According to MergerMarket's Monthly M&A Insider Report, global M&A
activity declined in Q1 2016 after strong levels of activity in
2015. The first few months of 2016 resulted in a total of 3,474
deals worth an aggregate of US$605.5 billion, down from the 4,126
deals worth US$785.5 billion in Q1 2015. The top performing sector,
industrial and chemicals, was responsible for 655 deals worth
US$145.1 billion, representing a 71.3% increase in value from deals
in this sector in Q1 2015.
The decrease in M&A activity has been particularly
noticeable in North America where Q1 2016 resulted in 1,117 deals
worth $US257.2 billion compared to 1,396 deals valued at US$370.8
billion in Q1 2015. The pharma, medical & biotech sector led
the way in North America with 125 deals worth US$56.2 billion. The
report attributed the decline in deal value and activity to
wavering confidence in the European and Asian economies, global
political concerns and uncertainty with respect to U.S. tax laws
The political turmoil and faltering economy in Brazil have
helped depress M&A activity in this country. Brazil customarily
represents a large portion of M&A deals in Central and South
America. In Q1 2016, however, Brazil represented 25.9% of deal
value and 48% of volume in the region, resulting in a decrease of
27.9% and 11% in value and volume, respectively, from Q1 2015.
Overall, Central and South America accounted for 100 deals worth US
$10.1 billion during Q1 2016, down from 128 deals valued at US
$11.3 billion in Q1 2015. Energy, mining and utilities was the top
performing sector in this region in Q1 2016.
The worldwide decline in oil prices and the uncertainties
surrounding the South African economy has had an impact on the
number of M&A deals in the Middle East and Africa. Q1 2016 saw
48 fewer deals in this region, as compared to Q1 2015.
Although M&A activity in the Asia-Pacific region (excluding
Japan) declined in Q1 2016, China announced 339 deals valued at
US$82.5 billion, representing a 16.8% increase in value from its
activities in Q1 2015, and was responsible for 62.6% of the value
of M&A activity in this region. The report notes that of
particular importance is the increased level of interest by Chinese
bidders on foreign targets. Outbound activity from China
represented 26.3% of cross-border deals globally in Q1 2016.
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