Deal Volume Increased in All Financial Institution Industries in 2006 According to SNL Financial
CHARLOTTESVILLE, Va. — (BUSINESS WIRE) — Deal volume increased in all financial institution industries in 2006 according to SNL Financial. There were a total of 1,261 financial institution deals in 2006, up from 1,169 in 2005, and aggregate deal value rose to $211.6 billion from $202.4 billion a year ago.
Financial institution industries include bank and thrift, insurance and insurance broker, securities and investments, specialty finance and financial technology. Deal counts include whole and asset deals and exclude terminated deals and branch deals. SNL Financial’s data on financial technology deals is comprehensive since 2004.
Bank and Thrift
278 bank and thrift whole deals were announced in 2006, as compared to the 269 that were announced in 2005. Deal value increased significantly to $108.4 billion from $29.1 billion. Over half of this increase can be attributed to four deals with price tags in excess of $10 billion.
The top bank and thrift deal of the year was Wachovia Corp.’s (NYSE: WB) acquisition of Golden West Financial which had a deal value of $25.5 billion. The merger of Bank of New York (NYSE: BK) and Mellon Financial Corp. (NYSE: MEL) was the second largest deal with a value of $16.8 billion. Two additional deals valued over $10 billion-plus were Capital One Financial’s (NYSE: COF) buy of North Fork Bancorp and Regions Financial Corp.’s (NYSE: RF) acquisition of AmSouth Bancorp. These deals had deal values of $14.6 billion and $10.1 billion, respectively.
Average price to book was 227.9% for 2006, as compared to 219.7% in 2005. Median price earnings was 24.6x in 2006 compared to 25.1x for 2005.
Click here for complete 2006 M&A league tables for banks and thrifts.
Insurance
Although the number of insurance deals announced climbed to 112 in 2006 from 107 a year ago, aggregate deal value dropped to $12.3 billion from $46.8 billion.
Aviva’s acquisition of AmerUs Group Co. topped the deal list for the insurance industry with a deal value of $2.7 billion. Trailing in second was Protective Life Corp.’s (NYSE: PL) buyout of Chase Insurance Group from JPMorgan Chase & Co. (NYSE: JPM) which had a deal value of $893.0 million. Swiss Reinsurance Co.’s bid for UK GE Life business from General Electric Co. (NYSE: GE) followed close behind with a value of $862.8 million.
The insurance sector had an average price to statutory capital and surplus of 175.3% in 2006, down from 199.8% in 2005. Median price to statutory earnings was 6.3x in 2006, compared to 10.8x a year ago.
Insurance broker deals announced in 2006 totaled 216, up from 207 in 2005. Aggregate deal value rose to $1.7 billion from $1.6 billion in 2005. The top insurance broker deal was AEGON NV’s (NYSE: AEG) acquisition of Clark Inc. (NYSE: CLK) for $262.2 million.
Click here for complete 2006 M&A league tables for insurance.
Financial Services
Securities and investment deals announced this year totaled 192 deals, as compared to last year’s 171 deals. Aggregate deal value more than doubled to $41.0 billion in 2006 from $20 billion a year ago.
The largest deal in 2006 was the $9.8 billion merger of Euronext NV with NYSE Euronext (NYSE: NYX) which barely edged out BlackRock Inc.’s (NYSE: BLK) $9.5 billion purchase of Merrill Lynch Investment Managers LP. Another exchange deal, Chicago Mercantile Exchange Holding Inc.’s (NYSE: CME) $8.0 billion merger with CBOT Holdings Inc. (NYSE: BOT) rounds out the top three.
Offers averaged 383.8% of book value, as compared to 218.6% a year ago. Median price to earnings was at 31.3x for 2006 compared to 25.4x in 2005.
The specialty finance industry announced 188 deals in 2006, up from the 162 announced in 2005. The 2006 aggregate deal value decreased to $26.9 billion from a record-setting $74.6 billion in 2005.
The leading specialty finance deal in 2006 was an investor group’s acquisition of a majority interest of General Motors Acceptance Corp. for $7.4 billion. The investor group was led by Cerberus Capital Management and also included Citigroup Inc. and Aozora Bank Ltd. The second largest deal was Terra Firma Capital Partner’s $2.5 billion acquisition of AWAS Aviation Holdings LLC from Morgan Stanley (NYSE: MS).
Offers averaged 126.0% of book value, as compared to 202.4% in 2005. The median price to earnings for announced deals was 17.3x in 2006, as compared to last year’s 16.1x.
Financial technology deals are still on the rise. 275 deals were announced in 2006, as compared to 253 in 2005. However, aggregate deal value dropped to $21.3 billion in 2006 from $30.4 billion in 2005.
The top transaction was the purchase of GTECH Holdings Corp. by De Agostini S.p.A. for $4.6 billion. The number two deal was M&F Worldwide Corp.’s purchase of John H. Harland Co. (NYSE: JH) for $2.1 billion. Intuit Inc.’s (NASDAQ: INTU) $1.3 billion bid for Digital Insight Corp. (NASDAQ: DGIN) was the third largest financial technology deal of 2006.
Price to sales averaged 2.9%, up from 2.2% in 2005.
Click here for complete 2006 M&A league tables for specialty finance, securities & investments and financial technology.
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.