Global mergers and acquisitions (M&A) activity broke records in this year’s second quarter as companies continued to borrow cheaply and spend their cash reserves.
Deals worth $1.5 trillion U.S. were announced in the three months ended June 30, more than any second quarter on record and up 13% from the record first quarter of this year, according to data from Refinitiv.
Second quarter volumes rose 440% in the U.S. with $699 billion U.S. worth of M&A deals compared to the same quarter last year when the world’s biggest economy came to a halt because of the pandemic.
U.S. President Joe Biden’s proposed tax hikes drove some companies to rush to complete deals in the second quarter before proceeds get taxed at a higher rate.
Deal making in Asia Pacific jumped 104% to $327 billion U.S. while Europe was up 50% to $293 billion U.S. between April and June.
The biggest deals of the quarter were all done domestically, as companies hedged their bets and refrained from hunting outside their home countries, wary of rising protectionism and geopolitical tensions between China and the United States.
The $40 billion U.S. merger of Southeast Asia’s biggest ride-hailing and food-delivery company, Grab Holdings, with U.S. blank-check firm Altimeter (AGC.O) was one of the few sizeable cross-border deals to top the quarterly charts.
While the global deal count suffered a 10% contraction compared to the first quarter, the M&A frenzy has translated into a spike in transaction values, with deals greater than $5 billion U.S. up 127% in the second quarter.
In the U.S., telecoms firm AT&T merged its content unit WarnerMedia with rival Discovery to create a media giant with an enterprise value of about $150 billion U.S., while in Europe two German real estate giants – Vonovia and Deutsche – combined in a $34.5 billion U.S. merger.
Dealmakers said a possible rise in interest rates in the second half of this year could make financing conditions less favourable for investment funds but the pressure to deploy capital would remain for the next few quarters.