U.S. announced merger and acquisition activity in 2016 involving the purchase of European businesses or assets is experiencing a decline from year ago activity. According to S&P Global Market Intelligence data, the aggregate disclosed value of announced U.S. M&A transactions to date this year involving European targets stands at under $54 billion, off almost 49% from the year ago deal value of $105.2 billion. In terms of announced deal account, this year’s volume is off by 10% as 730 deals have taken place to date in 2016 compared to 814 a year ago at this time.
With regard to specific sectors, in terms of disclosed deal value, three, energy, materials and telecommunication services, have seen a drop of 90% in announced deal value in 2016 from year ago level for announced U.S. acquisition in Europe. On the other hand, U.S. acquirers have increased their European purchases in three sectors, industrials, utilities and consumer staples, with the latter two sectors showing gains of 121% and 559% respectively. For the consume staples sector, much of the advance is attributed to Texas-based food distributor Sysco Corporation (NYSE:SYY) acquiring Brake Bros Limited from Bain Capital Private Equity and management for $3.1 billion in a deal announced on February 19, 2016 on completed on July 5, 2016. As for the utilities sector, this year’s increased value is due to New York-based private equity firm I Squared Capital Advisors, LLC signing an agreement to acquire electric utility Viridian Group Holdings Limited for €1 billion in cash on March 29, 2016.
Yet, while deal count and deal value of U.S. M&A in Europe is off this year from year ago levels, some of the year’s biggest transactions have recently taken place. Earlier this month Verizon Communications Inc. (NYSE:VZ) entered into a definitive agreement to acquire Irish software Fleetmatics Group PLC (NYSE:FLTX) for $2.4 billion in cash in a deal that ranks as the largest U.S. acquisition in the European information technology sector this year. Also, Avnet, Inc. (NYSE:AVT) entered into an agreement to acquire Premier Farnell plc (LSE:PFL) from a consortium of sellers in a transaction valued at approximately $1.26 billion on July 28, 2016. Additionally, MasterCard Incorporated (NYSE:MA) entered into a definitive agreement to acquire a 92.4% stake in electronic payment processing firm VocaLink Holdings Limited from The Royal Bank of Scotland Group plc (LSE:RBS), Barclays Bank PLC, Lloyds Banking Group plc (LSE:LLOY), HSBC Bank Plc and others for approximately £870 million in cash on July 21, 2016. In fact, of the five largest announced U.S. acquisitions in Europe this year, three have occurred following late June’s BREXIT vote. We will continue to monitor developments to see if this trend accelerates for the balance of the year.