Proactive Investors - Rising interest rates, geopolitical instability, and recession concerns took its toll on Mergers and Acquisitions (M&A) activity in 2023, in what was the worst year for dealmaking in a decade based on the number of transactions, according to Bloomberg.
That said, there were a number of notable M&A moves made over the past year, including:
Exxon Mobil (NYSE:XOM) buys Pioneer Natural Resources (NYSE:NYSE:PXD)
In October, energy giant Exxon Mobil announced its all-stock acquisition of shale rival Pioneer Natural Resources (NYSE:PXD) in a deal valued at $59.5 billion. Pioneer Natural Resources (NYSE:PXD) shareholders will receive 2.3234 shares of Exxon for every Pioneer share they own.
The acquisition is expected to close in the first half of 2024, with Exxon anticipating its Permian Basin production volume to more than double to 1.3 million barrels per day once the transaction closes.
Chevron (NYSE:CVX) acquires Hess
Also in October, Chevron revealed it would buy Hess Corp (NYSE:HES) in a $53 billion all-stock deal just weeks after Exxon’s announced acquisition.
Hess shareholders will receive 1.0250 shares of Chevron for each Hess share held. Chevron stated that the acquisition of Hess adds a major oil field in Guyana as well as shale properties in the Bakken Formation in North Dakota.
Pfizer (NYSE:PFE) buys Seagen
In March, pharmaceutical giant Pfizer said it would acquire cancer-focused biotech company Seagen Inc in a cash-and-stock agreement valued at about $43 billion. Pfizer will pay $229 million in cash, with the remainder due in company shares.
The deal is expected to contribute more than $10 billion to Pfizer’s risk-adjusted revenues in 2030.
Seagen expects to generate about $2.2 billion in revenue this year, which would be a 12% year-over-year increase.
The takeover closed in December after Pfizer gave its royalties from the US sales of a cancer-treatment drug called Bavencio to the American Association for Cancer Research in order to receive Federal Trade Commission (FTC) approval for the agreement.
Bunge merges with Viterra (TSX:VT)
In June, US grain company Bunge and Glencore-backed Viterra (TSX:VT), a Canadian grain handling business, announced a merger agreement to create an agricultural trading giant that values the combined companies at about $34 billion including debt.
Under the deal, Viterra (TSX:VT) shareholders will receive approximately 65.6 million shares of Bunge stock and about $2 billion in cash.
The combination of Viterra (TSX:VT) and Bunge would generate revenue in line with that of Archer-Daniels-Midland Company (NYSE:ADM), which recorded sales of nearly $102 billion in 2022.
Merging the two companies is also expected to lead to about $250 million in annual gross pre-tax operational synergies within three years.
Cisco Systems (NASDAQ:CSCO) acquires Splunk
In September, Cisco said it would buy cybersecurity software company Splunk for $157 per share in cash, or a total consideration of about $28 billion.
It would be Cisco’s largest acquisition ever, equivalent to about 13% of the company’s market cap.
Cisco expects the deal will close in the third quarter of 2024 and says it should improve gross margins in the first year and non-GAAP earnings in year two.
The company will finance the deal with a combination of cash and debt.
Newmont buys Newcrest Mining
In November, Newmont Corporation (ASX:NEM) closed its $19.2 billion acquisition of Newcrest Mining Limited (ASX:NCM).
Newcrest shareholders received 0.4 Newmont shares in exchange for each share of Newcrest plus a special dividend of $1.10 per share.
Newmont stated that the combined operations will generate annual pre-tax synergies of US$500 million, expected to be achieved within the first 24 months, together with at least US$2 billion in cash improvements through portfolio optimization in the first two years after closing.
All in all, while 2023 wasn’t great for M&A, momentum from some notable late year transactions could spill over into 2024 as interest rates are expected to fall and inflation is anticipated to continue cooling.