The number of deals concluded worldwide fell in the first quarter to a lowest since 2005, for values down 17%. In Europe, volumes fell 68% year on year to $ 115.6 billion.
First quarter contrasted for the mergers and acquisitions (M&A) market. Only 8,765 acquisitions have been signed worldwide since January, a drop of 30.5% which corresponds to an all-time low since 2005. The volume fell by 17% compared to the first quarter of 2018, to 927 billion dollars (- 17%), according to Refinitiv, even if it represents an increase compared to the last quarter of 2018.
“Political uncertainties, the agreement between the United States and China on tariffs, still make boards of directors quite reluctant to launch very large structuring deals, since the poor stock market performance at the end of 2018,” says Gilberto Pozzi, Global Co-Head of M&A at Goldman Sachs. The lack of visibility on Brexit, in particular, has reduced the significant flow of transactions from the United States to Europe. “ But, he believes, “It’s a period of reflection. The momentum will resume if these tensions are lifted in the second half of the year ”.
Records in the United States
In the United States, the world’s largest market, deals exploded to their highest level since 2000, to $ 489.5 billion: the pharmacy giant Celgene was sold for more than $ 93 billion to Bristol-Myers Squibb (BMS), the payments specialist Worldpay (based in Great Britain and listed in the United States) was sold for 42.7 billion to the American Fidelity National Information Services (FIS), etc.
In North and South America, domestic operations are driving the market. The more cautious American groups’ offensives outside their borders have stalled and foreign transactions to the two continents have more than halved.
Caught in the turbulence, the European dynamic is at a standstill. Since the historic record of mergers signed in early 2018, companies in the European Union have been more reluctant to engage in M&A operations. In the first quarter, their volume fell 68% year on year to $ 115.6 billion.
Major operations absent in Europe
“Volumes fell more than expected, including in the mid-size business segment. No one rushing to sign deals as political tensions cast a shadow over the markets, remarks Dirk Albersmeier, joint head of M&A in Europe, Middle East and Africa at JP Morgan. Large groups remain attentive to continuing their strategic review and selling non-strategic assets, particularly in defense of potential activist campaigns. But what has changed is that the bold transformational operations are no longer here. “
On the French side, the bulk of operations were local (20.2 billion, -6%). The industrialists put a stop to their offensives outside the borders (-89%, to 4.6 billion). “There are many strategic reflections, but their implementation is uncertain, considers Pierre Drevillon, head of Citi’s M&A in France. We are in a transitional phase where the price expectations of sellers are still too high and not yet aware of the economic realities. “