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May M&A Roundup: Key Takeaways and Predictions for the Rest of 2024

May 2024 has marked a period of significant resurgence in mergers and acquisitions (M&A) activity, reflecting broader economic recovery and strategic corporate initiatives. The month witnessed a robust volume of high-value transactions, underscoring the dynamic nature of the current M&A landscape. Key sectors such as technology and life sciences led the charge, driven by ongoing digital transformation and innovation imperatives. Additionally, private equity firms remained active, leveraging their capital to seize high-potential opportunities. Overall, the first half of 2024 has shown a marked increase in both the number and value of deals, setting a strong precedent for continued growth and strategic realignments in the months to come.

IMAA’s May 2024 Analysis and Highlights

May 2024 has been a dynamic month for mergers and acquisitions, reflecting significant activity across various sectors. According to the Institute for Mergers, Acquisitions & Alliances (IMAA), the global market experienced a notable surge in high-value deals throughout the month. From May 6 to June 2, there were a total of 1,914 M&A transactions, collectively valued at USD 136.53 billion.

EY-Parthenon's 2024 M&A Forecast

The EY-Parthenon Deal Barometer forecasts a robust increase in M&A activity for 2024, with US corporate M&A deal volume expected to rise by 20% and US private equity (PE) deal volume by 16%. This optimistic outlook follows a challenging 2023, which saw a 17% contraction in corporate deals and a 15% drop in PE activity. The first quarter of 2024 has already shown promising signs, with a 36% increase in global deal value. This resurgence is driven by CEOs’ growing intentions to make acquisitions and divest assets, as highlighted in EY’s latest M&A outlook.

According to EY, the US M&A landscape is set to rebound to near pre-pandemic levels, with deal volumes projected to be only 4% below the 2017–2019 average. The economic environment, featuring resilient consumer spending and a robust labor market, supports this positive trend. However, the trajectory will be influenced by inflation and credit conditions. The global market also reflects this upward trend, with significant deal-making activity in the energy, life sciences, and financial services sectors. Despite some fluctuations, the overall M&A outlook for 2024 remains optimistic, underpinned by strategic acquisitions and divestitures.

Forbes Insights: Unveiling the 2024 M&A Resurgence

Forbes sheds light on the evolving narrative of mergers and acquisitions (M&A) in 2024, marking a departure from Mark Zuckerberg's "year of efficiency" in 2023. Analysts anticipate a notable uptick in M&A activities, propelled by key drivers such as declining inflation rates, favorable interest rate dynamics, a backlog of deferred deals from the previous year, and the continuous imperative for firms to innovate, notably in the domain of artificial intelligence (AI) (Forbes, 2024).

Craig Clay, President of Global Capital Markets at DFIN, supports this forecast, highlighting a robust pipeline of M&A deals across diverse sectors like energy, technology, and healthcare, with AI permeating all segments. Clay points to the heightened activity among financial sponsors, buoyed by significant capital reserves and a surplus of private equity-owned assets awaiting strategic transactions.

This momentum is poised to shape the M&A landscape across various industries. From publishing, where mid-size transactions are anticipated amidst inflationary pressures, to tech, where a rebound in spending is expected, particularly in AI-centric ventures, and to healthcare, witnessing a surge in consolidation driven by financial exigencies post-pandemic, the outlook remains optimistic albeit tempered by cautious valuations and geopolitical uncertainties.

Highlighted Deals in May

Uber Technologies, Inc. and Delivery Hero SE have struck a deal for Uber to acquire Delivery Hero’s foodpanda delivery business in Taiwan for $950 million in cash, marking one of Taiwan's largest international acquisitions outside of the semiconductor industry. The acquisition aims to merge the companies' complementary customer bases, merchant selections, and geographic footprints into a unified platform, enhancing consumer choices, restaurant demand, and delivery partners' earnings opportunities. The agreement, subject to regulatory approval, underscores Taiwan's allure for global companies and investors, positioning Uber to leverage foodpanda's established local operations and drive continued growth in the competitive online food delivery landscape.

T-Mobile has announced its acquisition of UScellular’s wireless operations, encompassing customers, stores, and specified spectrum assets, for approximately $4.4 billion. This move aims to extend T-Mobile’s leading 5G network to millions of UScellular customers, particularly in rural areas, enhancing connectivity and offering access to T-Mobile's value-packed plans and customer support. Both companies' customers will benefit from increased coverage, improved 5G services, and competitive pricing, contributing to enhanced choice and competition in the wireless market. The transaction, subject to regulatory approvals, is expected to close in mid-2025, with T-Mobile anticipating synergies yielding cost savings and reinvestments in consumer offerings and industry competition.

Squarespace, Inc. has announced a definitive agreement to go private with Permira, a global private equity firm, in an all-cash transaction valued at approximately $6.9 billion. Under this deal, Squarespace stockholders will receive $44.00 per share in cash, representing a premium of 29% over the 90-day volume weighted average trading price. Anthony Casalena, Squarespace's CEO, will retain a substantial portion of his equity and continue leading the company. Long-term investors General Atlantic and Accel will also reinvest as part of the agreement. The transaction, subject to regulatory approvals, is expected to close in the fourth quarter of 2024, making Squarespace a privately-held entity no longer listed on public stock exchanges.

ConocoPhillips has announced its acquisition of Marathon Oil Corporation in an all-stock transaction valued at $22.5 billion, with Marathon Oil shareholders receiving 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock. This deal is expected to be immediately accretive to ConocoPhillips' earnings, cash flows, and return of capital per share, with an increase in the ordinary base dividend by 34% to 78 cents per share starting in the fourth quarter of 2024. ConocoPhillips anticipates achieving at least $500 million of run-rate cost and capital savings within the first full year following the transaction's closure, along with share buybacks exceeding $20 billion in the first three years. The transaction, subject to regulatory approval, is expected to close in the fourth quarter of 2024.

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