M&A quarterly deals down 59% for midstream oil and gas sector

6 February 2019 (Last Updated February 6th, 2019 12:10)

M&A activity for Q4 2018 was down 59% from the US$94 billion in M&A deals announced in Q3 2018.

M&A quarterly deals down 59% for midstream oil and gas sector

A combined value of US$38.7 billion in mergers and acquisitions (M&A) activity took place in the midstream sector during the last quarter of last year, a recent report by GlobalData has found.

This represented a 59% decrease from the US$94 billion in M&A deals announced in the previous quarter. A year-on-year comparison shows a decrease of 30% in the number of deals and an enormous increase in values in Q4 2018, compared to 101 deals with a combined value of US$13 billion in Q4 2017, according to the 12-page report by the data and analytics company.

During the quarter, there were 24 M&A deals with values greater than US$100 million, together accounting for US$38.1 billion.

Top deal: EnLink Midstream acquisition

EnLink Midstream’s (ENLC) agreement to acquire the remaining 78.3% interest in EnLink Midstream Partners (ENLK) was the top deal registered in Q4 2018.

The transaction is estimated to have an enterprise value of approximately US$8.62 billion and an equity value of approximately US$5.06 billion.

Under the terms, ENLK common unit-holders will receive 1.15 ENLC units for each outstanding ENLK common unit, representing a value of US$18.46 per ENLK unit, based on the closing price of ENLC on 19 October 2018.

The offer represents a premium of 3.5% based on the volume weighted average price for both ENLK and ENLC securities over the last 30 trading days. Citigroup Inc is acting as financial adviser, while Baker Botts LLP is acting as legal advisor to ENLC. Gibson, Dunn & Crutcher LLP is acting as legal adviser to ENLK. The transaction will enable ENLC to have a streamlined structure that further strengthens its ability to achieve greater returns on the capital.

Midstream M&A deal value and count, Q4 2018

Source: Deals Analytics, GlobalData Oil and Gas

On the volume front, the number of M&A deals decreased by 23% from 92 in Q3 2018 to 71 in Q4 2018, of which 27 were cross border transactions and the remaining 44 were domestic transactions. Europe, Middle East, and Africa (EMEA) was the destination of choice for cross-border M&A activity in Q4 2018, recording 12 cross-border transactions in the quarter.

The Americas, EMEA and Asia-Pacific

Regionally, the Americas led the global M&A market in terms of volume and deal value, with 37 deals worth a combined value of US$30 billion, representing 51% of the global deals and 78% of the total value in Q4 2018.

EMEA accounted for 32% share in Q4 2018, comprising 23 acquisitions, of which 12 were cross-border and the remaining 11 were domestic acquisitions, while the Asia-Pacific region accounted for 12 global deals, or 17% in Q4 2018, of which eight were cross-border acquisitions and the remaining four were domestic acquisitions.