Sep 5, 2023 - Economy

After drought, experts see return of merger gusher

Data: LSEG; Chart: Axios Visuals
Data: LSEG; Chart: Axios Visuals

Merger Mondays used to be CNBC's version of Must-See TV, with corporate mergers kicking off every workweek. After a long hiatus, dealmakers think they're ready for a comeback.

Driving the news: Fueling these hopes are a surprising number of big-ticket summer deals, improved business confidence and easier bank lending.

By the numbers: The trend line ticked up this summer. U.S. M&A was down 26.7% to $981 billion through Aug. 31, according to LSEG.

  • But on June 30, M&A value was down 40%.

What's happening: M&A markets were dead quiet in the first half of the year, but deal activity came to life in the normally quiet summer months, across multiple sectors. Significant deals announced since July 1 include:

  • Pipeline operator Energy Transfer agreeing to acquire rival Crestwood for $7.1 billion.
  • Private equity firm GTCR agreeing to buy a 55% stake in fintech Worldpay, which included a $1.25 billion check for Worldpay to pursue more deals.
  • And last month, fashion conglomerate Tapestry struck a deal to buy competitor Capri Holdings last month for $8.5 billion.

State of play: These stirrings have bankers getting back to work.

  • Brian Haufrect, co-head of Goldman Sachs' North American M&A, says his team has been able to "relaunch processes and dialogue that had previously been put on hold."
  • The IPO market rebound is also helping to kickstart dual track discussions from sellers, says Dan Grabos, co-head of Barclays' North American M&A team.
  • Meanwhile, Haufrect says he expects to see spin-offs increase as corporations continue to assess their portfolios.

Yes, but: A stricter antitrust regime and new merger guidelines are casting a shadow over the deals landscape.

  • Both Haufrect and Grabos say potential antitrust concerns loom when vetting prospective buyers.
  • "People are spending more time thinking about regulatory risks and thinking about it up front," Haufrect says.

Claire Rychlewski and Michael Flaherty are editors for Axios Pro Deals.

Axios reporters dove deep into the M&A market outlook in Tuesday's Health Tech, Fintech, Media and Retail Deals newsletters. Start your free trial today.

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