Going into 2020, merger and acquisition (M&A) predictions looked grim. At the time, the US and China, two of the largest economies, were continuing to spar over trade. The US elections scheduled for the fall added even more uncertainty. Then, a global pandemic threw the markets into utter chaos. Despite this, some company mergers in 2020 still happened.
These companies managed to show everyone that a global crisis doesn’t have to put the economy on hold. Here are some of the most noteworthy recent mergers and acquisitions of 2020.
1. S&P Global Inc. and IHS Markit Ltd.
Announced in December, the acquisition of IHS Markit by S&P Global is one of the most unexpected all-stock company mergers in 2020. The US$44 billion deal is likely to close in the second half of 2021, but there’s good reason for S&P’s interest in IHS.
Whilst S&P derives almost half of its revenue from credit rating services and around 30% from financial and market information, IHS Markit has focused on financial data services, including quantitative and algorithmic trading as well as robo-advisories. Overall, the deal would give S&P a broader array of products and significant scale in the future.
2. AON and Willis Tower Watson
Looking back at 2020, many risk assessors and market analysts may refer to 2020 as the year that defined the term “black swan event.” The year, however, will have a notably different meaning for AON and Willis Tower Watson, as one of the major mergers and acquisitions in modern history.
In fact, the US$30 billion transaction is the largest ever acquisition in the insurance industry. The combined company will maintain its headquarters in London, United Kingdom, with shares divided 63% to 37% between AON and Willis Tower Watson, respectively, making the former the largest insurance broker in the world.
But this merger represents much more than a simple acquisition. At a time when the insurance industry faces new threats and a range of short- and long-term uncertainties, the all-stock deal shows that there is hope.
3. Seven & i and Speedway
Convenience stores and gas stations seemingly don’t have too much in common, but the Japanese Seven and i begs to differ. In one of the biggest business mergers in 2020, 7-Eleven’s owner has agreed to acquire Marathon Petroleum’s Speedway gas stations for US$21 billion.
Like AON and Willis Tower Watson’s merger, Seven & i and Speedway clearly shows the pandemic has not killed off global deal making. The merger allows Seven & i to tap into the US economic growth at a time when Japan’s economy is moving in the opposite direction. Adding to a portfolio fattened in 2018 with the purchase of Canada’s Sunoco, Seven & i Holdings now control over 14,000 convenience stores and gas stations in North America.
4. Analog Devices and Maxim Integrated
Another of the recent business mergers that made the news in 2020 is Analog Devices’ takeover of Maxim Integrated, an American design and manufacturing company that sells analog and mixed-signal integrated circuits. Why did it make the news? Basically because neither of the two companies involved in the US$21 billion transaction boasts unrivaled popularity. In fact, both of these companies rule the world from the shadows, considering that everyone comes in frequent contact with their products.
As the world’s largest manufacturer of semiconductors, Analog Devices produces electronics and chips that power well-known products in the automotive, industrial, healthcare, and consumer segments. Its all-share acquisition of Maxim Integrated strengthens its leading position in the industry and further reflects the ongoing pandemic trend of big companies hoarding cash.
5. Teladoc and Livongo
Some industries may have found it difficult to avoid the disaster wrought by the coronavirus pandemic, but the opposite is true for the telehealth industry. Virtual health care not only managed to avoid disaster, it actually thrived during the health crisis. Thus, it doesn’t come as a surprise that Teladoc, the global leader in whole person virtual care, seized the opportunity to complete one of the most prolific business mergers in 2020, acquiring Livongo.
Both companies were founded with the same mission, but the merger managed to boost Teladoc’s post-transaction value to US$18.5 billion. Business growth aside, the merger also promises to improve telemedicine for patients and empower better health outcomes, with Livongo’s platform for managing chronic conditions adding to the services previously offered by Teladoc.
6. Morgan Stanley and E*Trade
Announced back in February 2020 and completed in October, the Morgan Stanley merger with E*Trade is another all-stock deal that made 2020’s headlines. One of the year’s most noticeable transactions, the merger is one of the first that started the online brokerage industry’s trend of companies bulking up quickly and improving their platforms to face the economic uncertainty brought on by one of the hardest financial years in history.
The leading global financial services firm Morgan Stanley closed the US$13 billion deal, increasing the scope and effect of its Wealth Management franchise, which now controls over US$3.3 trillion in assets.
7. Just Eat and GrubHub
One of the most unexpected business mergers managed to revolutionize America’s food delivery industry when Just Eat announced that it had acquired GrubHub in June 2020. The announcement shocked many experts and analysts, since all odds suggested that GrubHub would be acquired by Uber Eats.
The last minute swoop by Just Eat means the company has now expanded to 13 different countries and has become the largest food delivery company in the world. With the US$7.3 billion deal, European takeaway giant secured itself over 300,000 eateries spread across 4,000 US cities, entering a new market and demonstrating to the world what a major competitive swipe means.
If there is something to learn from these recent mergers and acquisitions it is that a global health crisis doesn’t necessarily mean carnage for industries. Many companies have seized the opportunity to hoard cash and thrive. With high expectations for other robust merger and acquisition activities to take place in the coming year, dominant industries will no doubt play a dominant role in those transactions.