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.
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.
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.
Chevron-Occidental Bidding War for Anadarko Heats Up
Pitchbook data reveals there were 23 deals for $13.4 billion invested capital in M&A markets last week. That is $9.8 billion more capital than the week before on two fewer deals. Two billion-dollar deals, 3M’s acquisition of KCI Holdings and Parker Hannifin’s acquisition of Lord, drove the increase in value from last week, contributing $6.7 billion and $3.7 billion, respectively, to the increase. M&A news was encapsulated by Occidental Petroleum and Chevron’s bidding war for Anadarko Petroleum and their Permian Basin shale-oil fields. Warren Buffett has committed to financing $10 billion of Occidental’s bid.
Campbell’s Soup to Sell Bolthouse Farms Brand in Refocusing Effort
Pitchbook data reveals that $43.6 billion in capital was spent on 27 M&A deals throughout last week, $28.4 billion more capital than the week before but on two fewer deals. Chevron (NYS: CVX) shelled out $33 billion to acquire Texas-based Anadarko Petroleum (NYS: APC) in the week’s largest deal.
Transportation Space Highlights Last Week’s M&A Activity
Data from Pitchbook shows that $15.2 billion of capital was invested across 29 M&A deals last week, $4.4 billion less capital on two more deals than the previous week. The largest two deals during the week were Stonepeak Infrastructure Partners’ $3.6 billion LBO of Oryx Midstream Partners and the $2.44 billion acquisition of AmeriGas Partners by UGI Utilities. AmeriGas is a publicly traded propane distributor, and Oryx is a natural gas collection group. The transportation space was an active sector, as A&S Kinard and Buckler Transport were acquired by Day & Ross Freight; TFI International acquired Nebraska-based Aulick Leasing and its manufacturing business, ShurAul; and Providence Equity Partners acquired transportation software provider GlobalTranz.
In last week’s economic news, US job openings reached a record high at 7.3 million, marking 1.2 jobs available for every unemployed person. However, despite the record-breaking job market, the week’s most notable news was a relatively steep decline in retail sales during the month of December. US retail sales dropped 1.2% during the month, or the greatest percent decline in more than nine years.
The U.S. job market added over 300,000 jobs while wages grew 3.2% for the last twelve months. The job market has been a shining spot in an economy facing rising rates, tariffs, and slowing global growth. New home sales grew dramatically month-to-month in November but are still slumped 7.7% from a year before. Lastly, the Institute for Supply Management showed that manufacturing growth is expanding at a faster rate in the first month of the new year, thanks to increased production and new orders.
The minutes from the Federal Open Market Committee’s December meeting were released, showing the board’s reluctance to increase interest rates amid weakening inflationary pressures and slowing global growth. The Bureau of Labor statistics furthered this point when releasing its December Consumer Price Index, which revealed the first monthly decrease in prices in nine months. The inflationary gauge did rise on an annualized basis, albeit slower than in prior months. Also, unemployment insurance claims fell unexpectedly in the first week of the new year.
Two surveys on U.S. manufacturing activity suggest a dramatic slowdown in the sector. HIS Markit’s manufacturing PMI revealed a subtle 1.5-point drop to a 15-month low, while the Institute for Supply Management’s PMI experienced a one-month decline of 5.2 points, the greatest in 10 years. Despite waning manufacturing activity, the job market experienced an unexpected surge as 312,000 jobs were added, 136,000 more than expected, while the unemployment rate rose slightly and wage gains posted a nine-year higher.