Whitbread Plc. The sale proceeds of £3.9 billion were received in cash. (January)
3. The outward acquisition of GlaxoSmithKline Plc acquiring the oncology-focused biopharmaceutical company Tesaro Inc from the US for £4.0 billion. This deal will significantly strengthen GSK’s commercial capability in oncology. (January)
4. Intercontinental Hotels Group Plc acquired Sustainable Luxury Management (Thailand) Ltd, one of the world's leading operators of luxury hotels, resorts and spas. The deal was set at $300 million in cash and allows International Hotels Group to expand its luxury footprint. (February)
5. New York based cancer drug maker Bristol-Myers Squibb Co bought biotech Celgene Corp for $74 billion. (January)
6. Private equity firm Hellman & Friedman and Blackstone Group LP acquired cloud-based human resources applications firm Ultimate Software Group Inc for $11 billion. (February)
7. US-based plastic maker Berry Global Group Inc. agreed to buy British packager RPC Group Plc for 3.34 billion pounds ($4.4 billion), to create one of the world’s largest plastic-packaging companies, derailing a rival takeover plan by Apollo Global Management. (March)
8. Japanese drug maker Takeda acquired Jersey-based Shire making it one of the top ten pharmaceutical companies in the world. The deal was set at $62 billion, marking the largest ever overseas takeover by a Japanese company.(January)
9. Uber announced it will acquire its Middle Eastern rival Careem for $3.1 billion, taking Uber’s share price to $55 each. (March)
10. Newmont Mining acquired Goldcorp for $12.5 billion creating the world’s leading gold mining company. (January)