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Who dares wins: European M & A Outlook 2020
A study of European M & A activity
In cooperation with:
September 2020 Contents
Foreword 3 Market commentary 4 CMS articles Latin America offers a trove of opportunities for foreign investors 6 The great divide in energy M&A as renewable sector enters boom period 8 The GP-led secondary: A new dawn or a flash in the pan? 10 COVID-19 reset: Need for high-quality upgrades clear as day 12 Market research M&A environment and expectations 14 Deal dynamics 30 Regional environment: The future of European M&A 36 Financing conditions 42
Conclusion 46
Methodology
In the second and third quarters of 2020, Mergermarket surveyed senior executives from 170 corporates and 60 PE firms based in Europe about their expectations for the European M&A market in the year ahead.
All respondents have been involved in an M&A transaction over the past two years. All responses are anonymous and results are presented in aggregate.
2 | European M&A Outlook Foreword
Welcome to the eighth edition of the CMS European M&A Outlook, published in partnership with Mergermarket
The last six months have been the most challenging for European dealmakers since the 2008 financial crisis. The COVID-19 pandemic and ensuing lockdowns have taken a heavy toll on the continent’s economies and sent M&A activity tumbling.
The European Commission is forecasting an 8.3% contraction in EU GDP for 2020. Year-on-year, Stefan H1 M&A activity in Europe was down 31% by volume and 29% by value. Brunnschweiler, Partner, Global However, there are some reasons for optimism. European economic growth is expected to Head of the CMS rebound in 2021 and, at least for now, loosening lockdowns have allowed vendors, investors and Corporate/ advisers to meet and advance deals. M&A Group But the speed and sustainability of economic recovery will depend in great part on the development of a vaccine. Until one is distributed, uncertainty and volatility will weigh heavily on market sentiment. It is unsurprising, then, that respondents to this year’s survey are cautious and readying themselves for a difficult and challenging period ahead.
Key findings from our research include:
M&A appetite weakens Financing conditions Distressed M&A, 74% of respondents say to tighten restructuring and the pandemic has caused 79% of respondents expect corporate defaults to rise their dealmaking appetite to financing conditions to All respondents anticipate lessen. 65% of respondents become more trying in the an increase in distressed are not considering M&A, coming year. Leveraged loan M&A, 90% say there will be against 45% in last year’s issuance is down year-on-year an increase in restructuring survey. Uncertainty around and, although corporates have activity, and 82% expect an future company earnings has been able to tap high-yield increase in corporate defaults. widened pricing expectations bond markets, lenders are The pandemic has already between vendors and focused on nursing current forced companies in sectors buyers. Dealmakers are portfolios through COVID-19 impacted directly by lockdowns nervous about paying full disruption rather than funding – such as aviation, retail and multiples for assets at a new transactions. Debt leisure – into insolvency and time of high volatility, while for deals is expected to be restructuring. As government vendors are reluctant to more expensive and issued support mechanisms crystallise lower valuations on tighter terms than were unwind, more businesses at the bottom of the cycle. available pre-pandemic. will encounter distress.
3 Market commentary
Intrepid M&A explorers will find rewards in the COVID-crisis tundra
Scott Moeller, professor and director of deals in H1 2020, the percentage the M&A Research Centre of The Business represented by Europe has risen to 29% of the global total from School, City, University of London, analyses 19% in the same period last the key trends in European dealmaking year. The report shows that this increased percentage should remain steady over the next year or so. In the early 20th century, Vilhjalmur Stefansson, the legendary Icelandic Europe is well-positioned to American explorer of the Canadian maintain this rising percentage Arctic, said, “There are two kinds because it is strong in many of of Arctic problems, the imaginary the industries, where the experts and the real. Of the two, the surveyed found reason for imaginary are the most real.“ optimism. This includes both the technology, media & telecoms Scott Moeller, The same might be said about the (TMT) and pharma, medical & Professor and outlook for European M&A in late biotech (PMB) sectors. Indeed, very Director, M&A 2020. When we look at the first large deals, admittedly announced Research Centre half of the year, the future looks before the height of the pandemic of The Business dismal and we imagine worse but that remained on track to School, City, is yet to come. Yet the in-depth close despite those headwinds, University of analysis in this report – which drove much of that value. London surveyed more than 230 senior executives from corporates and It will be an upward climb, private equity firms in Europe – however, as almost two-thirds goes beyond the commonly-heard (65%) of the dealmakers contacted superficial negative assumptions for this report said they were not to reveal pockets of strength and considering M&A at this time, 20 reasons for considered optimism. percentage points worse than last year. Obviously, uncertainty Part of that optimism comes from due to COVID-19 is the principal the relative strength of Europe reason given (by almost three- vis-à-vis the rest of the world. quarters of those contacted), but Mergermarket data shows that, there are other drivers as well. The although Europe’s share of global most important were the fear of a M&A deal volume has dropped global recession and a reduction commensurate with the rest of in cross-border activity due in the world, in terms of value of part to the increased antitrust
