Although uncertainly clouded in the post-pandemic era, businesses make their preparations for the new reality with an unceasing wave of global mergers and acquisition bids, running into $1.3 trillion.
According to Refinitiv, Global mergers and acquisitions worth $1.3 trillion were announced during the first three months of the year. That was a 94% increase compared to previous year, perhaps, the strongest opening period since records commenced in 1980.
This is the third consecutive quarter that dealmaking has reached in above $1 trillion.
Tech dominates the deals
The tech sector has been particularly dominating the dealmaking scene. During the first quarter, the Sector registered $274 billion in deals, well over triple 2020 levels.
In addition, there were mergers with special-purpose acquisition companies, or the buzzy “blank check” firms that gathered money from investors and go for a takeover target. In terms of Refinitiv’s data, SPACs played a dominant role in the quarter’s powerhouse performance, with 110 combinations worth $232 billion announced.
The boom is welcomed by investment banks as the employees have had to pull long hours to organise and execute the deals. According to Refinitiv estimates, global investment banking fees went up to $39 billion during the first quarter, the strongest period on records dating back to 2000.
Top investment banks profited from the frenzy is JPMorgan Chase (JPM) followed by Goldman Sachs (GS) and Morgan Stanley (MS). All three banks report substantial earnings this week. It is obvious that the second quarter is going to be incredibly strong as well.
Multimillion deals
Some of the mega deals include Microsoft (MSFT)’ deal that will buy artificial intelligence developer Nuance in a deal worth $16 billion, excluding debt. It’s Microsoft’s second-largest ever acquisition and the first being the $26 billion purchase of LinkedIn in 2016.
With this move, Microsoft is expected to solidify its increasing influence in the health care industry. Nuance’s technology assists medical professionals with patient intake, documentation and telehealth — big growing areas in the sector, particularly, during a global pandemic.
SPAC mergers will continue to play a dominant role. Meanwhile, Grab said it will merge with a US-based SPAC assisted by Altimeter Capital in a deal that would shot up Southeast Asia’s premier ride-hailing and food delivery service to nearly $40 billion.
According to Dealogic, the Grab merger is the biggest blank-check deal ever. “The US listing is important because it gives us access to the widest global base of liquidity,” Grab co-founder Tan Hooi Ling said.
Bitcoin up ahead of Coinbase’s public debut
Bitcoin has reached a new record height above $62,700 as investors gear up for this week’s eagerly-awaited stock market listing of cryptocurrency exchange Coinbase.
Bitcoin has topped $60,000 in early March, showing the signs that it would gain more mainstream acceptance as a store of value. The crypto currency now has a market value of nearly $1.2 trillion.
Coinbase’s debut is valued at nearly $68 billion, according to recent private stock trades. The company will allow investors to gain exposure to the business without actually having to own cryptocurrencies.
However, some of the investors consider surge in the interest in Bitcoin as a bubble although its popularity grow as an asset class.
Despite the global pandemic, the global trend seems to be to make multimillion worth deals in form of merges and acquisitions in vital sectors such as healthcare and tech which are deemed to yield massive returns, particularly, in times of a global pandemic and this is like a gold rush.
