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Zoom Deals Put Barbarians at the Virtual Gate

 |  June 9, 2020

By Tara Lachapelle, Bloomberg

There’s a long-running joke among my team’s deals writers and editors that in the corporate world, all roads eventually lead to mergers. Whatever is happening on the outside or on Wall Street — economic downturns, upturns, elections, currency fluctuations, CEO departures, CEO arrivals, good earnings, bad earnings, you name it — the case can somehow always be made, almost comically, that it’s an impetus for more corporate tie-ups. Warren Buffett would say that’s thanks to all the fee-hungry bankers playing to CEOs’ vain propensity for empire-building. Others say it’s the animal spirits at work.

Whatever the case, the global pandemic is giving businesses plenty of reasons to get back to dealmaking. Yes, even social distancing may draw some companies closer together. How they do it will just require a bit more ingenuity in a post-handshake, post-Covid-19 world.

As drugmakers race to develop vaccines and treatments for the virus, the pharmaceutical industry is an obvious place to expect renewed M&A activity. Already, drug giant AstraZeneca Plc has made a preliminary takeover approach to Gilead Sciences Inc., Bloomberg News reportedSunday, citing people familiar with the matter. That’s a potential $100 billion transaction. Executives from Johnson & Johnson also said in April that one of their top priorities is finding M&A that enhances its pipeline, citing the drugmaker’s financial strength. The company has $18 billion of cash and equivalents, and Ebitda exceeds debt.

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