4 | European M&A Outlook regulatory scrutiny (including deal driver, with much of this will be worse than last year. Within restrictions on cross-border happening through their corporate this context, private equity, credit acquisitions originating from venture capital investment arms. funds and non-bank lenders certain countries, notably China). were identified as the sources of This has been partially offset by As noted above with the slowdown funding that would be most readily the increase in the percentage of of cross-border activity, only 5% of available, though these too were intraregional deals done in Europe corporates surveyed would target expected to be both more expensive and thus not subject to the same new geographies. And the report and with tighter covenants and regulatory reviews, representing provides advice for struggling terms. The areas of opportunity more than 75% of all European companies, who shouldn’t look to are expected to be distressed debt deals in H1. And if they did want the corporate sector to bail them and special situations, and survey to venture outside of Europe, out: only 14% of corporates said respondents predict that the most those European acquirers said they would consider acquiring activity will come via deals related overwhelmingly that North America distressed targets at this time. to distressed M&A, restructurings would be their first choice. The report offers some interesting and corporate defaults. Those guidance for others who are on who are willing to be bold are In addition to an expectation the sell side, as buyers, whether clearly hoping to be rewarded. of continuing strength in the private equity or corporate, who TMT and PMB sectors, another were principally looking for targets The Arctic Ocean is not a frozen sector expected to see growth that provided a lower cost base wasteland – Stefansson and was consumer/retail. This would and/or access to new technologies subsequent explorers discovered seem to be one industry where and other intellectual property. a plethora of wildlife and sea life, distress and even insolvency will and even vast amounts of minerals drive activity – one company’s There are interesting trends as and oil below the seemingly pain can be another firm’s gain. well for the debt and financing impenetrable ice. Similarly, markets. As corporates shored underneath a veneer of negativity, The experts surveyed identified up their balance sheets earlier deal activity in Europe does have a divestments and carve-outs as this year, deal financing ground strong foundation going into the strong deal drivers, with almost to a halt. For the first half of closing months of 2020, according three-quarters of the cash- the year, M&A loan activity was to the experts active today in the rich private equity firms noting down 39% from H1 2019. As had M&A market and surveyed for this their interest in distressed and been widely reported, Europe’s report. But, as with those early turnaround opportunities, linked IPO market more than halved. Arctic pioneers, dealmakers not only with the more favourable valuations need to know where to explore but, currently available. In contrast to The outlook for these financing perhaps even more importantly, the private equity acquirers, 83% markets is, unsurprisingly, negative. where to avoid adventuring. of corporates saw acquisition of Among survey respondents, 79% new technologies as their principal believe financing market conditions
5 Latin America offers a trove of opportunities for foreign investors
Senior CMS representatives from across Latin America report on the region’s response to the COVID-19 pandemic and opportunities for investors from Europe
Latin America has been hit in the construction and hard by the pandemic. But, the hospitality sectors pre- in some ways, the crisis is pandemic. That has of course opening up opportunities, changed, as nobody currently mainly for equity investors wants to enter the industry. who can capitalise on Now European investment Juan Carlos Jorge Allende their strong currencies in Mexico is moving more Escudero, D., Partner, such as euros or dollars. towards pharmaceuticals Managing CMS Chile and the fintech space, which Partner, On top of that, valuations are was already very popular CMS Peru falling for local companies, with private equity firms. which creates more attractive targets. Activity is also Where will investors find rising. Since August, we’ve ideal opportunities? been able to see a light at Every crisis presents the end of the tunnel. opportunities, and this is no exception. There will be an We expect a lot of investment increase in distressed M&A in the mining industries, in and divestments, including which the UK happens to in the tourist and real estate Juan Camilo Giancarlo be very concentrated. On sectors. In some markets, Rodríguez, Schievenini, the infrastructure side, Latin like Chile, private equity and Managing Senior American governments are strategic investors can take Partner, CMS Associate, developing many projects advantage of falling valuations. Colombia CMS Mexico – highways, energy, a little mining, even some airports Nobody would like to sell – and will want to attract their business at a very low investment for those to move valuation, but sometimes the economy forward. Spain you do not have much could prove a very important of a choice. We are also country in that respect. seeing a lot of mergers and ‘white knight’ takeovers, In Mexico, European as local entrepreneurs investors were very active look for cross-border
