SNL FINANCIAL SAYS MEGAMERGERS PRESENT IN THE FOURTH QUARTER

Despite flat deal volume in most sectors, total deal value soars in banking and insurance

CHARLOTTESVILLE, VA. (January 13) — Megamergers in banking and insurance boosted aggregate deal value by as much as 160% in the fourth quarter, but the number of announced deals remained relatively unchanged across sectors, according to SNL Financial.

Banking M&A activity for the period was up slightly with 68 deals announced, five more than the prior quarter's 63 and well over the previous year's 50. For the year, there were 236 deals announced compared to 231 in 2002. Total deal value soared to $57.3 billion, compared to $4.1 billion in the previous quarter. In 2003, total deal value reached $72.1 billion, compared to $17.6 billion in 2002.

The largest single transaction in the quarter was Bank of America Corp.'s (BAC) $49.3 billion offer for FleetBoston Financial Corp. (FBF.) The second-largest deal was significantly smaller: Independence Community Bank Corp.'s (ICBC) $1.5 billion offer for Staten Island Bancorp Inc. (SIB). The average price-to-book deal ratio for the quarter was 224.38%, compared to 210.97% in the previous quarter and 165.30% in the fourth quarter of 2002.

Fourth quarter's Insurance M&A activity was unchanged quarter-over-quarter with 83 deals and year-over-year with 302 deals. Total deal value registered $37.9 billion, a 160% increase compared to last quarter's $14.5 billion. Total deal value for the year was $57.9 billion, an almost 500% increase compared to last year's $9.7 billion. The increase was due primarily to two megadeals: Anthem Inc.'s (ATH) $16.2 billion offer for WellPoint Health Networks Inc. (WLP) and St. Paul Cos.'s (SPC) $16.1 billion offer for Travelers Property Casualty Corp. (TAP.A.) The quarter's average price-to-book ratio for insurance deals was 250.69%, a marked increase over 100.31% in the third quarter.

In the securities and investments segment there were 28 deals announced, a 17% increase over third quarter's 24. Total number of deals registered in 2003 was 126, a 25% decrease compared to 168 deals in 2002. Total deal value in the quarter was $2.6 billion, down 37% from last quarter's $4.1 billion. Most of the fourth quarter value was attributable to one deal: Prudential Financial Inc.'s (PRU) acquisition of CIGNA Corp.'s (CI) retirement business for $2.1 billion. Total deal value for the year was $12.2 billion, a 53% increase compared to $8.0 billion in 2002.

Specialty Finance had a steady fourth quarter with 20 deals, the same as last quarter. Total deal volume for the year was down 27%, with 77 deals from last year's 106. Deal value decreased to $4.3 billion from last quarter's $11.8 billion and year-ago quarter's $16.6 billion. The largest deal for the quarter was General Electric Co.'s (GE) agreement to acquire certain assets and liabilities of IOS Capital from IKON Office Solutions Inc. (IKN) for $1.5 billion. Total deal value for the year was $19.3 billion, a 18% decrease from $23.6 billion in 2002. The average price-to-book ratio for specialty finance deals was 201.78%, up from the 152.51% posted in the third quarter.

For more information, see the charts that follow this release (Adobe Acrobat file, 31k).

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.