Aggressive Global M&A Deal Recovery...A Post-Corona Choice for 'Survival'

$9 Billion Paysafe Reverse Merger
Credit Suisse Strongly Hints at UBS Acquisition
3Q Global M&A Deals Surge Over 5 Times Compared to 2Q

[Asia Economy Reporter Hyunwoo Lee] The global mergers and acquisitions (M&A) market, which had been significantly contracted until the second quarter of this year due to the impact of the novel coronavirus disease (COVID-19), is making a strong rebound. Analysts suggest that amid policy easing in various countries and massive liquidity flowing into the market, companies are expanding their scale with the post-COVID era in mind. It is forecasted that next year will see a series of M&A deals much larger in scale than this year.

According to Bloomberg News on the 6th (local time), Poly Tresmin, a special purpose acquisition company (SPAC) founded by American billionaire Bill Foley, announced it will acquire Paysafe, a prepaid online card company jointly owned by the U.S. hedge fund firm Blackstone and CVC Capital, for $9 billion. This is the largest merger deal for a backdoor listing on the New York Stock Exchange this year.

The day before, news broke of a merger between Credit Suisse and UBS. Urs Rohner, Chairman of Credit Suisse, indicated strongly in an interview with local media that "a merger with UBS is not unreasonable and will bring benefits," suggesting the possibility of an acquisition. Rumors of M&A between Credit Suisse and UBS began circulating in the market since September, and it was reported that discussions are underway with financial authorities such as the Swiss Financial Market Supervisory Authority (FINMA).

The global M&A market, which had been sluggish until the second quarter of this year, has shown a clear recovery entering the third quarter. According to JP Morgan's global M&A outlook report, the transaction volume of the global M&A market reached $896.3 billion by the third quarter of this year, surging more than fivefold compared to the previous quarter and surpassing the $675.6 billion recorded in the same period last year.

The semiconductor sector stands out in M&A activity. Starting with ADI in July, followed by Nvidia, SK Hynix, GlobalWafers, and others, a series of large-scale M&A plans centered on the semiconductor industry have driven up the global M&A volume. The semiconductor sector is expected to see M&A transactions exceeding $120 billion this year, marking the largest M&A deal volume since 2016.

Following the third quarter, large-scale M&A deals continue to be announced in the fourth quarter, and the transaction volume is expected to grow even larger next year. Global market analysis firm S&P Global, in its recently released '2021 Credit Market Outlook' report, analyzed that "the reason M&A is occurring across various sectors such as technology, telecommunications, and healthcare is that countries have maintained low interest rate policies amid the COVID-19 situation, resulting in abundant liquidity in the market and making it easier to borrow for merger costs." It added, "It appears that companies also feel the necessity of mergers to survive in the post-COVID era." S&P Global further stated, "There is a belief that synergy through mergers can provide a competitive edge over other companies and establish a scale capable of withstanding long-term stagnation," forecasting that M&A among mid-sized companies in various sectors will be actively pursued.

Global accounting firm EY also evaluated in its M&A market report that "although COVID-19 temporarily contracted the M&A market, it conversely opened active negotiation venues through video conferencing without corporate due diligence." It analyzed that "the weakening of corporate value has lowered acquisition prices, thereby opening up an active M&A market next year."

According to the UK Independent, Carrie Kochman, Co-Head of Global M&A at Citigroup, said at a press conference, "The U.S. presidential election concluded as the market expected with the victory of President-elect Joe Biden, and the control of the Senate and House of Representatives by the Republicans and Democrats respectively has removed uncertainty." She added, "With expectations that the new administration will continue large-scale economic stimulus, M&A activities are expected to become even more active next year."

This content was produced with the assistance of AI translation services.