Major stock indices fell in August for the first time since May, in which indices lost in excess of 6%. In August, the S&P 500 declined 1.8%, falling to 2,926.46, while the Dow Jones Industrial Average (DJIA), Nasdaq, and Russell 2000 each declined 1.7%, 2.6%, and 5.1%, respectively. The month was characterized by excess volatility, as each index counted 10 or more days of 1%-or-greater swings.
Acquisition Investment is Lifted to a Two-Year High on the Back of Five Out-sized Deals
According to preliminary data from Pitchbook, there were 752 M&A deals worth a total of $240 billion in July, remaining relatively unchanged from the $237 billion spent on corporate acquisition and leveraged buyout deals in June. Over 60% of the deal value is comprised of the buyouts of five target companies: Worldpay, L3 Technologies, Red Hat, First Data, and Array BioPharma.
Skyline Advisors has released its Capital Markets Review: Midwest Edition for the second quarter of 2019. The report details developments on the broader economy, public markets, valuations, as well as activity and trends for mergers and acquisitions, private equity deals, and venture capital deals, both at national and Midwest levels. Key highlights within the report include:
Major stock market indices advanced in July, building upon a strong year for market returns. The Nasdaq advanced the most, gaining 2.1% to 8,175.42, while the S&P 500 gained 1.3% to 2,980.38. The Dow Jones Industrial Average and Russell 2000 also closed the month in positive territory. Only the Russell 2000 has a negative return through the last twelve months.
The stock market rebounded strongly in June from a weak May performance, with major indices increasing approximately 7% on the back of increased hope for a trade truce with China and signals from the Federal Reserve that a rate cut may come this year. The month closed out the best first half market performance since 1997
M&A Activity Spikes in June on the Back of Mega Deals
In June, there were 643 deals in M&A capital markets worth a combined $270 billion, the highest level since the start of the decade in 2010. However, 45% of that value is attributable to United Technologies’ blockbuster acquisition of defense contractor Raytheon. In fact, the deal is the largest since Time Warner acquired AOL in January 2001.
Stock markets dropped in May due to the on-going trade tensions with China. The S&P 500 dropped 6.6% to 2,752, while the Dow Jones Industrial Average, NASDAQ, and Russell 2000 each declined 6.7%, 7.9%, and 7.9%, respectively. May marked the first month of broad index declines for the year, though returns are still up considerably year to date.
M&A Activity Picks Up in May Despite Weaker Year than 2018
There were 720 M&A deals valued at a combined $194 billion in May, according to Pitchbook. For the year through the end of the May, there were 3,756 deals for $906 billion capital, roughly 1,140 fewer deals and $506 billion less value for the same period in 2018.
Disney Claims Control of Hulu Ahead of Disney+ Streaming Rollout
Pitchbook data reveals that $9.5 billion was invested across 27 M&A deals in the U.S. last week, 6 fewer deals and $75 billion less capital after outsized M&A activity in the week prior. Two deals – targets Cray and Hulu - were in the billion-dollar range. The Walt-Disney Company acquired full control of Hulu for $5.8 billion, after what once was joint ownership by Disney, 21st Century Fox, Comcast, and Time-Warner.
Maker of Samuel Adams Buys Delaware Craft Brewery
Data from Pitchbook shows that $84.5 billion was invested in 33 deals across American M&A markets last week, 10 more deals and $71.1 billion capital than the week prior. Four of those deals were for over $2.5 billion, including $38-billion and $23.3-billion-dollar deals, both of which were in the energy space. Another deal that caught significant media coverage was that of Boston Beer Co., the brewer of Samuel Adams brand beers, which paid $300 million to acquire Dogfish Head Brewery, a craft beer maker from Milton, Delaware. Dogfish produces over 250,000 barrels of beer annually.