SINGAPORE (BLOOMBERG) – The value of mergers and acquisitions fell 50 per cent in the first half from the year-earlier period to the lowest level since the depths of the euro-zone debt crisis, as the coronavirus pandemic brought global dealmaking to an abrupt halt.
Every region was hit by the economic impact of Covid-19, which gripped markets in March and sparked countrywide lockdowns. This situation has made face-to-face meetings, a lifeblood of M&A, all but impossible. Little more than US$1 trillion (S$1.39 trillion) of deals have been announced this year, making for the slowest first half since 2012, according to data compiled by Bloomberg.
The sharpest fall has been in the Americas, where the value of deals is down 69 per cent in the first half. While every major industry has been hurt, the financial sector fared better than most. It was boosted by insurance brokerage Aon’s US$30 billion offer for Willis Towers Watson and Morgan Stanley’s proposed US$13 billion acquisition of E*Trade Financial Corp. The top three advisers on deals targeting the Americas so far in 2020 were Morgan Stanley, Goldman Sachs Group and JPMorgan Chase & Co, the Bloomberg-compiled data show.
Deals involving targets in Europe, the Middle East and Africa are down 32 per cent. Large transactions that helped prevent a more dramatic drop include the US$19 billion leveraged buyout of Thyssenkrupp’s elevator unit by Advent International and Cinven. There was also a recent flurry of activity in the Middle East, including Abu Dhabi’s sale of a US$10.1 billion stake in its gas pipeline network that ranks as the biggest infrastructure transaction of the year. Goldman Sachs, JPMorgan and Rothschild & Co were the busiest advisers on EMEA deals.
Asia Pacific has held up better, with overall volumes falling just 7 per cent and most sectors seeing smaller declines than in other parts of the world. The technology, media and telecommunications industry reported a 13 per cent increase, helped by Indian billionaire Mukesh Ambani’s digital arm attracting US$15 billion of investments from the likes of Facebook and KKR & Co. Another landmark transaction was Tesco’s sale of Asian businesses to Thai billionaire Dhanin Chearavanont for more than US$10 billion. The most active banks on deals in the region were Morgan Stanley, HSBC Holdings and JPMorgan.