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Healthcare M&A value surges in Q3 as large transactions resurrect dealmaking


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Healthcare M&A value surges in Q3 as large transactions resurrect dealmaking

The aggregate value for healthcare M&A increased sharply in the third quarter, both compared to the first half of the year and the year-ago period, as three deals crossed the $15 billion mark.

Aggregate transaction value was $92.71 billion in the third quarter, compared to $12.26 billion in the second quarter and $26.19 billion in the year-ago quarter. As of Sept. 30, the aggregate transaction value for healthcare deals in all of 2020 was $123.32 billion, based on 1,474 deals tracked by S&P Global Market Intelligence.

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Mergermarket's Global and Regional M&A Report for the third quarter said Blackstone's acquisition of Takeda Consumer Healthcare is the largest private equity buyout deal during the third quarter and is part of a wave of noncore asset divestitures by Japanese blue-chip companies.

The resurgence in deal-making activity in the third quarter was driven by the largest and most complex deals — a 256% increase on a quarterly basis in transactions valued at $5 billion or more, according to Mergermarket. Most of the healthcare sector's $1 billion-plus deals were announced in the second half of the year, and only one was announced before May.

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Of the 20 largest healthcare deals in the quarter, nine targeted biotechnology companies and three involved pharmaceutical firms.

Gilead Sciences Inc. said it would acquire Morris Plains, N.J.-based biotechnology company Immunomedics Inc. for $88 per share in a cash deal valued at about $19.92 billion. The transaction, which was announced in September, has the highest deal value for the quarter and will add Trodelvy — a cancer therapy approved for the treatment of certain patients with triple-negative breast cancer — to Gilead's pipeline.

Healthcare technology company Teladoc Health Inc. and Mountain View, Calif.-based Livongo Health Inc., which provides remote patient monitoring services, agreed to merge in a cash-and-stock deal valued at about $18.26 billion. The companies expect to close the deal in the fourth quarter and the combined company will be named Teladoc Health with headquarters in Purchase, N.Y.

The biggest deal for the healthcare equipment companies was Siemens Healthineers AG planned acquisition of Palo Alto, Calif.-based Varian Medical Systems Inc. for $16.39 billion. Germany's Siemens Healthineers, a unit of Siemens AG, will pay $177.50 per share for Varian, which manufactures medical devices and software for treating cancer.

The deal is approved by Varian shareholders and is expected to close in the first half of 2021.

The largest pharmaceutical company deal was announced by private equity firm The Blackstone Group Inc.'s unit Oscar A-Co KK. The Tokyo-based company, which engages in investment and management of securities, is acquiring Takeda Pharmaceutical Co. Ltd.'s Takeda Consumer Healthcare Co. Ltd. for ¥242 billion.

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Mergermarket stated that the uptick in large deals could not cover up for the lack of overall activity and lower numbers in the first half caused by uncertainty regarding COVID-19. The overall value of the disclosed deals year to date is down 27.9% to $1.86 trillion from $2.58 trillion during the same period in 2019.

The report noted the U.S. had a strong turnaround during the quarter as total deal values and number of transactions were up 425.4% and 22.2% on a quarterly basis, respectively. Europe and Asia-Pacific regions saw the volume of deals decline while seeing significant increases in overall disclosed transaction values.

Mergermarket said the low number of deals could be a sign that plenty of uncertainty remains in the global economy.

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As of Oct. 20, US$1 was equivalent to ¥105.57.