While mergers and acquisitions activity remains below pre-pandemic levels, a resurgence in global deal making in the last month or so suggests the drought may finally be coming to an end.
This has been led by a series of blockbuster deals. According to FactSet data, over 20 agreements worth more than a $1bn (£756m) have been struck since the beginning of July and are awaiting completion. Most of these involve US-listed companies, including oil major Chevron’s (US:CVX) proposed $5bn all-share takeover of Noble Energy (US:NBL). More recently, Johnson & Johnson (US:JNJ) announced it has agreed to purchase biotech company Momenta Pharmaceuticals (US:MNTA) for $6.5bn to boost its capabilities in treating autoimmune and rare diseases.
On this side of the Atlantic, M&A activity is recovering more slowly. But if you take a quick glance at the takeovers page, you will see that home and motor insurer Hastings (HSTG) and gold miner Highland Gold (HGM) are both recommending shareholders approve takeover deals worth more than £1bn. There could be more to come, too. Activist investor Jason Ader has suggested that online gambling software supplier Playtech (PTEC) be bought by American sports betting provider Draftkings (US:DKNG). While it may be idle talk, Mr Ader has form in orchestrating such deals – he pushed for Flutter Entertainment’s (FLTR) merger with The Stars Group, which completed in May.
It hasn’t all been positive on the deal-making front. Thermo Fisher Scientific’s (US:TMO) attempted €10.7bn (£9.7bn) takeover of diagnostics company Qiagen (US:QGEN) fell through earlier this month after only 47 per cent of shareholders voted to approve the tie-up. This came as demand for Qiagen’s Covid-19 testing equipment has soared, prompting many investors to reject what they saw as a lowball offer.
Still, moving forward we are likely to see more corporate deal making – Goldman Sachs (US:GS) has even rolled out an app for M&A matchmaking in a socially distanced world. While activity could be hindered by a second wave of Covid-19 or greater protectionism, buyers are still likely to be on the hunt for distressed assets and consolidation opportunities.