6 | European M&A Outlook European M&A trends 2011-2016 YTD
and smart-money investors What issues could be most For instance, in Colombia coming into the market. challenging for dealmakers? last year, Chinese companies Leaving the COVID-19 pandemic won their bids for the Bogotá Some countries face unique to one side, the biggest underground metro project circumstances. In Chile, for near-term challenges facing as well as for a regional train example, the price of copper Latin America are the various project in the city’s suburbs. is returning to levels not seen elections that are happening for a while, even before the throughout the region between Latin America, in truth, is pandemic. That is down to now and the end of 2021. changing every day. It’s not like China seemingly being back on Europe, where generally there track and needing resources Peru has elections at the start is more certainty. European for infrastructure projects. of next year, which will create dealmakers coming into this some uncertainty. Depending market must also bear in mind All of the big players in the on which party takes control of this situation and protect copper industry are already in the congress and who becomes properly their investments. Chile and Peru, which should president, that will send an also reap the benefits of important signal to private renewed energy investment, investors and potentially set a so that’s one area where we trend for the next five years. expect to see a lot of activity. Chile, too, is facing several Mexico is beginning to feel the elections and plebiscites, effects of the North American including a possible major Free Trade Agreement, constitutional change. So, particularly for the automotive while the post-pandemic sector. A lot of investment is economic forecast is still coming from European carmakers quite good for the country, into Mexico, because, if they foreign investors will need to want to put their cars in the contend with all these political US, they have to do it through and social developments. the region, and it’s easier and cheaper for them to do it in Then there is the question Mexico rather than going directly of competition, particularly to the US or into Canada. with investors from China.
7 The great divide in energy M&A as renewable sector enters boom period
Charles Currier of CMS UK reports on the state of the EMU industry and the future of clean energy in Europe
There are sub-sectors within the energy, Oil & gas companies, too, are looking very mining & utilities space that are likely to do seriously at this market; they realise the very well over the next several months. Others, need to diversify. As the focus on climate though, are being very negatively impacted change continues to grow in importance, by COVID-19, including on the mining, oil & a lot of the exploration and production gas and energy supply sides. But Europe’s companies are making public commitments renewables market is booming. A lot more around transitioning to net-zero targets. It’s funds and institutional money are being going to drive a lot of deal activity, which Charles Currier, allocated towards clean energy generation. should begin with a lot of partnerships. Partner, CMS UK In many renewables deals, the assets are How is the European market performing underpinned by some kind of subsidy regime, now, several months into the pandemic? which effectively means more revenue is The renewables sector is extremely busy with guaranteed. Most of the investors who are dealmakers adapting to the new environment. looking at the sector are long term and thinking about the market with at least a In the renewables space, there’s a lot of capital 20-year timeframe, which is one reason out there looking for opportunities to be why the space has been less susceptible deployed at the right returns with the right to shorter-term COVID-19 issues. risk criteria, and renewable energy is in that sweet spot. There are lots of projects that need In respect of face-to-face meetings in M&A capital over the next 10, 15, 20 years, which is transactions, in this space we are even augmented by government policies to compel seeing virtual site visits being conducted the transition to decarbonised-only energy by drones, which is helping deals get generation. So there’s a combination of factors done in the current environment. driving a lot of M&A activity in this sector.
Financial investors are interested in the What challenges are dealmakers offshore wind sector because it offers facing in the energy space? opportunities to deploy very significant Other than the pandemic, of course, the amounts of capital in single transactions. industry is still facing technological challenges. They are getting ever more comfortable with Most renewable technologies are moving very the risks around the sector. More people quickly to grid parity, or better than grid parity. are coming in at the construction phase, That change raises the question of how long it where previously they would have only can continue, and where and when renewable invested in the operational phase. Several energy providers will hit the bottom in terms of funds are buying their own platforms to pricing. And then you’ve got new and untested develop projects. So now they are investing technology coming to market. All those sorts of in the full lifecycle of renewable assets. factors can be added to the technology bucket.
