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The Latest Excuse for Deals Falling Through? GDPR

Nov. 13, 2018, 5:36 PM

Pity the dealmakers.

While 2018 is on track to be a banner year for global M&A, about $1.3 trillion of deals have fallen through, according to data compiled by Bloomberg. Close to 900 transactions have been terminated or withdrawn this year, including Allergan Plc’s pursuit of Shire Plc, and Qualcomm Inc.’s takeover of NXP Semiconductors NV.

A report released this week has just identified a new scapegoat for busted deals: the European Union’s General Data Protection Regulation. Rolled out this year, the GDPR forces companies to clearly state when they’re collecting personal data and ask for users’ consent.

Its implementation is becoming a major hurdle to deal-making, particularly in Europe, Africa and the Middle East, according to a survey by Merrill Corp. and Euromoney Institutional Investor Plc.

Fifty-five percent of respondents said the primary reason that a transaction had stalled was due to concerns about a target company’s data-protection policies. Two thirds of the 539 M&A professionals surveyed said the law would add a level of complexity to due diligence as acquirers scrutinize their targets’ compliance.

Failure to comply with GDPR can bring down penalties of as much as 20 million euros ($23 million) or 4 percent of annual revenue, whichever is higher. At that price, many acquirers clicked “opt out.”

©2018 Bloomberg L.P. All rights reserved. Used with permission

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net Matthew Monks