Merger Monday Is Back. Is It Here To Stay?
The month of April ended with a bang. An upwards of $72B worth of deals have been announced in the telecom, energy, retail and real estate sectors over the weekend and today. To put that number into perspective, Reuters estimates global M&A activity is up 56 percent, and US M&A is up 29 percent, from the same period last year.
Below are five of the major deals announced, ordered by deal value:
- Telecom: The deal that has everyone talking is T-Mobile's agreement to take over Sprint for approximately $26.5B. The combined company, named T-Mobile, would overtake Verizon to create America's second-largest wireless carrier (AT&T would still be number one). Regulators blocked this proposal once before in 2014, but the companies, maintaining that the merger would create more competition, are more optimistic about the deal's fruition under the pro-business Trump era. However, the market has reacted poorly to the news; shares for T-Mobile and Sprint today fell roughly 4 percent and 14 percent, respectively, indicating skepticism that the horizontal deal would be able to obtain the approval of antitrust regulators. As a whole, the telecom sector suffered a 2.7 percent decline today. To see more of martinwolf's take on the deal, click here.
- Oil: Marathon Petroleum announced today its agreement to buy rival Andeavor for $23.3B, which would make the combined company the largest US refiner by capacity, overtaking Valero Energy. The cash-and-stock deal values Andeavor at $152 per share, a premium of about 24 percent to Andeavor stock's Friday closing price. Marathon's board also approved an additional $5B in stock buybacks, and shares of Andeavor jumped 13 percent after the deal announcement, suggesting further confidence in the decision on behalf of both the company and investors. The deal is expected to close in the second half of this year.
- Supermarket: Sainsbury announced yesterday its agreement to merge with Walmart's Asda for a cash-and-stock deal valued at $10.1B. The deal would create the UK's largest supermarket group, giving the combined company 31.4 percent of the market, and overtake current leader Tesco. Shares in Sainsbury climbed more than 16 percent.
- Real Estate: Prologis announced yesterday its agreement to buy rival logistics owner DCT Industrial Trust for $8.4B in stock, giving more exposure to key markets like NY, SoCal and Florida. The deal will put more distance between Prologis and lesser rivals in the global warehouse and distribution center market. The offer represents a premium of about 16 percent over DCT's closing price on Friday.
- Travel: Marriott Vacations Worldwide, the leading pure-play public timeshare company, announced today its agreement to buy Interval Leisure Group for $4.7B in a stock-and-cash deal. The deal would create the largest largest luxury brand for timeshare vacation resorts, and represents a premium of 13 percent based on the two companies' closing share prices on Friday. The combined firm will have revenue of $2.9B and own more than 100 vacation properties around the globe.
Overall, the rise in deals indicate the confidence public companies have in the value of their companies and in the US stock market. According to FactSet, 79.3 percent of the S&P 500 companies that have reported earnings through today morning have reported stronger-than-forecast earnings. The IPO market has also been on the upswing, and if it is any indicator, we should expect to see more Merger Mondays in the future.
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Headquartered in Scottsdale, Arizona with offices in the San Francisco Bay Area and New York, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 155 transactions in over twenty countries and sold seven divisions of Fortune 500 companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com. To learn more about martinwolf, contact Bless Bai at [email protected]. © martinwolf 2018 |
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