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Guernsey 'megadeals' push up offshore M&A activity in Q4

26 February 2015

Two Guernsey megadeals have played a major role in boosting total offshore mergers and acquisition activity during the final quarter of 2014

The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition activity in the major offshore financial centres, showed that the final quarter of last year maintained the run of 600-plus deals per quarter that started in early 2013.

In the fourth quarter of 2014, Guernsey experienced a massive 774% increase in cumulative deal value when compared to the previous quarter and 444% increase in deal value when compared to the same quarter one year ago.

The jump in value was due in large part to the quarter's only two megadeals - defined as deals valued at more than US$5 billion - each involving a Guernsey target. They included British life insurer Aviva announcing its intention to acquire 100% of rival Friends Life Group for US$8.2 billion, and Pershing Square, the Guernsey trusts and funds group, announcing a planned US$6.2 billion Initial Public Offering (IPO) on the Euronext exchange in Amsterdam.

"The strength of Q4 2014 across offshore jurisdictions can be attributed in part to two megadeals involving Guernsey targets," said Jeremy Berchem, Corporate Group Partner in Guernsey.

"These transactions were both in the financial services and insurance industry, demonstrating Guernsey's significant position in what was the most dominant offshore sector of the fourth quarter."

The total cumulative value of offshore M&A deals and IPOs in 2014 spiked 63% over the previous year, making it the biggest year in terms of dollars spent offshore in the past decade.

"When looking at the year as a whole, 2014 saw 2,687 deals with an aggregate deal value of US$277 billion, making it by far the best year for offshore-targeted M&A for the past decade," said Cameron Adderley, Partner and Global Head of Corporate.

"The year was up more than 60% in value terms over the previous year despite being broadly flat in terms of volume."

In the fourth quarter of 2014, 628 deals were announced involving offshore targets, the report found. At US$69.2 billion, the cumulative value represented an increase of 38% over the third quarter of the year.

While activity levels were similar to previous quarters, Q4 was second highest in terms of value in 2014 putting the average deal size at US$110 million. That figure has been greater in only four quarters over the past 11 years and helped make 2014 as a whole the largest on record for average deal size, at US$103 million.

The final quarter of 2014 was also the fourth in the last five to record more than 10 deals worth more than a billion US dollars each, after only four quarters in the preceding decade did the same. There were 12 deals worth at least US$1 billion each in Q4 2014, and a mammoth 49 across the year, compared to 28 throughout 2013, according to the report.

In the fourth quarter of 2014, insurance and financial services stood out as the dominant sector for offshore deal activity. The sector saw 161 deals with a cumulative worth of US$26.5 billion, accounting for one in four deals done offshore in the time period and for more than a third of the dollars spent.

Meanwhile, the professional, scientific and technical activities sector ranked second in both value and volume, while a strong performance in the transport sector showed the movement of goods and resources is proving a hot area for investment.

Offshore jurisdictions also played a notable role in the global information technology sector over the course of the year. In all, the offshore jurisdictions witnessed eight technology deals each worth over one billion US dollars in 2014.      

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