Mergers & Acquisitions

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>>> A $40 billion Merger Monday shows M&A appetite increasing after brutal 2022


Yahoo Finance

by Alexandra Semenova

December 12, 2022


https://finance.yahoo.com/news/a-40-billion-merger-monday-shows-ma-appetite-increasing-after-brutal-2022-180716456.html


As investors wrap up one of the most challenging years on record, signs of life in the M&A market suggest risk appetite might be increasing as we approach the new year.

U.S. investors were met with at least $40 billion worth of deals ahead of the open Monday, led by Amgen’s acquisition of Horizon Therapeutics, Microsoft’s new stake in the London Stock Exchange Group, Coupa Software’s sale to Thoma Bravo, and a move by Weber to go private.

This deluge of deals in one of the year's final weeks comes during a challenging time for M&A as volatile markets, tighter financial conditions, and other macroeconomic headwinds choke off deal financing and cause dealmakers to postpone transactions.

In Q3, global M&A activity saw its worst quarter since the start of the COVID pandemic in 2020.

Third-quarter deal value stood at $443 B, half of the sum of transactions in the second quarter, and a decline of 58% from the same period last year, according to data from S&P Global Market Intelligence.

Amgen (AMGN) on Monday announced plans to buy biopharmaceutical company Horizon Therapeutics in a transaction totaling $27.8 billion. The purchase is part of a bid by Amgen to expand its portfolio of drugs for rare diseases.

Elsewhere in a rush of activity that kicked off the week, Coupa Software (COUP) entered an agreement to sell itself to private equity giant Thoma Bravo in an all-cash transaction valued around $6.2 billion. Coupa will become a privately-held company after closure of the deal.

Gillmaker Weber (WEBR) also locked in a take-private deal with BDT Capital Partners, which is expected to shell out $3.7 billion for the purchase.

Meanwhile, Microsoft (MSFT) is set to spend $2 billion for a 4% stake in the London Stock Exchange Group. The tech giant said Monday the 10-year strategic partnership is expected to generate $5 billion in revenue for Microsoft as it marks its largest foray into the financial services industry, while LSEG’s revenue stands to grow over time from a migration to Microsoft’s products.

While bankers navigated a sizable drop-off in dealmaking this year following a boom in 2021, the M&A landscape is poised to improve next year.

A washout in public markets — particularly in the technology sector — has sent valuations tumbling, offering vast potential for consolidation in the space. Private equity firms, despite more cautions transactions this year, are also strapped with capital to deploy.

Just days before Monday's purchase of Coupa, Thoma Bravo touted the completion of fundraising for its largest technology buyout fund ever, with $32.4 billion in capital commitments.

"While the higher cost of taking on debt does make acquisitions more challenging, remember that private equity firms have an unprecedented amount of dry powder in their reserves," Louis Lehot, Brandee L. Diamond, and Eric Chow of corporate law firm Foley & Lardner said in a recent blog.

The authors noted firms may use different capital structures to work around higher rates. "The combination of these factors has the potential to bolster activity next year."

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