Global M&A plunges to 11-year low as coronavirus fears discourage deals
Theron Mohamed Mar. 31, 2020, 07:18 AM
Coronavirus fears drove global mergers and acquisitions to their lowest level since the financial crisis last week.
Worldwide transactions totaled $12.5 billion, the smallest weekly value since April 2009 per Refinitiv data.
The value of global deals dropped 28% to below $700 billion in the first quarter, marking the worst start to the year since 2016.
Global mergers and acquisitions tumbled to an 11-year low last week as the novel coronavirus discouraged dealmaking. Transactions totaled $12.5 billion, marking the lowest weekly M&A volume since the height of the financial crisis in April 2009 per Refinitiv data. The dearth of deals fueled the worst first quarter for tie-ups since 2016 as the total value of transactions plummeted 28% to below $700 billion.
US takeovers and mergers more than halved to $253 billion in the first quarter according to Refinitiv data. Cross-border deals also dropped 17% to $204 billion. In contrast, European deal volumes more than doubled to $232 billion, reflecting private-equity buyouts, an insurance mega-merger, and Russia's central bank passing a stake in a Russian bank to a state-controlled fund.
The smattering of major deals in the period included Morgan Stanley's $13 billion acquisition of E-Trade and Thermo Fisher's $11.5 billion takeover of Qiagen.
The M&A drought has hurt corporate law firms in recent months, but the recent decline in company valuations could fuel a surge in combinations once the pandemic threat recedes. Technology companies such as Amazon, Microsoft, and Google-parent Alphabet might seek to fill gaps in their offerings or eliminate rivals through acquisitions. Moreover, Warren Buffett's Berkshire Hathaway — on the hunt for an "elephant-sized acquisition" for a few years now — has the cash to buy almost any of America's public companies following the recent sell-off.