8 | European M&A Outlook And there is always risk. A lot of the oil majors have looked to invest in the past, made some investments, but then pulled back. It will be interesting to see if this really is the turning point where the market will see very significant investment by those entities. The sector also is not immune to other kinds of macro shocks. A worsening of the US-China trade war would inevitably drive up costs, particularly as a lot of manufacturing of components is done in China.
Considering the UK, a no-deal Brexit will have various material effects on the sector. Beyond the usual concerns about importing and exporting, there would probably be an impact on investor confidence and investing in the UK. Brexit was overtaken by other events over the past several months, but it is coming back into focus now.
9 The GP-led secondary: A new dawn or a flash in the pan?
Dr Eva Annett Grigoleit and Dr Igor Stenzel of CMS Germany report on a potential rising trend in continental Europe
The GP-led secondary has recently been current investors maximum flexibility. To introduced in the German market as an initiate and accelerate future growth of innovative transaction structure. There the portfolio company, new investors are good reasons for this new transaction are given the opportunity to participate structure to proliferate over the next in the buyer fund alongside investors several months. GP-led secondaries already invested in the seller fund. Dr Eva Annett could provide a post-COVID-19 boost for Grigoleit, the market in Germany, as groups look What is the economic background Partner, CMS for innovative ways to hold on to good of GP-led secondaries? Germany assets for longer and provide LPs with GP-led secondaries are used to raise new optional early liquidity. Here we explore capital for a specific portfolio company the commercial background and special and capitalise on its economic success features of these transactions, and ask beyond the stipulated term of the whether this could be the beginning of existing invested fund. By such means, a new trend in continental Europe. the secondary can elevate the existing business to another level, such as by What is a GP-led secondary? rolling it out in other geographies or A secondary is the sale of a PE-owned expanding its product portfolio. This can portfolio company to another PE fund. occur before an exit, which would no Dr Igor Stenzel, The specific structure of a GP-led longer enable investors in the seller fund Partner, CMS secondary compared with an ordinary to profit from later, successful steps. Germany secondary is that the same GP is managing both the seller fund and the What is the specific appeal buyer fund, the latter being a single- of a GP-led secondary? asset fund with the sole purpose of That the GP understands the portfolio acquiring the portfolio company from company in question better than any the seller fund. The transaction is thus new asset, and also reinvests funds initiated on the seller’s side and executed of investors already invested in the on the buyer’s side by the same GP. existing fund, should inspire confidence in potential new investors. Especially Typically, investors in the seller fund will in times of increasing economic and be able to roll over into the buyer fund or political uncertainty, investors and GPs to cash out. A partial exit combined with may feel more comfortable investing a partial rollover is also possible, to afford in familiar assets over the term of the
10 | European M&A Outlook European M&A trends 2011-2016 YTD
existing fund. That GP-led asset fund launched by capiton secondaries have garnered a specifically for this purpose. great deal of interest in the light of the COVID-19 crisis should Looking to the US and UK, where therefore come as no surprise. GP-led secondaries are better entrenched, the commercial need What are the special features for and viability of these sorts of a GP-led secondary? of transactions is self-evident. In usual exits of a PE fund the More widespread adoption of purchase price is determined by GP-led secondaries, spurred at negotiations or via an auction least in part by the economic process, but this differs in GP- implications of the COVID-19 led secondaries. Since the GP crisis, should be anticipated in is on both the seller and buyer Germany and other continental side, the purchase price must European nations. In all likelihood, be determined via a complex we will soon be looking back on bidding process which is part of capiton’s GP-led secondary as a the establishment of the new major trendsetter in the market. fund. The price determination leads to a considerably higher transaction complexity compared with less sophisticated exit- channels such as an ordinary secondary or a trade sale.
What is the outlook for GP- led secondaries in Europe? In December 2019, Berlin-based PE fund capiton closed the first German GP-led secondary after completion of the bidding process by transferring its majority stake in KD Pharma Group from the capiton IV fund to a new single-
11 COVID-19 reset: Need for high-quality upgrades clear as day
Niall McAlister of CMS UK and Mariano Bautista of CMS Spain report on the state of Europe’s PMB industry
At the start of 2020, the expectations investment activity will increase in relation were for a busy year – then COVID-19 to care homes. Foreign funds are already derailed that. But some sectors are faring investing, albeit timidly, in the Spanish market better than others and pharma, medical with buy-and-build strategies. Nevertheless, and biotech (PMB) is one of those. The life the problems pointed out during the sciences industry offers exciting returns if pandemic may require the authorities to dealmakers can find the right company. reconsider the model in the near future.
