Oil & Gas: The One Sector Missing Out of M&A’s Big Revival

Deal values in the global energy sector have fallen about 6% this year

By David Carnevali and Fareed Sahloul

Low energy

On this Tuesday a year ago, as US voters were handing Donald Trump the keys to the White House for a second time, M&A bankers were looking forward to the boom times; few more so than those covering the oil and gas sector, which was supposed to be supercharged by the president’s pro-fossil fuel agenda.

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Twelve months on, however, energy companies and their advisers are the only ones missing out on what’s turned into one of the best ever years for the world’s dealmakers. Bloomberg-compiled data show that energy is the single major industry in which transaction values are trailing 2024 levels; it’s down about 6%, while all others are up by between roughly 25% and 60%, the data show.

With the price of oil having fallen sharply this year and still stuck in the low-to-mid $60s a barrel, would-be sellers, including private equity firms with assets in the sector, have been struggling to get the valuations they want. Worryingly for them, the oil market remains oversupplied as we head toward 2026.

So far, OPEC+ hasn’t given any indication it is about to cut production, and Trump is content for prices to drop further to keep Americans happy at the pumps ahead of mid-term elections next November. For the White House, low oil prices offer the bonus of putting extra pressure on Russia, Iran and Venezuela.

Source: Bloomberg

Ben Lett, a Houston-based vice chairman in mergers and acquisitions at Bank of America, acknowledged it had been a difficult year but said lower commodity prices would ultimately create pressure for more M&A, especially at the smaller end of the market.

“This year was an interim period in the consolidation story,” Lett said. “There will be additional consolidation both at the small end of the independents and at the larger end. It just takes time.”

One standout deal this week suggests the stirrings of a recovery.

Publicly traded drillers SM Energy and Civitas Resources on Monday confirmed our reporting with the biggest shale deal of the year: an all stock tie-up valuing the combined entity at $12.8 billion including debt. In a recent report on the state of oil and gas M&A, Enverus Intelligence Research said consolidation among such small and mid-cap players could continue to deliver some wins for the sector, amid the scarcity of high-quality inventory from private sellers.

“Stock-for-stock swaps should be easier to negotiate in a weak crude environment compared to cash deals,” Andrew Dittmar, principal analyst at EIR, said in the report. “However, companies will need to scout for prospects with overlapping in-basin operations.”

This week has also brought news that private equity firm Sixth Street will buy some US shale assets from oil major BP, and KKR-backed producer Crescent Energy will sell its drilling portfolio in the Rocky Mountain region to Aethel Energy.

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“You are also seeing the majors come to market with divestiture packages, which has a tendency to lift the number of private opportunities out there,” said Bank of America’s Lett.—David Carnevali and Fareed Sahloul

M&A focus

Pfizer and Novo Nordisk have boosted their bids for Metsera as the ongoing battle for the obesity startup intensified ahead of a court battle slated for Tuesday, underscoring the surging interest in one of the fastest-growing areas in medicine.

Starbucks is selling a majority stake in its China business to private equity firm Boyu Capital at a $4 billion enterprise value. Boyu will hold up to a 60% interest in Starbucks’ retail operations in China through a new joint venture.

Budget apparel chain Primark could be separated into a standalone business in a move that would break up one of Britain’s biggest conglomerates. Associated British Foods is considering separating Primark from the rest of its business.

Just a month into becoming CEO at Yum! Brands, Chris Turner has decided that it might be time to ditch Pizza Hut. Yum has initiated a strategic review of the chain, which generates less than 15% of its total revenue.

Photographer: Waldo Swiegers/Bloomberg

Goldman Sachs CEO David Solomon said in a Bloomberg TV interview that the bank sees a ”tremendous backlog of significant consolidating situations.” The current environment for large M&A is quite “constructive” for 2026 and 2027, particularly in the US, he said.

Specialty chemicals manufacturer Element Solutions has agreed to to buy EFC Gases & Advanced Materials to boost its business that supplies the semiconductor and satellite industries.

Bob Diamond sees the number of US lenders dwindling by 3,000 in the next two to three years as regulators embrace consolidation of the industry—a trend that he hopes to help accelerate with his firm Atlas Merchant Capital.

IPO watch

WeRide raised HK$2.39 billion ($308 million) from its Hong Kong share sale, Julia Fioretti and Dave Sebastian report. The company joins a slate of US-listed Chinese firms seeking a second listing in one of the world’s busiest markets.

A cloud is hanging over one of Japan’s biggest listings of the year as investors including Citadel and Norges Bank claim in court filings that the price offered to take SBI Shinsei Bank private in 2023 was too low.

Activist corner

Australian billionaire Brett Blundy is pushing for changes to the board of Victoria’s Secret after accusing the lingerie retailer of failing to engage on steps to improve value. Blundy, founder of investment firm BBRC International, wants board chair Donna James out and a new independent chair put in place. Victoria’s Secret is considering adding Blundy to its board.

Who’s news

EFG Hermes has appointed former HSBC banker Christopher Laing as head of its equity capital markets franchise, adding to a regional talent battle as the Middle East remains one of the world’s busiest hubs for share sales.