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The 6 Biggest Mergers and Acquisitions of 2022 - Hum test

Volatility in the markets can cause companies to think hard about taking risks, but even so, M&A activity has been been plentiful this year.

Despite volatility in the markets due to geopolitical instability, interest rate hikes and inflation, mergers and acquisitions (M&As) have been active in 2022. More than 2,000 deals have been made, with a total value of about $2 trillion.

While the M&A market is down from historic highs in 2021, its numbers are fairly even with pre-pandamic levels.

“Uncertainty always weighs on decision making, and M&A is a big decision for deal makers,” said Andy West, global coleader of McKinsey & Company’s M&A Practice, in an article on its website. “So naturally we’re seeing a bit of a slowdown.”

But some analysts express optimism around the change in pace.

“With a slightly slower market, you can take your time to really understand the drivers of the asset that you’re considering,” remarks Oliver Enger, senior partner at McKinsey’s, in the article. “You can cultivate the management team and the employees that you are about to embrace and create something that’s far better than merely a ‘transaction.’”

The following is a quick recap of the six biggest merger and acquisition deals of 2022.

Microsoft’s Acquisition of Activision Blizzard

There were many acquisitions in the video game industry this year, from Netflix (NFLX) - Get Free Report purchasing six indie studios to beef up its gaming initiative to Sony’s (SNEJF) purchase of Bungie, the developer behind the popular game series “Halo.”

But none made bigger headlines than Microsoft’s (MSFT) - Get Free Report offer to buy Activision Blizzard for $69 billion -- a move that the FTC is suing to stop. The agency claims the acquisition would “harm competition in high-performance gaming consoles” by denying or degrading access to its gaming content by rival console makers.

If the acquisition is finalized in 2023, it would give Microsoft access to a slate of IPs that have proven big sellers with gamers for decades such as “Call of Duty,” “World of Warcraft,” “Overwatch,” and “Candy Crush Saga.”

Kroger Merger With Albertsons

Rival supermarket companies Kroger (KR) - Get Free Report and Albertsons (ACI) - Get Free Report shocked many in October when they shared plans for a merger that is one of the largest deals in the grocery industry’s history. Subject to regulatory approval, Kroger would purchase Albertson’s for about $24.6 billion.

The combined company would give Kroger stores in 48 states and create a supermarket chain that would compete with non-grocery companies such as Walmart and Amazon that have squeezed the industry in recent years.

“An argument can be made that a stronger combined company could possibly help reduce food inflation as it would have more negotiating power to push back against food producers’ proposed price increases,” said Krisztina Katai, equity research analyst at Deutsche Bank. “It would also mean greater competition for food manufacturers. This comes at a time when consumers are increasingly looking for value and trading into private brands to help reduce the strain of higher food prices.”

Prologis Merger With Duke Realty

Real estate investment trust Prologis, Inc. (PLD) - Get Free Report announced its acquisition of Duke Realty on Oct. 3 in an all-stock transaction.

The deal was valued at about $23 billion and will expand Prologis’ presence in U.S. markets, the company said.

“In addition to the day-one accretion and avenues for further earnings growth, this acquisition gives us an even stronger ability to support our customers and their growth,” said Prologis Co-founder, CEO and Chairman Hamid R. Moghadam. “We’re gaining high-quality properties and more than 500 new customers in key markets. These new customers will be able to tap into our Essentials platform, which delivers end-to-end solutions to address critical supply chain challenges and contributes to their broader sustainability efforts.”

Prologis and Duke Realty are betting on a positive future for the eCommerce sector, while many analysts are less optimistic. Shares of Prologis are up 9% since the deal was announced.

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