SNL's Second Quarter M&A Summary for Financial Institutions

Charlottesville, VA -- Aggregate deal value for financial institutions has come half-circle over the last five periods, parabolically checking in at a total of $76.3 billion this quarter, compared with $77.9 billion in the second quarter of 2005 according to SNL Financial. The third quarter of 2005 and the first quarter of 2006 saw aggregate deal values separated by less than $1 billion at $47.3 billion and $46.4 billion, respectively, and the fourth quarter of 2005 saw the lowest deal value over the five period snapshot at $35.7 billion, although it did rank the highest in total number of deals at 345. 

Financial institution deals are defined as bank and thrift, insurance, and financial services whole and asset deals, excluding terminated deals and branch deals. For deal charts and a complete list of adviser rankings sorted by industry, click here: http://www.snl.com/press/20060713.pdf.

Bank and Thrift

There were 74 bank and thrift whole deals announced this quarter compared to 67 announced in the second quarter of 2005. Aggregate deal value soared to $47.3 billion this quarter, more than the previous four quarters combined.

This jump was primarily the result of two huge deals announced less than three weeks apart in May, Wachovia Corp.’s (NYSE: WB) $25.5 billion bid for Golden West Financial (NYSE: GDW) and the $10.1 billion merger of Regions Financial Corp. (NYSE: RF) and AmSouth Bancorp. (NYSE: ASO). These were two of the top three bank and thrift deals announced in the last five quarters, the other being Capital One Financial Corp.’s (NYSE: COF) $14.6 billion offer for North Fork Bancorp (NYSE: NFB) in March.

Deals averaged 227.2% of book compared to 213.4% a year ago. The median price to earnings ratio was 23.7x this quarter compared to 28.1x a year ago.

Insurance

There were 20 insurance deals announced this quarter for a total of $1.3 billion in deal value, compared to 28 deals and $1.4 billion a year ago.

The largest transaction this quarter came on the last possible day, Onex Corp.’s $710 million offer for Aon Warranty Group on June 30.

Average price to book was 123.2% compared to just 101.2% a year ago.  Insurance deals had a median price to earnings ratio of 13.9x compared to only 6.9x a year ago.

Insurance broker deals announced this year totaled 48, slightly up from the 43 deals announced a year ago.  Announced deal value was considerably lower this quarter, however, dropping to $106.9 million from $650.1 million a year ago.

The largest transaction was HealthSpring Inc.’s (NYSE: HS) $50.0 million offer for AHC Medical Plans Inc. announced in May.

Financial Services

There were 40 Securities and Investment deals announced this quarter compared to 43 announced a year ago. Deal value shot up to $15.0 billion compared to $11.1 billion last year. 

Powering the surge in deal value was the $9.8 billion agreement between NYSE Euronext (NYSE: NYX) and Euronext N.V., which narrowly bested the $9.5 billion deal between BlackRock Inc. (NYSE: BLK) and Merrill Lynch Investment Managers for the top spot among announcements in the last five quarters.

Specialty Finance deals this quarter enjoyed a healthy $10.5 billion in aggregate deal value spread between 38 deals. However, these numbers pale in comparison to the mammoth quarter a year ago which saw 44 deals accumulate $58.9 billion in total deal value.

The top deal this quarter was the $7.4 billion bid for General Motors Acceptance Corp. by an investor consortium led by Cerberus Capital Management, including Citigroup Inc. (NYSE: C) and Aozora Bank Ltd.

Specialty Finance deals averaged 130.8% of book compared to 190.8% a year ago. On a price to earnings basis, deals had a median of 20.5x compared to 14.9x a year ago.

Financial Technology deal activity was down this quarter. The 48 deals and $2.0 billion in deal value were not only lower than the previous year’s quarter, which saw 61 deals for $2.4 billion, they were the lowest totals for both categories for the last five quarters.

VeriFone Holdings Inc.’s (NYSE: PAY) $894.8 million offer for Lipman Electronic Engineering topped the list as the biggest Financial Technology deal announced this quarter.

About SNL Financial

SNL collects, standardizes and disseminates all relevant corporate, financial, market, and M&A data — plus news and analysis — for the Banking, Financial Services, Insurance, Real Estate, Energy and Media & Communications industries. For more information, visit www.SNL.com.