Year in Review: Blockbuster Deals Amid 2023’s M&A Bust

Global M&A plunged to a 10 year low, falling further after 2022’s steep drop-off. According to the International Monetary Fund, global economic growth has slowed to 3% in 2023, down from 3.5% growth in 2022, as tightening monetary policy constrains growth in the face of inflationary fears. Companies have responded with caution – making the lavish spending during the M&A boom of 2021 seem like a distant memory. With cash suddenly much more expensive, many companies and investors have shown decreased appetite for acquisitions. 

Source: IFLR

Despite economic headwinds, 2023 was not without blockbuster deals. One bright spot in M&A was the U.S., which is the world’s biggest investment banking market. The U.S. market enjoyed an uptick in activity in Q3 and helped buoy global M&A with it’s relatively robust activity. Matterhorn’s M&A database tracks publicly-announced U.S. deals over $25 million in value, harnessing both AI and attorneys to digest the granular deal points of each transaction to allow for comparisons across industries, specific deal terms, and both legal and financial advisors. This analysis focuses on deal announced during the calendar year, thus far.

2023 enjoyed multiple mega energy deals, with ONEOK, Inc.’s whooping $60 billion takeover of Magellan Midstream Partners, L.P. leading the pack. Announced in May, the deal closed promptly in September. Chevron’s $7.45 billion acquisition of PDC Energy and Exxon’s acquisitions of Pioneer Natural Resources ($6.45 billion) and Denbury Inc. ($4.9 billion), did not even crack the top 10 deals for the year, however. That’s because healthcare was king. 

Flush with cash from vaccine sales, Pfizer announced its $43 billion takeover of Seagen, Inc. in March. U.S. Federal Trade Commission expressed concerns about the deal and held up closing until just last week, when Pfizer agreed to donate royalties from its U.S. Bavencio® sales the American Association for Cancer Research. The Biden Administration’s more aggressive antitrust policies has threatened M&A activity during 2023, just as it had in years prior.  

Additional healthcare deals also figured prominently this year, including Merck & Co., Inc.’s  $10.8 billion acquisition of Prometheus Biosciences, Inc., CVS’s $10.8 billion acquisition of Oak Street Health, Inc., and AbbVie Inc.’s $10.1 billion takeover of ImmunoGen, Inc. Rounding out the list of 2023’s blockbuster deals is Brookfield Infrastructure Partners L.P.’s $13.3 billion acquisition of Triton International Limited, which is the largest owner and lessor of intermodal containers in the world. 

Source: Goldman Sachs

While some analysts predicted that 2023’s M&A activity would surpass 2022, this column was skeptical – and apparently, rightfully so. Analysts are predicting a return to market stability in 2024 as inflation falls and rates normalize, which should help M&A activity top the lows of this year. While 2024 does not look like it will return to the boom of 2021, one thing is all but certain: we will see more blockbuster deals.