Seventy-Seven Deals Announced Worth $9.8 Billion
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August’s health care merger and acquisition market posted a total of 77 deals. The health care services segment captured a total of 40 deals (see page 4 of the September issue of The Health Care M&A Monthly) while the health care technology segment had the remaining 37 (see page 10 of the September issue of The Health Care M&A Monthly). The services segment thus represents 52% of all deal volume, with technology representing the remaining 48%.
Just three individual sectors taken together account for 42% of the month’s deal volume: Pharmaceuticals with 13 deals, Medical Devices with 11 and Long-Term Care with eight. Although activity was low in some services sectors, such as Behavioral Health, Labs and Rehabilitation, all sectors produced deals.
Based on prices revealed to date, a total of $9.8 billion was committed to fund the month’s M&A activity. Health care technology led the services sectors in terms of dollar volume. A total of $5.7 billion, or 58% of the month’s dollar volume, was spent on technology transactions, with the services segment providing the remaining $4.1 billion, or 42%. Two billion-dollar deals were announced in August, one in the biotech sector and one in the pharmacy benefits manager industry. These indicators might suggest that M&A activity is tapering off, but seen in a broader perspective, they confirm what we may call the “August Vacation Effect” on the M&A market (see the table on page 2 of the September issue of The Health Care M&A Monthly). Over the past five years, deal and dollar volume in August has always dropped from the corresponding levels in July. This, we believe, is a holdover from the times when businesses virtually shut down in the summer, and dealmakers, their advisors and bankers took their vacations. Even with the advent of air-conditioning and elevators, this pattern seems to have become embedded in the business cycle.
The incidence of unsolicited or hostile bids for companies increased in August. One major factor for this uptick has been falling stock prices, which are placing more targets within the grasp of acquisition-minded competitors. Though some analysts feel the relative absence of private equity groups from the M&A market is also contributing to the increase in hostile dealmaking, PEGs remain active in M&A, as evidenced by several deals this month.
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