The World In A Week 71 – M&A Is The Way

Mergers and acquisitions activity saw a significant resurgence since the pandemic halted the economy back in March. The ability to complete transactions on a nonface-to-face basis has not proved to be an issue with eight global deals of more than $10bn having been wrapped up in the last six weeks. This includes many predatory buyouts of poorer performing entities but has also included diversification-based deals as companies gear up for an imminent economic downturn. Private equity appears to be the predominant source of funding with TowerBrook Capital Partners recently acquiring Azzurri Group who run the Zizzi and Ask high street restaurant chains. The retail sector has taken a huge hit during the pandemic, with chains unable to pay rent as cash flows have been squeezed. The high street is expected to shrink as we move into a new era of consumer behaviour and spending patterns.

Last Friday saw the Trump administration sanction eleven Chinese and Hong Kong officials in a response to China’s new security law. US companies have also been barred from doing business with major technology Chinese companies and this has derailed the planned trade collaboration between the two largest economies in the world. Both parties have declared their political messages with a recommendation for the de-listing of all Chinese stocks from US markets. Trump has also stated that the US will block China’s WeChat, ultimately eliminating the major forms of social media communication between the nations.

The return to normality has been supported by the ‘Eat Out to Help Out’ scheme which offers a subsidy of up to a maximum of £10 per diner to dine in at restaurants every Monday, Tuesday and Wednesday from the 3rd to 31st August. The first week of the scheme has seen a 19% rise in footfall in UK regional cities with the hope that it can kickstart spending again to support the recovery of the hospitality sector.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete.  Unless otherwise specified all information is produced as of 10th August 2020.