Bermuda involved in nearly $10bn in deals

The offshore markets experienced their largest quarter-to-quarter rise in M&A transactions in the last three years. This according to a report released by Appleby on Tuesday.

The report stated Bermuda experienced a nearly 25 per cent increase in deal volume with 101 deals in Q4 compared with 76 deals in Q3, the report.

The number also marks a significant increase over the 89 deals in Q4 of 2011.

In terms of value, the $9.99bn in Q4 2012 represents a roughly 10 per cent increase over the $9.07bn in value from the previous quarter and roughly 57 per cent increase over Q4 of 2011.

Timothy Faries, Bermuda group head, corporate and commercial, said in a press release: “In the last quarter, Bermuda again demonstrated that it remains a centre for offshore activity, outperforming the previous quarter and Q4 of 2011.

“We anticipate Bermuda will continue to be a powerhouse in the offshore world in 2013 with four of the top five rumoured deals in terms of value expected to occur in our jurisdiction.”

Bermuda was home to two of the top 10 deals in terms of value of Q4 2012 – the $3.13bn acquisition of property and casualty carrier Alterra Capital Holdings Limited, by Markel Corporation and the $1.13bn share buyback of semiconductor manufacturer Marvell Technology Group Ltd. In terms of deal value in which Bermuda companies were acquirers, the jurisdiction saw a nearly 150 per cent increase from $3.2bn in Q3 to USD8bn in Q4.

Worldwide

Globally, both the volume and value of deals involving offshore targets increased considerably in Q4 as against the preceding three months, with volume up 27 per cent and value up 202 per cent.

While the substantial increase in value is largely attributable to the biggest transaction of the quarter — the $56bn sale of British Virgin Islands-listed oil exploration business TNK-BP to Russian state-owned oil company Rosneft — it is encouraging to see that if this deal is excluded from the data, the quarter still boasts a deal value of $45.8bn, placing it as the third highest three-month period of the last three years.

Despite the surge in activity for the last quarter, 2012 overall had 14 per cent fewer deals than 2011, and 26 per cent fewer than 2010.

Cameron Adderley, global head of Appleby’s corporate and commercial department, said: “While we remain positive about activity levels going forward, there is no escaping the fact that 2012 was another challenging year for M&A in our markets.

Euro crisis

“2012 was peppered with uncertainty, most notably around the Euro crisis, the US presidential election, and changes of leadership in China and elsewhere. Moving into 2013, the outlook is far from clear and the very real questions remain around the single European currency and America’s challenges related to the so called Fiscal Cliff and China’s continuing growth.”

Average deal sizes illustrated a depth slowly returning to the marketplace.

The average deal size this quarter stood at $173m, outstripping averages over the last 12 quarters, while average deal size in 2012 surpassed the preceding two years, coming in at USD103m as against USD63m in 2011 and USD71m in 2010.

Francess Woo, Appleby’s Hong Kong-based global chair, said: “We are optimistic that the M&A markets in which we operate will gradually strengthen, not least as a result of the relative health of strategic buyers, the emerging markets and the energy sector.

“Offshore jurisdictions generated two of the world’s largest transactions in 2012 — that of TNK-BP and Jersey based Glencore’s USD33bn purchase of Xstrata.  We have plenty of reason to be cautiously hopeful going forward, with general robustness returning to deal value as well as the number of deals coming out of our region growing faster than any other world region apart from the Nordic States this quarter.”