January 11, 2018

M&A Outlook: Wachtell Weighs In

This Wachtell Lipton memo lays out some thoughts on M&A for the upcoming year.  The memo cover a lot of ground – topics include the impact of tax reform, unsolicited deals, shareholder activism, acquisition financing & cross-border M&A, among others. Here’s what they had to say about hostile deal activity:

2017 was a significant year for hostile and unsolicited M&A deals, with $575 billion of unsolicited bids, representing 15% of total global M&A volume, including Broadcom’s proposed $130 billion acquisition of Qualcomm. The percentage of hostile and unsolicited bids out of total M&A deal volume in 2017 was greater than both 2015 (11%) and 2016 (9%).

We expect the percentage will continue to remain high, given that the stigma once associated with pursuing unsolicited transactions is long gone. It is still possible to defeat a premium, hostile bid with a thoughtfully executed defense, as illustrated by Rockwell Automation’s successful defense against Emerson Electric’s $29 billion unsolicited offer. That defense focused on the value of Rockwell Automation’s long-term prospects and the inadequacy of the consideration offered.

John Jenkins