Big, global and daring defined deal making in 2015. This was the year of the megamerger as blue-chip companies pursued and closed more outsize cross-border unions than ever, with support from the deep, liquid capital markets produced by low interest rates.
Worldwide announced M&A deal volume hit a record $4.6 trillion through December 1, according to Dealogic. Not since 2007 has that total breached $4 trillion; U.S. M&A exceeded $2 trillion for the first time, nearing $2.3 trillion.
Size was all-important, with an unprecedented number of announced transactions worth $10 billion or more 65 in all, with a combined value of $1.8 trillion, eclipsing the previous record of 48 set near the peak of the last M&A boom in 2006. The number of cross-border deals breaking that barrier also set a record: There were 20, valued at a collective $534 billion, versus 13 worth a total of $210 billion for the whole of 2014.
Technology and health care generated much of the activity, including two still-unfinished jumbo tie-ups: computer giant Dell's $65.7 billion acquisition of EMC Corp. and Pfizer's $160 billion tax inversion with fellow drugmaker Allergan, the largest pharmaceuticals merger in history. But the boom was broad-based, with hefty cross-border transactions in oil and gas, such as the pending $70 billion purchase of British energy company BG Group by rival Royal Dutch Shell, and Belgium's Anheuser-Busch InBev announcing the biggest brewing deal of all time with a $117 billion offer for SABMiller, its London- and Johannesburglisted rival.Click to enlarge
If the U.S. dominated mergers in 2015, bankers believe the action will shift to Europe in the next 12 months, when companies are expected to accelerate strategic plans against a backdrop of improving economic conditions and continuing loose monetary policy. Announced M&A activity in Europe, the Middle East and Africa hit $1.06 trillion for the year to December 1, barely changed from $1.01 trillion in 2014. Asia-Pacific deal volume reached a record $984 billion, a 27 percent surge over the previous year's total.
The pipeline of M&A megadeals created a virtuous circle in the capital markets, where companies enjoyed favorable financing rates to sell bonds and help fund acquisitions. Again, North America led the way: U.S. debt capital market deal volume rose 11 percent to reach a new high of $1.9 trillion, driven by a record level of M&A financings. The pace lagged elsewhere, dragging down global DCM volume to $5.5 trillion, compared with $6.4 trillion for 2014, as volatility triggered a sell-off in high-yield and emerging-markets debt.
Equity capital markets began 2015 at a blistering pace, with Banco Santander of Spain pricing Europe's biggest-ever accelerated equity sale within a week of markets reopening for the new year. But a spike in volatility brought about by concerns over China and a slump in commodities prices dented confidence during the second half of the year, causing global initial public offering volumes to fall 30 percent, to $184 billion.
Institutional Investor's2015 Deals of the Year highlights six groundbreaking transactions, from H.J. Heinz Holding Corp.'s $62.6 billion takeover of fellow food giant Kraft Foods Group to telecom Frontier Communications Corp.'s $6.6 billion high-yield bond offering. Each shows the importance of seizing opportunities when they present themselves. With choppy markets expected to persist in 2016, this ability will remain crucial to deal making.
2015 Deals of the Year