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A tilt toward the cross-border deal: mergers and acquisitions.

Cross-border mergers and acquisitions activity set something of a milestone during the third quarter of 1990. For the first time in history, international deals accounted for a majority of the disclosed prices for all M&A activity in a single quarter.

On an overall basis, third-quarter activity reflected the slowing pace of dealmaking. According to Mergers & Acquisition's [R] magazine, there were 810 completed mergers, acquisitions, and divestitures valued at $42.8 billion for the 378 deals in which prices were announced. In the 1989 third quarter, there were 815 completions valued at $52.8 billion for the 443 transactions disclosing price.

But the tilt toward cross-border dealmaking, which is expected to be one of the leading M&A forces during the 1990s, was clearly evident. There were 112 foreign acquisitions in the U.S., valued at $14.7 billion, and 57 American acquisitions abroad, with a value of $7.5 billion. Their combined value of $22.2 billion was about 52% of the total reported dollar value.

Transactions involving only American companies on both the buy and sell sides totaled 641 with a value of $20.7 billion in the third quarter.

International dealmaking volume was swelled by a number of megadeals that reflected the increased commitments to global markets being made by major companies. The largest deal of the quarter was Philip Morris Cos. Inc.'s acquisition of Switzerland-based coffee and chocolate giant Jacobs Suchard Ltd. for $3.8 billion.

Major inbound deals included the purchase of control of Rorer Group Inc. by France's Rhone-Poulenc SA for $3.3 billion; the $2.2 billion acquisition of Motel 6 LP by Accor SA, also of France; and Swiss-based Roche Holding Ltd.'s purchase of Genentech Inc. for $2 billion.

Overall activity in the third quarter compared with an upward revised total in the second quarter of 958 merger, acquisition, and divestiture completions valued at $28.6 billion for the 412 transactions disclosing price.

Corporate divestitures totaled 267, and had a value of $13.8 billion in the latest quarter, with prices revealed for 101 deals. In the prior quarter there was a greater number of divestitures, but the total value of the sell-offs was less -- 333 divestitures valued at $11.1 billion, with 119 transactions disclosing price.

Leveraged buyout activity continues to decline. There were 45 leveraged buyouts in the third quarter valued at $2.5 billion, with 12 deals revealing price. In the second quarter, there were 73 LBOs valued at $3.6 billion, with price disclosed in 25 transactions. The top five LBOs of the quarter were:

-- General Instrument Corp., acquired by Forstmann Little & Co. for $1.54 billion;

-- The Maybelline cosmetics business of Schering-Plough Corp., acquired by Wasserstein, Perella & Co. for $300 million;

-- PennCorp Financial Group, acquired by PCF Acquisition Co. for $300 million;

-- International Banknote Co. Inc., acquired by U.S. Banknote Co. LP for $114.3 million; and

-- Mediplex Group Inc., acquired by Diamond Healthcare Acquisition Corp. for $100 million (plus the assumption of $20 million in liabilities).

The five most active industries for M&A transactions in the third quarter were banking (with 92 deals); business, professional, and social services (69 deals); wholesale trade (46 deals); health care (42 deals); and electrical and electronic equipment (40 deals).

Mergers & Acquisitions is published by MLR Publishing Co., which also publishes Directors & Boards. It operates the M&A Data Base, ADP/MLR Publishing, which contains information on more than 44,000 transactions completed and announced since 1979.
 Merger and Acquisition Activity
 3rd Q 2nd Q 3rd Q
 1990 1990 1989
Completed Transactions 810 958 815
Transactions Reporting Price 378 412 443
Value of Priced Transactions $42.8 $28.6 $52.8
Source: M&A Data Base, ADP/MLR
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Title Annotation:Mergers and Acquisitions
Publication:Directors & Boards
Date:Jan 1, 1991
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