Global Merger and Acquisition Deal Volume About Half of 2020

Bryce Elder reported earlier this month at The Financial Times Online that, “It has been a rotten year for bid rumours and a rotten year for bids.

Global merger and acquisition deal volume nearly halved year-on-year in the first six months of 2020 to $1.1tn, according to Dealogic data. That is the lowest haul in at least 15 years. Reasons for the slump are obvious enough. Covid has erased revenues and played havoc with profit forecasts, while market volatility has outfoxed even the most predatory of buyers.

“Lockdowns have also had a chilling effect on the free flow of speculation. With bars closed and international travel rationed, the peripatetic types who trade stock market ideas found themselves with nowhere to go. And though chat continued over the encrypted messaging services, there was suddenly a lot less to talk about.”

The FT article noted that, “Life always finds a way, however, and the second half has already thrown up its first unlikely bid rumour: Apache, the Houston-based oil and gas company, was said to have been working with advisers on putting together a bid for UK peer Premier Oil. Both companies declined to comment.”

Mr. Elder added that, “Though stocks have rebounded on central bank support, the outlook for corporate earnings remains murky. But while credit keeps getting cheaper for companies that do not need it, there are still some easy pickings for buyers among those companies that do. What little M&A there is, will probably be confined to the bargain bin.”

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