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As year-end looms, still a chance for giant deals

John Shipman | November 10, 2017

The third quarter yielded a paucity of big buyouts, though a spate of potential large transactions – including what would be the largest one ever in the technology sector – could help 2017 M&A finish on a high note.

Deal news got a jolt in late October with word that CVS Health was pursuing a combination with insurer Aetna in a transaction valued at $66 billion. Reuters reported the two are aiming to cinch an agreement for more than $70 billion as early as December, citing sources familiar with the matter.

Following close behind CVS-Aetna were reports that Emerson Electric has made two offers since August to buy Rockwell Automation, with the most recent bid near $29 billion. Rockwell has so far not been receptive, and Emerson said there were currently no ongoing discussions.

Then came the blockbuster, with reports that Broadcom is seeking to buy rival semiconductor maker Qualcomm for more than $100 billion. That would rank as the biggest deal to ever hit the tech group though, like Rockwell Automation’s chilly reaction to Emerson’s overture, a Qualcomm statement acknowledging the bid exuded little enthusiasm.     

Quickly on Broadcom-Qualcomm’s heels, CNBC said Disney has been in talks with 21st Century Fox to purchase most of Fox’s businesses, with the exception of its broadcast network, Fox News and Business channel, and its sports programming assets. The speculation did not include a deal price, but Fox has a market capitalization of more than $50 billion.

If any of those four transactions came to fruition, it would rank among this year’s top two in size for the US. So far, United Technologies’ $31 billion buyout of Rockwell Collins is 2017’s largest. That’s followed by Becton Dickinson’s $23.7 billion acquisition of CR Bard, and a $17.7 billion takeover of Mead Johnson Nutrition by Reckitt Benckiser Group.

Of course, the sizes of these latest deals would draw a close look by regulators, which has been an impediment during the past year. Aetna already scrubbed a $34 billion merger with Humana in February over antitrust concerns, and recent reports indicate the Justice Department is more closely scrutinizing AT&T’s proposed $85 billion acquisition of Time Warner, casting uncertainty over the timing on when it might close. That suggests a transformative Disney-Fox media deal might not sail through with a quick OK from regulators.

A Broadcom-Qualcomm combo would also likely get a thorough vetting, though not just from officials in the US and Europe. The Financial Times said such a deal “is expected to come under particular regulatory scrutiny in China as authorities there look to protect domestic players in a key industrial sector.” The FT added that a deal as significant as this “would almost certainly be required to go the full 180-day approval process” by China’s Ministry of Commerce.

Merrill Corporation helps firms around the globe securely protect, share and collaborate on their most sensitive and confidential content. Its industry-leading virtual data room, Merrill DataSite, ensures the right information is shared with the right people, leading to successful mergers and acquisitions.

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