Follow the Money: M&A Activity Across Robotics, AI & Health Tech

Past the halfway mark, 2021 is shaping up to be another record year for mergers, acquisitions and venture funding in robotics, AI and healthcare technology. Over the past six months, eight members of the ROBO Global ETFs received takeover offers, reflecting what we believe to be a growing corporate urge and appetite for advanced technologies.

The combination of digital and physical transformations over the past year has potentially created a perfect storm for capital to flow into robotics, AI and healthcare technology. In 2021, we have seen automation deployments across all sectors of the economy.

 

Leading Causes for Corporate Investments in Disruptive Tech in 2021

  • Supply-chain disruptions
  • Semiconductor and labor shortages
  • Rising commodity prices and other critical chokepoints in this booming economic recovery amid a global pandemic

 

De-risking these points of failure has become a priority in boardroom discussions, leading to a boom in M&A activity as both offensive and defensive measures to try to future-proof businesses. While Covid-19 created chaos in 2020, it also provided a peek into a future where agile organizations thrive, with quick and snappy supply chains for one-day order deliveries and touchless and automated retail experiences. Here at ROBO Global, we see the path towards increasingly frictionless operations as inevitable.

This will require companies large and small to build or acquire robotics, automation and AI capabilities to remain competitive in the eyes of both customers and shareholders. Barring any significant external shock, we think the pace of acquisitions across robotics, AI and healthcare is unlikely to slow and competition for quality assets to drive transaction values even higher.

 

Why Now? Unique Market Conditions Driving Capital

Corporate M&A activity, in general, is breaking records thanks to a combination of market factors that are enabling companies to accelerate their plans to digitize and future-proof their portfolios.

 

  • record-high valuations
  • strong cashflows
  • low borrowing costs

 

The Technology Sector is Leading the Pack in M&A Activity

 

According to Refinitiv, the $3.6 trillion total pending and completed deals as of 9/1/2021 already surpasses last year’s $3.59 trillion. The technology sector led the way with $800 billion in transaction value.

 

Robotics M&A Highlights

M&A has provided a strong tailwind to ROBO since its inception in 2013 with a total of 25 attempted takeovers of index members in seven years, reflecting the increasingly high value given to robotics, automation, and AI technologies by large companies.

So far in 2021, four ROBO index members (FLIR, Nuance, Hollysys and Raven) have received takeout offers on the heels of a banner year in 2020, when a record seven index members received offers.

 

All Time ROBO Index Deals

  • 2021 (through Sept. 1, 2021): 60 deals involving 32 ROBO index members totaling more than $23 billion in value
  • 2020: 107 deals in 2020 involving 40 index members and totaling over $62 billion
  • 2019: 97 deals in 2019 worth over $17 billion.

 

AI M&A Highlights

Artificial Intelligence in all its forms has seen one of the fastest adoption rates and usage across nearly all industries, even before the pandemic began. Since the inception of the THNQ index, there has been a total of nine takeover attempts with 6 occurring in 2021 alone. Furthermore, as of 9/1/21, there have been 97 completed acquisitions by THNQ index members and 48 deals totaling over $74 billion in value.

Six THNQ index members have received takeout offers so far in 2021, as the race to build the best cloud-based data platform is underway.

 

Healthcare Tech M&A Highlights

We anticipate M&A will increase in the coming year with a shift towards AI, data analytics and other technology solutions that will improve the efficiency of care that can help produce faster and better healthcare outcomes and help reduce physician burnout. Additionally, we expect continued consolidation of the rapidly verticalizing digital health industry.

Since HTEC's inception, there have been 6 takeout offers, and its members have completed 225 deals totaling over $100 billion.

 

All Time HTEC Index Deals

  • 2021: 73 deals (completed and pending) worth $50.1 billion made by index members as of September 1, 2021
  • 2020: 93 deals valued at $66.7 billion
  • 2019: 59 deals totaling $16.8 billion.

 

We believe robotics, healthcare tech, and AI should continue to be a major focus across all sectors and major business development plans as companies globally prioritize technology not just to thrive but survive.

Despite the economic turmoil created by the COVID-19 pandemic, we have witnessed this flurry of mergers and acquisitions in disruptive tech, proving that investment is likely not slowing down. For investors in innovation, we believe that these signals point to strong future growth potential across the ROBO, HTEC, and THNQ ETFs.

 

 

 

 

ROBO Top Ten HoldingsHTEC Top Ten HoldingsTHNQ Top Ten Holdings

 

This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.

 

 

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