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COVID-19 pandemic presents opportunities for M&As
Kind: ICD What's New  Organization: Department of International Cooperation  Publish Date: 2020-07-30 14:29
COVID-19 pandemic presents opportunities for M&As

With industry fluctuations increasing by the day, enterprises chasing growth need to shift from “efficiency-driven” to “innovation-driven.” One of the ways is through acquisitions, investments or strategic alliances to obtain specific ideas, products, talent and markets. Major U.S. companies in particular are good at seeking economies of scale through mergers and acquisitions (M&As) to expand their product and market synergies.

When the economy is booming, enterprises have less motivation to put themselves up for sale and fewer M&A opportunities. The COVID-19 pandemic has had a major economic impact since its onset at the beginning of this year. It has resulted in many “fallen angels”-- companies that have had their debt rating reduced to junk status due to their deteriorating financial position. These firms face insufficient capital and are willing to put themselves up for sale at lower prices. This presents opportunities for enterprises seeking M&As to enlarge their market scale.

Recently, Amazon.com Inc. acquired self-driving start-up Zoox for US$13 billion, while Uber announced its acquisition of delivery service Postmates Inc. in a US$2.65 billion all-stock deal. Meanwhile Taiwanese electronics component maker Yageo Corporation completed its acquisition of American rival KEMET Corporation for US$1.64 billion; U.S. multinational tech firm Garmin Ltd. acquired Firstbeat Analytics, a leading provider of physiological analytics for health, fitness and performance; Taiwan’s Polytronics Technology Corp. acquired Germany-based Henkel AG& Company’s thermal clad dielectric (TCLAD) material business unit for US$26 million; and French hypermarket chain Carrefour announced that it is set to acquire supermarket chain Wellcome Taiwan Co. Ltd. All of these are examples of firms taking advantage of the pandemic’s impact to enlarge themselves through M&As.

Sources: Economic Daily News, Business Weekly, China Times

Update: 2020-04-23
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