A “Super Sunday” for M&A for Global Deal-Making

It was what can only be termed a “blockbuster” of a Super Sunday on September 13th as several notable deals were announced. The news of M&A activity stretched into Monday for the fastest start to a week for global deal-making in 2020.

The Japanese conglomerate SoftBank Group Corp. and U.S. pharmaceuticals group Gilead Sciences Inc. announced $69 billion of deals. Bloomberg reports this to be the highest total for the start of a week since late November 2019. That news brings the volume of M&A announced in September to $146 billion. That’s a 51% increase from the same period in 2019.

News outlets announced several other Super Sunday potential deals. These included plans by Czech billionaire Daniel Kretinsky to boost his stake in German wholesaler Metro AG. At the same time, Chinese internet giant Alibaba seeks to invest $3 billion into Southeast Asian ride-hailing firm Grab.

If deals keep moving at the current pace — but there’s no guarantee that they will — September could be one of 2020’s best months for M&A. This would be rare good news for investors and advisers. The coronavirus crisis is keeping transaction volumes 33% below 2019 levels.

Although some pharmaceutical and technology companies are doing deals, the activity in many other industries remains moderate.

“The equity market has really driven this, and as a result CEOs and boards have been comfortable transacting,” said Mark Shafir, Citigroup Inc.’s global co-head of M&A, in a Bloomberg interview.

The S&P500 Index is up 23% since March 11th. That’s the date on which the World Health Organization (WHO) officially declared the coronavirus outbreak to be a pandemic. Here are some of the notable deals from Super Sunday:

Nvidia to Acquire Arm for up to $40 Billion

Arm’s tech is at the center of the more than 1 billion smartphones that are sold each year. Chips using its code and its layouts are in everything from factory equipment to home electronics. Nvidia’s purchase is driven by its quest to bring AI to everything that has an on-switch.

“AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of NVIDIA. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

Regulatory clearance may prove an obstacle for this Super Sunday deal. The deal must obtain approval from China, the U.K., the European Union, and the U.S. In fact, Chinese approval may be especially difficult with the increased tensions with the U.S.

Huang said that Arm will remain headquartered in Cambridge.

As an aside, SoftBank founder Masayoshi Son is looking at a management buyout of the group. The object is to attempt to solve the persistent gap between its market valuation and the value of its investments.

Another Super Sunday Deal: Gilead to Acquire Immunomedics for $21 Billion

“This acquisition represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio. TrodelvyTM is an approved, transformational medicine for a form of cancer that is particularly challenging to treat. We will now continue to explore its potential to treat many other types of cancer, both as a monotherapy and in combination with other treatments,” remarked Daniel O’Day, Chairman and CEO of Gilead Sciences. “We look forward to welcoming the talented Immunomedics team to Gilead so we can continue to advance this important new medicine for the benefit of patients with cancer worldwide.”

Gilead has been concentrating its efforts on drugs that leverage the immune system to fight tumors. The Immunomedics deal is another major gamble that the strategy can increase its profits.

New Jersey-based Immunomedics makes the breast-cancer treatment Trodelvy that received approval from the FDA in April. Gilead subsequently began talks with Immunomedics about a partnership. Recently, these discussions moved toward an outright acquisition.

Super Sunday Surprise: Oracle to Grab TikTok in U.S. Over Microsoft

Super Sunday
Super Sunday

Oracle Corp. bested its rival Microsoft in the negotiations for the U.S. operations of TikTok. Oracle and TikTok are still discussing the terms, but a deal between TikTok owner ByteDance Ltd. and Oracle will look seem to be more like a corporate restructuring than the outright sale proposed by Microsoft.

Reports say that the deal will create a separate corporate entity for the app in which Oracle will take a minority share. Oracle will also make certain that it will store and process data from U.S. users in the United States pursuant to recommendations of the Committee on Foreign Investment in the United States (CFIUS).

The deal follows the Chinese-owned music-video app’s efforts to avoid being shut down amid a clash between the world’s two superpowers. The sale of TikTok, which was forced by President Trump’s administration ban on grounds of national security, is one of the issues at the center of fraying Washington-Beijing tensions. Any deal will need the approval of both sides.

TikTok lets people record and edit short video clips and has gained popularity during the global pandemic that’s kept most of the world indoors.

Verizon to Acquire TracFone Wireless

The largest U.S. wireless operator will pay Mexican mogul Carlos Slim’s America Movil SAB $3.1 billion in cash and $3.1 billion in stock. There will be up to an additional $650 million tied to performance goals.

While Verizon has 116 million regular monthly subscribers, it has never been a big player in the prepaid market.

Super Sunday Offer: Garda Bids $3.8 Billion for G4S

Garda urged G4S’s shareholders to force its board into talks with them. The bidders said that they’d repeatedly been “summarily dismissed or ignored” after an initial approach. The Financial Times said that it’s rare for private equity firms to threaten a hostile approach.

Garda said it had made three unsuccessful attempts to engage with G4S over the past three months.

This latest proposal is an 86% premium to G4S’s share price prior to Garda’s initial approach in June. Garda, controlled by buyout firm BC Partners, is looking to attract G4S investors who have seen the company’s share price drop through the past year.

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.

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