2025 MERGERS & ACQUISITIONS UPDATE & OUTLOOK
- Global M&A activity totaled $3.0 trillion through the first nine months of 2025, up 33% year-over year
- Domestic deal activity year to date increased 25%to $1.4 trillion
- Cross-border transactions were notably strong, increasing 37% YoY to $988 billion
- Private equity transaction totaled $654 billion, equating to 22% of total M&A
- Deal spreads have remained relatively consistent throughout the year, averaging around 6-9%, while deals with increased regulatory scrutiny have traded with larger spreads
- Technology, industrials energy & power, and financials were the most active, accounting for about 62% of all announced activity
The above information is taken from LSEG Global Mergers & Acquisitions Review – First Nine Months 2025
WHY MERGER ARBITRAGE IN 2026
We anticipate deal activity to be robust driven by:
- Regulatory Shift: The new antitrust leadership under FTC Chair Andrew Ferguson and DOJ’s Gail Slater have signaled a more business-friendly, pragmatic enforcement stance, marking a notable change from the previous administration.
- Sector Consolidation: We expect continued consolidation across various sectors, but particularly within metals & mining, software & cybersecurity, and healthcare, with an emphasis on small and mid-cap targets, deals which are easier to integrate and have a lower probability of attracting antitrust scrutiny.
- Diversification: Allocating to merger arbitrage strategies can be a terrific way to provide portfolio diversification, as investing in these special situations offer lower correlation to the broader equity markets.
The months ahead present a compelling setup for global M&A to accelerate, with rising CEO confidence, loosening regulatory conditions, and strong strategic and sponsor appetite driving activity. For client’s looking for exposure to the broader equity markets with reduced volatility, we offer two solutions that incorporate investing in announced M&A. Our M&A team is always available to speak further about our positioning and the current deal environment.
Gabelli ABC Fund (+5.7% YTD)
Class I: GABCX | Class Adv: GADVX
- Merger arbitrage expertise: invests globally in announced M&A deals, seeking to capture spreads with lower market sensitivity
- Proven downside protection: positive returns in 30 of the past 32 years, while averaging 5.2% annually since 1993 (as of 6/2025)
- Diversification benefit: absolute return focused with historically low correlation to equities, beta of just 0.15 vs. the S&P 500 since inception
- Robust deal activity: expectation of resurgence of deal activity driven by renewed board confidence, pro-business regulatory environment and need for technology
Gabelli Enterprise M&A Fund (+13.2% YTD)
Class Y: EMAYX | Class A: EMAAX | Class C: EMACX
- Combination of two of our core competencies:
– Merger Arbitrage: Investing in announced deals globally, dedicated strategy and team since 1985
– Private Market Value + Catalyst Investment Methodology: Focusing on companies which are ripe candidates for financial engineering to surface value - Robust deal activity: expectation of resurgence of deal activity driven by renewed board confidence, pro-business regulatory environment and need for technology
Closed Deals:
The deals listed below are ones which we owned in our portfolios and had strong contribution to performance.
- Juniper Networks sells network routers and switches, primarily to enterprises. On January 9, 2024, the company agreed to be acquired by Hewlett Packard Enterprise for $40.00 per share in cash. On January 30, the Justice Department sued to block the transaction, but on June 27,a settlement was reached with the parties and the DOJ, allowing the deal to close on July 2.
- GMS is a distributor of building products including wallboard and ceiling systems. QXO had initially proposed to acquire the company for $95.20 per share in cash. On June 30, GMS agreed to be acquired by Home Depot for $110.00 per share in cash. The deal closed successfully on September 4 after a majority of outstanding shares were tendered into the offer and clearance of regulatory approvals.
- Amedisys is an in-home healthcare provider for hospice and high-acuity care services. On June 26, 2023, the company agreed to be acquired by UnitedHealth for $101 per share in cash. On November 12, 2024, the Justice Department sued to block the transaction. But on August 7, a settlement was reached after UnitedHealth agreed to divest at least 164 locations across 19 states. The deal closed on August 14.
DISCLOSURES
Returns represent past performance and do not guarantee future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so, upon redemption, shares may be worth more or less than their original cost. To obtain the most recent month end performance information and a prospectus, please call 800-GABELLI or visit www.gabelli.com.
As of September 30, 2025, affiliates of GAMCO Investors, Inc. beneficially owned less than 1% of Hewlett Packard Enterprise, Home Depot, and UnitedHealth.
As a non-diversified Fund, the Gabelli ABC Fund may have a larger portion of its assets in a single issuer than a more diversified fund. Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues including currency fluctuations, economic and political risks. Because the Fund invests in announced mergers or acquisitions, the Fund is subject to the risk that the announced merger or acquisition may not be completed, may be negotiated at a less attractive price, or may not close on the expected date. The Fund may not achieve its objective and you may lose money by investing in the Fund.
The Gabelli Enterprise Mergers and Acquisitions Fund is a non-diversified fund, which means that it can invest in a limited number of issuers. The Fund may invest in foreign securities. Investing in foreign securities involves risks not ordinarily associated with investment in domestic issues including currency fluctuations, economic and political risks. The Fund may invest in small and mid capitalization securities. Small capitalization stocks are subject to significant price fluctuations and business risks. The stocks of smaller companies may trade less frequently and experience more abrupt price movements than stocks of larger companies; therefore, investing in this sector involves special challenges.
This is not intended as impartial investment advice under the Department of Labor Fiduciary Rule and has not been individualized to any plan.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. The prospectus, which contains more complete information about this and other matters, should be read carefully before investing. To obtain a prospectus, please call 800 GABELLI or visit www.gabelli.com
Not FDIC Insured. Not Bank Guaranteed. May Lose Value
The Gabelli Mutual Funds are distributed by G.distributors, LLC., a registered broker-dealer and member of FINRA
