Corporate dealmakers stayed close to home in 2019, leading to a decade high for the share of domestic M&A activity. Charts from Deals Intelligence analyze the deal trends, amid signs that trade tensions and protectionism have impacted cross-border takeovers.
- Domestic M&A activity is up four percent so far in 2019 to US$2.4 trillion, a figure only exceeded once since Deals Intelligence records began in the 1970s.
- All but one of 2019’s largest 20 M&A transactions are domestic deals, with 15 of the top 20 involving all-U.S. players.
- Cross-border M&A transactions targeting Europe have fallen furthest, with deals involving acquirors outside the region halving from this time last year.
Foreign takeovers as a proportion of total global M&A activity have slumped to their lowest level in a decade, reinforcing recent signs of a move against globalization.
The prominence of large domestic acquisitions is shown in figures from Deal Intelligence, with domestic M&A accounting for 70 percent of the global total in 2019. This is the highest share since 2009, when the global financial crisis led to a sharp slowdown in overall M&A activity.
It is particularly unusual for domestic deals to take such a large share of M&A when overall deal values remain high. Domestic M&A has totalled US$2.4 trillion so far in 2019, a rise of four percent from last year and the second highest year-to-date total on record.
These figures have been supported by a wave of ‘super mega-deals’, each valued at over $10 billion, which have helped offset a broad decline in smaller domestic deals.
Domestic M&A activity
Thirty-two domestic super mega-deals with a combined value of US$1 trillion have been announced so far this year, a third more than last year and worth almost twice as much.
All but one of 2019’s largest 20 M&A transactions are domestic deals, while 15 of the top 20 involve all-U.S. players. Domestic M&A within U.S. borders has reached an all-time high of $1.4 trillion so far this year, up ten percent in the year-to-date.
In contrast, cross-border M&A declined 27 percent globally from last year to $1 trillion.
Just 30 percent of deals struck so far this year have been across borders, the lowest level in a decade.
Cross-border mergers and acquisitions are often used by companies to quickly gain access to new markets and customers, but with increased government scrutiny of deals, political intervention and protectionism, these deals have proved a challenge.
Transactions targeting Europe have fallen furthest, with deals involving acquirors outside the region halving from this time last year, as Brexit uncertainty dents corporate confidence towards deal-making in the region.
Despite this backdrop, French cross-border M&A reached a 12-year high. M&A involving either a French target or acquiror is $135.5 billion so far in 2019, up 20 percent from last year. Deals include the $30.1 billion FCA/Peugeot merger and LVMH’s $16.8 billion offer for Tiffany & Co.
Booming U.S. market
Meanwhile, deals into the Americas have fallen 20 percent year-to-date, while those targeting Asia Pacific have fallen 32 percent.
Although down from last year, a recent wave of cross-border takeovers, including more than $75 billion worth of deals targeting the booming U.S. market, have been announced in the last two months.
LVMH’s acquisition of Tiffany & Co and Novartis’ $8 billion offer for The Medicines Co highlight the attractiveness of the U.S. as an investment destination for European acquirors looking for growth opportunities abroad.