Exxon Mobil Corp.’s plan to buy Pioneer Natural Resources Co. for $64.5 billion including debt ranks as the largest merger announced thus far in 2023, which has been a lackluster year for deal making.
Exxon Mobil
XOM,
on Wednesday said it would buy Pioneer Natural Resources
PXD,
for about $59.5 billion in stock. The Wall Street Journal reported on the pending deal last week.
Exxon Mobil’s stock was down by 3.2% in premarket trading. Pioneer Natural Resources moved up by 1.7%.
Also read: Pioneer Natural, other Permian stocks rally on news an Exxon deal may be next
The deal bumped Pfizer Inc.’s
PFE,
$44.6 billion acquisition of Seagen Inc.
SGEN,
announced on March 13, out of its spot as the largest of the year, according to data from KPMG.
Cisco Systems Inc.’s
CSCO,
acquisition of Splunk Inc.
SPLK,
for $31.86 billion, announced on Sept. 21, now ranks third.
That deal is followed by the $21.6 billion acquisition of Newcrest Mining Ltd.
NCMGY,
by Newmont Corp.
NEM,
and the $21.3 billion acquisition of WestRock Co.
WRK,
by Smurfit Kappa Group Plc.
SMFTF,
All told, U.S. mergers and acquisitions, or M&A, activity has totaled $1.12 trillion in deals in the first three quarters of 2023, down from $1.65 trillion for the first three quarters of 2022, according to KPMG.
In all of 2022, the M&A market generated $2.19 trillion in deals.
Phil Isom, global head of M&A at KPMG, said the third quarter of 2023 remained weak for deal making due to the threat of higher interest rates, in addition to a traditional summertime slowdown in the market.
“We did see an uptick in deals announced in September, and with the end of rate rises hopefully in sight we are seeing some green shoots in the M&A market,” he said in a prepared statement. “We are seeing a narrowing of the gap between seller and buyer valuation expectations and deals are being made for quality assets, although with the higher rates, private equity has been sitting on the sidelines, with corporate buyers taking the lead.”
M&A advisory work is an important revenue generator for big banks.
In the case of Exxon Mobil’s deal, Citibank
C,
was lead financial adviser, with Centerview Partners advising Exxon, while Goldman Sachs Group Inc.
GS,
Morgan Stanley
MS,
Petrie Partners and Bank of America Securities
BAC,
advised Pioneer.
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