The Health Care M&A Monthly: The Year in Health Care M&A, 2005
By all accounts, the M&A market for 2005 was a good one, a very good one. Based on figures at hand, a total of 964 deals were announced in the 13 sectors of the health care industry we cover. This figure represents a 10% increase over the 874 deals announced in 2004. It also represents the largest deal volume in the past five years.
With 522 deals, the health care services segment accounted for 54% of the year’s total deal volume; technology accounted for the remaining 46%. In 2004, by contrast, the technology segment captured 52% of total deal volume.
The top three sectors in term of deal volume were Medical Devices (141), Pharmaceuticals (128) and Long-Term Care (126). Together these three individual sectors accounted for 41% of the year’s activity. The Rehabilitation sector limped through the year with just nine deals, or less than 1% of the total.
What They Spent
Based on prices revealed to date, a total of $158.7 billion was committed to fund 2005’s M&A activity. This total represents just a 3% decrease from the $164.1 billion committed in 2004.
Both the dollar and deal contributions of each sector to the year’s total appear in the table on page 9. Each sector’s percentage contribution to the dollars spent in the health care M&A market appears in the chart on page 16.
A total of 27 billion-dollar deals were announced in 2005 with a combined value of $110 billion, or 69% of the year’s total. By comparison, 2004 also saw 27 billion-dollar deals, but worth a combined total of $124.3 billion, or 76% of the total. This year’s billion-dollar deals are listed chronologically beginning on page 10. The average price per deal in 2005 was $231.4 million, compared with $260.1 million in 2005. However, the medians for both years were close, with $17.5 million for 2005 and $17.4 million for 2004.
Two provisos concerning these figures are in order. First, the figures we have provided here are preliminary in that we expect to unearth some straggling deals buried in 10-Ks as companies file their annual reports with the SEC. Second, our figures assume that Boston Scientific’s $25 billion, preemptive bid for Guidant Corp. will ultimately replace Johnson & Johnson’s $21.5 billion offer, which was originally made in 2004. Currently, our 2005 figures include the BSX-GDT deal while our 2004 figures omit the JNJ-GDT transaction.
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