M&A deal leaks plummet, reveals new report

BY Fraser Tennant

The number of M&A deal leaks has fallen for two years running, a decline driven entirely by the Asia-Pacific (APAC) region, according to a new Intralinks report.

The ‘2019 M&A Leaks Report’, a study carried out annually by Intralinks in association with the M&A Research Centre at the University of London’s Cass Business School, found that, after peaking at around 9 percent of announced M&A transactions in 2013, worldwide deal leaks have declined in recent years.

The report also notes that the decline in M&A deal leaks has occurred at the same time as increased regulations and enforcement actions by financial regulators against different forms of market abuse, including deal leaks – and there is undoubtedly a connection between increased regulatory attention and the decline in leaks.

Among the report’s other key findings, worldwide, the rate of M&A deal leaks fell in 2018 for the second consecutive year, and 7.4 percent of deals in 2018 involved a leak of the deal prior to its public announcement, compared to 7.9 percent in 2017 and 8.6 percent in 2016.

The fall in the overall worldwide rate of deal leaks in 2018 was driven solely by the APAC region, where leaked deals declined to 7.9 percent from 10.8 percent the previous year.

Furthermore, both the Americas and the Europe, Middle East and Africa (EMEA) regions saw increases in the rate of deal leaks in 2018 of 0.5 and 0.4 percentage points, respectively. APAC remains the region with the highest rate of deal leaks, followed by the Americas at 7.6 percent and EMEA at 5.8 percent.

“Deal leaking is down, but the stakes remain high,” said Philip Whitchelo, vice president of Intralinks. “In 2018, the difference in the median target takeover premium for leaked deals compared to non-leaked deals was an average of an extra $68.1m accrued to the shareholders of the targets in deals that leaked. This was the highest ‘leak premium’ difference for three years.”

Finally, for the 10 regions with the most M&A activity, the top three for deal leaks in 2018 were Hong Kong, Japan and the US. The bottom three countries for deal leaks in 2018 were the UK, Australia and France.

Report: 2019 M&A Leaks Report

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