U.S. Dealmaking Heads for Best Month of 2020 After Pandemic Rut

After months of lagging 2019 volumes, U.S. dealmaking has crept back and put July on course to be the busiest month of the year so far.

The tally is rising as large deals that have been in the works for months finally reach the finish line. U.S. transactions valued at $105 billion have been announced in July, making it the only month of 2020 so far in which deal volume has increased year-on-year, according to data compiled by Bloomberg.

Even sleepy sectors like oil and gas have made an appearance as bankers start to put the coronavirus crisis behind them.

Warren Buffett’s Berkshire Hathaway Inc. pulled off its first deal since the pandemic began, spending $4 billion to buy pipeline and storage assets from power company Dominion Energy Inc. On Monday, Chevron Corp. agreed to buy Noble Energy Inc. for about $5 billion in stock as the oil giant looks to beef up in the Permian Basin.

“At the beginning of this in March, companies were all about raising capital but now the tone of the conversations is moving back to M&A,” said Marco Caggiano, co-head of North America M&A at JPMorgan Chase & Co., which advised Noble Energy on the transaction.

M&A activity has increased each month since May and that trend is expected to continue, Caggiano said.

“Whether all those conversations will turn into deals remains to be seen and year-to-date volumes still remain muted,” he said. “But our pipeline is strong and we are encouraged by the signs of a rebound.”

U.S. Dealmaking Heads for Best Month of 2020 After Pandemic Rut

Even as the coronavirus spreads in many U.S. states, corporate boards are making M&A moves, frequently through all stock-deals and with targets familiar to them.

Uber Technologies Inc. had held on-and-off talks with Postmates Inc. before announcing July 6 it would buy the food delivery service for $2.65 billion. Analog Devices Inc. said a week later it’s acquiring rival Maxim Integrated Products Inc. for $20.9 billion in stock, after long admiring the company from afar. These deals helped the technology, media and telecommunications sector make up the biggest chunk of July dealmaking volumes -- almost $45 billion and counting.

That total was boosted on Tuesday when EBay Inc. announced the sale of its classified advertising unit to Norwegian online marketplace Adevinta ASA for $9.2 billion.

U.S. Dealmaking Heads for Best Month of 2020 After Pandemic Rut

More deals could be on the way as U.S. companies push through large divestitures to shore up their cash positions, often returning to processes that fell apart in early days of the pandemic.

Marathon Petroleum Corp. has revived plans for a potential sale of its U.S. gas station operator Speedway that could fetch more than $15 billion, Bloomberg News has reported, while Walmart Inc. said Monday it has restarted talks on a potential sale of its U.K. grocery unit Asda.

“We’re starting to see the market opening up for new deals, but it’s still easier to get a deal done with a target where there was already some familiarity before the pandemic hit,” said David Bain, co-head of mergers and acquisitions for the Americas at Nomura Holdings Inc.

©2020 Bloomberg L.P.

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