Weekly Update: Assessing the Impact of COVID-19

Below are our weekly summary thoughts on the M&A market, the economic outlook, and reasons to be optimistic.

Reasons for Optimism in M&A and Capital Markets

• 123 deals closed in the U.S. & Canada over the past 7 days (last week 185 deals closed)
• Fed buys $305 billion of U.S. listed ETFs in first two days of intervention into corporate debt market
  • Anticipating $100 – $120 billion of U.S. investment-grade corporate bond issuance in June, on pace for record $1.2 trillion supply in 1H2020
• S&P 500 Index is up 31% from its 2020 low (down 13% from its all-time high)
• Oil prices rise due to increasing global fuel demand, rising factory activity in China, and record supply cuts
• U.S. lawmakers in discussions to revise small-business aid program, which includes more flexibility in spending and extension of time to spend funds
• This is truly a tale of two cities; it is both the best of times and the worst of times
  • Number of companies having remarkable years is extraordinary: Nintendo, Clorox, Amazon, Peloton, Publix, Kroger, Wayfair, Slack, Zoom, DoorDash, 3M, Uber, etc.

Good News We’ve Been Reading

 Economic Recovery Beginning Across Globe

• United States: all 50 states have begun reopening!
  • Entertainment update
    • South Carolina beaches opened May 16^th
    • Wyoming opened Yellowstone National Park May 18^th
    • Florida’s lodging space sees occupancy recover to 50% – 60% over Memorial Day weekend
    • Professional sports, childcare providers, gyms, and entertainment attractions resume in Texas
  • Sports Update
    • National Hockey League making progress on plan that would allow fall season to resume with 24-team format
    • Several National Basketball Association teams reopen facilities for players to voluntarily practice
    • National Football League releases 2020 schedule, indicating plans to start as usual in September
  • Europe: EU continues plans to reopen internal borders, goals to reopen for summer tourism with security measures and limitations in place if coronavirus is kept at bay
    • Greece: 500+ beaches reopen as temperatures look set to soar
    • France: domestic vacations resume in July & August
    • United Kingdom: campsites report increased bookings
    • “Baltic bubble” permits travel between Estonia, Latvia and Lithuania, mirroring the planned Australia-New Zealand zone
    • Croatia and Slovenia reach similar agreement
    • Italy & Spain: record fewest daily deaths since entering lockdown in March, announce plans to consider reopening internal borders in June
    • Iceland: expects to ease restrictions on international travel in mid-June
  • Thailand: traditional dancers return to streets & hotels train employees in hospital-style cleaning, preparing for travel between provinces
  • Taiwan’s pilot-program sees 500 travelers from San Francisco tested every two days to determine if shorter quarantine period is feasible
  • Aruba, Antigua, and Barbuda to open mid-June to early-July

Vaccine Development Update

• AstraZeneca receives +$1 billion from U.S. Health Department to develop Oxford’s vaccine, agrees to supply at least 500 million doses and to secure total manufacturing capacity to produce 1 billion doses with first deliveries in September
• Early results for Moderna’s first human study are positive, suggesting Moderna is on track to meet its ambitious timetable for emergency vaccine use in the Fall
• Coalition for Epidemic Preparedness Innovations gives +$380 million to Novavax Inc. to develop vaccine made in various countries for worldwide distribution
• Thomas Jefferson University signs exclusive deal with Bharat Biotech to develop vaccine using existing rabies vaccine as a carrier, delivering coronavirus proteins to trigger immune response

Testing Update

• To date, the FDA has worked with 400+ test developers on tests that detect the virus or antibodies to the virus
  • Authorized 103 tests under Emergency Use Authorization, including 90 molecular tests, 12 antibody tests, and 1 antigen test
  • Recently includes Everlywell’s first standalone at-home sample collection kit

Innovations Bloom, Habits Change as Society Adjusts to COVID-19

• China’s smartwatch brand Amazfit designs self-disinfecting mask with UV light
• New Zealand’s Putti Apps launches free check-in app for sports clubs, charities, and churches
• Canada’s Fairmont Hotel MacDonald launches social distancing wedding packages
• Zurich Airport & Brussells’ train station boast Selecta vending machines providing essential protective gear
• French designer Christophe Gernigon creates Plex’Eat concept for COVID-safe dining
• London’s Forest Road Brewing Company uses “pub-on-wheels” to deliver fresh pints to doorsteps

ArkMalibu is happy to answer any questions you may have and to offer guidance during this challenging time.

Until our next update, we send best wishes to you and yours for safety and health.