Facebook-Giphy sale shows how fear of regulators is slowing M&A market
Meta, formerly known as Facebook, recently sold its popular GIF platform Giphy to Shutterstock for $53 million, an 83% markdown from the $315 million it spent acquiring it in 2020. The sale was forced by the U.K.’s antitrust regulator, which deemed Meta’s acquisition a potential risk to the social media and advertising markets. This, alongside increased regulatory scrutiny in Europe and the United States, has led to a decrease in dealmaking and a higher focus on regulatory concerns in boardrooms. Experts say that deals are now being done for 20-30 cents on the dollar compared to six or twelve months ago.
Jonathan Kanter, who helms the Department of Justice’s Antitrust Unit, and Lina Khan, the Federal Trade Commission’s chair, have been given wide latitude by President Joe Biden to pursue potentially anticompetitive behavior. These agencies have opened probes into Amazon, Google, Microsoft, Jetblue Airlines, and Meta. The Biden administration has increased scrutiny of deals and enhanced enforcement, according to Morrison Foerster global risk and crisis management co-chair Brandon L. Van Grack.
Aside from U.S. regulators, Publicly disclosed reviews from the all-powerful Committee on Foreign Investment in the United States (CFIUS) are also slowing down deals. CFIUS, which is charged with reviewing corporate acquisitions that could have an impact on national security, increased its reviews by 50% since 2020. Its involvement can affect deals completely or displace a favored bidder from the running. The international scope of most deals has made it more complicated as many regulators weigh in on acquisitions or mergers.
FAQs:
Why did Meta sell Giphy to Shutterstock?
Meta sold Giphy to Shutterstock for $53 million, an 83% markdown from the $315 million it spent acquiring it in 2020 because the U.K.’s antitrust regulator deemed its acquisition a potential risk to the social media and advertising markets.
Which agencies have opened probes into anticompetitive behavior?
Jonathan Kanter, who helms the Department of Justice’s Antitrust Unit, and Lina Khan, the Federal Trade Commission’s chair, have been given wide latitude by President Joe Biden to pursue potentially anticompetitive behavior. The agencies have opened probes into Amazon, Google, Microsoft, Jetblue Airlines, and Meta.
What is CFIUS, and how does it affect deals?
The Committee on Foreign Investment in the United States (CFIUS) is charged with reviewing corporate acquisitions that could have an impact on national security. Its involvement can affect deals completely or displace a favored bidder from the running. Publicly disclosed reviews from CFIUS increased by 50% since 2020.
M&A Market Stagnant as Regulatory Concerns are Exposed by Facebook-Giphy Deal
Meta’s sale of Giphy to Shutterstock for $53 million, at an 83% markdown from its acquisition price in 2020, has highlighted the chilling effect of regulatory scrutiny on the tech deal-making environment, experts have told CNBC. The sale was mandated by the UK’s antitrust regulator, which found that Meta’s acquisition posed a risk to social media and advertising markets. The Biden administration’s heightened scrutiny of deals and cross-jurisdictional regulatory interests have also impacted deal-making, with boardrooms giving regulatory concerns more weight. Publicly disclosed reviews from the Committee on Foreign Investment in the United States (CFIUS) increased 50% since 2020, but it is the non-public reviews that wield the most power in the secretive body, which is charged with reviewing acquisitions that could impact national security.