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M&A Races Past $400 Billion Mark After Capital One-Discover Deal

M&A Races Past $400 Billion Mark After Capital One-Discover Deal
The Discover Financial Services application login screen on a smartphone arranged in Dobbs Ferry, New York, U.S., on Sunday, Jan. 16, 2022. Discover Financial Services is scheduled to release earnings figures on January 19. Photographer: Tiffany Hagler-Geard/Bloomberg

The US is leading a revival in global mergers and acquisitions that many dealmakers didn’t think would emerge until later in the year. 

The latest big transactions in the country are led by Capital One Financial Corp.’s $35 billion offer to buy Discover Financial Services. Elsewhere, Truist Financial Corp. is selling its insurance brokerage business in a deal valuing the asset at $15.5 billion and Walmart Inc. has agreed to acquire smart-TV maker Vizio Holding Corp. for about $2.3 billion.

These take the value of deals announced globally this year to roughly $425 billion, according to data compiled by Bloomberg — a figure that’s up 55% on this point in 2023.

This is good news for dealmakers working hard to put two consecutive years of falling values behind them. The end of the interest rate-hiking cycle is creating more certainty around valuations, while rising equity markets are providing buyers with extra financial firepower for acquisitions; more than half of the 10 biggest deals announced this year are being financed at least in part by stock.

Global M&A Values Are Bouncing Back in Early 2024 |

Ongoing geopolitical tensions and lingering fears of recession mean bankers and lawyers have remained cautious about calling an M&A comeback too soon, with a number of senior executives on Wall Street pointing to the second half of 2024 as the most likely starting point for a meaningful recovery.

Instead, markets have already seen multiple deals valued at more than $10 billion across a range of sectors, with the US leading the way. Deal values in the country are up more than 80% year-on-year, the Bloomberg-compiled data show, compared with an increase of about 40% in Europe and a drop of roughly 14% in Asia Pacific.

Since the start of January, chip-design company Synopsys Inc. has agreed to buy software developer Ansys Inc. for about $34 billion in cash and stock. In the natural resources sector, Diamondback Energy Inc. has struck a $26 billion deal to acquire fellow Permian Basin driller Endeavor Energy Resources LP. And in financial services, investment giant BlackRock Inc. announced a $12.5 billion purchase of Global Infrastructure Partners.

To be sure, dealmakers still have lots of ground to make up if they are to return to the heady days of 2021, with current transaction values down about a quarter on the same point of that record-breaking year.

Centerview Partners LLC is serving as financial adviser to Capital One on its purchase of Discover. PJT Partners Inc. and Morgan Stanley are working with Discover.

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