Second Quarter Figures Show Steep Decline in Israeli M&A

In the second quarter of 2018, acquisitions of Israeli companies reached a total disclosed deal value of $478 million, a 80.8% decrease compared with the first quarter of 2018 and a 25.1% decrease compared with the same period in 2017, according to a new quarterly report on M&A activity in Israel, published Sunday by KPMG Israel. The decline is mainly due to the small number of deals finalized in the second quarter, the report found.

Global M&A activity in the second quarter of 2018 reached a total deal value of approximately $1,011.8 billion, a 33.4% increase compared to the same period in 2017 and a 9.1% increase compared to the first quarter of 2018. Worldwide, this year’s second quarter was the highest in the last three years in terms of M&A activity. The total deal value in the first half of 2018 amounted to $1,939 billion, an increase of 28%, compared to the same period in 2017. North America led the global M&A activity in total deal value, with deals adding up to $877 billion in the first half of the year.

In Israel, average deal size decreased from approximately $120 million to $69 million between the first quarter of 2017 and the first quarter of 2018. Globally, average deal size for cross-border transactions decreased from approximately $249 million in the first quarter of 2018 to $80 million in the year’s second quarter.

The acquisition of Frutarom Industries, Ltd. by IFF for approximately $6.35 billion, announced in May, is not included in the data as it was not completed during the quarter.

During the second quarter of 2018, 170 Israeli-based tech companies raised a total of $1.61 billion in financing, a 5.6% increase compared to the previous quarter and a 27.2% increase compared to the second quarter of 2017.

In February 2018, Nasdaq-listed KLA-Tencor Corporation announced it agreed to buy Nasdaq-listed Orbotech Ltd. according to an equity value of approximately $3.4 billion and an enterprise value of $3.2 billion.

The largest transaction completed during this year’s second quarter was the acquisition of Landa Digital printing by Altana AG for approximately $300 million, which accounts for 62.8% of total cross-border deal value in the Israeli market.

This article was authored by Yoav Lavy, head of Transaction Services at KPMG Israel.