Global mergers and acquisitions in the first half of this year jumped nearly 50 percent from a year earlier to a record high. Despite heightened market volatility from geopolitical risks such as the war involving Iran, companies pursued mega-deals to prepare for the artificial intelligence era, pushing the M&A market to its largest size ever, analysts said.
According to the Financial Times, data compiled by the London Stock Exchange Group (LSEG) showed that M&A announced worldwide in the first half of this year totaled $2.8 trillion. That marked a 49 percent increase from the same period last year. It surpassed the first half of 2021 ($2.74 trillion), when deals rebounded sharply after the COVID-19 pandemic, to become the largest on record.
Deals worth $10 billion or more numbered 47 this year, up 62 percent from the same period last year. That was the highest since related statistics began being compiled in 1980. By contrast, the total number of deals fell 9 percent. While small and mid-sized deals declined, mega-deals led the market.
By region, the United States and Europe led the market. U.S. deal volume rose 77 percent from last year, while Europe increased 105 percent. By contrast, the Asia-Pacific region declined 2.4 percent. Nick Rumsby, co-head of Europe, Middle East and Africa (EMEA) corporate advisory at Cleary Gottlieb, said, "There is a difference in the level of deal activity between the U.S. and outside the U.S." He added, "In the U.S., corporate confidence has not been significantly shaken, but in Europe, deal volume has been considerably affected."
Analysts point to the U.S. government's easing of antitrust regulations and industry reshaping driven by the spread of AI as the background for the surge in deals this year. Industry officials explained that companies are moving aggressively to respond to the changes in industrial structure that AI will bring. Ben Goodchild of Paul, Weiss said, "This is a risk-on environment, so it is a good time to get deals done." He added, "Corporate boards are reviewing every possible strategic option, including once-in-a-lifetime large deals."
A representative example is NextEra Energy's acquisition of Dominion. As AI proliferation caused data center power demand to surge, the two decided to launch the largest electric utility in the United States through the merger. SpaceX also acquired coding AI startup Cursor in a $60 billion stock swap shortly after completing its initial public offering (IPO). Charlie Bucknall, head of global M&A at JPMorgan Chase, said, "There is a growing sense among corporate boards that they need to act." He added, "Companies recognize that standing still is itself a risk, and the need to move strategically is increasingly overwhelming uncertainty."
