09/17/2020

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Dealmaking During a Pandemic



Mergers and Acquisitions Begin to Bounce Back

When the COVID-19 pandemic set in across the US in March, mergers and acquisitions all but ground to a halt. During the first quarter of the year, M&A activity sank by 50% compared to 2019, and most of the transactions that did happen in the quarter occurred in January and February before COVID-19 spread globally. Now, however, mergers and acquisitions are beginning to come back as companies find creative, safe ways to do business.

Microsoft’s (MSFT) expected acquisition of TikTok has made headlines this week, but several other companies have also announced recent transactions. For starters, Marathon Petroleum (MPC) announced that it will sell its Speedway gas stations to Seven & I Holdings (SVNDY), the Tokyo-based parent company of 7-Eleven. The $21 billion all-cash sale is the largest energy-related deal so far this year. Elsewhere, Siemens Healthineers (SMMNY) recently agreed to buy Varian Medical Systems for about $16 billion.

Even Dwayne “The Rock” Johnson got in on the action this week. The former WWE star and a group of investors acquired the XFL for roughly $15 million after the league declared Chapter 11 bankruptcy in April. Needless to say, there’s been a spat of dealmaking recently.

Ligongo and Teladoc’s Socially-Distanced Deal

Livongo Health (LVGO) and Teladoc Health (TDOC), two of the biggest public companies in the rapidly growing digital health sector, closed an $18.5 billion merger agreement this week.

The companies’ leadership agreed to discuss the merger via late-night video calls and then at one socially distanced meeting. The meeting was supposed to take place in Chicago, but because Jason Gorevic, CEO of Teladoc was coming from New York and would have to quarantine upon his return home from Illinois, the CEOs agreed to meet at an airport hotel in Detroit. They wore masks, sat at a distance, and did not shake hands during the meeting. They even sanitized white board markers each time someone touched them.

Despite the restrictions, the executives reached an agreement, creating a $37 billion virtual health company.

Goldman Creates “Tinder for Investment Banking Clients”

Banks like Goldman Sachs (GS), which help firms with mergers and acquisitions, are also responding to the “new normal,” and are finding ways to help their clients make deals in a world with less travel and fewer in-person meetings.

Goldman has created Gemini—a deal making app which functions somewhat like Tinder for investment banking clients. Goldman says Gemini will give clients quick access to information about a business’ profit metrics, environmental impact, and more, which will help them think about the potential for deals. Though handshakes are out, at least for the time being, swiping may be the new norm in the world of mergers and acquisitions.


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