US Steel & Nippon, Adobe, Illumina: Top M&A announcements

Japanese steel producer Nippon Steel (5401.T) is set to acquire United States Steel (X) in a deal valued at up to $14.9 billion when accounting for debt. Adobe (ADBE) relinquishes its $20 billion takeover bid of collaborative design app Figma.

Lastly, biotech company Illumina (ILMN) plans to divest cancer test developer GRAIL following antitrust headwinds, planning to sell it for up to $7.1 billion.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- Our top story, meanwhile today, we're going to dig into a number of deal announcements. More than $40 billion worth of M&A was announced today. That's according to Bloomberg. Highlights include that $14 billion takeover of US Steel by Nippon Steel.

Gene sequencing machine company, Illumina, meanwhile, selling its cancer test developer, Grail, for $7 billion. And on the other side, Adobe abandoning its $20 billion acquisition of design software company, Figma.

So where to begin, Julie? A lot of headlines here. Deals getting done, not getting done.

- Yeah. I mean, and that $40 billion also accounts for stuff that is not necessarily the top of the top, in terms of our headlines. Say, Koch Industries making an acquisition of a fertilizer business, for example.

I think we should start with the steel deal because it is quite an interesting one. And, I guess, started on an up note here with this 122-year-old company.

- Iconic company, yeah.

- Getting taken out by a Japanese steel giant.

- Yeah. And there was a back and forth here. So by the way, this would be a big deal. From what I'm reading, this would be-- if it gets done here, this would be the biggest steel company outside of China. So this is big.

Of course, US Steel, the backstory had been thinking over these potential transactions for some time. Rejected that offer from rival Cleveland-Cliffs, And the board at US Steel clearly thought, you know what? I think we can do better.

- And they could.

- And they did do better, as it turns out. Nippon, biggest steel producer in Japan moves in, will pay 55 in cash.

- Yeah, there are some interesting wrinkles here. I mean, I think the build up to the deal getting done is interesting, to your point. You have to ask the question, given the other stories we're going to get to today, if there's going to be any regulatory scrutiny here?

What's interesting is the United Steelworkers Union is calling for scrutiny of the deal. They had favored Cleveland-Cliffs, which is another union shop, to combine with US Steel. But ultimately, they could not get that deal done. So we'll see if the union does end up putting enough pressure on regulators here to take a look at this deal.

- And sticking with regulators.

- Yes.

- So then Adobe and Figma terminate their $20 billion deal. And the basic bottom line was the company just said, listen, there's no clear path here to getting the green light, right, from regulators from the EU and the UK's CMA. See, Adobe quoted as saying in reports here that the CMA's proposed remedies were disproportionate.

This was a big bet by Adobe. And the company did just report earnings last week. We didn't hear anything at that point, but they dropped this headline today.

- Yeah. And last week, they got punished a little bit because they did not meet sort of the loftiest projections from analysts as to how they were going to do in the coming year. So what is this going to mean for Adobe?

It's going to have to pay $1 billion termination fee, that's what they had agreed to. The CEO, Shantanu Narayen, saying the companies disagree with the rulings on the parts of regulators, but they think it's in the best interest.

What I thought was interesting is the almost unanimity of analysts who say, good riddance.

- Exactly. Yeah.

- It's a relief that this--

- It is interesting. Yeah.

- That this a decision has been come to and they're going to not go through with this. There had been, again, not universal, but the broad view that Adobe might have been overpaying for Figma. So I think that's part of the relief that's being expressed.

- In fact, Barclays goes to an overweight on the name, by the way. In fact, the deal, an implied dilution, they told their clients, had kept on the sidelines. So they actually saw that headline as kind of a positive catalyst or reason to move in.

- Yeah. And then finally, just quickly here on Illumina, because we do want to get to a broader look at the markets. Illumina went ahead and made an acquisition that seemed to be kind of panned by regulators. There was a whole activist campaign from Carl Icahn that eventually, in part, ended up costing CEO, Francis deSouz, his job at Illumina.

Now, Illumina says, never mind--

- Icahn basically saying, you blew money on this.

- Right. Exactly. So we don't exactly know how much Illumina is going to get for Grail. We don't know how they're going to-- who they're going to sell it to, how they're going to spin it off, but they said, they're getting rid of it. And again here, relief on the part of investors--

- For sure.

- --who had seen this as an overhang.