Friday, February 24, 2012
Paul, Weiss just released its 2011 Review of Selected U.S. Strategic M&A Transactions. The report:
- examines the largest 25 such transactions announced during the seventeen-month period from August 1, 2010 through December 31, 2011, and
- compares the 10 largest transactions in calendar 2011 involving non-U.S. acquirors to those involving U.S. acquirors.
Among other things, the firm makes the following observations regarding the 2011 transactions:
- Rising equity prices raised dealmakers’ tolerance for risk
- Private equity-like treatment of financing risk declined substantially
- The strength of credit markets led to cash being used as the exclusive consideration in over half of the surveyed transactions
- Only one of the surveyed transactions was priced as a merger-of-equals ("MOE")—i.e., by offering no premium to either party’s shareholders—but many more included MOE-like post-closing governance provisions
- Despite an increase in cash-only transactions, the use of two-step (i.e., tender offer) structures declined
- The sizes of termination fees and reverse termination fees (in the few cases they were used) declined slightly
- Few non-U.S. acquiror transactions used stock consideration, likely reflecting the regulatory burden of listing securities in the U.S.
- Antitrust and other regulatory issues were less common among non-U.S. acquiror transactions, leading to the more frequent use of tender offer structures than in U.S. acquiror transactions
- None of the non-U.S. acquiror transactions limited the acquiror’s financing risk
- Non-U.S. acquirors gave more flexibility to target boards to change their recommendations