Americas remains world’s leading M&A region in 2019

Written by Adam Cadle

09/03/2020

The Americas remained the world’s leading region in 2019 in terms of M&A activity, accounting for 43% of the global total, according to latest research published by Clyde & Co.

It is expected that 2020 will be characterised by a more cautious approach to deal-making in the US.

“Despite persistently strong economic fundamentals and strong stock markets, a combination of trade wars, diplomatic tensions and the impact of the coronavirus will further deter interest in cross-border acquisitions,” the report said. “This will result in the completed number of transactions likely to be level with or slightly down on 2019.”

M&A activity in Canada in 2019 – the second busiest country in the region – was predominantly driven by domestic consolidation. One of the largest deals saw Intact Financial Corporation – Canada’s largest property and casualty insurer – acquire specialty insurer The Guarantee Company of North America for around $750m. This was in contrast with Bermuda, which until recently was a location ripe with targets for acquisition. In 2019 the tables were turned with the vast majority of deals being outbound by Bermudian acquirers involving overseas targets. These included RenaissanceRe’s $1.2bn acquisition of Tokio Millennium Re and Athora’s move on Generali Belgium for $667m.

“Latin America remains an important market, but deal activity is still muted,” the report said. “Brazil and Chile each saw a handful of predominantly small domestic deals in 2019, but in-bound interest was negligible. Latin America is a challenging environment in which to operate, and we will continue to see some one-off deals as foreign players re-set their expectations and retreat, which sold its operations in Argentina to Zurich for $350m. Overall, however, businesses are staying the course and remain focused on cautious growth, including via acquisition, providing suitable targets can be found.”

Deal-making has continued to grow in Asia Pacific with 2019 marking the third consecutive year of increasing M&A volume. Once again Japanese acquirers were the region’s busiest with 26 completed transactions involving a mix of domestic and overseas targets.

In Europe, 2019 was a year of two halves for insurance M&A. There were 88 transactions completed in the first six months as deals that had been put on hold due to Brexit preparations finally got over the line. There were 67 in the second half as activity dropped back to a level more in line with recent years.

M&A in the Middle East continues to bump along at a low level.

“Although there was anticipation that new regulatory requirements to increase capital in jurisdictions and pressure from regulators across the region would translate into a flow of deals as businesses moved to consolidate, this has yet to materialise,” the report added.

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