With the arrival of the final month of 2016, what are the expectations for U.S. announced merger and acquisition activity for December? An examination of past deal performance, based upon data from S&P Global Market Intelligence, may provide some guidance as to the pace of M&A for the remainder of the year.
As profiled below, in three of the past four years, the month of December saw better than $100 billion in announced U.S. M&A deal value. In fact, December 2015’s deal value of $179.1 billion stands as the strongest ever December for U.S. M&A, fueled by The Dow Chemical Company’s (NYSE:DOW) definitive agreement to acquire E. I. du Pont de Nemours and Company (NYSE:DD) in a merger of equals transaction valued at $72.8 billion on December 11, 2015. Despite that strength, December 2015 ranked as just the fifth-biggest month for announced U.S. M&A that year, as the months of March, May, July, and October of theta year each saw over $200 billion in announced deal value.
Since 1998, in nine of the past eighteen instances, December U.S. M&A deal value topped $100 billion. On only three occurrences during this time frame (2002, 2003, and 2008) has December U.S. M&A dropped below the $50 billion mark. Additionally, December deal activity has generally ranked as among the more active months of the year for M&A announcements. In the past six years, December has ranked as either the year’s best or second-best month for deal value in three instances: 2009, 2012, and 2013. The biggest U.S. M&A announcement that ever occurred in December was the combination of Exxon Corporation and Mobil Corporation in a $85.6 billion deal, occurring in December 1, 1998.
This year finds just two months – January and March – where announced U.S. M&A failed to top the $100 billion mark. With current year deal activity at $1.62 trillion, a monthly average of $147 billion in transactions this year, it seems reasonable that December 2016 may very well see over $100 billion in deals. Already the month is off to a good start with Cleveland-based Parker-Hannifin Corporation (NYSE:PH) entering into a definitive agreement to acquire CLARCOR Inc. (NYSE:CLC) for $4 billion in cash on December 1, 2016.