Non-Subscriber Extract
Briefing: M&A activity reached new low in third quarter
By Guy Anderson
16 October 2009
M&A activity by location of target, Jan-Sept 2009. US (62%); Europe (22%); Rest of World (10%); and Israel (6%) (Jane's M&A Database)
Mergers and acquisitions (M&A) activity in the defence domain remained heavily subdued in the third quarter of 2009, suggesting that hopes of an upturn prompted by the spike in the number of higher value deals during the preceding three months may have been premature.
Jane's tracked 24 publicly disclosed M&A transactions in the sector for the three months to the end of September, and they were down from 27 in the second quarter and close to the 23 recorded during the first quarter. This marks a continued decline from the relatively low performance of 2008, when activity stood at 28, 24 and 30 deals in the year's third, second and first quarters respectively.
The total value of deals reported during the third quarter of 2009 was particularly notable, however: the total of USD502.1 million is lower than any quarterly result from the past three years.
Such headline figures reflect the nature of activity during the three months. The deal landscape was characterised by the pursuit of small, in-fill targets some way below the USD500 million mark, which typically added niche capabilities to buyers' portfolios. Buyers crossed the spectrum of bidders, however, with upper-tier, lower-tier and private equity participants leading activity.
The total headline value of deals in the third quarter marked a sharp decline on the previous three months, when Jane's tracked transactions valued at USD3.284 billion. This reflected a series of relatively high-value transactions during the quarter that raised hopes that the poor climate for dear activity was drawing to a close.