Feb 3, 2020 - Economy & Business

Global mergers are off to a slow start in 2020

Illustration: Sarah Grillo/Axios

There was only $164 billion of announced global mergers and acquisitions in January, the slowest start to a year since 2013, per Refinitiv.

Why it matters: This comes off a 2019 in which volume was down slightly from 2018, but still the fourth-largest dollar volume in history and sixth-straight year above $3 trillion.

  • At first blush, this doesn't make a whole lot of sense. CEO confidence is through the roof, companies are flush with stock thanks to buybacks, and private equity is sitting on Everest-like piles of dry powder.

Three theories for the early 2020 lethargy:

1. Regulatory pressures. All sorts of deals are being blocked, or at least put under very tough scrutiny, by a variety of governments in a variety of industries. It's not just about U.S. regulators and big tech (which, truth be told, has largely skated so far).

  • The FTC this morning announced it will sue to block Edgewell, the maker of Schick razors, from buying Harry's for $1.3 billion in cash and stock.
  • Harry's says it is "disappointed" and is "evaluating the best path forward."

2. Coronavirus. This won't permanently stop mergers that make strategic and financial sense, but it could slow announcements until both parties can get a better handle on what the spreading illnesses mean for their businesses (including for their supply chains).

3. Political uncertainty: It's mostly a CEO excuse for not pulling the trigger, but it's still being discussed. Particularly in a presidential election year in which two of the leading Democratic candidates are pledging to fundamentally restructure a healthcare industry that played host to many of last year's largest deals (including BMS buying Celgene for $74 billion).

The bottom line: January may prove to have been an anomaly, and 2020 M&A volume could end up more closely resembling 2019 than 2013. But so far it's been all systems stop.

Go deeper: Guitar-maker Fender gets new majority owner

Go deeper

Edgewell and Harry's case against the FTC merger block

Illustration: Aïda Amer/Axios

Razor-maker Harry's last May agreed to be acquired for $1.37 billion by Schick parent Edgewell and, for the next six months, there were few concerns at either company.

But, but, but: Shortly before Christmas, everything changed. "[Regulators] started asking different sorts of questions, and you could see where they were heading," says a source familiar with the situation.

The vindication of Elon Musk

Photo Illustration: Sarah Grillo/Axios. Photo: Jörg Carstensen/picture alliance via Getty Images

Tesla stock has been in Ludicrous Mode for the past few days. Given its bonkers gyrations, it's now easy to see why CEO Elon Musk might feel that he was right all along in wanting to take the company private back in 2018.

Gentlemen (and ladies) prefer bonds

Illustration: Aïda Amer/Axios. Photo: Sunset Boulevard/Getty Contributor

After pouring record inflows into bond funds last year, investors are doing so at an even faster pace in 2020 — pushing 10 times more money into bonds than stocks.

By the numbers: More than $65 billion has flowed into bond funds this year, according to Lipper Refinitiv data provided to Axios, outpacing inflows through 2019's record pace when bond funds took in $316 billion.