Weekly Update: Assessing the Impact of COVID-19

Below are our weekly summary thoughts on the M&A market, the economic outlook, and reasons to be optimistic.

Reasons for Optimism in M&A and Capital Markets

  • 185 deals closed in the U.S. & Canada over the past 7 days (last week 157 deals closed)
  • Family Offices and other buyers are anxious to invest in great companies
    • Have significant cash reserves set aside for the right acquisition
    • Prefer to pre-empt processes but will participate in an auction with the right sellers
  • Fed buys U.S. listed ETFs for first time in history, focusing on investment-grade debt followed by high-yield bond funds
    • Follows April as busiest month on record for investment-grade corporate bond sales, totaling +$300 billion
  • House of Representatives to review HEROES Act
    • Includes second round of direct stimulus payments, extension of unemployment benefits, hazard pay for first responders and front line workers, increased spending on testing, rent and mortgage payment assistance
  • Global stimulus to economies in 11 leading industrial countries surpasses $15 trillion
    • Includes Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, United Kingdom, United States
  • Chairman Jerome Powell pledges the Federal Reserve will continue to use tools to fullest until recovery is well underway, suggests fiscal support is worth the cost in order to avoid long-term economic damage and provide stronger recovery

Good News We’ve Been Reading

Economic Recovery Beginning Across Globe

  • United States: many states continue to announce reopening plans
    • Volkswagen resumes vehicle production May 17th
    • Apple opens 5 stores in U.S., following prior openings in South Korea, Australia, Austria
    • Disney Springs (large shopping & dining complex next to Disney World) reopens May 20th
    • Major League Baseball plans to start season in July (without fans)
    • NASCAR races on Sunday (without fans)
  • Europe: EU unveils action plan to reopen internal borders, fire up hospitality and education sectors, and revive rail, road, air, and sea connections
    • Developing healthy protocol for beaches, hotels, campsites, B&Bs, and dining
    • Borders for Baltic countries Estonia, Lithuania, Latvia to be EU’s first Green corridor / travel bubble, opening May 15th for each other’s citizens
    • By mid-May, Swiss border crossings with Italy, France, Germany, Austria will reopen
    • Germany and Hungary reopen schools for older children, while France, Norway, and Poland reopen schools for youngest children
    • Half of Spain’s 47 million people begin to shop small stores, enjoy outdoor seating at restaurants and bars, utilize hotels
    • Denmark opens museums, cinemas, indoor sports, colleges June 8th, and gyms, swimming pools, nightclubs in August
    • Switzerland opens swimming pools, railways, cinemas, theaters June 8th

Vaccine Development Update

  • $138 million contract between Depart of Defense and U.S. Department of Health and Human Services jumpstarts production of 100 million U.S. made syringes by year end for any proven vaccine, with production goal of 500 million units in 2021
  • Serum Institute of India (SII), world’s largest maker of vaccines by volume, partners with Oxford University to produce up to 60 million doses
  • Bacillus Calmette-Guerin (BCG) vaccine candidate, used against tuberculosis to boost the immune system, in Phase 2 testing for protection from coronavirus
  • Inovio Pharmaceuticals Phase 1 Trial begins at University of Pennsylvania
  • Antimalarial drug hydroxychloroquine shows mixed results; studies being conducted to pair with dietary supplement zinc sulfate for more effective treatment

Testing Update

  • U.S. on track to pass 10 million coronavirus tests conducted, states to receive additional funding for testing
  • Antibody tests flood market as 200+ different tests are made available to consumers, the largest number of options for any infectious disease
  • FDA grants emergency authorization to first at-home saliva collection test kit developed by Rutgers University

Innovations Bloom, Habits Change as Society Adjusts to COVID-19

  • Germany’s “Bauer sucht Hilfe” connects farmers with citizens to help with harvests
  • Ireland’s Lidl creates WhatsApp chatbot to let customers know ideal times to shop
  • S. startup Maptician develops workplace safety management software with contact tracing system
  • Spain’s local councils introduce beach reservation slots to ensure social distancing

ArkMalibu is happy to answer any questions you may have and to offer guidance during this challenging time.

Until our next update, we send best wishes to you and yours for safety and health.