5 derailed deals: HP, TGI Fridays among those losing buyers during coronavirus crisis
The coronavirus pandemic has already quashed a number of previously announced deals, including Xerox’s hostile takeover bid for HP. More deals are expected to fail, as companies focus on preserving cash and ensuring debt access just to make it through the challenging economic cycle.
The auto, retail, restaurant, travel and manufacturing sectors have been particularly hit hard, as they face declining sales and location closures. Automotive manufacturers are restructuring their businesses, and car dealerships are seeing fewer people walk in the door. Manufacturers are cutting investments and production.
“The major auto manufacturers were already reeling from the effects of the trade war on supply chains,” says GlobalData lead analyst Aurojyoti Bose. “The virus outbreak has multiplied problems for the industry with a cloud of uncertainty over the path forward.”
Jaguar Land Rover owner Tata Motors plans to separate its cars business from trucks and buses. Car sales are falling, and that is expected to continue as the coronavirus is limiting travel, and financing new vehicles becomes more difficult.
The restaurant industry is also facing extreme challenges. Social distancing is restricting restaurants to take-out and delivery offerings only, and many chains have seen a drastic drop in sales, while others have gone bankrupt.
“To date, many consumers have continued to buy restaurant meals through delivery, takeout, and drive-thru to the degree allowed by the restrictive environment; but with rising unemployment, payroll reductions, and temporary furloughs, consumers may begin to think differently about their food budgets overall,” says NPD food industry advisor David Portalatin.