US continues to top cross-border M&A activity

The US secured the top spots in terms of outbound and inbound mergers and acquisitions (M&A) deal volume and value in 2020, despite witnessing a decline in activity during the COVID-hit 2020. Meanwhile, China continued to remain attractive to foreign investors and emerged as a notable exception to witness growth in inbound M&A activity, according to GlobalData, a leading data and analytics company.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Cross-border M&A activity declined significantly during 2020 with growing protectionism, heightened geopolitical tensions and fears of an economic slowdown due to the COVID-19 pandemic. However, the US managed to be in a relatively better position and witnessed a sizeable number of cross-border M&A deals. The strength of its economy appears to have played a crucial role in driving deal activity.”

M&A outbound

The US witnessed 1,631 outbound M&A deals worth US$269.3bn in 2020, which is a decrease of 13% and 11% in deal volume and value, respectively, compared to 2019. Despite the decline, the US continued to lead the outbound M&A activity by accounting for close to 20% and 30% of the outbound M&A deal volume and value in 2020, respectively. Top target destinations (in terms of deal volume) for US outbound M&A transactions were the UK, Canada, Australia, Germany and France.

The US was followed by the UK, which registered 980 outbound M&A deals worth US$135.4bn in 2020. While deal volume shrank by 9% for the UK, it was among the few countries that witnessed growth in deal value in 2020 compared to the previous year. Of the top ten, Sweden was the only other country that witnessed growth in outbound M&A deal value.

Sweden also witnessed growth in outbound M&A deal volume. Hong Kong was the only other country that witnessed growth in outbound M&A deal volume.

M&A inbound

The US also led the way in inbound M&A activity, with 1,453 transactions amounting to US$246.2bn in 2020. However, it witnessed a decline of 14% and 10% in volume and value in 2020, respectively, compared to 2019.

While most of the countries witnessed decline in inbound M&A activity, China emerged as a notable exception and witnessed growth in deal volume as well as value in 2020 compared to 2019.

Bose adds: “Despite China being the country from where the COVID-19 outbreak originated, it remained attractive to foreign investors. The country’s success in curbing the virus remained pivotal. The relaxation on foreign investment regulations by the Chinese Government is also likely to have encouraged foreign companies to invest in the country.”

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