Global Mergers and Acquisitions Reached $3.6 Trillion in 2020

A wave a large deals in the last few weeks of 2020 drove global mergers and acquisitions to the $3.6tn mark in 2020. It’s an impressive rebound of M&A activity in the second half of the year.

Financial Times reports that the 2020 total value of M&A transactions is down roughly 5% from 2019. Nonetheless, this is a dramatic recovery from the first half of the year when the spread of COVID-19 brought deal-making to a stop.

Details of the Second Half Comeback

Although he didn’t “really see an M&A environment,” earlier in the year, Salesforce CEO Marc Benioff pulled the trigger on the acquisition of Slack in December. Under the terms of the $27.7bn takeover, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share.

Global Mergers and Acquisitions Covid Vaccine
Global Mergers and Acquisitions Covid Vaccine

Biden Win Also Fuels Resurgence of Global Mergers and Acquisitions

For example, Asian shares were mostly higher on hopes for additional economic stimulus after the U.S. Congress confirmed Joe Biden as the winner of the presidential election on January 6th. Media announced more than $1.3 trillion of deals in the fourth quarter alone.

Q4 Saw Large Global Mergers and Acquisitions

Other notable deals in the final three months of the year included AMD’s $35bn acquisition of rival US chipmaker Xilinx and UK pharmaceutical group AstraZeneca’s $39bn takeover of US biotech group Alexion.

Anu Aiyengar, co-head of global mergers and acquisitions at JPMorgan Chase, told Financial Times, “Outside Covid, this is a good environment for deal-making. The equity markets are high, interest rates are low and equity investors are happy to pay for growth.”

Interestingly, in many of these deals, the acquiring company used its own stock as the main currency, leveraging rising stock markets. S&P Global and AMD are paying for their deals 100% with their own shares. AstraZeneca is paying for about two-thirds of its purchase with its shares, and Salesforce is paying for just 50% of its Slack deal in its own shares.

Diversification Drove Some Deals

Despite an increase in the overall number of American deals, the total value in the region fell 21% to $1.4tn for all of 2020. Outside of North America, Europe was a bright spot for deals compared to recent years. Comparted to the lackluster performance in the Americas, activity climbed 34% to $989bn in Europe and 15% to $872bn in Asia. In fact, the Asia Pacific region returned with the strongest in the second half, and the region may extend its recovery into 2021 with stronger economic growth led by China.

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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