Through acquisition, companies can bring an effective pool of resources, broaden their market reach, and compete efficiently with their rivals. This article will give investors and stakeholders an insight into the 15 most acquisitive public companies in the US.
Market Outlook
In 2021, the US acquisition market had the highest record of$2.9 trillion in transactions, an increase of 55% from $1.9 trillion in 2020. At this time, the U.S. acquisitions market was unparalleled (up from less than 50% in 2020). This represents over 60% of all worldwide agreements based on the stated value.
In times of uncertainty or market volatility, M&A tends to slow down, but those can also be the exact times when valuations improve, and opportunities present themselves. Having said that, 2022 was a year of uncertainty due to rising inflation. North America's fourth quarter of 2022 saw a dismal finish to a challenging year as corporations refrained from growing due to rising interest rates and a weakening economy.
According toS&P Global Market Intelligence statistics, the overall value of mergers and acquisitions in the United States decreased to $1.477 trillion in 2022, down 41.4% from 2021. In 2022, there were 20,965 transactions, a 21.2% decrease from the previous year.
Early in 2023, concerns about a global recession and increasing interest rates maintained a shadow over the short-term economic picture as central bankers worked to contain high inflation in several areas. So it's understandable why executives have been pushed back on their heels given the crisis in Ukraine, other geopolitical risks, supply chain interruptions, increased regulatory scrutiny, and thejittery investors still processing 2022's precipitous collapse in global stock market prices.
Interest Rate - A Big Concern in 2023 for Acquisitive Public Companies
Since the start of October 2022, businesses have been developing their budgets and business plans for 2023. Numerous changes have occurred in the economy and financial markets during this time. Two major worries are rising interest rates worldwide and how long they could stay high.
On the ten-year bond issued by the US Department of the Treasury, interest rates are approximately the same in 2009 and 2022, ranging between3 and 4 percent. However, credit was much more accessible back then because governments had opened the floodgates of fiscal support.
US "new money" leveraged-loan issuance through October 2022 (i.e., not a refinancing) is down roughly a third year to date compared to 2021. A comparable metric for high-yield bonds is down by about70% year over year, and 2021 was worse than 2020.
2023 will be an incredible year for potential US acquisitive public companies. These businesses should be better protected against the hazards of an economic downturn because of their strong and adaptable balance sheets. They should also have reserves to take advantage of the worthwhile growth prospects of a recession's recovery phase.
Cross-Border Acquisitions Might Get Increased
Deal-making across international boundaries was considerably slowed down in 2022 by the COVID-19 epidemic, trade tensions between the U.S. and China, and regionally different economic situations. As a result, from 2012 through 2022, the average annual percentage of worldwide M&A dollar volume is roughly18%.
Although M&A was not exempt from all of this turmoil, cross-border M&A remained alluring to dealmakers. In 2022, cross-border transactions accounted for32% ($1.1 trillion) of all worldwide M&A, which was in line with the average percentage for the previous ten years (35%). $217 billion in transactions were spent on acquiring American firms by non-American parties in 2022, accounting for 6% of worldwide M&A activity and 19% of cross-border M&A activity. Acquirers from China, India, and other emerging economies accounted foronly 8% of the volume of cross-border acquisitions of U.S. targets, compared to 50% from the British, Canadian, Singaporean, Australian, and Japanese acquirers.
15 Most Acquisitive Public Companies in the US
Photo by Kai Wenzel on Unsplash
Our Methodology
We have selected the most acquisitive public companies based on factors like the number of deals (acquisitions) made by an organization, the acquiring companies' total buying value, the acquirer's market capitalization, and the quality companies (potential companies) being acquired by the acquirer. After analyzing and combining all these factors, the 15 most acquisitive public companies are chosen. The main sources include Mckinsey, Companiesmarketcap, and Mergr. The companies are picked and ranked in ascending order based on the above four factors.
A worldwide manufacturer of consumer products, The Procter & Gamble Company (NYSE:PG) has been in business for more than 180 years – founded in 1837. The Procter & Gamble Company (NYSE:PG) has made 12 investments and 21 acquisitions during its existence. Over$59.90 billion has been spent by the company on acquisitions. With over 65 leading brands and operations in over 70 countries, its market cap is $368.58 billion as of the first quarter of 2023.
'Gillette' was one of the most important acquisitions that took place in 2005. It was bought by P&G for $57 billion, making it one of the most expensive acquisitions in the history of consumer products.
With over 2.8 billion active cards, over22,000 people globally, and operations in over 210 countries and territories, Mastercard Incorporated (NYSE:MA) is a multinational financial services firm that offers electronic payment solutions to consumers worldwide.
