Despite rising uncertainty, global M&A and IPO markets remain active in 2019 so far.
Though we've been experiencing a variety of economic and political unknowns, some industries and regions have been as active as ever this year. Here are some activity highlights from the first half of 2019:
- Worldpay agreed to a $43bn acquisition by Fidelity National Information Services in March, demonstrating that payment service companies are seeing increasing interest globally from buyers due to technological and regulatory trends, such as Open Banking. Another driver for consolidation is the need to invest in mobile payment services, cyber-security solutions and big data analysis. These are likely to drive further consolidation in this space.
- Canada’s Goldcorp agreed to a $10bn takeover by US based Newmont Mining to create the world’s largest gold producer, topping Barrick Gold only months after the Canadian miner grabbed the top spot with it’s purchase of Jersey-based Randgold. In a mature industry that increasingly rewards economies of scale and low-cost production, the latest tie-up may not only make economic sense, it pretty much guarantees a further global arms race in the quest for size.
- The universe of ride-sharing apps got its first public listing at the start of April with the IPO of Lyft, which raised $1 billion in the US, only to see it quickly fall below its IPO price, where it remains. Public interest in the sector remains high after rival Uber launched its own IPO in May, raising over $8 billion but ending up short of the $100 billion valuation that some expected.
- The Asia-Pacific region is coming off a banner year for M&A in 2018, but developments in the real estate sector have already demonstrated that there’s still more on the way. The first quarter saw Singapore’s CapitaLand agree to buy a controlling stake in developer Ascendas-Singbridge, in a deal which would value the target company at the Singapore dollar equivalent of $8.13 billion, thereby affirming the continued vibrancy of activity in the region.
- The Gulf States of the Middle East have also been ramping up corporate activity, with the financial sector appearing particularly ripe for cross-border consolidation. The most recent case-in-point is Kuwait Finance House, which in January announced the acquisition of Bahrain’s Ahli United Bank for $7.7bn. The consolidated profit of KFH from the combined bank is expected to rise 90% as a result of the merger, which will create the region’s sixth largest bank.
- General Electric has been through a lot since CEO Jeffrey Immelt stepped down a year-and-a-half ago. By the time the full scale of its financial losses came to light, shareholder patience with his replacement as CEO had already run out. As a second CEO settles in, the reality that the company needs to shore up its cash reserves and rebuild investor confidence has led to a number of divestments from businesses deemed to be no longer core. One of the largest of these is GE’s life science biopharma business, which the conglomerate sold to Danaher Corp. for $21.4bn in March.
- Levi Strauss, the iconic inventor of denim blue jeans, took its time coming to market – 166 years to be precise – but most investors today would say it was well worth the wait. The company floated a relatively small stake in the $6.6bn family-owned business, raising a modest $623m along the way. But the shares have since risen some 30% price they opened for trading in late March. Not a bad return for such a small float.