European Buy & Build activity reached its highest recorded level in 2018 with a total disclosed deal value of GBP9.5 billion, according to Silverfleet Capital’s European Buy & Build Monitor.
Despite increased Brexit uncertainty, the UK & Ireland remained steadfast as the most active region for add-ons.
The Buy & Build Monitor, which tracks global add-on activity undertaken by European-headquartered companies backed by private equity, identified a provisional total of 702 add-ons in 2018, an 8 per cent increase from the 650 recorded over the same period in 2017.
The average disclosed value of add-ons in 2018 was GBP164 million2, up from the 2017 average of GBP80 million. However, 2018 saw just 16 add-ons with values greater than GBP60 million or EUR67 million announced, significantly fewer than the 35 deals exceeding GBP60m announced in 2017.
The largest recorded private equity-backed add-on in 2018 was CVC and the Messer Group’s USD3.3 billion acquisition of Linde AG’s gases business in North America and certain Linde and Praxair activities in South America.
The UK & Ireland and the Nordic region remained the most active add-on regions with 131 and 103 deals respectively, but both suffered falls of 7 per cent and 14 per cent compared to the previous year. The former’s drop in activity from 141 add-ons to 131 is in large part due to growing political uncertainty, which significantly hampered domestic investment over the course of the year.
France registered the biggest surge in Buy & Build activity, rebounding with a 15 per cent increase (75 add-ons versus 65 in 2017). The DACH region similarly bounced back with an 11 per cent increase (73 versus 66) and Italy continued its stable growth, announcing 51 add-on deals compared to the 46 announced in 2017.
The Nordic region’s biggest contributor in 2018 was Sweden, staging a strong recovery with 42 add-ons, up 24 per cent from 2017. This was offset by weakened activity in Denmark and Norway, which both had ten fewer add-ons than in 2017.
Despite registering fewer transactions, Danish ferry operator Molslinjen’s acquisition of shipping company Danske Færger for DKK 594 million meant the country had one of the largest add-ons of the year.
Outside of Europe, North America too suffered a notable fall in add-ons made by European companies compared with the previous two years, with 11 fewer made than in 2017, marking a 20 per cent decrease.
Silverfleet’s buy & build activity in 2018 includes 7days’ acquisition of Praxis Herning A/S. 7days is a specialist workwear supplier to the healthcare sector based in Germany and agreed to acquire the Danish company Praxis Herning A/S, which supplies the same end markets in the Nordic region. The purchase price has not been disclosed. The acquisition is the first step in the growth strategy for 7days, in particular through increasing its market penetration in other regions of Europe.
Gareth Whiley, Managing Partner of Silverfleet Capital, says: “The volume of transactions has risen every year since 2013, driven by liquid financing markets, a resilient European economy and increased appetite among private equity-backed companies to generate growth through acquisition. The fact that the UK & Ireland continued to lead the way in add-on activity despite a slow start to the year and Brexit uncertainty speaks volumes for the growing success of this method of value creation.”