FactSet Mergerstat's M&A Roundup in 2004

    Business Editors

    NORWALK, Conn.--(BUSINESS WIRE)--Jan. 3, 2005--A surge in merger and acquisitions activity and spending made 2004 a year to remember for U.S. and European dealmakers alike, according to the latest statistics from FactSet Mergerstat, a leading provider of global mergers and acquisitions information.
    In the U.S., the number of mergers and acquisitions announcements rose 14.8% to 9,964 in 2004 and spending on deals shot up 43.7% to U.S.$777 billion. It was the best overall performance for U.S. M&A since the record-breaking market of 2000.
    In Europe, year-over-year M&A activity increased by 6.6% to 10,966 and spending by 43.5% to EUR458.5 billion (U.S.$662 billion). It was the best overall performance for European M&A activity since 2001 and the largest level of M&A spending since 2000.
    A jump in mega-deals and private company transactions, greater access to the lending markets, and a return of corporate buying interest to late-1990s levels spelled the end of the recession-era markets for M&A, which by most accounts, began in 2001 and carried on through much of 2003.
    Perhaps the clearest sign of strength in the robust 2004 M&A market, both in the U.S. and in Europe, was the jump in the number of bellwether transactions. In the U.S., the number of deals that were announced for over U.S.$1 billion dollars increased 56% to 140 and spending rose 59.4% to U.S.$498.6 billion. Among the top five transactions for 2004 were: JP Morgan Chase & Co's U.S.$57.6 billion deal for Bank One Corp; BellSouth Corp and SBC Communications Inc's U.S.$40.9 billion deal for AT&T Wireless Services Inc; Sprint Corp's U.S.$28.4 billion deal for NEXTEL Communications Inc; Johnson & Johnson's U.S.$24.3 billion deal for Guidant Corp; and Wachovia Corp's U.S.$14.6 billion deal for SouthTrust Corp.
    In Europe, the number of deals that were announced for more than $1 billion increased by 17.3% to 108 and total spending grew by 69.6% to EUR289 billion (U.S.$394.1 billion). Among the top five transactions for 2004 were: Sanofi Synthelabo SA's EUR48.6 billion (U.S.$66.3 billion) deal for Aventis SA; Telecom Italia SpA's EUR20.3 billion (U.S.$27.7 billion) deal for 43.87% of Telecom Italia Mobile SpA; KBC Bank & Verzekering Holding NV's EUR15.3 billion (U.S.$20.8 billion) deal for Almanij NV; Ispat International NV's EUR13.6 billion (U.S.$18.6 billion) deal for LNM Group's LNM Holdings NV; and Banco Santander Central Hispano SA's EUR12.5 billion (U.S.$17.1 billion) deal for Abbey National PLC.
    Private company transactions also provided a major lift to M&A dealflow in the U.S. and Europe. The number of private company announcements in the U.S. climbed 24.4% to 5,109 in 2004; the number of private company announcements in Europe escalated to 11.7% to 5,171. For the U.S., it was the largest number of private company announcements since 2000; for Europe, it was the largest number of private company announcements since 2001.
    Much of the boon in dealflow for large deals and private company transactions was the result of dealmakers having greater access to financing. Througout 2004, leverage multiples steadily increased, signaling that bankers were more willing to provide acquisition funds at a cheaper price than they had been during much of the 2001-2003 markets. Also aiding dealmakers in their pursuit of transactions this year was the fact that the lending environment became extremely competitive due to an enormous amount of liquidity in the capital markets at all levels, including greater access to high yield debt financing.
    Competition may also be responsible for boosting the activity of another key segment of the M&A market: strategic buyers. Prior to 2004, many strategic buyers were either on the fence about making acquisitions or were simply not interested, but as competitive pressures in their respective industries have grown and shareholders have turned their attention from bookkeeping to stimulating growth and capturing market share, strategic buyers have been forced to look more seriously at doing deals in the M&A market. That fact is evident from a recent FactSet Mergerstat study, in which the number of M&A transactions announced by S&P 500 companies in 2004 rose 2.8% to 913 and the total dollars spent by these companies on their transactions increased 31% to U.S.$355.8 billion. It was the first time in four years that year-over-year acquisition activity grew for this key strategic buyer group and the first time since 2001 that overall spending had surpassed U.S.$334.7 billion.
    Without a doubt, it was a banner year for dealmakers in the U.S. and Europe, but can it be repeated or bettered in 2005? Confidence in the M&A market seems to be high, but there is some risk that confidence may be deflated by rising prices. In a recent Bank of America Business Capital survey, twenty-three percent of CFOs said that they expected to participate in a merger or acquisition in 2005, up substantially from 14% last year, but the survey noted that nearly one-third (32%) of CFOs believe that the purchase price for companies in their industry - as a multiple of earnings - will increase in 2005. The result may be a market where buyers are looking at lots of deals, but biting only when the cost synergies of a combination are obvious.
    One way to measure where deals may be taking place in 2005 is to look at the dealflow and Dollar volume of 2004's top industries in the U.S. and Europe. In terms of activity, the biggest producers in the U.S. were: Computer Software, Supplies & Services (1,273 announced deals), Broadcasting (502), Leisure & Entertainment (453), Brokerage, Investment & Management Consulting (410), and Banking & Finance (367). In terms of dollar volume, the U.S. leaders were: Banking & Finance (U.S.$131.2 billion in disclosed value), Communications (U.S.$94.3 billion), Drugs, Medical Supplies & Equipment (U.S.$47.5 billion), Electric, Gas, Water & Sanitary Services (U.S.$41.1 billion), and Leisure & Entertainment (U.S.$37.1 billion).
    In Europe, the most active industries were: Computer Software, Supplies & Services (857 announced deals), Wholesale & Distribution (421), Retail (420), Construction Contractors and Engineering Services (415), and Leisure & Entertainment (403). In terms of dollar volume, the top European industries were: Drugs, Medical Supplies & Equipment EUR56.2 billion (U.S.$76.6 billion), Banking & Finance EUR35.1 billion (U.S.$47.9 billion), Communications EUR25.7 billion (U.S.$35.1 billion), Electrical Equipment EUR24 billion (U.S.$32.7 billion), and Electric, Gas Water & Sanitary Services EUR22.5 billion (U.S.$30.7 billion).
    To find out more about the M&A landscape in 2004, visit the FactSet Mergerstat website at www.mergerstat.com or contact us at 1-800-455-8871/ info@mergerstat1.com. Complete coverage of M&A statistics can be found in FactSet Mergerstat's M&A publications, Flashwire Weekly and Flashwire Monthly.

    * The data in this release was complete as of December 30, 2004.

    FactSet Mergerstat, LLC tracks mergers and acquisitions involving global business entities excluding the exchange of business assets, private placements, spin-offs, and open-market transactions. FactSet Mergerstat offers its research and analysis electronically through FactSet Research Systems, Reuters, Alacra, Lexis Nexis, Standard & Poor's, and Shannon Pratt's BV Resources.

--30--AC/ny*

CONTACT: FactSet Mergerstat, LLC Kurt Kunert, 310-315-3131 www.mergerstat.com

KEYWORD: CONNECTICUT INDUSTRY KEYWORD: BANKING MERGERS/ACQ SOURCE: FactSet Mergerstat, LLC

Copyright Business Wire 2005