Global mergers and acquisitions (M&A) deals surged 28% q-o-q to reach US$602 billion ($807.95 billion) in 2Q2023, according to London-headquartered data and analytics company GlobalData.
Of these, 124 were “mega-deals”, hitting at least US$1 billion. This was up 46% q-o-q from 85 “mega-deals” in the previous quarter.
In terms of deal volume, however, the 8,001 M&A deals recorded in 2Q2023 marks a 3.3% q-o-q fall.
M&A deal activity continued to decline y-o-y and q-o-q in Asia-Pacific (APAC) excluding China. “This indicates that the investors are more cautious towards this region,” according to the Mergers and Acquisitions Deals by Top Themes and Industries in Q2 2023 – Thematic Intelligence report, released July 27.
North America continued to lead M&A deal activity in 2Q2023, according to GlobalData thematic intelligence analyst Priya Toppo. It accounted for 3,185 deals worth US$291 billion, making it the most active region. Europe was the second-largest region by deal value.
The key sectors considered for M&A activity in 2Q2023 were basic material, energy, automotive, consumer, healthcare and technology, media and telecommunications, among others.
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The basic material sector accounted for the highest deal value in 2Q2023, with 1,611 deals worth US$212 billion recorded during the quarter.
Some of the key acquirers in the basic material sectors were Bunge, Glencore, Carrier Global, Chow Tai Fook and KKR. In June, American agribusiness Bunge merged with grain handler and agribusiness Viterra to disrupt the supply chain in Europe, forming a US$34 billion agricultural giant.
ESG main driver
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Globally, environmental, social and governance (ESG) was the most prominent theme driving M&A activity in 2Q2023, with a total of 104 deals worth US$145 billion.
After four consecutive quarters of decline, this growth signals a resurgence in ESG deal-making activities, notes GlobalData.
Toppo explains: “This thematic emphasis reflects a growing awareness among corporations about the impact of their actions on society and the environment, and it highlights investors' increasing focus on companies that prioritise ESG principles.”
As businesses seek to align themselves with societal and environmental goals, GlobalData expects the ESG theme to continue driving M&A strategies in the foreseeable future.
Despite the recovery in global M&A activity in 2Q2023, Toppo says the outlook for 2H2023 remains “relatively sluggish”, with likely further increases in interest rates and the prospects of mild recessions in several key markets. “However, the M&A market will likely rebound as we head into 2024, as acquisitions remain a key element of corporate strategy.”
