For M&A, It's Go Big or Go Home
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The cards dealt to dealmakers in the first half of the year have not been in their favor. It only takes reading the barrage of headlines about inflation, market conditions, increasing regulatory scrutiny and a war in Europe to understand just a few of the conditions making investors and business leaders worry about the ability to close deals – or even initiate them. New data from Dealogic highlights a mixed picture. While Q2 deal valuations in the US were up 5.5% from Q1, the dramatic drop in the number of deals by 17.5% in Q2, led to the lowest dealmaking quarter in 18 years.
Despite this downturn, the M&A market certainly hasn’t come to a screeching halt. Several megadeals announced this year, such as Elon Musk’s $44bn proposed acquisition of Twitter, Broadcom’s $61bn proposed acquisition of VMware (which just came out the other side of its go-shop period), and yesterday’s news of Merck’s reportedly looking to buy Seagen, are sporting high valuations and hinting at a potentially rosier picture to come. IPOs, on the other hand, face an uncertain second half of the year.
It was quite a busy week on the other side of the pond. Sainsbury, a supermarket chain and the largest private sector employer in the UK, had its Living Wage shareholder proposal rejected, while the UK’s Competition and Markets Authority formally announced its investigation into the Microsoft-Activision deal for potential regulatory concerns.
Have a great weekend,
GPP Team
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Financial Times: Megadeals Buoy Global M&A Despite Pullback From Record 2021
Despite headwinds in the global M&A market such as the war, market volatility and inflation, the regulatory environment and rising interest rates, megadeals are continuing without pause, carrying high valuations. Overall deal volume for the year is still down sharply, according to Refinitiv. Read More
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Bloomberg: VMware-Broadcom Deal Moves Ahead as Go-Shop Period Ends
With the end of the 40 day go-shop period, Broadcom is able to move forward with its anticipated $61bn merger with VMware, while still facing several obstacles ahead with antitrust review. Read More
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Axios Pro Rata: IPOs
Dan Primack reports a quiet week for IPOs, speaking to the trend of a slow IPO market this quarter, with increasing volatility shying away investors. Renaissance Capital’s IPO Index indicates a 43% decrease year-to-date. Read More
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Reuters: Sainsbury’s Shareholders Vote Against Committing to Pay Real Living Wage
The Living Wage accreditation resolution received only 16.7% at Sainsbury’s annual general meeting yesterday, and as a result was rejected by shareholders in a win for one of Britain’s largest private-sector companies. Read More
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The Information: U.K. Announces Antitrust Probe into Microsoft’s Activision Purchase
The Competition and Markets Authority—the UK’s antitrust organization—has officially launched an investigation into Microsoft’s $69 billion acquisition of Activision Blizzard. Since Brexit, UK watchdogs have been increasing scrutiny of US tech companies, a trend which does not bode well for the deal. Read More
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The Wall Street Journal: Audit and Consulting Firms at Odds Over Who Should Verify Climate Data
With climate disclosure requirements becoming a reality for American businesses, the auditing and accounting firms are at odds over who is qualified to verify the data. Read More
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The Washington Post: The Supreme Court’s EPA Ruling Was the Beginning of Something Bigger
Overshadowed by the overturning of Roe v. Wade last week was the Supreme Court’s environmental decision regarding climate regulation. In what some claim to be the first in a wave of anti-regulation decisions, the court’s ruling could spell big changes for environmental reporting and SEC regulations of different kinds. Read More
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The Washington Post: Elon Musk’s Deal to Buy Twitter is in Peril
Reporters Faiz Siddiqui and Gerrit De Vynck report that all signs lead to trouble for the Musk/Twitter deal, with funding discussions slowing down and remaining concerns from Musk’s team about spam accounts on the platform. Read More
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ADDITIONAL READINGS & LISTENINGS
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Masters of Scale: Michael Dell: Break it ‘til You Make It
Host Reid Hoffman, LinkedIn co-founder, interviews Michael Dell on his story of building the household name, including his deep competitive curiosity and his approach to getting the business off the ground. Listen Here
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The Deal: Amazon Takes Stake in Just Eat Takeaway’s Grubhub
Amazon has acquired a 2% stake in GrubHub. The deal—which can ultimately climb to a 13% ownership of the company—comes amidst concerns by activist investors who believe the food delivery service is more trouble than it’s worth. Read More
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Harvard Law School Forum on Corporate Governance: The Critical Role of the Board Chair in Driving Board Performance
Strong leadership proves to be an empirically observable feedback loop. Directors who rate their boards as having high levels of efficacy are overwhelmingly led by Chairmen and Chairwomen who themselves exhibit practices aligned with best leadership practices. Read More
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Bloomberg Law: Analysis: Tech Investor Activists Target Supply Chain in Q2
Q2 activism campaign data reveals an uptick in activists targeting tech companies over their handling of ongoing supply chain disruption. Read More
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FROM OUR DESK TO YOURS
If you’re looking for a good summer road trip podcast, listen to Dan McCrum of the Financial Times and his award-winning investigative journalism into German tech giant, Wirecard. Dan gives a glimpse into how whistleblowers, shoe-leather reporting, hacking, suspected surveillance and legal threats all helped lead to the company’s eventual downfall.
On our watchlist, Loot, the new Maya Rudolph Apple TV hit, is a nice spoof of a divorcee who figures out what to do with $80 billion from her cheating tech gazillionaire ex-husband.
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PEOPLE MOVES
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Susan Athey will join the Justice Department as an antitrust economist. She has been a professor at Stanford Business School and was the chief economist at Microsoft earlier in her career. Read More
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Boomerang. Mick Basa has returned to Mergermarket as a financial journalist focused on Southeast Asia, after leaving to be a consultant last November. Read More
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Megan Rose Dickey will begin a role as a Reporter for the San Francisco Newsletter at Axios, coming from Backstage Capital. Read More
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Martin Peers will be a technology columnist at Bloomberg Opinion, after serving as the New York bureau chief of The Information. Read More
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Josh Sisco has joined Politico as an antitrust reporter in San Francisco after covering the same beat for The Information Read More
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