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M&A European deal flow to grow towards the end of 2012

Merger and acquisition deal flow into Europe is set to grow towards the end of 2012 and into 2013 as overseas buyers, including those in Asia Pacific, North America and South America, target discounted European M&A opportunities, according to Clifford Chance.



Arndt Stengel, M&A partner in Frankfurt, says: "We expect to see a rise in European M&A activity driven by increasing investment opportunities in Europe. High quality assets are becoming available at competitive valuations as European sellers, including distressed sellers, are disposing of non-core assets.  This is attracting larger international buyers with a strong cash position, looking for the right opportunities to expand and grow their core business."

Roger Denny, head of corporate in Asia Pacific, says: "Companies in many parts of Asia, including China, Japan and Korea, are assessing opportunities to snap up discounted targets in Europe, often targets with exposure to higher growth markets in other regions. Of course, integration planning needs to be carefully considered upfront, and is sometimes the stumbling block for these potential opportunistic purchases."

Clifford Chance expects that global M&A in Q4 will continue to be driven by high levels of cash on the balance sheets of companies with the appetite and opportunity to access growth through cross-border transactions. Regulatory change in the financial institutions sector continues to underpin FIG M&A activity across all regions, as institutions dispose of non-core assets to strengthen their capital positions and to comply with changing regulatory requirements.

Matthew Layton, global head of corporate, says: "We are continuing to see companies in the low-growth developed economies looking to drive higher returns by accessing the higher growth and emerging markets with the increasing spending power of their consumers – just this week it was announced that Diageo is in talks to acquire a stake in India’s premier distiller United Spirits, following recent deals in other emerging markets – Turkey, Brazil, China, Vietnam and Tanzania. We have also seen a string of outbound M&A deals by Japanese corporates in the last quarter, and several FIG deals motivated by the changing regulatory landscape".

Tim Wang, corporate partner in Beijing, adds: "There’s an appetite for buyers from the higher growth markets for opportunities in the developed economies to access technology, customers and of course brands – as we have seen recently from the acquisition of Weetabix by China’s Bright Food, and Mayhoola (the Qatari royal family’s investment vehicle) acquiring Valentino. In Asia we are also seeing a notable uptick in intra-Asian M&A and in outbound M&A into the Southern hemisphere, including Australia and Africa."

Whereas energy and natural resources M&A has continued to dominate global M&A from 2011 into 2012, Clifford Chance has also seen significant activity levels in the TMT sector, with the value of technology sector M&A representing an increasing proportion of global M&A. 
 

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