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Deal Drivers North America 2011
Mergermarket, March 2011, Pages: 72
This report provides a comprehensive review of North American M&A deal flow, with in-depth analysis of recent activity and forward-looking insight for the remainder of the year.
H1 2011 saw 1,894 deals worth a combined US$526.6bn in North America, representing a remarkable 47% increase in value over H1 2010 in the region. This jump in value can be traced back to a string of large-scale strategic mergers, including the US$39bn acquisition of T-Mobile USA by AT&T, pending approval as this publication goes to print, and the US$25.8bn acquisition of Progress Energy by Duke Energy. Beyond these headline items, competition between strategic buyers with deep pockets and aggressive financial buyers drove the M&A surge, while a stabilizing economy further aided an apparent shift to a sellers’ market. This dynamic is highlighted by a review of H1 2011’s largest deals.
Mainstay: Energy Sector
The energy, mining, oil & gas sector, a mainstay industry for bigticket transactions, contributed seven deals worth US$84.2bn to the half-year’s 20 largest. Runner-up for largest deal in the sector is the US$14.7bn spin-off of the downstream business of Marathon Petroleum Corporation (MPC), the US-based oil refinery and petroleum retailer with an aggressive expansion strategy. In June, Marathon announced its US$3.5bn acquisition of Hilcorp Resources from Hilcorp Energy Company and Kohlberg Kravis Roberts & Co. (KKR) - a deal aimed at maximizing its profitable reserves and strengthening its grip on the US shale market.
BHP Billiton Ltd. also showcased its appetite for shale and its buying power with its US$4.8bn acquisition of Chesapeake Energy’s Fayetteville shale assets, while Korea National Oil Corporation (KNOC) likewise announced it would pay US$1.6bn for a 23.67% stake in the Maverick Basin shale assets of Anadarko Petroleum Corporation.
Newcomer: Real Estate
Beyond the energy sector, real estate deals also left a notable mark on H1 2011 deal value. Though the sector saw just 17 deals in H1 2011, three were worth a combined US$31.4bn and made the list of top 20 largest M&A deals of the period. Targets in these cases generally took the form of distribution and logistics facilities, shopping centers and healthcare-related real estate.
Examples include the US$14.8bn acquisition of ProLogis, the leading global provider of distribution facilities, by AMB Property Corporation, and The Blackstone Group’s US$9.4bn acquisition of Centro Properties Group. Following closely was the all-stock acquisition of Nationwide Health Properties Inc. by trade buyer Ventas Inc., announced in February and valued at US$7.2bn.
Private Equity Bidders
Private equity activity resurged in the first half with 357 buyouts, a 10% increase over H1 2010. Value in private equity M&A surpassed the overall increase with a 59% uptick to US$64.1bn. Though, only one private equity deal broke the top 20, the US$9.4bn Blackstone/ Centro deal, which doubled the amount of H1 2010‘s top transaction in the US$4.7bn sale of East Resources Inc by KKR.
In the second largest buyout, a consortium led by Temasek Holdings Pte Ltd - the Singapore based state owned private equity firm - agreed to acquire Frac Tech Services, LLC - the US based company providing oil and natural gas well stimulation services for US$5bn.
Outlook
North American M&A became considerably top-heavy in H1 2011 as values soared while the number of deals remained relatively unchanged. Indeed, the 20 largest deals totaled approximately US$259bn, representing a 32% increase over the top 20 of H1 2010. Despite 2011’s booming start, uncertainty has re-emerged with disappointing growth figures and the mid-year debt ceiling debate debacle. M&A professionals will watch from the sidelines as they speculate over the next big-ticketed announcement. We hope you find this half-year edition of Deal Drivers both useful and informative, and as always, we welcome your feedback.
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