One major contributor to the return of the megadeal has been the revival of private equity backed blockbusters. In 2017, there were 26 transactions valued at US$4bn or more by PE funds or PE-backed companies.
Toppan Vintage, a trusted financial printing and communications company, in partnership with Mergermarket, is pleased to present the newest edition of M&A Pulse newsletter. This newsletter features expert insights on high-dollar transactions, or "megadeals", in 2018.
Toppan Vintage question: What will happen to the number of private equity backed megadeals over the next 12 months? Leading deal experts weigh in...
In a deal that made a major splash early this year, alternative asset manager Blackstone Group teamed up with Singaporean sovereign wealth fund GIC and the Canadian Pension Plan Investment Board to buy a 55% stake in the financial and risk unit of Thomson Reuters for US$17bn. The buyers saw strong growth potential in the business’s data services and foreign exchange platforms, Bloomberg reported after the deal was announced.
This mega-buyout by a Blackstone-led consortium – which Mergermarket ranks as the fourth-largest PE buyout of the last 10 years – came after a year of headline-grabbing PE deals. These included two transactions led by experienced player Bain Capital: the US$10.6bn purchase of Toshiba’s memory chip unit in September 2017 and the US$5.9bn acquisition of German pharmaceutical company STADA Arzneimittel after a bidding war in July 2017.
Our survey respondents largely believe the number of PE megadeals will rise further in the next 12 months. More than three-quarters (76%) think there will be 5-10 more such deals than last year, while 12% foresee an increase of more than 10 mega-buyouts.
A New York-based investment banker predicts that the PE industry’s record fundraising levels will lead to more high -dollar acquisitions. In 2017, PE funds raised US$453bn globally, the most ever in a single year, according to Preqin. “This year will see an additional 5-10 megadeals made by private equity funds,” the investment banker said. “Some PE firms have the capital they need to complete deals above US$4bn rather easily. This year will again see them utilizing those funds and their expertise to make some big disruptive deals in the market.”