Niall McAlister, Governments have pumped economies The pandemic has highlighted the poor state Partner, with additional finances, and investors are of many nations’ healthcare businesses. CMS UK looking for ways to get into businesses that The market sees that the government have got much higher opportunities for knows it must do more, so there is an return than the usual, bigger players that you interest in investing in the sector again, would expect to see in the stock markets. but doing so in a smarter way that takes advantage of new technologies and builds What types of deals will be struck? a higher-quality healthcare market. The COVID-19 crisis has caused larger companies to look at their supply chains, How resilient is the European market? indeed at the whole infrastructure behind In terms of life sciences generally, the the life science industry, and realise that European market is robust. There is also it’s actually very fragile. In response, there more money coming in from the US, much Mariano will potentially be a lot of M&A activity more than three or four years ago. Bautista, around services-related businesses those Partner, companies need to deliver their product. For big pharma and big medical device CMS Spain In addition, there’s the digital side – the businesses, there is always a need to switch to remote working during lockdowns be buying up good assets. The sector is will likely speed up the uptake of digital structured in such a way that research is services more generally in this sector. outsourced to small companies that take it forward to a point where it then requires the In Spain in particular, the private hospital heft of bigger companies to see it through network is attracting many leading or take it to market. European assets are international firms and several deals have cheaper relative to American ones, and there recently been closed. Due to an ageing is a lot of money around, so conditions look population and the expectation of better reasonably good in Europe. Companies will quality services, healthcare companies probably focus more on mid- and lower-mid- are generally appealing targets for private market deals, and transactions where larger equity firms. There is a need to increase corporates go after single assets or small accommodation capacity and, consequently, portfolios of assets, rather than megadeals.
12 | European M&A Outlook What challenges will this sector have to navigate over the coming months? Healthcare companies must embrace emerging technologies to stay relevant. I think these companies will soon be the target of the M&A deals. In terms of macro issues, the US political situation is challenging because it creates such unpredictability, although for now the industry has kept its head below the parapet while the politicians throw rocks at each other.
COVID-19 is an issue, beyond the obvious public health concerns, because ultimately it will be diverting a lot of capital from the big players in the industry. If they are putting the money into finding vaccines, then they’re not putting it into other therapies and therapeutic areas. That could have an impact on existing programmes and on the funding of future programmes.
So COVID-19 is undeniably a big issue, even though the sector can benefit in some ways, and probably already has in terms of consumer sentiment. There is a feeling that the pharma companies have done very well to get up to speed with potential vaccines in a very short space of time. It remains a very uncertain situation, but PMB companies have responded very well to the crisis.
13 Chapter one
The M&A environment and expectations for the year ahead
The COVID-19 outbreak has disrupted market. Only 92 deals worth more than EUR 500m crossed the line European stock markets and forced in H1 2020, down almost 29% economies across the continent into retreat against the same period in 2019.
Moreover, many of the largest transactions – including the EUR 31.1bn merger between insurers AON and Willis Towers Watson, and the EUR 17.2bn private equity buyout of ThyssenKrupp Elevator by a consortium including Cinven and Advent International – were announced before Top findings The European Commission is lockdowns came into effect. predicting an 8.3% decline in 74% EU GDP in 2020 and the MSCI Buyers and sellers on guard of survey respondents say Europe, an index tracking more Although stock markets have their dealmaking appetite than 400 companies in 15 rallied as lockdowns have eased, has diminished as a result European countries, was down dealmaker sentiment remains of the pandemic as much as 36% at the height of bearish. Only 2% of respondents coronavirus uncertainty in March. to our survey expect their deal 64% activity to increase this year, don’t expect the M&A market This macroeconomic upheaval compared to 26% in 2019. More to return to pre-pandemic has directly impacted European than half (53%) expect activity levels before at least 2023 M&A, with deal volume and value levels to decrease significantly declining steeply in H1. According during the next 12 months. 56% to Mergermarket data, volume fell expect Europe to be the 31% to 2,800 transactions and The survey findings indicate that region most affected by aggregate value dropped by 29% respondents are strapping in for a the COVID-19 crisis to EUR 262.9bn compared to the long and bumpy recovery. Almost same period last year. Volume two-thirds (64%) don’t expect the 63% and value figures for Q2 are the M&A market to return to pre- predict North America will be lowest for any quarter since 2013. pandemic levels before at least 2023. the top non-European target Most predict Europe, by a distant region for European acquirers The dearth of large transactions margin, will be the region most over the next 12 months reflects the degree to which severely affected by the pandemic. confidence has drained from the Nearly three-quarters of respondents
14 | European M&A Outlook M&A departments used the European M&A trends 2015-2020 YTD* time freed up by COVID-19- 2,500 350,000 induced lockdowns to reassess their strategies. 2,250 300,000 Corporates are carving out 2,000 non-core business, and that 1,750 250,000 activity has been reinforced
1,500 Deal by slight increases in 200,000 deals value distressed M&A. Despite of 1,250 € the pandemic, transactions 150,000 m
Number 1,000 still went ahead. In particular it triggered activity in 750 100,000
the pharma, medical 500 & biotech 50,000 250 sector. 0 0
Dr Thomas Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Meyding, 2015 2016 2017 2018 2019 2020 Partner, Number of deals Deal value (EUR m) CMS Germany *Data correct as of 8 September 2020
What do you expect to happen to the level of European M&A activity over the next 12 months?
