Daily Management Review

Record M&A Deals In The Third Quarter As Pandemic Restrictions Ease


Record M&A Deals In The Third Quarter As Pandemic Restrictions Ease
Those deals that were put on hold at the height of the novel coronavirus pandemic were revisited by companies and with boardroom regained confidence after a roller-coaster year, the third quarter of the current year saw a strong comeback of mergers and acquisitions.
M&A reached a record in the third quarter because of a deal frenzy in September as deals worth more than $1 trillion took place across the world. According to Refinitiv data, most of the deals were in those industries that were somewhat resilient to the pandemic such as technology and healthcare.
However the lackluster performance at the beginning of the year because of the pandemic was not made up by the third quarter spike in M&A. 
In the first nine months of 2020, there was a 21 per4 cent year on year dip in the M&A deals overall at $2.2 trillion with deals in the United States coming in at $800 billion which was 43 per cent year on year drop.
"The way out of this crisis is through M&A and we have started to have really engaging conversations with CEOs and boards around strategic positioning post-COVID," said Alison Harding-Jones, Citigroup's head of M&A for Europe, the Middle East and Africa (EMEA) and vice chairman of EMEA banking, capital markets and advisory.
"People have realised they need to consolidate to create stronger and better-equipped businesses to deal with what the world looks like going forward," she said.
Compared to the preceding quarter, there was an 80 per cent spike in the M&A activity in July, August and September. The second quarter saw worldwide lockdowns because of the pandemic which brought business to a grinding halt.
There was a there fold rise in deal volumes in the US in the third quarter to $414 billion compared to the second quarter while Europe recorded a 21 per cent spike to at $231 billion and Asia Pacific recorded a 67 per cent growth in M&A deals at $274 billion in the same period. .
"The market is picking up quite rapidly. Ironically, the prospects for M&A activity are stronger now than they were pre-COVID," said Peter Weinberg, founding partner and chief executive of Perella Weinberg Partners.
LVMH's $16 billion takeover of U.S. jeweller Tiffany is the latest deal that has been held up because of the pandemic with the French luxury giant saying that it was not possible for it to meet the deal deadline.
However while the above deal was a blow for transatlantic deals, it was partially restored with the $40 billion deal of Nvidia for the British chip designer Arm Holdings.
On the other hand, billions were spent in acquiring US companies by German health firm Siemens Healthineers and French drugmaker Sanofi with the companies purchasing Varian Medical Systems and Principia, respectively.
The $49 billion deal by PetroChina for sale of its oil and gas pipelines and the move by Altice's Franco-Israeli founder Patrick Drahi to take the telecoms firm private in a deal worth $24 billion were among the other big deals in the third quarter.