Top Mergers and Acquisitions of 2020: Deals Worth $44 Billion and Their Impact on 2021

Despite a challenging environment, 2020 witnessed significant M&A activity, especially towards year-end.

Entering 2020, expectations for mergers and acquisitions (M&A) were subdued due to global economic uncertainties fueled by ongoing trade tensions between the U.S. and China and the upcoming U.S. presidential election. However, the unforeseen impact of COVID-19 further suppressed dealmaking. Nevertheless, several landmark transactions took place, shaping the landscape for 2021.

Key Insights

• COVID-19 heavily impacted markets, causing a decline in deal activity starting March 2020.
• Oil and gas sector deals focused on consolidation to navigate the low-price environment.
• Major semiconductor acquisitions responded to tech giants developing in-house chips.
• Financial sector acquisitions indicate growing competition among online brokerages and an increasing demand for financial data.

2020 Mergers and Acquisitions Overview

While 2020 was a subdued year for M&A, numerous deals across industries merit attention. These transactions generally fall into expansion, consolidation, or survival categories, reflecting companies’ strategic responses to market conditions.

Morgan Stanley's $13 Billion Acquisition of E*TRADE

In February 2020, Morgan Stanley (MS) acquired E*TRADE in a $13 billion all-stock deal, marking a significant move in the online brokerage space. This acquisition follows Charles Schwab’s 2019 purchase of TD Ameritrade, signaling a trend of rapid scaling and platform enhancement among digital brokers. As these firms integrate, competition over trading costs and platform innovation is expected to intensify.

S&P Global's $44 Billion Deal to Acquire IHS Markit

S&P Global Inc. (SPGI) announced its intent to acquire IHS Markit Ltd. (INFO) for $44 billion, making it one of the largest deals of 2020. This strategic move positions S&P Global to capitalize on the growing demand for financial data driven by quantitative and algorithmic trading, robo-advisors, and data analytics.

Semiconductor Industry Consolidation: $62 Billion in Deals

The semiconductor sector saw two blockbuster deals: Analog Devices’ (ADI) $22 billion acquisition of Maxim Integrated Products (MXIM) and NVIDIA’s (NVDA) $40 billion purchase of Arm Limited from SoftBank. Both transactions aim to strengthen chipmakers amid rising competition from tech giants like Apple, Amazon, Microsoft, and Google, which are increasingly designing custom in-house chips. Regulatory approval remains a critical hurdle, especially for NVIDIA’s acquisition due to licensing concerns.

Energy Sector Consolidation Amid Market Pressures

The oil and gas industry faced severe challenges due to the pandemic, resulting in multiple survival-driven mergers and acquisitions. Noteworthy deals include Chevron’s (CVX) $5 billion purchase of Noble Energy, Pioneer Natural Resources’ (PXD) $4.5 billion acquisition of Parsley Energy, and ConocoPhillips’ (COP) $9.7 billion buyout of Concho Resources. Divestitures also played a role, with Dominion Energy selling gas assets to Berkshire Hathaway and BP divesting its petrochemical business. These consolidations aim to create leaner, more resilient companies in anticipation of a potential market rebound.

Conclusion

The tumultuous market conditions of 2020 did not halt M&A activity but rather reshaped it, with industries adapting through strategic deals. Technology and finance sectors led with high-value acquisitions driven by innovation and data demands, while energy companies consolidated to survive market pressures. As the world moves toward a post-pandemic recovery, investors can anticipate increased M&A momentum in 2021.

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