×

Political risks such as Brexit, US election cause drop in global M&A volume

Political risks scared companies off inking deals so far this year, according to Dealogic—except for Chinese and Japanese firms that hunted U.S. and European targets.

In the first nine months of 2016, global merger and acquisition (M&A) volumes slipped 22 percent on-year to $2.55 trillion, from $3.27 trillion in the same period last year, Dealogic revealed in a new report on Tuesday. This ended a three-year streak of on-year increases, the financial data platform said.

"The Brexit vote in June, a turbulent election cycle in the U.S. and a slump in equity capital raising globally have shadowed opportunities for companies considering acquisitions in 2016," Dealogic said.

Overall, global cross‐border M&A stood at $899.5 billion, down an annual 9 percent, the report found.

Among the top ten largest transactions so far this year, Bayer's $66.3 billion purchase of Monsanto in May was number one, followed by ChemChina's $43 billion purchase of Sygenta.

Technology was the most active sector for deals globally, with agreements worth $475.4 billion, while healthcare—last year's darling—fell 48 percent on‐year to $255.4 billion.

Here's a regional breakdown of Dealogic's findings.

U.S.

Domestic M&A volume tanked 38 percent to $771.3 billion, with fewer mega-deals across sectors. Abbott Laboratories' $30.6 billion bid for St Jude Medical in April was the largest domestic deal in 2016 so far, versus the eight deals that were each above the $30 billion mark in the same nine months of 2015.

Europe

All the largest European economies recorded year‐on‐year declines in M&A volume.

Following a slow first half, post-Brexit U.K. M&A volume reached $62.1 billion in the third quarter, the highest Q3 result since 2008 thanks to SoftBank's $31.6 billion bid for ARM Holdings in July.

Asia Pacific

The region was particularly active in outbound M&A, the report showed.

Acquisitions of European targets hit a record high of $145.9 billion, with the ChemChina-Sygenta and SoftBank-ARM deals accounting for 54 percent of total Asian deal volume into Europe.

Chinese acquisitions into the U.S. reached an annual record high for both volume and activity at $35.7 billion spent on 124 deals. Meanwhile, Japanese firms inked a record 132 deals with U.S. targets.

—Follow CNBC International on Twitter and Facebook.