The targets in both $10 billion-plus M&A deals announced in December 2022 received hefty market premiums that helped their stock prices recover some of the losses they had sustained earlier in the year.

Chr. Hansen Holding A/S, a Denmark-based bioscience company, received a nearly 50% market premium based on the $12.37 billion announced transaction value in its pending merger with Novozymes A/S, also a Denmark-based bioscience company.

Shares of Horizon Therapeutics PLC climbed roughly 50% from late November 2022 — when the company announced it entered deal talks with potential partners — to December 2022, after it agreed to a deal with Amgen Inc. The combination of the U.S. based-biotechnology companies had an announced value of $28.12 billion.

At times during 2022, Horizon's stock price was down more than 40% while Chr. Hansen was down more than 30%.

Buying opportunity

Many companies suffered stock price drops in 2022, a year in which asset prices took a hit as recession fears grew and central banks raised interest rates in an effort to combat inflation. The depressed valuations gave buyers an opportunity to purchase targets at historically lower prices.

* Access a list of pending and completed M&A deals announced since Jan. 1, 2012. * Access the S&P Capital IQ Pro M&A summary page for U.S. financial institutions. * Read more M&A news.

Targets do not always want to sell at the reduced prices though, which led in part to a drop in large M&A deals in the second half of 2022. The final two quarters of the year produced 10 global M&A deals valued at $10 billion or more — half as many as the number announced during the first half of the year. During the same period, the total value of such transactions fell 65.2% to $177.81 billion from $510.77 billion.

Ending on higher note

The final two months of 2022 brought a pickup in large deal announcements. Of the eight $10 billion-plus deals announced in the fourth quarter, seven were announced in November and December.

Investment banks that advise on M&A transactions would welcome a continued pickup in larger deals, given the big paydays they can receive from them. For instance, Morgan Stanley stands to earn $80 million in fees if the Horizon sale to Amgen closes.