Quarterly deal volumes in the European M&A market fell 21.6 per cent over Q4 2008 and Q1 2009 to match levels last seen six and a half years ago, according to the latest Deal Driver
Quarterly deal volumes in the European M&A market fell 21.6 per cent over Q4 2008 and Q1 2009 to match levels last seen six and a half years ago, according to the latest Deal Drivers Europe report by mergermarket and Merrill DataSite.
Activity was focused in traditionally defensive sectors. The report says the lack of activity within financial services is perhaps indicative that the number of forced and distressed transactions has now bottomed out.
Private equity activity began to recover in Q2, with 125 transactions worth EUR4.6bn being announced – the largest of which was May’s consortium acquisition of an 80 per cent stake in Enel Rete Gas.
During H1 2009, the energy, mining and utilities sectors accounted for over half of the total collated value of M&A in H1 2009, with EUR66.2bn of transactions being announced in the sector.
The largest single transaction was in the pharmaceutical sector and saw Roche acquire a 44.2 per cent stake in Genentech for EUR34.6bn.
The consumer sector witnessed 262 deals worth a combined EUR6.2bn, notable due to its acute exposure to the economic downturn.
Paul F Hartzell, senior vice president, DataSite, Merrill Corporation, says: ‘While the first half of 2009 was chiefly characterised by forced divestments and defensive corporate plays, the fact that European M&A volumes are now bottoming out is a positive sign for prospective deal flow over the second half of the year. This, coupled with the fact that some semblance of normality is now returning to wider financial markets, bodes well for the region’s M&A community.’
The report also found that the UK & Ireland accounted for the largest proportion of European deal flow over H1 2009 with 282 deals coming to the market, comprising 18.4 per cent of overall M&A volume.
The largest deals by valuation occurred in the Benelux region, which witnessed EUR28.2bn worth of deals over H1 2009.
Transatlantic M&A activity was relatively steady in H1 2009, with deal volumes dropping slightly from 98 transactions in Q1 to 90 over the Q2.
Industrials and chemicals deals dominated the European M&A market over H1, accounting for 316 of the 1,530 deals.
Predicted areas of activity for the remainder of 2009 and H1 2010 include the consumer and industrials sectors in the CEE (excl Russia) region. Germany, Switzerland and Austria are likely to see a swathe of activity in the TMT, industrials and consumer sectors. The UK M&A market is likely to see the bulk of forthcoming M&A activity occur in the TMT and financial services spaces, the latter of which is also a likely prospect in the Middle East.
