Global mergers and acquisitions fell by 23% in the first half

Khaled Badr El Din _ Global mergers and acquisitions fell by almost 23% during the first six months of this year due to the tendency of large economies to raise interest rates to tame inflation, which has jumped to record levels in many countries of the world, the collapse of financial markets and the ongoing war between Russia and Ukraine.

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The US financial market research agency, Dialogic, stated that the value of mergers and acquisitions worldwide fell to about $ 2.3 trillion during the first half of this year, compared to the same half of 2021, and the number of transactions decreased by 20%. to 15,764 transactions during the same period.

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The value of mergers and acquisitions worldwide amounted to more than $ 1.2 trillion during the second quarter of this year, an increase of 5.5% compared to the first quarter of the same year, which amounted to $ 1.1 trillion. , while the number of transactions decreased by more than 17.5% to drop to 7,122 transactions during the second quarter to record The number is the lowest in 18 years as fears of a global economic recession increase.

Mergers and acquisitions fell by nearly a third in North America

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As for the global regions, the value of transactions in North America fell by about a third during the first half of this year, but it still accounted for about 47% of the value of global mergers and acquisitions, while transactions in Europe ‘ experienced a revival. during the second quarter, with an increase in their value by more than 24%, but it declined during the first quarter of The rest of the world due to Russia’s invasion of Ukraine since February 24.

But M & A transactions in North America continued to decline during the second quarter due to the implementation of several interest rate hikes by the Federal Reserve to curb inflation and reduce fears of economic recession, leaving companies in the last three months of these transactions stayed away. which decreased in number by about 36% to decrease to 2098 transactions and 32% in terms of value, which decreased to $ 500.6 billion compared to the first quarter of this year, while the value of these transactions during the first half decreased by 33% to $ 1,048. trillion compared to the same half of last year.

Sharp fluctuations in the volume and value of transactions in Asia due to Corona mutants in China

The situation seemed volatile in the Asian region as these transactions fell by about 36% in North Asia over the past two quarters due to the closure of economic activities implemented by China to spread the infection of the Corona virus mutants that in many spread, to limit. major industrial cities such as Shanghai and Beijing, which led to disruption of chains Stocks and the shortage of production of many companies and the decline in their sales.

Conversely, the value of M&A transactions in Australia increased by about two and a half times thanks to the sale of Ramsey Healthcare by about $ 21 billion last April, while the value of these properties in India increased by about 400% from the first to the second. quarter due to large transactions between Indian banks While the share of the Middle East reaches 3%, Latin America 2%, and the same percentage for Japan and Southeast Asia.

In terms of sectors worldwide, the value of mergers and acquisitions between technology companies recorded 28%, among the manufacturing companies, to record the highest percentage, followed by real estate companies with about 10%, then financial services companies with 9%, transport and transportation, both as healthcare companies with more than 8% each, while utility companies achieved Energy 5%, telecommunications companies more than 3.5%, and about 3.2% oil and natural gas companies.

US “technology” transactions take the largest share among global companies

America won the lion’s share of mergers and acquisitions between technology companies, which accounted for 70% of the value of transactions between these companies worldwide, led by Microsoft, which bought Activity Blizzard for about $ 75 billion last January, and Broadcom’s acquisition of VMware for more than $ 71.6 billion last May.

The world’s third largest transaction was the sale of Housing Development Finance, India’s largest mortgage company, to HDFC Bank, India’s largest bank, for more than $ 60.8 billion, following Blackstone’s acquisition of Atlantia last April to to operate. airports and roads worth $ 46.4 billion, indicating that Companies are interested in investing in infrastructure and real estate.

The value of mergers and acquisitions worldwide last year was $ 5.8 trillion, up 64% from the year of the epidemic, thanks to declining interest, easy access to cheap financing, booming global stock exchanges and rising stock prices to the highest record. level in its history, which exceeded the previous record value of more than 4.55 trillion in 2007, according to Dealogic Financial Markets Agency.

