FactSet Mergerstat's M&A Roundup: Second Quarter, 2004.

LOS ANGELES -- The pace of mergers and acquisitions stayed steady in North America, but slipped in Europe, for the overall M&A market in the second quarter of 2004, according to data from FactSet Mergerstat, LLC.

North American M&A clocked in at 2,281 net new announcements through June 29, five deals off the pace of the first quarter and 235 announcements ahead of second quarter of last year.

European dealmaking, on the other hand, fell to 2,071 net new announcements for the second quarter, trailing its first quarter tally by 288 deals. Curiously, a similar drop-off in dealflow occurred last year in the second quarter as well. During that period, European dealmakers reported just 1,896 deals -- or 202 fewer transactions than 1Q03.

In both Europe and North America, total deal value trended lower in the second quarter. The aggregate deal value for Europe stalled at $71.9 billion, eclipsed by both the $158.5 billion disclosed in the first quarter of 2004 and the $81.5 billion reported in the second quarter of last year. Meanwhile, dealmakers in North America posted $136.5 billion in aggregate deal value on transactions, which was less than the $217.3 billion recorded in the first quarter, but more than the $93.1 billion reported in the second quarter of 2003.

Topping the list of biggest US transactions in 2Q04 was Wachovia Corp's deal to buy Birmingham-based bank SouthTrust Corp. The deal was valued at about $13.8 billion. The banking industry also provided the second- and third-largest deals in North America. The Royal Bank of Scotland plc's agreement to acquire Cleveland-based Charter One Financial Inc was announced at $9.9 billion and Sun Trust Banks' agreement to buy Memphis-based National Commerce Financial Corp was announced at about $6.8 billion. The world of high rollers ushered in the fourth-biggest deal of the quarter: MGM Mirage's recently accepted bid to buy Mandalay Resort Group for approximately $4.7 billion. In healthcare, UnitedHealth Group Inc also struck a deal for $4.7 billion, agreeing to acquire Trumbull, Connecticut-based Oxford Health Plans Inc.

Across the pond, the number one deal for the quarter materialized from the intense competition for UK property developer Canary Wharf Group PLC. Songbird Acquisition Ltd offered approximately GBP1.7 billion (US$3.1 billion) in cash for the group, outbidding both CWG Acquisition Ltd and Silvestor UK Properties Ltd. In the second-largest deal of 2Q04, Switzerland's UBG AG launched a tender offer to acquire the 98.77 percent it doesn't own in Swiss electric company Aare-Tessin AG fuer Elektrizitaet for CHF3.7 billion (US$2.9 billion) in cash. The chemicals industry concocted the third-largest deal when Rockwood Specialties Inc, which is owned by Kohlberg Kravis Roberts & Co, agreed to acquire Germany's Dynamit Nobel AG, a subsidiary of MG Technologies AG, for EUR2.25 billion (US$2.8 billion). The biotech industry incubated the fourth-largest deal for the period: Belgium's UCB SA's agreement to buy the UK's Celltech Group Plc for GBP1.5 billion (US$2.7 billion) in cash. And finally, in the aircraft industry, Italy's Finmeccanica SpA signed an agreement to acquire the remaining 50 percent stake that it doesn't own in helicopter maker AgustaWestland SpA from UK joint venture partner GKN PLC for GBP1 billion (US$2.7 million) in cash.

Switching gears back to North America, the busiest industry in M&A for the second quarter was Computer Software, Supplies & Services, which posted 371 net new announcements and disclosed $6.5 billion in aggregate deal value. Brokerage, Investment & Management Consulting grabbed the second spot with 227 reported net new announcements and $8.0 billion in aggregate deal value, followed by Leisure & Entertainment (126 deals/$8.7 billion in total value), Broadcasting (103/$1.3 billion), and Wholesale & Distribution (100/$1.2 billion).

Computer Software, Supplies & Services also topped the most active industry list in Europe for 2Q04 with 198 net new announcements and $5.7 billion in deal value. Brokerage, Investment & Management Consulting racked up 148 net new announcements and $1.5 billion in reported deal value, followed by Wholesale & Distribution (101 transactions/$2.5 billion in aggregate deal value), Banking & Finance (88/$10.9 billion), and Food Processing (85/$523.7 million).

Mid-Market Report

Now to the Middle Market, where the final results of the second quarter mirrored the overall markets through June 29: once again positive in North America, lacking punch in Europe.

For North American targets valued at less than US$500 million (including undisclosed deals), 2Q04 delivered 2,263 net new announcements valued at approximately US$40 billion. Those figures outshone last year's second quarter stats of 2,014 net new announcements and US$34.2 billion in disclosed deal value. They are also a slight improvement upon the 2,227 net new announcements and US$39.5 billion in deal values announced in the first quarter of 2004.

Not since the second quarter of 2001 has this crucial segment of North American M&A been so active. Additionally, the uptick in net new announcements marks the third consecutive quarterly rise in dealflow for North American dealmakers.

One of the driving factors behind the increasing activity has been the emergence of public buyers in North America. In 2Q04, public buyers accounted for over 59 percent of net new announcements in the region, spending about US$30.5 billion on 1,313 transactions, which surpasses 1Q04, when public buyers accounted for 53 percent of deal activity and spent approximately US$29 billion and 2Q03, when they accounted for just 52 percent of the net new announcements and spent some US$22 billion.

Conversely, the European M&A mid-market seems headed in the other direction. In 2Q04, European dealmakers announced just 2,028 deals and disclosed a total of EUR23.1 billion (US$28.2 billion), down from 1Q04, which claimed 2,299 net new announcements and an aggregate deal total of US$33.5 billion. It was the third consecutive quarterly decline for the European mid-market. Perhaps the one statistical bright spot was the fact that 2Q04 dealflow managed to surpass the 1,847 deals announced in 2Q03, although that period boasted roughly EUR4.3 billion (US$5.3 billion) more in combined deal value.

Top Advisors

The top five financial advisors for North America and Europe by enterprise deal value for the second quarter of 2004, according to FactSet Mergerstat numbers, were UBS AG (US$68.2 billion), Goldman Sachs Group Inc (US$55.7 billion), JP Morgan Chase & Co (US$45.5 billion), Merrill Lynch & Co (US$44.6 billion), and Citigroup NA (US$40 billion). The top five financial advisors for North America and Europe by number of deals advised for the second quarter of 2004 were Citigroup NA (57 deals), Morgan Stanley (54 deals), JP Morgan Chase & Co and Goldman Sachs Group Inc (42 deals), Credit Suisse Group (40 deals), and UBS (38 deals).

--The data in this release was complete as of June 29, 2004

--For more statistics on the first half of 2004, including league tables, top deals, and industry activity, call 1-800-455-8871 for a custom report

FactSet Mergerstat, LLC tracks mergers and acquisitions involving global business entities excluding the exchange of business assets, private placements, spin-offs, and open-market transactions. FactSet Mergerstat offers its research and analysis electronically through FactSet, Reuters, Alacra, LexisNexis, Standard & Poor's, and Shannon Pratt's BV Resources.