EQT Corporation. (NYSE:EQT) has been on an aggressive acquisition spree as it looks to strengthen its prospects and competitive edge in the embattled energy industry. After acquiring assets belonging to Chevron Corporation (NYSE:CVX) to a tune of $735 million, the company has affirmed it is not yet done in driving the wave of consolidation in the industry.
EQT M&A Plan
The U.S largest gas producer has already set sights on CNX Resources Corp (NYSE:CNX) and other sector peers. While the company is yet to confirm which specific deal it is pursuing, Chief Executive Officer Toby Rice believes there is some value to create through mergers and acquisition. Likewise, he expects M&A to be the next change in value creation for shareholders.
In the recent past, shale mergers have mostly involved oil companies at the backdrop of oil prices tanking to decade lows. The drop has led to big discounts when it comes to valuation, allowing companies to pick up highly discounted assets.
Shale gas producers such as EQT have also used the opportunity to strengthen their position in the industry by acquiring some highly depressed gas producers. conversely, does not come as a surprise that EQT Corp is eyeing a deal for Appalachian producer CNX valued at close to $2.2 billion.
The flurry of consolidation has not been limited to the energy industry. Instead, it’s been across all industries as big players move to acquire discounted peers. Advanced Micro Devices, Inc. (NASDAQ: AMD) has already moved to seal a $35 billion deal for peer Xilinx, Inc. (NASDAQ: XLNX). If complete, it will mark one of the busiest years for semiconductor industries when it comes to deals.
Inspire Brands, the owner of Arby’s and Buffalo wild wings, has also tapped into the M&A market with an $11.3 billion purchase of Dunkin Brands Group Inc. (NASDAQ: DNKN). Stone peak Infrastructure Partners has agreed to acquire the sixth-largest cable and broadband provider, Astound, in a deal valued at $8.1 billion, including debt.
While M&A activity did jump in the third quarter after coming to a halt at the peak of the pandemic, it was still down by 12% year to date to $2.84 trillion. Deal volume involving U.S companies was down 32% to $1.07 trillion. If the M&A activity are to pick up in the fourth quarter and the New Year, then certainty on the financial and regulatory policy should be clear.
Biden Win Impact
The wave of consolidation is expected to gain momentum with the certification of Joe Biden as the next U.S president. Dealmakers expect the M&A market to be a buzz of activity as Democrats take the white house and Republicans maintain the Senate control.
According to lawyers and bankers who advise companies on M&A, it would be the best outcome on providing a stable economic and regulatory environment. Dealmakers expect Biden to be more predictable when it comes to governance as compared to Donald Trump. Likewise, a Republican-controlled senate should help restrict the president from interventionist policies.