M&A activity in Germany in terms of share to the total value of transactions in Europe. has seen a significant decrease, according to a new report by MergerMarket.
With total declared deal values at EUR55.7bn during 2014, German M&A activity dropped 17.6% compared to EUR67.6bn. However, total deal count for the year was the highest on Mergermarket record with 798 transactions, beating the previous high of 740 set in 2013.
Germany’s deal activity overall constituted only 8.3% to the total value of transactions in Europe during 2014, compared to the 14% in 2013. “Germany saw a decline in industrial output, exports and retail sales in Q4, which is reflected in the final quarters’ M&A,” says Johannes Koch, bureau chief of Mergermarket Germany. “After a strong first three quarters of the year with deals above EUR10bn, deal activity slowed during Q4 and reaching only EUR7bn.”
Marked by growth in transatlantic deal making, there was a significant increase in total cross-border activity during 2014. Inbound takeovers continued a trend of five consecutive annual increases by value, reaching a total of EUR44.2 bn. Emphasising this trend, 394 deals were the highest number on record, 56 more than the its peak in 2007. Globally, the US made the most acquisitions in Germany, increasing 191.3%. German firms were the target of 91 deals which contributed EUR13.5bn to the US-outbound activity into Europe.
German outbound activity was exceptionally positive – with deals valued at EUR83.9bn it reached the second highest annual value after 2007. German investments into the US have led this high with Mergermarket recording 53 deals worth EUR49.5bn – a 165% increase compared to the previous high of EUR18.7bn in 2012. This makes up almost a quarter (24.8%) of Europe’s total outbound deal making into the US. “Pharmaceuticals was a key driver, with two mega-deals taking up over 40% of the total investment into the US with. Merck’s acquisition of Sigma-Aldrich and Bayer’s takeover of Merck’s US-based consumer care business”, states Johannes Koch. “Figures show that the US continues to play a major role for M&A transactions globally. We expect them to remain an important destination for European companies and Germany.”
With five deals above EUR1bn the Industrials & Chemicals sector kept its status as the most active sector by value with EUR16bn-worth of deals, accounting for 29% of the total German M&A activity. Due to the absence of large-caps deals (above EUR5bn) during 2014, the TMT sector, the target industry of the highest valued German deal during 2014, saw its market share by value drop to 19%, compared to 41% in 2013.
