Pinterest deal to top charts in tech's US$1 trillion M&A

[NEW YORK] PayPal Holdings' potential takeover of social media firm Pinterest would top the charts in what is already a record-breaking year for tech deals. It will also push industry merger and acquisition (M&A) volumes past the US$1 trillion mark for the first time.

The online payments provider is discussing a roughly US$45 billion acquisition of Pinterest, Bloomberg News reported on Wednesday (Oct 20). That would rank as the biggest takeover in the tech industry this year, surpassing Square's proposed US$29 billion purchase of "buy now, pay later" company Afterpay, and Microsoft's US$20 billion deal for speech-recognition pioneer Nuance Communications.

Tech companies have announced US$971 billion of M&As this year, double the tally for the same period in 2020, data compiled by Bloomberg showed. It is already the busiest year on record by far, thanks to a series of ambitious deals such as Intuit's US$12 billion purchase of email marketing firm Mailchimp and cyber security company NortonLifeLock's up to US$8.6 billion takeover of rival Avast.

Pinterest investors welcomed news of PayPal's interest, sending the company's stock up 13 per cent on Wednesday. It clawed back some of that gain on Thursday, with shares falling as much as 3.2 per cent in early New York trading.

A string of tech executives have been cooking up their biggest acquisitions in recent months, emboldened by soaring stock valuations and easy credit conditions. Still, their enthusiasm could run into trouble amid increasingly assertive regulators in the US.

The US Federal Trade Commission's new chair Lina Khan has vowed to restore the agency's power to take on dominant companies thwarting competition. She has specifically called out the tech industry, where she is scrutinising privacy practices and clamping down on deals falling below the radar. Khan's aggressive stance has spooked some in the market, as traders become wary about whether major deals can be completed.

Those worries have not slowed the pace of dealmaking just yet. There has been a new billion-dollar tech deal announced roughly every two days this year, Bloomberg data show.

BLOOMBERG