Facebook-Giphy sale shows how fear of regulators is slowing M&A market

Meta has sold Giphy to Shutterstock for $53m, an 83% markdown from its $315m acquisition in 2020, which was forced by the UK’s antitrust regulator. Experts believe the current deal-making environment has been chilled further by regulators refusing to approve deals or unwinding them once they have happened. It is said that deals are being done for 20% to 30% cents on the dollar compared to what they would have been just six or twelve months ago. Both the US and Europe have been eyeing smaller and larger deals, such as Amazon’s $1.7bn acquisition of vacuum-maker iRobot and Microsoft’s $69bn proposed acquisition of Activision. Federal government probes have been launched against Amazon, Google, Jetblue Airlines, Meta and Microsoft.

High-profile actions played a part in holding up deals, as have the increasing complexity and number of regulatory regimes. Boardrooms are now giving regulatory concerns increased weight. Even publicly disclosed reviews from the all-powerful Committee on Foreign Investment in the United States, or CFIUS, have increased 50% since 2020, according to PwC. Even the suggestion of a CFIUS probe can neuter a deal completely or displace a favoured bidder from the running. The committee is charged with reviewing corporate acquisitions which, among other things, could have an impact on national security.

The international scope of most deals has also complicated matters further, as multiple regulators can weigh in on an acquisition or a merger. Advisors are being forced to confront a global too powerful panoply of competing regulatory interests. This will mean that appeasing regulatory concerns, whether or not they are national security or anticompetitive grounds, can mean that mitigation or divestitures have to take place. It can also mean, as with the CMA in the Activision-Microsoft deal, that regulators move to block a deal in its entirety. As boardrooms and executives consider deals large and small, advisors are being forced to confront a global panoply of competing regulatory interests.



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