Introduction to Corporate Finance

21: Mergers, Acquisitions and Corporate Control

21-1a INTERNATIONAL ACTIVITY

Historically, the US and North American markets have tended to dominate the global M&A market. This

still appears to be the case, as highlighted by Figure 21.1. Global M&A activity increased substantially in

2014, with total deal value surpassing US$3 trillion. The Americas accounted for about half of the deals,

with deal flows within North America accounting for about 42% of deals in the last quarter of 2014.

The amount of cross-border merger activity has increased dramatically in recent decades. Figure 21.3

presents cross-border mergers between US companies and companies located in other countries.

FIGURE 21.2 RECENT TRENDS IN M&A ACTIVITY IN AUSTRALIA: BY TOTAL VALUE OF M&A

TRANSACTIONS AND BY TOTAL NUMBER OF TRANSACTIONS

Number of M&As and private placements Value of M&As and private placements

Number of transactions

0

500

1,000

1,500

2,000

2,500

3,000

FY2010 FY2011 FY2012 FY2013 FY2014

1,116 1,225 1,112 1,232 1,202

958 1,156 874 827 825

2,074

2,381

1,986 2,059 2,027

M&As (total) Private placements (total)

FY2010 FY2011 FY2012 FY2013 FY2014

AUDm

M&As (total) Private placements (total)

0

40,000

80,000

120,000

160,000

67,082 114,674 69,188 44,889 46,807

14,171

13,476

8783

9,550 5,582

81,253

128,150

77,971

54,439 52,390

Note: This report defines M&A as the ‘acquisition of equity stakes by purchasing existing securities’ and private placement as the ‘private sale of newly
issued securities (equity or debt) by a company to a selected investor or a selected group of investors’. These often include minority stake purchases
(equivalent to less than 50% ownership).

Source: Market Observations Australia, August 2014,The Australian Private Equity and Venture Capital Association Limited (AVCAL) in association with S&P Capital IQ, p.2.

FIGURE 21.3 VALUE OF CROSS-BORDER TRANSACTIONS INVOLVING US COMPANIES IN 2014

0

5

Canada

Switzerland

United Kingdom

Germany

Spain

Australia

South koreaNetherlands

Mexico

China

10

15

20

25

30

35

USD Billions

Target Nation (US Acquiror)

Acquiror Nation (US Target)

Note: Cross border transactions are shown where nations were involved as both significant acquirors and targets

Source: Data to create figure sourced from SDC Platinum, Thomson Reuters, 9 December 2015.