The following research was contributed to by Christine Short, VP of Research at Wall Street Horizon.
After global M&A activity reached a decade low in 2023, dealmakers were banking on a rebound in 2024. So far that hasn’t quite come to fruition when considering the total number of deal announcements which fell nearly 8% YoY in Q1.
Yet, thanks to a barrage of megadeals (those larger than $10B), Q1 did see an increase in volume to $549B, a 28% uptick from 2023.1
As we enter the second half of the year, however, there’s been renewed hope for an M&A comeback, starting with Waste Management’s (WM) $7.2B acquisition of Stericycle (SRCL) earlier this month. There’s also the drama around Paramount’s (PARA) acquisition by Skydance, a deal that’s not quite firmed up as other potential buyers are reportedly looking to make a play for the languishing studio.
Total M&A Announcements for 2024
With just two weeks left in the second quarter, M&A announcements are still looking pretty light on a quarterly basis at only 78. If no more announcements are made in June, this would be the worst performing quarter since Q2 2020, when the world was in the midst of COVID-19 pandemic lockdowns.
The largest deal announced in Q2 was ConocoPhillip’s (COP) acquisition of Marathon Oil (MRO) in an all stock deal valued at $22.5 billion. There was also Johnson & Johnson’s (JNJ) acquisition of Shockwave Medical (SWAV) to the tune of $13.1 billion and Blackstone’s (BX) deal to take Apartment Income REIT (AIRC) private for $10B.
The Bottom Line
While global M&A activity had a record year in 2021 in the wake of the COVID-19 pandemic, the sheer number of deals being announced has been tepid for the last two years as high interest rates and inflation make the cost of doing business more expensive.
High interest rates have increased borrowing costs and made it more difficult for companies to finance acquisitions, meaning management teams are being more selective with how they allocate capital. However, we’re starting to see inflation cool, with May’s Consumer Price Index coming in lower than expected last Wednesday.2
And as far as interest rates are concerned, both markets and the FOMC expect rates to decline over the next year. The current expectation is for a September rate cut of 25 basis points according to the CME Group FedWatch tool, followed by an additional 25 basis point rate cut at the December meeting.3 If both of these continue to trend lower it should open up the probability of more deal-making towards the end of 2024 and into 2025.
Sources:
1 Global M&A By the Numbers: Q1 2024, Joseph Toomey, May 23, 2024, https://www.spglobal.com
2 CONSUMER PRICE INDEX – MAY 2024, Bureau of Labor Statistics, June 12, 2024, https://www.bls.gov
3 CME FedWatch Tool, June 14, 2024, https://www.cmegroup.com
Wall Street Horizon provides institutional traders and investors with the most accurate and comprehensive forward-looking event data. Covering 9,000 companies worldwide, we offer more than 40 corporate event types via a range of delivery options from machine-readable files to API solutions to streaming feeds. By keeping clients apprised of critical market-moving events and event revisions, our data empowers financial professionals to take advantage of or avoid the ensuing volatility.
Christine Short, VP of Research at Wall Street Horizon, is focused on publishing research on Wall Street Horizon event data covering 9,000 global equities in the marketplace. Over the past 15 years in the financial data industry, her research has been widely featured in financial news outlets including regular appearances on networks such as CNBC and Fox to talk corporate earnings and the economy.
Twitter: @ChristineLShort
The author may hold positions in mentioned securities. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
