Frozen Global M&A Market... 20% Decline Expected This Year

[Asia Economy New York=Special Correspondent Joselgina] Last year, the global corporate mergers and acquisitions (M&A) market, which hit an all-time high, has frozen solid.

The Wall Street Journal (WSJ) reported on the 8th (local time), citing financial information firm Refinitiv, that the total value of M&A deals completed across countries in the first half of this year amounted to $2.17 trillion (approximately 2,827.5 trillion KRW). This represents a 21% decrease compared to the same period last year.

The outlook for the M&A market going forward is also unfavorable. Consulting firm Bain & Company projected that the global M&A volume for this year will decline by 20% to $4.7 trillion (approximately 6,124 trillion KRW) compared to the previous year. Last year, the global M&A volume approached $6 trillion.

This is interpreted as a consequence of the major countries' interest rate hikes taking full effect amid growing recession risks. For companies engaging in M&A, the burden of financing costs has increased due to the interest rate hikes. Additionally, uncertain economic conditions and soaring inflation have worsened corporate business outlooks. With recent concerns about a recession spreading, companies' divestment activities have come to a halt.

The major U.S. retail pharmacy chain Walgreens Boots Alliance recently announced the withdrawal of the sale of Boots and Number 7 Beauty. The reasons cited were that the prices offered by potential buyers fell short of Walgreens' expectations and that the buyers lacked sufficient financial capacity. Coles Corporation also suspended sale discussions with a franchise group, citing the weak financial market as the background.