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FirstFT: Global dealmaking set to break records


World updates

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A frantic summer of dealmaking has put 2021 on track to break records, with almost $4tn of deals already agreed since the start of the year, as companies rush to exploit cheap financing and bumper profits.

There were $500bn of transactions globally in the usually quiet month of August, up from $289bn in the same month last year, and $275bn in 2019.

The surge has been fuelled by a mix of low borrowing costs, trillions of dollars in the coffers of private equity groups, and the return of animal spirits to corporate boardrooms.

The summer boom has helped push global mergers and acquisitions to a record $3.9tn year to date, according to data compiled by Refinitiv, more than double the amount from the same period last year, and up from $2.6tn in 2019.

At this pace, total M&A activity this year is set to overtake the all-time high hit before the financial crisis in 2007, when $4.3tn worth of deals were announced.

Line chart of total deal volume ($tn) showing worldwide M&A

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Five more stories in the news

1. Taliban says it has captured last Afghan region of resistance The Taliban has declared victory over Afghanistan’s last opposition stronghold after resistance fighters in the Panjshir Valley claimed that an aerial attack had inflicted heavy casualties on their leadership. Meanwhile, Qatar has emerged as a bridge between the Taliban and the west. Read the rest of our Afghanistan coverage on FT.com.

2. Goldman Sachs plans IPO for $5bn Petershill Partners Goldman Sachs is planning a London listing for Petershill Partners, in a deal that would value the Wall Street bank’s stakes in alternative asset managers at more than $5bn, according to people familiar with the situation.

3. UAE eases residency rules in drive to lure foreign investment The United Arab Emirates has launched 50 economic initiatives aimed at making the country more competitive as it seeks to diversify its oil-dependent economy, including a drive to attract $150bn in overseas investment within nine years.

4. Zuma set for early prison release on medical parole Jacob Zuma is to be released early from prison after the former South African president was found eligible for medical parole two months after being jailed for contempt of court — a sentence that sparked the country’s worst post-apartheid violence.

5. Suga succession battle Yoshihide Suga’s resignation as Japan’s prime minister has set off a battle to succeed him that will pit younger politicians against an old guard fighting to maintain the status quo. The exit threatens a return to political volatility, writes Robin Harding. Leo Lewis outlines the top six challenges that Suga leaves for the next prime minister.

Coronavirus digest

  • Rising Covid-19 cases and a worrying increase in hospitalisations among children have forced some US schools to rethink the long hoped for return to classrooms after the Labor Day holiday.

  • Dr Anthony Fauci, Joe Biden’s chief medical adviser, said on Sunday that the planned roll out of third doses of Covid-19 vaccines would probably start with only BioNTech/Pfizer jabs because Moderna had not submitted all the required data to the Food and Drug Administration for its booster.

  • The White House wants to spend $65bn over the next 10 years to plan for future pandemics, including setting up a new office of pandemic preparedness at the heart of the US government.

Follow our live coronavirus blog and sign up to our Coronavirus Business Update email for a regular briefing on how the pandemic is affecting markets, global business and our workplaces.

The day ahead

Labor Day Today is a federal holiday in the US and financial markets will be closed.

US pandemic jobless aid ends The Pandemic Unemployment Assistance programme is set to expire after Congress extended it twice. Other jobless benefits are also set to end, leaving nearly 10m people strapped for cash at a time when Covid-19 cases are rising again.

Boris Johnson on Afghanistan The UK prime minister will defend Britain’s role in the chaotic withdrawal from Afghanistan when he addresses the House of Commons. Johnson will say he intends to “use every economic, political and diplomatic lever to protect our country from harm and help the Afghan people”.

MH17 murder trial resumes The Hague resumes its trial in absentia of four people charged with murder in the 2014 downing of the Malaysia Airlines flight that killed 298 people when it crashed in Ukraine. Investigators have appealed to Russian witnesses for information. (AP)

What else we’re reading and listening to

It’s not just chiefs who should benefit from equity ownership If anything would align the interests of investors and staff, it is making more employees shareholders, writes Andrew Edgecliffe-Johnson. Given that most chief executives are already multimillionaires, boards might reflect on what could happen if they took a chunk of the stock reserved for executives and distributed it around people for whom even a small stock payout would be a transformative incentive. 

Developing countries provide fertile ground for crypto While EU and US regulators have issued stark warnings about cryptocurrencies’ dangers, in the developing world there are signs that digital coins are building deeper roots. Here’s how bitcoin mining uses more electricity than some countries. (FT, NYT)

The Maoist echoes of Xi’s power play A sudden frenzy of political activity over the past two weeks has people wondering if China is entering a new period of social upheaval, reminiscent of the Great Proletarian Cultural Revolution in 1966. This time, it is under President Xi Jinping, the country’s most powerful leader since Mao Zedong. This is the first in a two-part series about Xi’s assertion of greater control in China.

It is mad to use an algorithm to hire a person Recruitment is widely outsourced to companies that scour websites for potential hires. An array of digital tools using voice recognition, body language software and the like are used to allegedly predict good recruits. But we have little idea if these strategies work, writes Pilita Clark.

FT launches new financial literacy and inclusion campaign Financial resilience can be boosted enormously by understanding how money works in everyday life. To promote better financial literacy and inclusion around the world the FT is launching a new charity, called FLIC. “Our hope is that with you, our readers, we can make an ongoing impact in an area that is consistent with our values and expertise,” writes FT editor Roula Khalaf in a letter to subscribers. Aimée Allam, executive director of FT FLIC, explains more about the initiative here.

FT Weekend podcast

In the first-ever episode of the FT Weekend podcast, host Lilah Raptopoulos talks to Eleven Madison Park’s Daniel Humm and Chez Panisse’s legendary Alice Waters to discover how the world’s top chefs are finding purpose beyond their restaurants. Plus, the FT’s design critic Edwin Heathcote gives us a tour of the world’s most revengeful architecture, and reporter Madison Darbyshire shares tips for how to furnish your home with old things. You can also watch on demand the FT Weekend festival.

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