Mergers and Acquisitions Slow Down Amid Market Turbulence

Strategic Insights -

The busiest year ever for mergers and acquisitions is grinding to a halt, with some proposed deals unraveling as stocks plummet. According to Securities Data Corp, the pace of mergers has slowed significantly since August, from a record $1.76 trillion in announced deals to $18.6 billion per week. Analysts attribute the slowdown to tumbling stock prices, which are making it difficult for companies to close deals.

Key Takeaways:

  • The record pace of mergers and acquisitions in 2023 has slowed down significantly, with Securities Data Corp reporting a decrease from $1.76 trillion in announced deals to $18.6 billion per week.
  • Tumbling stock prices are to blame for the slowdown, according to analysts, who say that companies are struggling to close deals due to the decreased value of shares.
  • At least two proposed acquisitions have been canceled due to the stock market slump, including Venator Group Inc.'s $760 million purchase of Sports Authority Inc. and Equity Inns Inc. and RFS Hotel Investors Inc.'s proposed combination.
  • The Tele-Communications Inc. and AT&T merger, valued at $48 billion, may be one of the few deals that remains knitted together despite the stock market uncertainty.
  • Analyst Ted Henderson believes that the deal will close due to the commitment of management on both sides and a huge breakup fee payable to TCI.
  • Buyers and sellers are experiencing a "severe disconnect" in the current market, with Mike Levitt, a partner at Hicks, Muse Tate & Furst, stating that mergers won't speed up until sellers get used to lower prices.

Statistics:

  • $1.76 trillion: the record amount of mergers and acquisitions announced through August 2023
  • $18.6 billion: the current pace of mergers per week, down from the records set in 2023
  • 61%: the decline in Venator Group Inc.'s shares since the announcement of the $760 million purchase of Sports Authority Inc.
  • 30%: the decline in Equity Inns stock, which cut the value of the proposed purchase from $990 million to $729 million
  • 13%: the gap between the price of TCI shares and the value shareholders would get by swapping each for a 0.7757 share of AT&T

Sources:

  • Securities Data Corp
  • Wall Street Journal
  • Merger Insight
  • Janco Partners
  • Hicks, Muse Tate & Furst
  • News Corp