Slowest 1st half for $10B-plus M&A deals since start of the pandemic

Compared to the last six months of 2022, the pace of global $10 billion-plus M&A deals picked up during the first half of 2023, but the activity levels were still historically low.

Two $10 billion-plus deals were announced in June, bringing the count of such transactions to 11 for the first half of 2023. The total marks an uptick from the 2022 second half, which recorded nine $10 billion-plus deals. However, 2023 still marks the first half with the fewest number of $10 billion-plus deals since 2020, when dealmaking halted during the height of the COVID-19 pandemic.

Regulatory pressure

Goldman Sachs Group Inc. President and COO John Waldron said part of the reason large M&A activity remains challenged is because dealmakers are worried about the transactions receiving regulatory approval.

"There's less appetite for larger-scale companies to do larger-sized deals and take the antitrust risk," Waldron said, according to a transcript of his June 1 presentation at an investor conference. "So, it's definitely a more muted level of activity there."

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US President Joe Biden's administration has made antitrust reviews a priority, and some large deals have faced difficulties. The FTC is seeking to block Microsoft Corp.'s $68.99 billion acquisition of Activision Blizzard Inc., while Toronto-Dominion Bank and First Horizon Corp. terminated their $13.67 billion deal because of regulatory approval uncertainty.

Evercore Inc. Chairman and CEO John Weinberg said companies are being careful about pursuing deals because regulators are not afraid to challenge transactions, which makes the process more drawn out. "Deals that are in the same industries they are often getting a second request, and that takes longer, so the elongation of the process really plays out," said Weinberg, according to a transcript of a June 13 presentation at an investor conference.

June deals

Regulators are expected to raise questions about June's largest global M&A transaction, US-based Bunge Ltd.'s $17.95 billion deal for Netherlands-based Viterra Ltd. During an investor conference call held to discuss the deal between the agricultural businesses, analysts asked if the companies anticipate regulators requesting divestitures and whether the deal would need approval from regulators in China. Bunge CEO Greg Heckman, who is slated to lead the combined company, said they will have to file for approval in a number of jurisdictions, but he did not make predictions on requests from regulators.

"We look forward to working with the regulators and helping them understand the footprint and why we believe it's important," Heckman said, according to a transcript of the June 13 investor call.

The only other global M&A deal announced in June to top $10 billion was Nasdaq Inc.'s transaction for Adenza Group Inc., a risk management and regulatory software technology provider that is backed by Thoma Bravo LP. The deal would mark Nasdaq's largest acquisition, but the company doubts it will have difficulty getting regulatory approval.

"We do expect it to have customary conditions, including anti-trust approval, and we are confident that we will secure those," Nasdaq President Tal Cohen said, according to a transcript of a June 12 investor call.