Neil MacDougall, managing partner of Silverfleet Capital

Continued downward trend in European buy and build activity in Q3 2012

Buy and build add-on activity in Europe has been even weaker than the subdued levels seen in H1 2012, and well below the same quarter in 2011, according to Silverfleet Capital and mergermarket’s Buy & Build Monitor for Q3 2012.

The volume of buy and build activity in Europe in Q3 2012 was slightly below the level seen in H1 2012, with only 50 add-ons completed in the quarter, compared with 142 add-ons in H1 2012 and 85 add-ons in the same quarter last year. This represents one of the weakest quarters since the nadir in mid-2009.

The average disclosed value of add-ons in the quarter was GBP42m, which was reasonably healthy compared to the H1 2012 average of GBP23m but still significantly lower than the average of GBP70m seen in Q3 2011.

Neil MacDougall (pictured), managing partner of Silverfleet Capital, says: “Any hopes we had of seeing an improvement in European buy and build activity levels in the second half of 2012 have taken a big knock from this data, which once again also reflects the weakness of the European buyout market. Even allowing for the fact that the number of add-ons for the most recent quarter is usually revised upwards as more buy and build deals subsequently come to light, this looks like it has been a very weak quarter with lower activity levels in most regions of Europe and none in Spain and Portugal.”

The largest add-on in the quarter for which a price was disclosed was the EUR212m acquisition of the German company CinemaxX by Doughty Hanson-backed Vue Entertainment.

The German speaking region of Europe was relatively active in the quarter possibly reflecting its stronger economic performance.

Two other notable deals were ISS’s acquisition of Shanghai B&A Property Management illustrating that one of Europe’s biggest buyouts is looking to China for future growth, and Tarkett’s acquisition of Ohio based Tandus Flooring, demonstrating the continued interest that European buyouts have in acquiring in the US, though neither of these two transactions had disclosed prices.

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