2018 has been a strong year for M&A activity despite increased trade tensions between major economies. Now we are in 2019, movements in the global M&A are arriving.
Data from Dealogic shows that the total deals volume in the first nine months of 2018 is a significant 32% increase from 2017. The current expectation of Backer Mckenzie is that total M&A values in 2018 will amount to USD 3.1 trillion – very modestly lower than the 2017, but the year will close with a high degree of momentum as several major deals announced in 2018 are due to complete in the first half of 2019.
In the past year, corporates and investors have refused to be mired in macroeconomic uncertainty and have instead taken a strategic view, capitalizing on continued global growth and the closing window of low interest rates. That momentum is likely to carry into 2019, meaning this year will begin strongly.
Europe: mixted fortunes across a diverse continent
2018 masks a weaker year in Europe’s M&A activities versus 2017, but cross-border M&A in this region has been boosted late in 2018. It can see that the Eurozone economy has entered a cyclical slowdown. However, Spain has been a notable exception.
Last year Spain has remained robust in the last 12 months. In 2018, the M&A activity in Spain has grown 45,7% with respect to 2017. Megadeals have played the leading role, large-cap transactions like the OPA of Abertis have been closed last year. Besides, Spain has benefited from the trade war between China and US: Chinese investment in Spain has increased 162% respect to 2017 while there was huge decline in the whole Europe and US. We expect the growing trend in Spanish M&A market to continue in 2019 although the overall view in European market will retard.
Asia Pacific: Chinese spending set to support activity
M&A in Asia Pacific has turned into another strong year in 2018 and the total value has increased. Chinese domestic M&A cooled, partly driven by tighter credit conditions, but inbound M&A has gathered pace as overseas firms’ move to protect access to the Chinese market in the event of future trade barriers. Consolidation in heavy industry and upgrading manufacturing capabilities in this country will be key structural drivers of M&A in 2019 and beyond.
Much of the momentum in the region can be maintained into 2019. The total M&A is expected to rise to USD 751 billion in 2019. More positively, US monetary policy will drag less on Asia Pacific dealmaking this year than previous cycles. The forecast is for a robust increase in M&A and sustained strength in IPO activity in 2019.