M&A in 2024 is expected to grow on an upward trajectory, marking the end of one of the worst M&A markets in a decade. The post-covid effect, high inflation rate, geopolitical uncertainty and high energy costs of 2023 had a great impact on M&A and investment banking.
However, with the last quarter, we began to see positive growth that many analysts believe will continue in 2024, with an increase in transactions globally. Global activity is finally beginning to stabilise with a steadier macroeconomic backdrop and the continued reopening of financing markets.
See the biggest M&A deals of 2023 here.
The 5 biggest M&A deals completed so far in 2024
5.Home Depotacquisition ofSRS Distribution
Deal value:$18.25Bn.
Home Depot will acquire SRS Distribution, a materials provider for professionals such as roofers, landscapers and pool contractors, in a deal valued at approximately $18.25 billion, including debt.
This will be Home Depot´s largest acquisition to date as it steps further into the fast growing profesional building and contracting market. Home Depot is placing a large bet on the suffering housing market. The severe lack of new homes has caused prices to sky-rocket.
4.Diamondback Energyacquisition ofEndeavor Energy
Deal value:$26Bn.
Texan oil and natural gas firm Diamondback Energy has acquired its privately owned competitor Endeavor Energy in a deal valued at approximately $26 billion. The two companies will pump the combined equivalent of 816,000 barrels a day, making it larger than both the Marathon Oil Corp. And Devon Energy Corp.
The deal will result in a newly formed company owned 60.5% by existing Diamondback shareholders and 39.5% Endeavor shareholders. Diamondback shares rose roughly 3% to $156 shortly after the announcement.
3.Synopsysacquisition ofAnsys
Deal value:$35Bn.
Chip design software makerSynopsys, California, US, has acquiredAnsys, Pennsylvania, US, in a $35 billion cash-and-stock deal.
Ansysshareholders will receive $197.00 in cash and 0.3450 shares ofSynopsyscommon stock for eachAnsysshare. It is the biggest acquisition in the technology sector sinceBroadcomtook overVMWarein November 2023.
Synopsysmakes tools to design chips, complementing the software made byAnsys for the evaluation of larger electronic systems. The transaction will create a competitive new player in the business software industry.
2.Capital One Financialacquisition ofDiscover Financial Services
Deal value:$35.3Bn.
The merger of Capital One Financial Corporation and Discover Financial Services will bring together two of America´s largest credit card companies, in an all-stock transaction valued at $35.3 billion.
The newly formed firm will overtake Goldman Sachs, Truist and PNC in becoming the sixth larest bank with nearly $625 billion in domestic assets.The merger is expected to create a global payments powerhouse with the combined company having a larger card loan volumen than both JPMorgan Chase and Citigroup.
The deal will also enable Capital One to leverage its customer base, technology and data ecosystem to drive more sales for merchants and great deals for consumers and small businesses.
1.ConocoPhilipsacquisition ofBurlington Resources
Deal value:$35.6Bn.
ConocoPhilips and Burlington Resources have signed an agreement in which ConocoPhilips will acquire Burlington. This transaction is valued at $35.6 billion. The transaction will provide ConocoPhilips with extensive, high quality natural gas exploration and production assets, primarily in North America.
The Burlington Resources portfolio provides a strong complement to ConocoPhillips’ global portfolio of integrated exploration, production, refining and energy transportation operations. It optimally positions the combined company for future growth.
The deal calls for investors in Burlington Resources to receive $46.50 in cash and 0.7214 shares of ConocoPhilips common stock for each Burlington share they own. Existing ConocoPhilips shareholders would own about 83% of the company after the transaction, and Burlington Resources shareholders about 17%.
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Trends and Predictions for M&A in 2024
M&A in 2024: M&A trend prediction analysis so far
As Quarter 1 draws to an end, we can analyse the biggest deals so far in comparison to the predictions made by M&A professionals at Goldman Sachs, PwC and Forbes at the end of 2023. As predicted, we have almost immediately seen closed deals in the energy and technology sectors. The mergers of Synopsys and Ansys and HPE and Juniper Networks are two of the largest M&A deals of 2024 so far, valued at $35Bn and $14Bn respectively.
Furthermore, we have seen numerous operations in the energy sector. These include: Chesapeake Energy and Southwestern Energy, ConocoPhilips and Burlington Resources, Diamondback Energy and Endeavor Energy, valued at $7.4Bn, $35.6Bn and $26Bn respectively.
The largest M&A deals in 2024 are yet to contain any of the healthcare and hospitality sectors, as previously predicted. We are surprised to see the emergence of large operations in the construction sector, such as the transactions between Home Depot and SRS Distribution and Sekisui House and MDC Holdings. These are valued at $18.25Bn and $4.9Bn respectively. This sector was not predicted to be a hotspot for M&A deals in 2024. However, in Q1 of 2024, the global construction market has witnessed a growth of 256% in deal value compared to Q1 of 2023.
As the year continues, we will be intrigued to analyse the accuracy of the predictions for M&A trends. As well as this, seeing in which sectors continue to lie the largest M&A deals in 2024.
Read the annual predictions below.
M&A in 2024: Goldman Sachs predictions
According to Goldman Sachs, we can expect to see some key themes for strategic M&A in 2024. There will be an increased focus on M&A as a strategic lever, especially from corporate acquirers.
In addition, 2024 will bring the return of sponsor deal-making –including on the sell-side. It also predicted activity growth across sectors such as technology and healthcare and in AI-driven M&A across industries.
Business models will continue to be simplified, and the volume surge in resources, energy transition and infrastructure will continue.
Finally, perhaps due to the easing of the post-covid effect, there will be an increase in cross-border M&A activity in 2024.
M&A in 2024: Forbes predictions
Forbes also forecasts an increase in M&A deals in the technology industry. Digital services and technological innovation are to become two of the most attractive verticals for M&A alongside the growth of AI.
Furthermore, with sustainability remaining a concern for investors and consumers, the focus on ESG could impact M&A. The global decarbonization process may also affect M&A in the energy and renewable energy sectors.
Forbes also shares insight on potential M&A trends in banking and financial services. We can see many Banks, Private Equity firms, wealth and investment management companies and Fintech businesses beginning to invest again. It is predicted that international organisations will look to expand their operations globally.
They will do so by acquiring smaller companies or competitors, allowing larger organisations to generate synergies and increase their profitability.
Moreover, the stronger US dollar and Swiss Franc could allow the US to be more proactive in M&A across Europe and in countries where the local currency Exchange has lost more than 20% in value, such as Turkey and in South America.
M&A in 2024: PWC’s M&A hot spots
Finally, PwC has suggested which sectors could be potential M&A hot spots in 2024.
Their list includes grocery retail, food and beverage, sustainability and recyclability, fashion, spending on pets and pet ownership, consumer health and hospitality and leisure. PwC UK´s Value Creation Transformation Survey also derived that «70% of business leaders expect to use M&A to accelerate adoption of technology and technology-related processes».
Furthermore, it predicts that 2024 will see the Middle East as a growth hub for M&A in transportation and logistics.
Final predictions for M&A in 2024
In conclusion, we can draw many similarities between the predictions of Goldman Sachs, Forbes and PwC.
By analysing each of these predictions, we can particularly expect to see growth in the technology, healthcare and hospitality sectors.
ONEtoONE anticipates an exciting year in M&A, especially with the industry on a growing trajectory.
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