The comprehensive review of mergers and acquisitions in the Americas region FY 2019 Deal Drivers Americas mergermarket.com ACCELERATE YOUR DUE DILIGENCE FASTER. EASIER. SECURE. Our market-leading applications, services, and expertise, powers the entire M&A lifecycle, helping companies worldwide close more deals, faster. Learn more at merrillcorp.com Mergermarket Deal Drivers Americas FY 2019 3 Contents Contents The comprehensive Foreword 04 Life Sciences & Healthcare 48 Americas Heat Chart 05 Canada 54 review of mergers All Sectors 06 West 61 and acquisitions in Financial Services 18 Midwest 68 the Americas region Industrials, Manufacturing & Engineering 24 South 75 Energy, Mining, Oil & Gas 30 Northeast 82 throughout 2019. Consumer 36 Latin America 89 Technology, Media & Telecom 42 About Merrill DatasiteOne 97 mergermarket.com Mergermarket Deal Drivers Americas FY 2019 4 Foreword Foreword Welcome to the full-year 2019 edition of 2018 to US$87.4bn in 2019 on deal volumes These concerns, as well as rising tension Deal Drivers Americas, published by of 671 and 669 respectively. between the US and Iran, will remain on the Mergermarket in association with Merrill radar for dealmakers going into 2020, but In North America, the technology, media & DatasiteOne. The report provides a detailed steady economic growth, low interest rates telecom (TMT) and life sciences & healthcare review of M&A activity and trends across and unemployment, and strong stock markets industries were the standout areas for deal Mark Williams North and Latin America. should sustain M&A through the year ahead. activity. However, there was a steady stream of Chief Revenue Officer, The US presidential election in November M&A deal value in North America held steady transactions across all sectors through the year Americas, Merrill DatasiteOne could impact M&A as dealmakers hold off in 2019, delivering US$1.702trn worth of with the 20 largest deals in the region spread making big investments until the result is clear. deals across 6,493 transactions in 2019, only over defense, energy, services, chemicals, The outcome of the presidential poll will be fractionally down on the US$1.636trn of value financial services and leisure in addition to the closely observed in Canada and across Latin generated from 7,033 deals in 2018. two leading sectors. Latin America’s largest America, as it will influence US investment into deals were also divided among a variety of Despite the slight dip, 2019 was nevertheless these regions. sectors, including medical, financial services, the third best year for North American consumer, real estate and telecoms. Overall, however, strategics and PE firms have dealmaking since 2008. Both the Canadian cash at their disposal and the economic and US markets performed strongly through Private equity (PE) also had a solid year, fundamentals remain favorable, pointing to the year with the US market securing more rising to US$301.4bn from a decade high of another solid year for deals even though the than US$1.5trn worth of deals and Canadian US$300bn in 2018. Buyout volumes were geopolitical backdrop is still uncertain. deal value rising by almost a third on 2018 down from 2,117 deals in 2018 to 2,040 deals, levels to reach US$112.6bn for 2019. Such has but exit value rose from US$264.4bn in 2018 been the resilience of the North American to US$288.8bn in 2019. PE firms have been deal market that the region accounted for increasingly anxious about rising valuations, 66.9% of total global deal value and more but with record sums of dry powder at their than half of total global deal volume (52.6%) in disposal they will have to remain active. High 2019. In addition to steady domestic activity, valuations, however, will support further exits. transatlantic investment into the US climbed The sustained level of deal activity continued 50% to US$152.7bn in 2019, further illustrating through 2019 despite rising trade tensions the attractiveness of the region’s M&A markets between the US and China, a prolonged to overseas buyers. Latin America also had a period of uncertainty around the UK’s Brexit good year, as deal flow improved following a plans and a growing consensus that after series of elections across South America in a bull run, markets and the economy are 2018. Deal value climbed from US$74.9bn in approaching the top of the cycle. mergermarket.com Mergermarket Deal Drivers Americas FY 2019 5 Heat Chart Americas Heat Chart Our forward-looking Heat Chart shows the Another sector that has seen a significant Heat Chart based on potential companies for sale distribution of “companies for sale” stories increase since 2H18 is financial services, moving on the