Tech leads crisis-driven M&A boom with $350 billion deal rush


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(Reuters) – Global M&A volumes are approaching $2 trillion(1.56 trillion pounds) for 2020, with technology making up almost a fifth of the total after mammoth deals such as SoftBank’s $40 billion sale of chipmaker Arm.

Dealmaking has stepped up a gear in September, with Nvidia Corp (O:) on Monday announcing the purchase of Arm from Japan’s SoftBank (T:).

Others are coming thick and fast, with Verizon (N:) buying Mexican mobile phones provider Tracfone (MX:) for $6.25 billion and Gilead Sciences (O:) to acquire biotech firm Immunomedics (O:) for $21 billion.

Such waves are characteristic after downturns, but Refinitiv data shows 2020’s $1.97 trillion total of deals announced so far exceeds $1.26 trillion and $1.6 trillion during the same period in 2009 and 2010 respectively, after the 2008 financial crisis.

“Coming out of recession, there’s usually a bit of catch-up to do and the cost of capital tends to be cheap,” Graham Secker, chief European equity strategist at Morgan Stanley (NYSE:), said.

Graphic: Global M&A deal volumes – https://graphics.reuters.com/HEALTH-CORONAVIRUS/oakveodgavr/chart.png

Tech firms comprised 17.8% of the total at $351.4 billion, the highest level since the dotcom boom of 2000, while financial services were in second place with a deal value of $283.8 billion or 14% of the total, Refinitiv said.

Tech’s dominance, the data showed 5,966 deals targeting tech so far this year out of a total of just over 30,000, reflects the wider impact the coronavirus crisis has had.

The en masse switch by people stuck at home to internet-powered platforms for shopping, working, schooling, medical consultations and communication has sparked speculation that some of these shifts are permanent.

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“Because of the changes that will come on back of this, companies will be thinking of whether they have the right business structures. There is a greater risk of a structural change in consumer behaviour than after previous recessions,” Secker at Morgan Stanley said.

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