Takeovers & Buyouts: Mega M&A Deals in 2019 Highest in Four Years

January 2, 2020 | Takeovers and Buyouts

Cross-border M&A was, however, down 25% year-on-year.

Key trends in global M&A during 2019 included a sharp rise in large M&A transactions accompanied by a slowdown in cross-border deals. Deal-makers were defensive given geopolitical tensions such as trade disputes. As a result, they focused more on deals in their home turf.

Aggregate transactions worldwide totaled $3.9 trillion in 2019, the fourth strongest year for M&A deal-making, according to data from Refinitiv as reported by Reuters. It was also the sixth year on the trot that transactions totaled more than $3 trillion.

The 2019 level was nearly flat compared to the 2018 volume of $3.96 trillion. But for a late surge in the last quarter of the year, the 2019 tally would have been lower.

Of this, cross-border deal-making accounted for $1.2 trillion, lower by 25% on 2018. It also marked the lowest volume since 2013.

Big-ticket M&A deals on the rise

Low financing costs and high stock prices led to a surge in large-value transactions. These are deals having a value greater than $10 billion. Of 43 such transactions, nearly half or 21, were over $20 billion in size.

“Mega-deals were the main feature of this year’s deal-making, especially in the United States, where the bulk of these transactions took place,” said Goldman Sachs Group Inc (GS.N) global M&A co-head Gilberto Pozzi.

Eight of the year’s 10 biggest transactions were located in the US. These were led by Bristol-Myers Squibb’s $74 billion takeover of Celgene Corp and United Technologies Corp’s $135 billion merger with Raytheon Co.

Interestingly, markets named November 25, 2019, as “merger Monday.”

More than $60 billion worth of deals were unwrapped on that one day.

These included Charles Schwab’s $26 billion all-share deal to nab TD Ameritrade and LVMH of France’s $16 billion takeover of Tiffany.

M&A Geographically speaking…

Europe and cross-border China slumped by a quarter each, while M&A volume in Africa and the Middle-East more than doubled. Cross-border UK deals were in demand regardless of Brexit tensions, and boosted by the cheaper pound.

Private Equity and M&A

Global private equity-backed M&A surged 4% to $479 billion in 2019, making it the best year for global buyout activity since 2007.

In 2020, private equity buyouts may be to the fore as PE firms nurse a dry powder trove of $1.3 trillion, according to Hernan Cristerna, global co-head of M&A at J.P. Morgan.

Slowdown not bad for M&A

The much-feared market correction or a slowdown in the global economy will in fact work in favor of M&A activity. Provided the severity is less than that of the 2008 crisis.

“A lukewarm economy is ideal for acquisitions, because companies need M&A to ensure growth, and business sentiment is sufficiently strong for CEOs and boards to be comfortable with pursuing deals,” said Sullivan & Cromwell LLP partner Frank Aquila.

Related Story:  Refinitiv: Sovereign Wealth Funds Put $24.6 Billion into Q3 M&A Deals

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.

Alt Insights

January 16, 2020

ESG: Lately-turned Tesla Bull Jim Cramer Adds Fink To The Mix

ESG: Lately-turned Tesla Bull Jim Cramer Adds Fink To The Mix

Latest Alternative Investment News

Emission-Free Friday: Here are the Latest Funds to Push for Carbon Neutral
January 17, 2020     ESG and Sustainability, Investments, News

Carbon emissions dominated the headlines this week. The European Commission has announced an ambitious plan to shift toward a green economy and make the EU carbon-neutral in the year ahead….

Kirkoswald Asset Management Will Turn New Investors Away in 2020
January 17, 2020     Hedge Funds, News

Kirkoswald Asset Management will stop accepting new investors when the fund hits nearly $2 billion. Reuters reports that the two-year-old fund will close itself to new investors at the end…

FinTech: Fundbox Hires Former Goldman Sachs Investment Banker as CFO
January 17, 2020     FinTech, Venture Capital

Fundbox, the fintech startup that finances SMEs, is planning a potential IPO. Fundbox has appointed Marten Abrahamsen as its CFO effective this January. Abrahamsen was previously a partner at The…

Hedge Funds: The Empire Strikes Back At HKD Short-Sellers and Doomsayers
January 17, 2020     Hedge Funds, News

Such is the power of Kyle Bass, the hedge fund manager who correctly predicted the crisis from US subprime mortgages in 2007. The Hong Kong Monetary Authority deemed it appropriate…