Mergermarket intelligence tool across from 160 stories last year to 190 in 2H19. Sector West South Northeast LatAm Midwest Canada Total sectors and regions in 2H19. The data reveals Meanwhile, despite trailing all US regions, both Technology, Media 178 110 103 80 61 29 561 that the technology, media & telecom (TMT) & Telecom Latin American and Canadian companies for sector had the most acquisition targets in sale stories were up on the previous year. Latin Life Sciences & Healthcare 98 118 96 17 74 24 427 the second half of the year with 561 — with 178 America saw 356 compared to 285 in 2H18, Industrials, Manufacturing 82 101 55 37 68 17 360 of those in the West region. That area of the & Engineering while the US’s northern neighbor was up year US also had the highest concentration of all on year by 25 stories to 161. The strongest Consumer 60 44 44 44 26 11 229 companies for sale at 596. sector for Canada was energy, mining, oil & Business Services 53 47 42 33 26 9 210 Indeed, TMT has by the far the most stories gas which saw a year-on-year increase of 10 Energy, Mining, Oil & Gas 36 40 17 52 16 33 194 of potential sales, even outside of Silicon potential sales to move up to 30. Financial Services 40 35 51 31 18 15 190 Valley and its confines. There were 103 in the One sector which is experiencing some Leisure 23 17 14 13 7 5 79 Northeast and 110 in the South as well as 80 weakness is consumer. Changing buyer reports from Latin America. The burgeoning Real Estate 7 4 9 10 3 7 40 habits, a raft of big-name bankruptcies and fintech industry in Brazil and beyond has Agriculture 8 2 4 10 4 8 36 restructurings coupled with the continued helped to boost these potential sales. strength of clicks over bricks has seen stories Transportation 3 8 4 16 3 1 35 Life sciences & healthcare is the second fall from 347 in 2H18 to 229 this year. This is Construction 3 5 2 13 1 2 26 highest sector with 427 stories in 2H19 — the likely to continue, although there are those Defense 5 9 4 1 19 that feel that distressed opportunities could US South and Northeast have provided Government 1 1 over half these stories. Across all regions, the boost the market, bringing further private biotech sector has been particularly active as equity money into the sector. Total 596 541 445 356 308 161 2407 companies compete with generics and seek products to fill their pipeline. Hot Warm Cold 140 80 20 120 60 10 100 40 1 Criteria of Heat Chart: Mergermarket’s sector Heat Chart is based on companies tagged as potential targets from 07/17/2019 to 01/16/2020. mergermarket.com Mergermarket Deal Drivers Americas FY 2019 6 All Sectors Part of the Acuris report on global M&A activity All Sectors mergermarket.com Mergermarket Deal Drivers Americas FY 2019 7 All Sectors All Sectors Overview North America’s deal market recorded steady led by Hellman & Friedman and Blackstone, Private equity power figures in 2019, consolidating the 15% growth also drove TMT dealmaking. PE deal activity continued apace after reaching in deal value in 2018. Deal value for North a ten-year high of more than US$300bn Energy boost American M&A came in at US$$1.702trn across in 2018. Buyout activity for 2019 edged In the EMOG sector, the reshaping of 6,493 deals in 2019, only fractionally down higher to US$301.4bn from this peak, but Canada’s gold industry with deals including on the US$1.636trn of deal value generated still represented the second highest year on the US$12.6bn tie-up between Newmont and from 7,033 transactions in 2018, according to record this decade. Buyout volumes moved in a Goldcorp, and megadeals in the US oil and Mergermarket data. similar direction, sliding from 2,117 deals in 2018 gas market, led by Occidental’s US$54.3bn to 2,040 deals. Exit value, however, climbed Despite escalating global trade tensions, which acquisition of Anadarko Petroleum, were from $264.5bn in 2018 to US$288.8bn in 2019 the IMF has forecast will reduce global growth highlights for the 2019 M&A year. However, as firms took advantage of the strong deal to its slowest pace since the 2008 financial a soft oil price and delays to pipeline market to sell assets at attractive valuations. crisis, deal activity has sustained the high levels construction in Canada meant that deal of previous years thanks to low interest rates value for 2019 was down on the US$387.4bn and steady stock market and GDP growth in worth of deals recorded for the sector in 2018. the US and Canada during the last 12 months. Healthy returns, consumer woes Tech the lead Deal value for the life sciences & healthcare The technology, media & telecom (TMT) sector more than doubled the 2018 total of sector accounted for the largest share of deal US$120.7bn.