The Health Care M&A Monthly: The Second Quarter Health Care M&A Market

The health care industry saw a total of 263 mergers and acquisitions announced during the second quarter of 2006, up 11% from the 236 transactions announced in the prior quarter, Q1:06 and up 15% from the 228 deals announced in the year-ago quarter, Q2:05.
The four sectors of the health care technology segments posted a total of 147 deals, or 56% of the quarter’s total, with the nine sectors of the services segment accounting for the remaining 44%. This reverses their relative positions from the first quarter of 2006 when the services segment accounted for the majority (54%) of deals announced.

Medical Devices produced the greatest number of deals, 46, of any single sector, followed by Pharmaceuticals with 39 and Biotechnology with 33. Taken together, these three accounted for 45% of the quarter’s total deal volume. Among the services sectors, Long-Term Care posted the highest numbers, 22 deals. At the other end of the spectrum, the Rehabilitation sector managed to eke out just one deal. The number of deals in each sector, as well as their percentage contribution to the total, appears in the table on the opposite page.

Based on prices revealed to date, a total of $65.8 billion has been committed to fund all this M&A activity. This figure reflects a 56% increase over the $42.2 billion spent in the prior quarter and a 254% increase over the $18.6 billion spent in the corresponding year-ago period.

As might be suspected, the technology segment grabbed the lion’s share of dollar volume during the second quarter, $54.5 billion, or 83% of the total amount. Medical Devices accounted for $27.2 billion of the dollars spent, followed closely by Pharmaceuticals with $22.4 billion.
A total of 13 billion-dollar deals were announced during the second quarter, with 10 in the technology segment and three (all in Long-Term Care) in the services segment. They have a combined total of $54.2 billion, or 82% of the quarter’s total.

During the first half of 2006 a total of 500 deals were announced with a combined total value of $108.1 billion. So far this year, there have been 17 billion-dollar deals, worth a combined total of $83.1 billion.
 

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