Decrease significantly Decrease somewhat Remain the same Increase somewhat Increase significantly
19% 53% 25% 25% 29% 20% 26% 2% 1%
0%
2019 2020
15 European M&A top deals, 2020 YTD* Announced Target company Target sector Target country Bidder company Bidder country Deal value date EUR (bn)
Willis Towers Watson Public Limited 09/03/2020 Financial services United Kingdom Aon plc United Kingdom 31.1 Company
Cinven Partners LLP; Advent International 27/02/2020 ThyssenKrupp Elevator AG Industrials & chemicals Germany USA 17.2 Corporation; RAG-Stiftung
Virgin Media Inc; Telefonica O2 Virgin Mobile Inc./ Telefonica O2 Europe 07/05/2020 TMT United Kingdom United Kingdom 11.5 Holdings Limited Plc JV
03/02/2020 Ingenico Group S.A. Business services France Worldline SA France 9.2
17/02/2020 Bombardier Transportation GmbH Industrials & chemicals Germany Alstom SA France 7.6
12/08/2020 Sunrise Communications AG TMT Switzerland Liberty Global Plc United Kingdom 6.1
29/07/2020 CPA Global Limited TMT Channel Islands Clarivate Analytics Plc USA 6.0
12/03/2020 Borealis AG (39% Stake) Industrials & chemicals Austria OMV AG Austria 5.7
26/02/2020 iQ Student Accommodation Limited Leisure United Kingdom Blackstone Group L.P. USA 5.5
17/02/2020 UBI Banca S.p.A (99.92% Stake) Financial services Italy Intesa Sanpaolo S.p.A. Italy 5.5
*Data correct as of 8 September 2020 say their dealmaking appetite has diminished as a result of the crisis. The markedly low levels of European M&A in Q2 have not been seen since Several factors contribute to this guarded outlook. As stock markets early 1997. Beyond the pandemic and have dipped, so have valuations resulting recession, other factors have for M&A assets. According to the contributed to this, including the UK Argos Index, which tracks the multiples paid for private European nearing the end of the Brexit transition companies valued between EUR 15m phase, increasing regulatory intervention, and EUR 500m, average multiples and notably the current US and European fell to 9.2x Ebitda in Q2 2020, down from 10.3x at end-2019. relationship with China. Mark Bertram, Partner, CMS UK Private equity vendors, entrepreneurs and owner-managers have been reluctant to sell assets at lower prices in a falling market. Equally, buyers are reluctant to pay full valuations when there is still so much unpredictability in future earnings. Travel restrictions and social distancing measures, which
16 | European M&A Outlook When do you expect European What do you believe will be the greatest buy-side drivers of M&A M&A to be back at (pre- activity in Europe over the next 12 months? (Please select top two) COVID-19) 2019 levels? 40% Rank 1
35% Rank 2
30% 64 Later than 2022 21 64% 25%
15 20%
15%
10% End of H1 2022 21% 5%
0%
End of H2 2021 15% acquirers Digitalisation Consolidation in Cash-rich corporate Undervalued targets European currencies Relative weakness of overcrowded markets Private equity buyouts Turnaround opportunities
have limited the scope for vendors, of 2020 and 2021. An insolvency Many transactions in Q2 buyers and management teams to index it compiles is projecting were cancelled or meet in person, have also made it double-digit year-on-year increases difficult to advance deal pipelines. in the number of companies interrupted. Little by little, going bust across Europe. these are being reactivated, Distress to dominate and financiers and existing As various government support In addition to COVID-19 disruption, initiatives and stimulus packages the upcoming US election in shareholders are prepared to unwind, dealmakers have opted November, the end of the UK’s make extensive concessions to step back and assess the Brexit transition period, and because of the existing full impact of the pandemic. deteriorating relations between Although several high-profile China and the West will intensify uncertainties. There besides, businesses have already gone the headwinds M&A investors face. this year we have seen into restructuring processes – UK carve-out transactions department store Debenhams went Unsurprisingly, survey respondents into administration in April and is believe this market dislocation and almost untouched by the facing liquidation, and German uncertainty to be a predominant COVID-19 payment processor Wirecard filed source of deal flow in the coming crisis. for insolvency in June – more months, with distress-driven M&A financial distress is anticipated. and the sale of non-core assets Dr Alexandra from larger companies expected Schluck-Amend, Credit insurer Euler Hermes expects to be the main drivers of sell-side Partner, CMS insolvencies to peak at the end activity. Most businesses, though, Germany
