- Wednesday, October 16, 2024
Exxon Mobil Corp.'s recent acquisition of Pioneer Natural Resources Co. has catapulted it to the top of the list for the largest merger of 2023, amounting to an impressive $64.5 billion, including debt. In what has been a relatively lackluster year for deal-making, this bold move stands out as a significant milestone.
The news had an immediate impact on the stock market. Exxon Mobil's stock experienced a 3.2% dip during premarket trading, while Pioneer Natural Resources saw a modest 1.7% increase.
Also read: Pioneer Natural, other Permian stocks rally on news an Exxon deal may be next
This acquisition effectively surpassed other notable mergers announced this year. Pfizer Inc.'s $44.6 billion acquisition of Seagen Inc., revealed on March 13, was previously recognized as the largest deal of 2023. However, data from KPMG clarifies that Exxon Mobil's merger has now taken the lead.
In the third spot sits Cisco Systems Inc.'s acquisition of Splunk Inc. for an impressive $31.86 billion, announced back on September 21.
Following closely behind are the acquisitions of Newcrest Mining Ltd. by Newmont Corp., valued at $21.6 billion, and WestRock Co. by Smurfit Kappa Group Plc., which amounts to $21.3 billion.
Remarkably, despite the subdued year for deal-making, U.S. mergers and acquisitions (M&A) activity still saw a substantial total of $1.12 trillion in deals during the first three quarters of 2023. While this falls short of the corresponding period in 2022, which reached $1.65 trillion, it is crucial to acknowledge the resilience and continued significance of M&A transactions in the market.
Looking back at the entire year of 2022, the M&A market generated a remarkable $2.19 trillion in deals.
M&A Market Trends: Q3 2023 Analysis
The global head of M&A at KPMG, Phil Isom, recently provided insights into the state of the mergers and acquisitions (M&A) market during the third quarter of 2023. Isom highlighted the challenges posed by the threat of higher interest rates and the traditional slowdown experienced during the summer months.
Despite these obstacles, Isom noted a promising development with an increase in deal announcements in September. He expressed optimism that the end of rate rises could be on the horizon, resulting in positive momentum for the M&A market. Isom emphasized that the gap between seller and buyer valuation expectations is gradually narrowing, leading to successful deals being struck for high-quality assets. However, private equity firms have remained cautious due to the higher rates, allowing corporate buyers to take the lead in this period.
It's worth noting that M&A advisory work plays a significant role in generating revenue for major banks.
For instance, in the recent Exxon Mobil deal, Citibank acted as the lead financial adviser, while Centerview Partners provided advisory services to Exxon. Additionally, Goldman Sachs Group Inc., Morgan Stanley, Petrie Partners, and Bank of America Securities offered their guidance to Pioneer.
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