The value of global M&A activity was USD 1,664 billion in H1 2009, representing a decline of 29% from USD 2,357 billion in H2 2008, according to the latest M&A Report from ZEPHYR, the M&A database. Transaction volume fell at a much slower rate of 6% over the six months, reaching 28,906 deals from 30,640 in H2 2008.
Consolidation in the US pharmaceuticals sector dominated the top 20 deals by value, taking precedent over banking industry bailouts. The largest deal in H1 was the USD 68,000 million purchase of Wyeth by Pfizer, followed by Roches USD 46,800 million takeover of Genentech.
Private equity
The negative impact of the downturn continued, pushing the value of global private equity-backed transactions down 44% in six months (H1 2009: USD 62,892 million; H2 2008: USD 111,457 million) following a 79% crash in EU transactions by value. However, the six months brought a 107% surge in the value of private equity transactions in Asia Pacific (H1 2009: USD 16,039 million; H2 2008: USD 7,762 million).
It comes as no surprise to anyone that H1 2009 has seen the lowest level of deal activity since H1 2004 and the figures reflect a significant drop of over 40% when compared with record deal levels in H1 2007, says Lisa Wright, commercial director of ZEPHYR.
This significant drop reflects the difficulty companies and advisors are experiencing in terms of getting deals to market, matching seller and buyer valuation expectations and a general overall cautiousness by chief executives across all markets.
Private equity activity remains a shadow of its former self with deal levels comparable with back in H1 2000 and shows no signs of being able to move forward at this point in time.
In previous years where H1 activity has been low, H2 has often ended up pulling the whole year back on track in deal activity terms. It would be an optimistic person who would forecast that H2 2009 would be able to pull 2009 out of its current cycle; but heres hoping.
L.D.