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Biggest Deals Down 74% in ’22Lock Icon

4 min read

The value of the biggest deals in Arkansas accounted for $4.32 billion in 2022, a decline of 74.3% from $16.8 billion a year ago.

There were 81 deals worth $10 million or more in 2022, down from 95 in 2021, a 14.7% drop.

The state’s mergers and acquisitions market mirrored the global market, which also saw a significant decline. Globally, M&A values were $3.6 trillion, down 39% from a record $5.9 trillion in 2021. Refinitive, a provider of financial market data, reported a 37% decrease globally from the first half to the second half of the year, the largest drop since 2001.

Some of the decrease was because of the economy and some of it was a natural cooling off after a red-hot M&A market the previous two years. The state started 2021 slowly before a strong second half carried over into 2022.

The M&A market during the second half of 2022 for the state was, like the global market, less active.

“It is a tale of two halves,” said Marshall McKissack, managing director and head of mergers and acquisitions at Stephens Inc. of Little Rock. “The back half of 2022, there was definitely a slowdown in the market generally. All in all, still a pretty robust M&A market relatively speaking to pre-COVID levels.”

The state’s largest deal was a $1.09 billion merger between Riverview Acquisition Corp. of Memphis and Westrock Coffee Co. LLC of Little Rock. 

That merger added a publicly traded company to the state’s ledger while the No. 2 deal took a company off the list.

DB Schenker of Germany acquired USA Truck Inc. of Van Buren for $435 million in a deal that closed in September. USA Truck is now a private subsidiary of DB Schenker, which wanted a foothold in the U.S. logistics market.

“It is just a match made in heaven,” former CEO James Reed said when the deal was announced. Reed is now COO of Kodiak Robotics of Mountain View, California.

No. 3 on the list was the Toro Co. of Bloomington, Minnesota, which spent $400 million to acquire lawn mower manufacturer Intimidator Group of Batesville in a deal announced in January. Intimidator Group was founded in 2013 by Robert Foster.

The deal granted Toro, which reported sales of $4 billion in 2021, access to Intimidator’s strong presence in the zero-turn mower market. Intimidator had sales of $200 million in fiscal 2021.

McKissack said the first weeks of 2023 have continued the modest activity of the second half of 2022. He and others expect that to change, especially if interest rates stabilize and inflation is brought under control.

“People are getting ready for what they hope is a very busy second half of the year,” McKissack said. It was a buyer’s market in the second half of 2022 and that’s continued into this year, he said.  

“We’re optimistic. We’re busy. We’re prepping. We expect the back half of this year to be busier than the first half, although we are busy right now.” 

Westrock a Rare SPAC Deal

Arkansas’ biggest deal of 2022 was a special purpose acquisition company merger, but SPACs are not nearly as popular as they were just a couple of years ago.

Riverview Acquisition Corp. of Memphis merged with Westrock Coffee Co. LLC of Little Rock in a $1.09 billion deal announced in early April. A SPAC such as Riverview is a blank check public company formed by investors that join with private companies so the resulting merger is a publicly traded business.
SPACs were all the rage just two years ago, but they have fallen out of favor since. The biggest reasons: a changing economic environment and more financial oversight.
The Riverview-Westrock merger was the only SPAC deal among the biggest deals in Arkansas. Nationwide, there was a similar drop. Refinitive, a provider of financial data, reported SPAC deals represented just 3% of the merger and acquisition market nationwide in 2022, compared with 10% in 2021.
“The popularity associated with SPACs has definitely waned over the last 12 months,” said Marshall McKissack, managing director and head of mergers and acquisitions at Stephens Inc. of Little Rock. “There are a lot of reasons why. It is more difficult from a regulatory standpoint to get those transactions done. There is an increase in scrutiny around SPAC transactions from an oversight standpoint.”
On the same day Riverview and Westrock announced their merger, another notable Arkansas SPAC fell through. MDH Acquisition Corp., founded by Franklin McLarty and Beau Blair, had planned to merge with Olive.com of Chicago in a $276 million deal.
The Federal Reserve has raised interest rates during the past year in an attempt to choke off inflation. That has made other investment vehicles more attractive to investors.
“Early on for a lot of companies it was a favorable way to access capital,” McKissack said. “As rates have gone from very low to the ramp-up we have been on in 2022 and 2023, the popularity has declined. There are other places that investors would potentially rather put their money. They’re looking for a different class of investments than they were 24 months ago.”
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