Wednesday, October 27, 2021

Third quarter deals break all records in biggest M&A boom

Global mergers and acquisitions hit record highs this year with excellent third quarter performance, breaking previous highs before and after the financial crisis.

M&A deals worth $4.33 trillion have been done so far in 2021, breaking the previous high of $4.1 trillion hit in 2007. Deals worth $1.52 trillion occurred in the third quarter. Based on Refinitiv data, this is the largest volume done in all recorded quarters. There has been an increase of about 38 percent as compared to the previous year.

In the United States, third-quarter volumes stood at $581 billion, up 32 percent from the pandemic-hit 2020; Asia-Pacific showed an impressive 21 percent gain with deals worth $365 billion; and Europe with $473 billion.

The United States accounted for nearly half of global M&A deals with $1.95 trillion in the first three quarters of the year.

According to a Reuters report, all sectors benefited from the M&A boom, especially in software with tech deals more than tripled in the first nine months of 2021.

Investors are excited by the new deals happening in the market after the 2020 pandemic. The Federal Reserve’s bond-buying has resulted in lower interest rates and cheaper debt financing. This has been beneficial to the acquirers, especially within private equity (PE).

“The logic is pretty straightforward – we’re really steeped in liquidity,” Mark Shafir, global co-head of M&A at Citigroup, told Reuters.

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Along with blank check companies, PE made up 32 percent of all global M&A deals. PE purchases have so far reached $818 billion in 2021. This is an increase of 133 percent compared to last year.

There are some bidding wars taking place in Europe, with a major public war being the battle to take 122-year-old leading grocer in Britain, WM Morrison, private. Part of the FTSE 100, Morrisons operates 494 stores and employs approximately 110,000 employees. Bidders include Clayton, Dubilier & Rice and Fortress Investment Group.

“We have never seen so many privates in Europe, with more than half of the 20 coming to the UK. The share prices of many of these companies did not recover quickly in the months following the pandemic, and this is where private Equities see opportunities,” Dirk Albersmeier, global co-head of M&A at JPMorgan Chase, told FT.

Investment banks have so far earned $100 billion in 2021. The deals have also done a lot for boutique advisors and major Wall Street banks, which combined have netted $60.6 billion on a Refinitiv basis.

One of the biggest M&A deals this year has been the US Bancorp acquisition of MUFG Union Bank. The combined asset size comes to $664 billion, while the sale price was $8 billion, which included cash and stock.

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This News Originally From – The Epoch Times

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