MONTHLY M&A INSIDER
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Monthly M&A Insider | November
The value of global M&A deals through the end of October has surpassed aggregate 2013 numbers, further illustrating a trend that has been apparent all of 2014. Indeed, deal sizes have skyrocketed during the year given the many large-cap and transformative transactions.
The biggest deal for October is the almost US$12bn acquisition of New Jersey-based medical equipment company Becton, Dickinson and Co (BD) of San Diego-headquartered medical technology company CareFusion Corporation. CEO confidence in the M&A market has boosted the number of these mega transactions in 2014.
Playing right into this mega deal trend is the Energy, Mining &
Utilities sector, which saw many of the top transactions during the month.
Dominating October M&A activity
Energy, Mining & Utilities dominated October 2014’s deal activity.
With the concentration of large deals in the sector, it was at the top in terms of the aggregate value of transactions in October, with a total of 116 transactions worth US$55bn. Driven by a series of factors that ran the gamut, the sector was also part of the top five industries in terms of the number of deals during the month.
Although the largest deal of the month, the BD/CareFusion transaction, is from the Pharma, Medical & Biotech sector, there were several large-cap Energy Mining & Utilities transactions led by a Latin America transaction. In October,
Gas Natural Fenosa (GNF) made a public offer to purchase
Compania General de Electricidad for close to US$8bn in a cross-border deal while Targa Resources Partners announced its close to US$6bn acquisition of Atlas Pipeline Partners through a share exchange. During the month, Targa Resources
Corp. also bought natural gas liquid services company Atlas
Energy Inc for roughly US$5bn. Master limited partnership
Targa Resources owns public companies Targa Resources
Partners and Targa Resources Corp.
A theme in M&A in this sector is companies looking to become a bigger presence in high-growth markets. For instance, one of the attractions of Compania General for Fenosa is the fact that there is an expected rising demand for natural gas and electricity in Latin America.
Another key trend that the sector has seen, specifically in the
US, has to do with the ownership by master limited partnerships
(MLP) of pipelines. For instance, the Atlas Pipeline purchase comes after a series of transactions involving US pipeline firms seen in 2014. Through the acquisition, Targa Resources
Partners can tap into Texas’ Eagle Ford Formation as well as the Mississippi’s Lime and Woodford Lime plays.
Also in October, producer of natural gas Chesapeake Energy
Corporation sold assets in the Southern Marcellus Shale and a portion of the Eastern Utica Shale in West Virginia to
Southwestern Energy Co for US$5.4bn.
Regulated utilities also drove the month’s M&A activity. October saw the roughly US$5bn purchase by a consortium led by
Macquarie of regulated utility Cleco Corporation. The group of buyers was probably drawn by the advantages of Cleco’s being regulated since this factor limits both the volatility related to earnings and that seen in the commodities sector. Given the weak natural gas prices, utility companies have had to deal with stiff competition arising from pricing pressures.
Head of Research: Elias Latsis
Global Overview: Dan Kim and Karen Sibayan
Editor: Laura Resetar
Latin America: Elizabeth Lim and Raquel Mozzer
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Tel: + (1) 212 686 3329 email@example.com North America: Nicole Corazza and Urna Chakraborty
Asia-Pacific: Chris Wong and Brandon Taylor
Europe: Damien Julliard and Melly Wells
Middle East & Africa: Damien