More than ever, M&A deals are getting nixed by regulators.
The year 2016 is set to break a record for global M&A—just not the kind dealmakers were hoping for. According to data provided by Reuters, the total value of withdrawn deals has not been this high since the start of the financial crisis in 2007.
Roughly $682 billion worth of M&A has been cut short, costing investment banks more than $2 billion in lost revenues globally. The Office Depot—Staples merger, the Baker Hughes and Halliburton deal and the Pfizer and Allergan merger are among the biggest transactions to fall apart so far this year. Pfizer and Allergan called off their merger by mutual agreement, and a US federal judge blocked the merger of Office Depot and Staples. Opposition from US and European Union antitrust regulators caused the Baker Hughes—Halliburton deal to collapse.
All eyes are now on German drug and crop chemical maker Bayer’s $66 billion bid for US seeds company Monsanto.
In spite of a high number of abandoned transactions, deal value in the first half of 2016, says consulting firm Dealogic, fell only 18%, compared with the first half of 2015, when M&A volumes passed the $5 trillion mark, the highest level on record. In light of Brexit and the US presidential election, observers noted, dealmakers have been cautious about their investment strategies.