Q4 Flash Report: CVS/Aetna, Disney/Fox Highlight Solid M&A
Two December megadeals capped M&A activity in the fourth quarter, which also featured three large unsolicited offers and several multi-billion dollar deals in which private equity firms cashed out of investments. Deal volume was steady but not frenetic—at least until the week before Christmas—and spread across a range of sectors.
CVS Health Corp.'s (CVS) $77 billion agreement to buy Aetna Inc. (AET) and Walt Disney Co.'s (DIS) $66.1 billion deal for Twenty-First Century Fox Inc. (FOXA) could both receive significant antitrust scrutiny given their size and the political sensitivity of the assets sold. Should they close, they'd be coups for Centerview Partners and Goldman, Sachs & Co. (GS), both of which advised CVS and Fox.
Goldman also landed assignments for the targets of the three unsolicited offers: Broadcom Ltd.'s (AVGO) $130 billion bid for Qualcomm Inc. (QCOM); Emerson Electric Co.'s (EMR) hastily abandoned offer for Rockwell Automation Inc. (ROK); and Brookfield Property Partners LP's (BPY) $14.8 billion bid for the 34% of GGP Inc. (GGP) that it doesn't already own. Centerview is working with Qualcomm and advised Emerson Electric, while a number of other banks worked on one or two of the five deals or bids that topped $10 billion in the fourth quarter.
At more modest levels, private equity shops cashed out of five investments for between $2 billion and $4 billion. KKR & Co. LP (KKR); Permira; TPG Capital LP; General Atlantic LLC; TA Associates Inc. and Equis Funds Group all took advantage of a generously priced market to sell properties, though PE shops were buyers in five of the 20 largest U.S. deals of the quarter, led by KKR & Co. LP, which agreed to pay $8 billion for Unilever's spreads business, and by Cerberus Capital Management LP, which agreed to assume 80% of BBVA SA's Spanish real estate portfolio for $4.74 billion.
The days before Christmas can be busy ones for M&A as companies try to wrap deals up, but the end of 2017 was crazed, with at least a dozen U.S. deals of $1 billion or more announced from Dec. 15 to 31 led by the Unilever spreads deal. The flurry suggests the continued appetite for M&A among both corporates and PE shops, which were involved on six of the 10 deals, three as buyers and three as sellers.