17 are only likely to transact when Financial pressure could also The impact of the massive they have exhausted other options, lead to an uptick in carve-out economic measures aiming depressing overall deal volumes. deals, as corporates look to focus resources on core business. at countering the effects of Non-distressed deals that do the COVID-19 pandemic proceed are expected to cluster Regional review remains uncertain. around the few sectors that have The UK logged the highest proven most resilient through proportion of European deal Accordingly, the current lockdown periods, including activity in H1 (34% of total deal appetite for dealmaking technology, media & telecoms value and 20% of total volume), seems limited to distressed (TMT), financial services, pharma, followed by Germany (19% and medical & biotech (PMB) and 13%, respectively) and France assets, carve-outs and industrials. Businesses in these (12% and 11%, respectively). some more resilient sectors have been able to sectors. Additionally, sustain operations and continue UK figures were boosted in large part serving customers through by a number of large transactions, stricter foreign investment lockdowns, providing potential such as the abovementioned Willis control regulations in the buyers with a clearer view of Towers Watson/AON merger and EU could also limit the current and future earnings. Liberty Global and Telefónica’s EUR 11.5bn deal to combine Virgin appetite of certain Companies in industries directly Media and O2. German activity non-EU impacted by COVID-19 – including was enhanced by a strong showing investors. aviation, retail, leisure and in industrials deals, including the restaurants – will find it difficult ThyssenKrupp Elevator transaction Jean-Robert to gain traction with potential and French railway equipment firm Bousquet, buyers unless they swallow Alstom’s EUR 7.6bn acquisition of Partner, rock-bottom valuations. Berlin-based Bombardier Transport. CMS France
What do you believe will be the greatest sell-side drivers of M&A activity in Europe over the next 12 months?
Rank 1 Rank 2
47% 23% 23% 27% 15% 17% 9% 22% 6% 11%
Distress-driven Non-core asset Succession issues Regulatory changes Capital raising M&A sales from EU-wide or for expansion larger companies in European in faster jurisdictions growing areas
18 | European M&A Outlook European M&A trends 2011-2016 YTD
The impact of COVID-19
Pandemic-induced lockdowns and slumping stock markets put the clamps on new deal activity in late Q1 and early Q2
On March 13th, the number of The COVID-19 pandemic has undoubtedly COVID-19 cases in Europe had already created significant short-term change surpassed those in China, where the pandemic originated. A in the way we do business; more deals than few days earlier, the whole of ever are being done without lawyers or even Italy entered a strict lockdown. principals meeting in person. Many of the Spain, Germany, the UK and France soon followed suit, behaviours we have had to adjust to will shutting schools, ordering become entrenched, and travelling for business people to work from home and will become a rarity. closing non-essential shops. Frank Fowlie, Partner, CMS UK Stock markets had already started to price in coronavirus risk in February, when indices dipped What impact will COVID-19 have on your dealmaking for the first time. The full financial appetite? (Please select only one) effects of the virus began to be felt in March, with the MSCI Europe Increased dealmaking Signi cantly less index shedding just under 30% appetite No impact Less dealmaking appetite dealmaking appetite of its value in that month alone. 3% 23% 19% 55%
After a promising start to the year, lockdowns and plunging stock markets put deal activity on hold, with barely any deals announced in March and April. The impact of this tumultuous period on M&A markets is still being felt, with 74% of survey respondents saying the pandemic has caused their dealmaking appetite to lessen.
