Headlines:

  1. Cross-border dealmaking accounted for almost half of global deal value (47%) and more than a third (36%) of all volume in Q2 2017
  2. Cross-regional dealmaking value was up 60% year on year
  3. The EU was the hot target location, accounting for the majority of cross-regional dealmaking by value
  4. China climbed back up the acquisitions table from 7th in Q1 to 2nd in Q2
  5. Middle-Eastern outbound value doubled on the back of two megadeals

The cross-border market has held strong in Q2 against a range of challenges. Uncertainty surrounding Brexit, European elections and President Trump’s future policies are weighing heavy on dealmakers’ minds. Cross-border dealmaking retained its dominance against this volatile backdrop, accounting for almost half (47%) of global value and 36% of volume. Driven by activity within the EU, cross-regional dealmaking was up 60% year on year.

EU on the rise
As the region gains relative stability in the wake of a fractious Brexit vote and a spate of regional elections, the EU has become a hub for M&A. It accounted for 41% of cross-regional volume and 58% of value, with 321 deals totaling US$138bn. North America was the major bidder into the EU, spending US$97.2bn on deals in Q2. Despite an upcoming election, Germany was the most targeted country in the EU and attracted the highest valued cross-border deal of the quarter globally – US Praxair’s US$45.5bn purchase of industrial gas firm Linde.
In terms of total cross-border M&A, the EU accounted for 46% of cross-border deal volume and 56% of value. Highlighting the region’s dominance in the global dealmaking scene, seven of the most targeted countries in Q2 by value were from the EU. This compares with only four in Q1 2017. 

China returns, Japan marches on
Following a challenging first quarter where strict government legislation caused a sharp drop in overseas deals, Chinese investors have returned to the deal table. China was the second most acquisitive cross-border nation in Q2 with 94 deals valued at US$35.9bn compared with 74 deals valued at just US$11.5bn in Q1.
Meanwhile, Japan continues its outbound buying spree. The country carried out 66 deals valued at US$18.6bn in the second quarter compared to 63 deals at US$14.7bn in Q1. Many of the largest deals were focused on the tech arena and involved Softbank, which bought stakes in Chinese, Indian and UK tech companies in Q2.

Middle-Eastern promise

The UAE has emerged as a purposeful investor overseas having secured two of the top ten cross-border deals of Q2. The largest outbound deal from the Middle East saw the Abu Dhabi Investment Authority partner with Singaporean sovereign wealth fund GIC to buy US firm Pharmaceutical Product Development for US$9bn.
These outbound deals helped the overall Middle East cross-regional deal total rise by 167% quarter on quarter from US$6.8bn in Q1 to US$18.2bn in Q2. It is clear that the UAE has become a powerful force within the global cross-border deal market.

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