Citigroup’s M&A Advisory Unit Ends 2017 On A High Note With A Role In Deals Worth $155 Billion In Q4

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The global M&A industry reported a spurt in activity over Q4 2017, with companies around the world announcing almost $1.2 trillion in deals for the period. This marked a 40% jump from the $837 billion in deals announced for the previous quarter, but remained 8% lower than the $1.27 trillion in deals announced in Q4 2016. While this was the third consecutive year in which total global M&A deals announced over the fourth quarter exceeded $1 trillion, Q4 2017 stands out as the best year in history in terms of total number of M&A deals announced, with more than 14,000 deals being announced.

With the five largest U.S. investment banks playing lead roles in most of the largest deals announced over the quarter, their market shares were correspondingly high for the period. Goldman Sachs topped the list as it is playing a key advisory role in each of the three largest deals announced over the quarter – Broadcom’s $129 billion bid for a hostile takeover of Qualcomm, CVS’s $68 billion proposed acquisition of Aetna and Disney’s $68 billion proposed acquisition of Fox.

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However, the situation over Q4 in terms of M&A deals completed was markedly different, with total deals being completed falling for the second consecutive quarter to $757 billion. This compares to a figure of $768 billion in the previous quarter and the substantially higher $936 billion a year ago. That said, the total number of deals closed in Q4 was an all-time high figure of 10,767 – indicating that the decline in deal volume compared to the other quarters was because most of the largest deals that were initiated over recent quarters are still pending in Q4. As large deals generally take several months (and in some cases several quarters) to finalize due to their complexity, the depressed Q4 figure should be more than made up for over subsequent quarters.

It should be noted that the largest M&A deals employ multiple investment banks, so the market share figures in either table are not exclusive – explaining why the total market share for these 5 banks in terms of deals completed is almost 90%.

Citigroup edged ahead of its competitors to report the largest volume of M&A deals closed in Q4 2017. This is a commendable feat by the geographically diversified banking giant, given that the last time it figured in the top-3 M&A advisors for a quarter was three years ago (when it ranked second in Q4 2014). Citigroup has ranked #5 among the five largest U.S. investment banks in 15 of the last 26 quarters. This is in sharp contrast with Goldman Sachs, which has held the #1 spot for M&A deals completed worldwide in 16 of the last 26 quarters. Citigroup’s figures for Q4 2017 were boosted by its role in the two largest deals that completed over the period – the $24-billion acquisition of CR Bard by Becton Dickinson, and the $23-billion spin-off of Hong Kong-based Wharf Real Estate’s commercial property arm.

You can see how Citigroup’s share of the global M&A industry impacts our price estimate for the bank’s shares by modifying the chart below.

See the links below for more information and analysis about the 5 largest U.S. investment banks:

Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, -please refer to the full Trefis analysis for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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