MERRILL LYNCH BUSINESS BROKERAGE AND VALUATION SAYS NUMBER OF
MERGERS AND ACQUISITIONS ANNOUNCED IN 1991 LOWEST SINCE 1963
SCHAUMBURG, Ill., Jan. 21 /PRNewswire/ -- Merrill Lynch Business Brokerage and Valuation, a division of Merrill Lynch (NYSE: MER), announced the results of their annual research of merger/acquisition activity. According to their findings, the number of merger and acquisition transactions announced in 1991 was at the lowest level since 1963. The total value of proposed deals for 1991 reached a nine-year low.
There were 1,877 mergers and acquisitions announced in 1991, a decrease of 9 percent from the 2,058 announced transactions in 1990. The total value of proposed mergers and acquisitions disclosing a purchase price was $71.2 billion, down 34 percent from $108.0 billion in 1990.
Felicia Imperatore, national marketing manager, said that the drop in both M&A activity and value may be attributed to a number of factors, including the reluctance of potential buyers to commit capital in the face of economic uncertainty and the current recession.
The average transaction price announced in 1991 was $98.6 million, a decrease of 22 percent from $126.3 million in 1990, while the median price offered was $422.7 million, up 10 percent from $20.6 million a year earlier. Activity in the smaller, under $50 million segment decreased 18 percent, with 482 announcements compared to 588 announcements in 1990.
There were 13 announced deals in 1991 valued at $1 billion plus, a decrease of 38 percent from 21 in 1990. Those deals valued at $100 million plus fell 16 percent to a total of 150 compared to 179 a year earlier. This is reflected in the fact that the value of 1990's 15 largest deals were almost double that of the top 15 transactions in 1991.
Divestitures accounted for approximately 45 percent of the announced transactions in both 1991 and 1990 as companies continued to sell off unrelated or unprofitable units in their effort to lower debt and increase working capital. There were 849 divestitures in 1991, compared with 937 a year earlier. Four of the 15 largest deals announced in 1991 were divestitures, led by the proposed spin-off of Metromedia Co.'s Philadelphia Cellular Telephone System to Comcast Co. which was valued at $1.1 billion.
Banking and finance was the second most active industry in 1991 with 165 announced transactions valued at $20.4 billion versus 178 valued at $4.6 billion in 1990. Six of the 15 largest transactions announced in 1991 were in the banking and finance industry. The two largest announced deals were the proposed acquisition of C&S/Sovran Corp. by NCNB Corp. for $4.2 billion, and the proposed purchase of Security Pacific Corp. by BankAmerica Corp. for $3.9 billion.
Jody Beutler, research manager, said the significant increase in the value of these deals may reflect the consolidation of several large banks to improve balance sheets, trim costs and achieve market domination.
Based on the number of announced transactions, miscellaneous services was the most active industry in 1991 with 170 proposed deals valued at $1.2 billion, versus 195, valued at $5.4 billion in 1990. The largest announced transaction in the miscellaneous services industry was the purchase of Dun & Bradstreet's Donnelley Marketing unit by a private group for $200 million.
Four of the 15 largest deals announced in 1991 involved the purchase of U.S. entities by foreign corporations, led by the completed acquisition of Square D Co. by Groupe Schneider of France for $2.0 billion. Imperatore noted that two of these announced transactions are divestitures of European operations of U.S. companies: the divestiture of Peter Kiewit Sons' Continental Can Europe unit to Viag AG of Germany valued at $1 billion and Sara Lee Corp.'s European Consumer Medicine Business to Roche Holding Ltd. of France for $821 million.
There were 188 foreign buyers in 1991, a decrease of 29 percent from 264 in 1990. The total value bid for those deals where a purchase price was disclosed dropped to $12.3 billion, a 63 percent decline from $32.8 billion a year earlier.
The number of U.S. corporations announcing foreign acquisitions was 244, down 8 percent from 266 in 1990. The total value bid for those deals where a purchase price was disclosed fell to $5.7 billion in 1991, a 68 percent decrease from $18 billion in 1990.
Transactions between U.S. and foreign companies accounted for 23 percent of the merger-acquisition announcements in 1991, compared to 26 percent in 1990. The most active participants were in the United Kingdom with 40 buyers and 49 sellers and Canada with 30 buyers and 72 sellers. In 1990 there were 62 buyers and 80 sellers in the United Kingdom and 33 buyers and 41 sellers in Canada.
Based on 645 proposed transactions for which method of payment data is available, 34 percent were all-cash deals compared with 41 percent in 1990. Proposed all-stock transactions accounted for 34 percent versus 31 percent a year earlier and a combination of cash, stock and/or debt was at 32 percent, compared to 28 percent.
According to available data, the average price-to-earnings ratio offered in 1991 was 20.0x, almost equal to the 20.3x in 1990. The average premium offered in 1991 was 35.1 percent, down 17 percent from 42.4 percent a year earlier.
Beutler says the merger-acquisition picture for 1992 is still uncertain. "However, interest rates are at a very reasonable level," she says, "and an improved economic picture may stimulate activity."
Headquartered in Schaumburg, Merrill Lynch Business Brokerage and Valuation provides specialized financing, transaction advisory, valuation consulting and business brokerage services to closely-held companies. It also publishes Mergerstat Review, one of the oldest and most extensive merger data banks of its kind, with approximately 80,000 recorded transactions since 1963.
/CONTACT: Jody Beutler of Merrill Lynch Business Brokerage and Valuation, 708-981-9800/
(MER) CO: Merrill Lynch Business Brokerage and Valuation ST: Illinois IN: FIN SU: ECO FC-SM -- NY059 -- 1861 01/21/92 12:48 EST