COVID-19 takes toll on global M&A as $1b deals disappear

People walk on the street in Macau wearing face masks to protect them to be infected with coronavirus. Source: Macau Photo Agency/Unsplash

For the first time since September 2004, no merger and acquisition deal worth more than $1 billion was announced worldwide last week, according to data provider Refinitiv, as the new coronavirus stifles global M&A.

The dearth of mega deals comes as countries across the world have shut down large swathes of their economies as they battle the COVID-19 pandemic that has infected over 2.33 million people and claimed 165,000 lives.

Worldwide merger activity so far this year is down 33% from a year ago and at $762.6 billion is the lowest year-to-date amount for dealmaking since 2013, the data showed. The number of deals also fell 20% year-on-year.

“We anticipate that there may be fewer signed deals announced this quarter as parties take longer to work through the impact of the COVID-19 situation,” said Robert Wright of law firm Baker McKenzie’s Asia-Pacific M&A group.

“However, where parties have completed underlying due diligence processes and where there remain strong fundamentals, we do expect to see a number of these deals to come back online.”

Companies have been walking away from announced transactions amid changed deal conditions and high levels of uncertainty. Canada’s Alimentation Couche-Tard Inc on Monday said it would shelve its $5.6 billion buyout of petrol station operator Caltex Australia Ltd, as fuel demand plunges and as companies look inward to get through the crisis.

Regulators worldwide have also toughened rules for foreign investments to protect national assets. India last week ruled that investments by an entity from a country that shares a land border with it will require government approval in a move to curb “opportunistic takeovers/acquisitions”.

Australia and Germany have also stepped up scrutiny over overseas investors.

With big deals largely put on hold as buyers wait to gauge the true impact of the pandemic, dealmakers are seeking other, related work on companies needing rescues, restructurings and potentially nationalizations as governments and central banks try to shore up their economies.

Still, efforts to recover from the virus-driven downturn are set to support M&A activity.

Some 56% of more than 2,900 executives surveyed globally by consultancy EY were planning an acquisition in the next 12 months, as they need to look beyond the current crisis to secure long-term growth, the firm said in a March report.

“If there is any prolonged downturn due to the current crisis, executives may be bolder in their ambitions and look to acquire those assets that will help them accelerate into an upturn faster,” the report said.

Reuters 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.