Finance Docket: Big Deals Are Big These Days

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Last month, in spite of the uptick in dealmaking, we expressed a bit of bearishness about the prospects for major mergers given the Biden administration’s growing opposition to them. Well, about that (and, indeed, more on the White House’s opposition later): Takeovers worth at least $10 billion more than doubled in the first quarter, including last week’s announcement that Home Depot would pay $18.25 billion for materials provider SRS Distribution, and Apollo Global Management’s $11 billion offer—which is far from certain to be accepted—for Paramount Global’s studio division.

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“History shows we are in the early innings of a cyclical M&A rally,” Goldman Sachs’ Andre Kelleners told The Wall Street Journal. And the early days of the second quarter shows no sign that it’s slowing, and indeed quite the opposite: private-equity firm Silver Lake is taking talent agency Endeavor Group Holdings private at a $13 billion valuation. There are plenty of slightly smaller deals getting done, as well. Total dealmaking in the first quarter was $725 billion, a 24% jump from last year (including Apollo’s $8 billion deal for Credit Suisse’s securitized products group). Oilfield services company SLB kept the energy M&A space hot with a $7.75 billion bid for competitor ChampionX. Across the pond, Swisscom is paying $8.7 billion for Vodafone’s Italian business and actor Ryan Reynolds’ payment processor Nuvei will go private in a $6.3 billion deal with p.e. shop Advent International.

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“Mega-deals are thriving,” Citi’s Tyler Dickson says, and law firms are staffing up for them: lateral partner hiring by the biggest firms, especially among corporate lawyers, was up about 20% in the first two months of 2024. And there should be plenty for them to do: clothing maker Gildan Activewear, boasting a roughly $6 billion market cap, is on the block; the Carlyle Group has cast its net for a stake in Thyssenkrupp’s marine unit and Unilever plans to spin off its Ben & Jerry’s ice-cream business. Medical-device maker Masimo is reportedly looking for a joint-venture partner with whom to split off its consumer side (an activist hedge fund—about which more later—is launching a proxy battle anyway), and WeWork co-founder Adam Neumann has offered $500 million for his former company. And, of course, there’s the prospect of a mega-mega deal, one that at its owner’s current valuation would be bigger than all of the first quarter’s mega-deals combined: that for TikTok, which depending on what the Senate and China do faces a possible ban in the U.S. if it’s not sold, possibly to former Treasury Secretary Steve Mnuchin, who doesn’t seem to be on any shortlists for his old job should his former boss get his old job back in January.

Of course, the surge in big deals is uneven, and one place where they aren’t thriving is in TikTok’s current home region of Asia-Pacific, where M&A fell 28% in the first quarter. The malaise is matched on China’s stock markets, where traders are having to make due with bubble-tea debuts as two more major initial public offerings have been pulled in recent weeks.

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