The European private equity boom experienced in recent years continued throughout the first half of 2007, with a record breaking EUR130.6bn worth of deals being completed during the first
The European private equity boom experienced in recent years continued throughout the first half of 2007, with a record breaking EUR130.6bn worth of deals being completed during the first six months of the year, according to the half-year edition of Mergermarket’s European Private Equity in Review.
According to Mergermarket, an independent M&A intelligence and research service, the second half of the year looks set to emulate the performance of the first six months, with private equity firms poised to purchase a number of targets, such as Spanish airline Iberia and UK supermarket company J. Sainsbury, at unprecedented values.
The sector that dominated the headline deals was consumer, and the private equity deal of the past six months was, without a doubt, the EUR17.8bn buyout of Alliance Boots by the company’s deputy chairman Stefano Pessina in partnership with Kohlberg Kravis Roberts, the report says.
The transaction, which was announced in April, was more than four times larger than the second-largest private equity deal, Terra Firma’s announced EUR4bn buyout of EMI Group, the UK-based music company.
In fourth place was Vivarte’s acquisition by Charterhouse Capital Partners for EUR3.5bn, which, along with the Boots deal, propelled the consumer sector to pole position in terms of value. The Vivarte deal was also the largest secondary buyout to take place in the first half of 2007 and one of five secondary deals in the top 20 deals for the period.
Secondary buyouts have increasingly featured in the European M&A area, Mergermarket says, with activity growing from 60 deals in the first quarter to 71 in the second, up from just 36 transactions in the first half of 2003.
In terms of value however, secondary deals have fallen sharply, with deal value in the second quarter of this year less than two-thirds of that in the record-breaking fourth quarter of 2006.
Deals such as the Alliance Boots buyout ensured that the UK dominated European private equity M&A activity, in terms of both buyout value and volume as well as exit volume. Three of the top five acquisitions announced over the period were of UK companies and UK private equity firms were prominent, with Terra Firma, Novator Partners and Charterhouse Capital Partners all bidding in the top five deals.
Looking forward, Mergermarket says increased European private equity activity is set to drive deal values even higher, with offers such as the EUR3.4bn bid by Texas Pacific Group and British Airways for Iberia in danger of being trumped by a possible bid from a consortium of Air France-KLM and Apax Partners.
TPG and BA recently announced that they would start the due diligence process on Iberia shortly, and a recent report suggests that if the Air France-KLM consortium were to make a counteroffer, they would do so once TGP and BA have examined Iberia’s books.
With every type of business from aviation to department stores now under private equity scrutiny, Mergermarket says, it is clear that private equity has finally emerged into the mainstream.
