Companies That Spent Billions on M&A Are Now Selling for Peanuts

Bloomberg12-19

(Bloomberg) -- Companies that spent billions on poorly timed acquisitions in recent years are now offloading those assets at knockdown prices. Alibaba Group Holding Ltd. announced Tuesday it’s going ...

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The price is around 30% of the company’s valuation when Alibaba bought it during the heady days of 2017. The internet giant, which has largely abandoned its acquisitive ways amid government pressure, said it will book a $1.3 billion loss on the transaction.The deal came a day after BlackBerry Ltd. said it would divest its Cylance endpoint security unit to software startup Arctic Wolf for $160 million plus a small amount of stock. That’s a far cry from the $1.4 billion BlackBerry paid when it agreed to buy the business in 2018. Under BlackBerry’s ownership, Cylance reported substantial losses and its revenue fell over 50%, according to Royal Bank of Canada analysts.A representative for Just Eat Takeaway said the marke","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4220":"综合零售","LU1823568750.SGD":"Fidelity Global Technology A-ACC SGD","BK4524":"宅经济概念","BK4535":"淡马锡持仓","LU0072913022.USD":"UBS (LUX) EQUITY FUND -  GREATER CHINA \"P\" (USD) ACC","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","09988":"阿里巴巴-W","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","BK4588":"碎股","IE00B0JY6N72.USD":"PINEBRIDGE GLOBAL EMERGING MARKETS FOCUS EQUITY \"A\" (USD) ACC","BK4579":"人工智能","BK4526":"热门中概股","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","LU0067412154.USD":"UBS (LUX) EQUITY FUND -  CHINA OPPORTUNITY \"P\" (USD) ACC","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","BB":"黑莓","BK4503":"景林资产持仓","BK4122":"互联网与直销零售","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","BK4502":"阿里概念","LU1152091754.HKD":"UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) \"PM\" (HKD) INC","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","LU1880383366.USD":"东方汇理中国股票基金 A2 (C)","BK4547":"WSB热门概念","BK4505":"高瓴资本持仓","BK4097":"系统软件","LU1688375341.USD":"贝莱德中国灵活股票基金","BK4587":"ChatGPT概念","LU1008478684.HKD":"UBS (LUX) EQUITY FUND -  CHINA OPPORTUNITY \"P\" (HKD) ACC","BK4581":"高盛持仓","BK4504":"桥水持仓","LU1152091168.USD":"UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) \"PM\" INC","LU1046421795.USD":"富达环球科技A-ACC","BK4548":"巴美列捷福持仓","LU0918141887.USD":"安联亚洲实际收益股票基金","BK4565":"NFT概念","LU0651946864.USD":"贝莱德新兴市场股票收益A2","BABA":"阿里巴巴","IE00BFMHRM44.USD":"NEUBERGER BERMAN GLOBAL EQUITY MEGATRENDS \"A\" (USD) ACC","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","LU1046422090.SGD":"Fidelity Pacific A-SGD","LU1515016050.SGD":"Blackrock Emerging Markets Equity Income A6 SGD-H","BK4531":"中概回港概念","LU0501845795.SGD":"瑞银大中华区股票基金P Acc SGD","BK4534":"瑞士信贷持仓","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4575":"芯片概念","HBBD.SI":"Alibaba HK SDR 5to1","BK4558":"双十一"},"translate_title":"斥资数十亿进行并购的公司现在售价微乎其微","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BABA":0.9,"HBBD.SI":0.9,"BB":0.9,"09988":0.6},"content_text":"(Bloomberg) -- Companies that spent billions on poorly timed acquisitions in recent years are now offloading those assets at knockdown prices. \nAlibaba Group Holding Ltd. announced Tuesday it’s going to sell Chinese department-store chain Intime to a local apparel group for $1 billion. The price is around 30% of the company’s valuation when Alibaba bought it during the heady days of 2017. The internet giant, which has largely abandoned its acquisitive ways amid government pressure, said it will book a $1.3 billion loss on the transaction. \nThe deal came a day after BlackBerry Ltd. said it would divest its Cylance endpoint security unit to software startup Arctic Wolf for $160 million plus a small amount of stock. That’s a far cry from the $1.4 billion BlackBerry paid when it agreed to buy the business in 2018. Under BlackBerry’s ownership, Cylance reported substantial losses and its revenue fell over 50%, according to Royal Bank of Canada analysts. \nThe moves show how companies that were major acquirers during the boom times may sober up and regret those purchases only a few years later. Just last month, Just Eat Takeaway.com NV agreed to sell US food delivery service Grubhub for $650 million, a roughly 90% discount to the price it paid to buy the business at the height of the Covid pandemic. \nOverpayment was the inevitable byproduct of an era when competition for assets was fierce, according to Oliver Scharping, a portfolio manager at Berenberg. \n“Years of zero interest rates and pandemic-fueled deal hysteria sent valuations soaring in hype sectors, often detached from fundamentals,” Scharping said. “Now, as the zeitgeist demands a sober look in the mirror, companies are trimming excess, dumping underperformers, and opting for brutal honesty over sunk-cost fantasy — even if it means a multibillion-dollar haircut.”\nValeriya Vitkova, a senior lecturer at City University of London’s Bayes Business School, said that companies didn’t properly assess synergies and the expected benefits of some deals were overestimated.\nNow may be a good time to find buyers for these assets as the M&A market has become active again, Vitkova said. Overall M&A volumes have risen 16% this year to $3.2 trillion, according to data compiled by Bloomberg, and bankers expect the pace to pick up next year.\nThese divestments allow the companies to focus on shoring up their main operations at a pivotal time. Alibaba has been working to reignite growth in its Chinese e-commerce division, where it faces fierce competition from PDD Holdings Inc. and ByteDance Ltd. Meanwhile, BlackBerry Chief Executive Officer John Giamatteo is trying to turn around the company by devoting more attention to its Internet of Things business as well as its secure communications platforms. \nReopening the Gates\nA representative for Just Eat Takeaway said the market has changed since it bought Grubhub, with competition increasing and sector valuations falling. The sale to Wonder Group Inc. represents the “most attractive outcome” and “reflects the current trajectory of the business,” the representative said. \nA spokesperson for BlackBerry said it’s “incredibly pleased” with the outcome for Cylance, which will help profitability and let it focus on the growth engines in its portfolio. Alibaba didn’t immediately respond to queries.\nCompanies will continue to pursue divestments of acquisitions that didn’t work out, as markets are rewarding focus and punishing bloated firms, Berenberg’s Scharping said. That could provide good opportunities for cash-rich corporate buyers looking for bargains, as well as private equity firms that Bloomberg-compiled data show are sitting on $1.6 trillion of dry powder.\n“The pricing reset has reopened the gates for disciplined buyers to act,” Scharping said. “We’re seeing opportunists leverage cleaner balance sheets and tighter focus to pick up discounted assets with long-term upside.”\n--With assistance from James Boxell, Luz Ding, Amy Thomson, Monique Mulima, Adam Blenford and Aaron Kirchfeld.\n©2024 Bloomberg L.P.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492211345"}