Fourth Quarter 2004 Caps
Off A Record Year In Health Care M&A, According To New Report From Irving
Levin Associates, Inc.
NEW CANAAN, CT – January 7, 2004 – During the
fourth quarter of 2004, merger and acquisition volume in the health care
industry fell just 3% from the previous quarter and 9% from the year–ago
quarter, Q4:03. The contribution of each sector to this market is noted in
the chart below. The real story, however, lies in the prices paid to make
these deals. Based on revealed prices, a total of $50.6 billion was spent to
finance Q4:04’s 211 transactions. This amount represents a 138% increase
from the $21.3 billion committed to fund health care M&A in Q3:04, and a 13%
increase over the $44.7 billion spent in Q4:03.
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Long-Term Care continued to lead the services segment,
picking up steam during the latter half of 2004. “Just as distressed
properties were disappearing from the market, quality properties and
portfolios emerged during the past two quarters to take their place,” stated
Stephen M. Monroe, managing editor at Irving Levin Associates, Inc. “With
capital flowing back into the market and cap rates declining, some of the
prices paid were the richest we have seen in five years.
Though the Pharmaceutical sector generated the greatest deal
volume in Q4:04, Medical Devices topped the list in prices paid. A combined
total of $29.5 billion, or 58% of the $50.6 billion spent on all of health
care in Q4:04, was committed to fund 32 deals in Medical Devices. “In a year
packed with billion-dollar deals, the fourth quarter posted eight, three of
them in the Medical Devices sector alone,” observed Sanford Steever, Ph.D.,
editor of the Report. “The push to achieve dominance in certain promising
technologies, such as drug-coated stents, will continue to drive dealmaking
in this sector in the coming year.
The fourth quarter accounted for 2% of the year’s 867 deals,
and 26% of the $191 billion committed to finance that activity. As the chart
below shows, it caps off the single richest year in the past five.
| Year |
Deal Volume |
Dollars Committed |
| 2004 |
867 |
$191.0 billion |
| 2003 |
928 |
$93.8 billion |
| 2002 |
948 |
$97.9 billion |
| 2001 |
817 |
$74.5 billion |
| 2000* |
725 |
$125.4 billion |
| *Data incomplete for
Health Care Technology Segment |
“While the
current situation has much to be optimistic about in the near term, the M&A
market may take a breather for companies to integrate acquisitions and
investors to consolidate gains,” commented Mr. Monroe. For more
information on The Health Care M&A Report, or for a subscription to
any Irving Levin publication, call 800-248-1668. Irving Levin Associates,
Inc., established in 1948, has headquarters in New Canaan, CT and is online
at www.levinassociates.com. This privately held corporation publishes
research reports and newsletters, and maintains merger and acquisition
databases, on the health care and senior housing markets.
Click here to get more information or to order any of our
Publications.
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