Headlines

  1. Cross-border M&A made up 49% of all deal value and 35% of all deal volume in Q1 2017
  2. Intra-regional dealmaking value saw a 46% increase quarter on quarter
  3. Deals from the EU into North America were big news, with US$98bn spent on 118 deals, including the largest deal of the quarter
  4. North America was the hot target. The region accounted for more than half of all cross-regional dealmaking, with 206 deals worth US$120.8bn
  5. Japan dominates outbound M&A activity from Asia-Pacific

From the inauguration of a new US President to the triggering of Brexit via a fractious election in the Netherlands, Q1 2017 has been far from predictable politically. And the same is true for the cross-border M&A market – North America showed its mettle as a target, the EU slumped, and Japan replaced China as the Asian outbound dealmaking powerhouse.

Shelter from the storm

North America and the US in particular were the hot destinations for deals this quarter. There were 206 deals valued at US$120bn – accounting for more than a third of cross-regional volume and half of total cross-regional value. Despite, or possibly because of, the new administration, the US has been seen as a safe haven for deals.

And EU corporates were keen to make large acquisitions stateside. EU businesses spent US$98bn in North America on 118 deals, including two of the top four deals of the quarter. The consumer sector was the main driver for deals from the EU into North America with 14 transactions valued at US$81bn. The biggest inbound deal from the EU was the acquisition of US tobacco company Reynolds American by UK-based British American Tobacco Plc for US$60.7bn. 

Image title

PE props up EU

The fallout from Brexit, economic uncertainty in southern states such as Spain and Italy and a series of contentious election campaigns have hit the EU inbound M&A market in Q1. EU targets accounted for only 17% of cross-regional deal value, compared to an average of 35% since 2009. And almost a quarter of that value figure was propped up by two private equity megadeals out of the US, including buyout group Blackstone’s US$4.3bn acquisition of Aon's benefits outsourcing division. As the EU continues to come to terms with Brexit and a difficult political climate, it will be interesting to note how value fluctuates during the year.

Land of the rising sum

After a strong 2016, Japan has continued its cross-border M&A adventure in the first quarter of 2017. As China retreated from the deal table, due to stricter government regulations, Japan took center stage. Deals were spread across a number of sectors, including financial services, telecommunications and industrials; however, the largest deal came in the pharmaceutical sector, where Takeda Pharmaceutical bought US-based biotech company Ariad for US$4.9bn. With an aging population, limited opportunities on the home front and less competition from Chinese rivals (for the moment), Japan will continue to be a formidable force in cross-border M&A.