Takeover frenzy continued in the second quarter despite SPACs falling out of fashion


Deals worth more than US$1,500bn were announced in the second quarter of 2021, as the mergers & acquisitions (M&A) market continues to go bonkers.

Statistics from the data information provider Refinitiv indicates that global M&A activity broke records for the second quarter in a row, with the value of deals unveiled in the second quarter topping the first-quarter’s level by 13%.

This was despite the number of deals being down 10% quarter-on-quarter.

In the US, US$699bn worth of deals were announced, up 440% on the same quarter of 2020, when just about everyone was unsure how many companies would survive the year, never mind be in a position to take over a rival.

Enthusiasm for deals in the second quarter was possibly stoked by a desire to get the transactions done before President Biden finds some way to tax the dealmakers’ commissions at a higher rate.

The craze for so-called “blank cheque” cash shells – special purpose acquisitions companies (SPACS) – died out somewhat in the USA in the second quarter but private equity (PE) firms stepped into the breach, with PE buyouts up 152% year-on-year in the first half of the year.

Refinitiv said PE buyouts represented 18% of global M&A volumes.

In the Asia-Pacific region, the value of deals doubled to US$327bn while Europe trailed behind with a 50% increase in the value of deals at US$293bn.

In the UK, private equity firms have been on the prowl although they have not always been getting things their own way; Morrisons sent Clayton, Dubilier & Rice away with its tail between its legs last month while the same PE firm was forced by recalcitrant shareholders to up its offer for UDG Healthcare PLC (LON:UDG), despite UDG’s board recommending recommended acceptance of a previous low-ball offer.

READ UDG Healthcare agrees to higher bid from Morrisons stalker

Similarly, the board of property company St Modwen Properties PLC (LON:SMP) was happy to take the money and run when Blackstone came calling but some hard-nosed shareholders held out, forcing Blackstone to increase its offer by 3.3%.

READ Private Equity 1 – FTSE 1: St Modwen succumbs but Senior’s suitor slinks off

The engineering company Senior PLC (LON:SNR) was made of even sterner stuff, sending Lone Star Global back to Texas with a cheery toodle-pip and a “thanks but no thanks” smile.


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