With a $360.21 billion market worth (value of Q1 of 2023), the corporation has made numerous significant acquisitions, including Vocalink ($920 million) and Finicity ($825 million). Mastercard spent$3.19 billion to purchase 'Nets Inc.,' a major provider of payments technology in Europe, although not acquired solely, but with the partnership with private equity firms.
International financial services provider JPMorgan Chase has acquired several noteworthy businesses throughout the years to broaden its product and service offerings. The corporation, which has a $403.97 billion market valuation as of Q1 of 2023, has completed more than 160 acquisitions since 2000.
In addition to other significant purchases,'Bank One' for $58 billion was a prospective target in 2004. At that time, JP Morgan’s market cap was approx.$113.2 billion. This makes the acquisition around 51% of the total company value. As a result, JPMorgan Chase grew its position in the Midwest and became one of the country's biggest banks because of this huge deal.
The market value of UnitedHealth Group as of the first quarter of 2023, a worldwide healthcare organization, is around $458.43 billion. UnitedHealth Group, which has operations in more than 130 countries and offers a comprehensive range of healthcare goods and services. The company is regarded as one of the largest healthcare corporations in the world as of 2021. Since 2000, the UnitedHealth Group has acquired more than 100 companies, according to S&P Global Market Intelligence. Catamaran, Change Healthcare, and Surgical Care Affiliates, valued at $12.8 billion, $13.5 billion, and $2.3 billion, respectively, are a few of the major targets.
Exxon Mobil Corporation (NYSE:XOM) is a multinational oil and gas company. Exxon Mobil Corporation (NYSE:XOM) has acquired more than 100 companies since 2000. ExxonMobil has expanded its operations and improved its customer service through these acquisitions, which have included oil and gas firms, exploration and production assets, refineries, chemical companies, and other industries. Most of its acquisitions range from approx. $2 billion to max $41 billion (acquiringXTO Energy in 2010).
Talking about the retail sector, the giant company is always Walmart, which is notable around the world. Although the company only grabbed hold of around 20 companies since 2000 (compared to the above acquirers) and the market cap is $407.21 billion (during first quarter of 2023), Walmart’s acquisition of brands of Vudu, Asda, and Jet.com are the notable ones. One of the potential targets was 'Flipkart,' an Indian e-commerce company, where Walmart made a deal to get a77% stake in the company. The $16 billion deal with Flipkart enabled Walmart to grow its online retail operations aggressively in India.
As a multinational provider of financial services, Visa, Inc. (NYSE:V)'s main line of work is handling debit, credit, and prepaid card transactions for clients around the world. One of the biggest payment processors in the world as of 2021, Visa, Inc. (NYSE:V) has more than3.5 billion credit, debit, and prepaid cards in use. The corporation, with a market value of $487.80 billion as of Q1 of 2023, has already acquired more than 30 businesses. In 2016, Visa paid $23.4 billion to buy "Visa Europe," a former company that had been running independently. This acquisition not only made Visa the well-recognized payment platform globally, with a total of more than3 billion cards in circulation, but it streamlined its operations globally and strengthened its market position.
Tesla, Inc. (NASDAQ:TSLA) is an American EV manufacturer with the dominant market share in the industry. In the first quarter of 2023, having a market worth of $520.78 billion, some of the influential acquisitions of Tesla include SolarCity for $2.6 billion, Maxwell Technologies for $218 million, and DeepScale, which is an AI start-up. Musk, the CEO, is ambitious that this acquisition willprove impactful in the coming years.
With operations in more than 60 countries and a diverse portfolio of products and services, Johnson & Johnson is the world's top healthcare company, having three main segments: pharmaceuticals, consumer health products, and medical devices. The company has a whooping market worth $510.71 billion as of Q1 of 2023. Among the acquisitions of above43 potential brands since 2000, Johnson & Johnson has bought three big giants, namely Actelion (acquired at $30 billion), Guidant (purchased at $23.2 billion), and Synthes (bought at $19.7 billion).
General Electric Company (NYSE:GE) is widely known to be the most diversified company having core operations in GE Aviation, Healthcare, Renewable Energy, and Power. Although its market cap was $107.90 billion during Q1 of 2023, being lower than the other 14 players on the list, the reason why GE is counted as the influential company in acquisitions is that the organization has acquired more than32 companies and made around 90 investments to date. Alstom, Baker Hughes, LM Wind Power, and Wurldtech are among the popular acquisitions of GE.