The United States was the first in the world in mergers and acquisitions, accounting for nearly half of global volumes, and the value of these transactions has nearly doubled to $ 2.5 trillion over the past year, led by technology, finance , industry and energy companies.

The question analysts are currently trying to answer is whether the current half will see a further decline or a rise in global M&A transactions!

Analysts believe that M&A activity in Europe will increase in the next few months as food producer Unilever wants to sell its ice cream unit, French IT giant Athos is trying to split itself into two companies, while India is expected to see more mergers and acquisitions. in its banking sector.

Bargain hunters seize opportunities in the coming months with the collapse of the US and European stock exchanges

As for the United States, whose major indices have fallen sharply in the past half with the decline in the share prices of many companies, bargain hunters will have many opportunities to buy companies at cheaper prices than their real value, especially in the technology sector, after a private investment group bought Zendesk Software for about $ 10 billion last June, a few months after it refused to sell more than $ 17 billion, confirming the recovery of transactions between technology companies during the current half.

Real estate companies recorded the second most active merger and acquisition sector in the last three months for the third consecutive quarter, increasing by about 11% to more than $ 53 billion, led by Prology’s acquisition of Duke Realty REIT with ‘ worth $ 27.4 billion, and then Blackstone’s acquisition of American Campus Communities for $ 13 billion, and Healthcare Realty Trust’s acquisition of Healthcare Trust of America for nearly $ 11 billion.

Healthcare companies were third, with transactions worth nearly $ 50 billion during the last quarter, but a 66% drop in their value during the second quarter of last year, but a 15% increase from its peer during the first quarter of this year With a value of $ 11.5 billion, it was the largest healthcare transaction of the second quarter of this year.

Low listings in EMEA region

Mergers and acquisitions in Europe, the Middle East and Africa declined during the first half of this year after the record high recorded last year due to inflationary pressures, growing fears of an economic recession in the region and geopolitical tensions that companies have created . reduce their spending.

The total value of mergers and acquisitions in this region during the first six months of this year amounted to about $ 617 billion out of 5,493 transactions, down 12.7% from what it saw during the first half of last year, reaching about $ 705 billion but also a decline of about 28 percent from the second half of last year.The same last year, which recorded about $ 858 billion.

It is noteworthy that the total value of mergers and acquisitions in this region rose this year to the highest annual level recorded by Dealogic for global financial market research, thanks to the large transactions seen in the second quarter of this year, as the total value of transactions not less than $ 2 billion amounted to $ 194.4 billion, compared to $ 124.5 billion during the first quarter of this year.

Analysts at international research centers such as Solomon Consulting, the US company, have stressed that it is unlikely to reach a large number of giant deals during the rest of the months of this year, especially as it is difficult for companies to conclude mergers and acquisitions. . transactions when companies trade their share prices at their lowest level this year, especially With rising interest rates.

Expect transactions to continue to decline in the future due to the high cost of financing

The expectation that these transactions will decline is also due to the fact that M&A financing has become more expensive for companies after global central banks raised interest rates to curb inflation that rose to record levels that even large cash companies make a transaction to make it find. difficult to agree on price in markets where they This year is characterized by sharp volatility and depreciation, but transaction makers expect cross-border transactions between the US and Europe to recover by the end of the year if the gap between US valuations and European companies broadened thanks to the strong dollar.

Although the volume of transactions decreased by 11% during the second quarter of this year to 2,256 transactions in the Asia-Pacific region, there is a recovery in the mergers and acquisitions sector in this region, which increased by 18.4% increased to more than $ 286.7 billion compared to the same quarter last year, despite business closures. China’s economic volume is the second largest in the world after the United States, and the volume and value of transactions with 10.2% and 22.6% during the first half of this year, which dropped to 4,803 transactions and $ 528.7 billion, respectively, compared to the same half of 2021.

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