GlobalData: Supply Chain Drives M&A Deals Amid Decline
The significance of mergers and acquisitions (M&A) to supply chain operations has become clear in the second quarter of 2024, as revealed by GlobalData.
Despite facing challenges from persistently high interest rates and sluggish economic growth across major economies, M&A activity centred around the supply chain has surged, marking it as the dominant theme during this period.
According to GlobalData’s latest report, 'Global M&A Deals in Q2 2024 - Thematic Intelligence,' supply chain-related deals amassed a remarkable US$39bn across 19 transactions, making it the largest theme among the top 200 deals.
This trend highlights the critical role that effective supply chain management plays in strategy, especially in an era marked by economic volatility and uncertainty.
The strategic focus on the supply chain reflects companies' increasing recognition of the need to enhance resilience, agility and efficiency within their operations.
Consequently, M&A activities in this sector are not merely financial transactions but strategic moves aimed at securing competitive advantages and ensuring long-term sustainability in a challenging economic landscape.
Navigating a complex landscape
“Increasing geopolitical tensions, the emphasis on ESG and decarbonisation efforts, labour shortages and advancements in digital transformation have heightened the focus on supply chain deals, particularly in the consumer, basic materials, healthcare, transportation, infrastructure and logistics and industrials sectors," notes Priya Toppo, Analyst at GlobalData's Thematic Intelligence.
Priya also elaborates on the current landscape, stating:
“An ongoing trend is the dominance of North America in M&A deal activity, accounting for 3,019 deals worth US$257bn during Q2 2024.
"Nevertheless, APAC, excluding China, saw growth in deal value both on a year-on-year and quarter-on-quarter basis.”
Geopolitical tensions are prompting companies to reassess their supply chains to mitigate risks associated with trade wars, tariffs and political instability.
ESG concerns are steering companies towards more sustainable and transparent supply chains, necessitating investments in technologies and practices that reduce environmental impact and enhance social governance.
Whilst labour shortages are pushing companies to seek acquisitions that offer advanced automation and digital solutions to streamline operations and address workforce gaps- amounting to some increasingly complex supply chain concerns, however this M&A data shows supply chain leaders are tackling them well.
Priya concludes, “As we move into the second half of 2024, the M&A outlook remains cautiously optimistic.
"Prospects of rate cuts in certain markets and an overall improving global growth outlook could drive increased activity.
"However, mega deals will continue to face significant challenges, especially in the US, where antitrust concerns are a key focus for regulators.”
Johnson & Johnson amongst M&A leaders
Among the most noteworthy supply chain deals is Johnson & Johnson’s acquisition of Shockwave Medical for US$13bn, marking the largest transaction in the healthcare sector for Q2 2024.
This deal is poised to enhance Johnson & Johnson’s MedTech division by integrating Shockwave’s advanced intravascular lithotripsy (IVL) technology, which addresses calcified coronary artery disease (CAD) and peripheral artery disease (PAD).
It follows Johnson & Johnson’s previous investments in companies like Abiomed and Laminar, reinforcing its position in cardiovascular interventions.
Johnson & Johnson’s CEO, Joaquin Duato, highlights the strategic importance of the Shockwave acquisition, stating:
“This transaction represents a unique opportunity to significantly advance our impact in cardiovascular intervention.”
The deal is expected to finalize by mid-2024, subject to shareholder and regulatory approvals, integrating Shockwave into Johnson & Johnson’s Cardiovascular portfolio.
Prysmian’s acquisition of Encore Wire for US$4bn and Sonoco Products’ acquisition of Eviosys Packaging from KPS Capital Partners for another US$4bn also highlights the active consolidation and strategic realignment within the supply chain sector.
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