ANALYSIS: M&A Terminations Are Here, Mostly of All-Cash Deals
April 8, 2020, 3:16 PM
Last month, I asked where the terminations were. Now, they’re here. Sixty-six mergers and acquisitions deals have been terminated since the March 11 World Health Organization pandemic declaration—more than the combined terminations of January and February. Most were all-cash deals and involved Asia Pacific and North America targets. They include the terminated $3 billion WeWork-Softbank tender offer that is now subject to a lawsuit and the $7.5 Billion Hexcel Corp-Woodward Inc. all-stock aerospace deal.
Regarding the handful of terminated deals for which publicly filed agreements are available, none excluded outbreak of disease, epidemics, or the like from the scope of their material adverse effect (MAE) provisions—an exclusion that could have kept buyers on the hook.
Cash Is King, Even in M&A Terminations
During the turbulence of the Covid-19 outbreak, with recession likely, cash is king—and M&A deal terminations are a means to that end. As businesses seek to either hold onto the cash they have or get their hands on more, it is unsurprising that 63% of the M&A deals terminated since the pandemic declaration have been all-cash deals. All-stock deals represented only 15% of these terminations.
Asia Pacific, Consumer Non-Cyclical Targets Most Terminated
Since the pandemic was declared, terminated deals overwhelmingly involved targets in the Asia Pacific region (60% of terminated deals) and North America (33% of terminated deals).
https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-m-a-terminations-are-here-mostly-of-all-cash-deals