19 Which region do you think is going to be most affected by the crisis? (Please select one region from the list)
Europe 56%
North America 20%
Latin America 15%
Asia-Pacific 9%
What trends do you expect to see in European M&A in the aftermath of COVID-19? (Please select the two most important, 1 = most important, 2 = second most important)
Rank 1 Rank 2
29% 18% 22% 22% 23% 18% 10% 15% 8% 15% 4% 9% 4%3%
More lapsed Lower Increased More Fewer Greater More deals valuations PE activity carve-outs cross-border shareholder stake /spin-offs deals activism deals
20 | European M&A Outlook European M&A trends 2011-2016 YTD
Although deals that were already The pandemic has significantly changed in exclusivity generally went consumer behaviour and created demand ahead when lockdowns were coming into force, more broken for new products and services. deals and chipped valuations are Dealmakers are looking for less obvious anticipated. 47% of respondents targets and are willing to spend time and expect to see more lapsed deals following the crisis, while 44% money on reshaping the business if they expect to see lower valuations. see the potential to take advantage of the opportunities created by this change in the Respondents’ greatest concern about the pandemic is the risk consumer behaviour and needs. of global recession (identified by Sławomir Czerwiński, Partner, CMS Poland 29%) followed by uncertainty of policy responses (20%) and the possible financial impact (also 20%). When asked to identify the two sectors they believe will be most negatively impacted
What is your company’s main concern with regards to COVID-19? (please select only one)
Financial impact Uncertainty on (i.e. lack of liquidity, Supply chain Reduction Impact on Global recession policy responses capital resources) disruption in productivity workforce 29% 20% 20% 16% 9% 6%
21 Which sectors will be most negatively affected Which sectors are likely to see most growth by COVID-19? (Please select the top two) post-COVID-19? (Please select the top two)
Energy, mining & utilities TMT 54% 69%
Real estate 37% Pharma, medical & biotech 48% Industrial & chemicals 33% Consumer/retail 36% Leisure 33% Business services 20% Construction Financial services 16% 12% Transportation Industrial & chemicals 16% 11% Financial services Agriculture 7% 4% Agriculture 4%
Whilst securing merger by the crisis, respondents succumbing to administration clearances will continue to be predominantly pointed to after a period of financial energy, mining & utilities difficulty and mounting debts. a focus for parties, a further (54%) and real estate (37%). deal risk has now emerged: The TMT and PMB sectors, foreign investment controls. The energy industry suffered in contrast, are expected to a sharp slump in demand as enjoy the most growth post- COVID-19 has accelerated this lockdowns coincided with the COVID-19. Both industries have trend. Many EU governments, Russia-Saudi Arabia oil price proven resilient through the as well as the European war, at one point pushing oil as lockdown period and, in some low as USD 12 per barrel. Prices cases, managed to capitalise Commission, moved fast to have recovered somewhat, but on the disruption and changed impose enhanced controls. the outlook for the industry circumstances of individuals. These are already creating remains extremely challenging. timing and Real estate, meanwhile, has been practical hard hit as leaseholders seek rent challenges to holidays and forbearance through the crisis. Real estate groups deals. with large retail portfolios have Caroline Hobson, been especially vulnerable, with Partner, CMS UK UK shopping centre giant Intu
22 | European M&A Outlook European M&A trends 2011-2016 YTD
European outbound outlook
Lockdown restrictions and border closures have made outbound deal activity especially difficult for European dealmakers to pursue
In H1 2020, outbound deal The US is probably underreported as an value was down 68.1% year-on- investment destination for European year to USD 42.9bn, according to Mergermarket data. This corporates. Particularly, the TMT, life was a steeper drop than for sciences and healthcare sectors offer good both inbound and overall deal opportunities for investment. US trade value, and is the lowest year- to-date outbound deal value restrictions require regional diversified figure recorded since 2013. production sites to satisfy the US market. Established European bidders may be When businesses have pursued M&A, domestic and regional favoured over those from regions less liked consolidation has trumped by the US government. forays abroad. Pre-pandemic Dr Heike Wagner, Partner, CMS Germany outbound dealmaking was also already being curtailed somewhat by tightening M&A control procedures globally. In the US, for example, the Committee on Foreign Investment in the United States regime received a broader remit in 2018 when the sectors and criteria for deals it could review were widened.
The presence of additional hurdles when investing abroad has caused dealmakers to pivot towards domestic and regional transactions. In H1, intra-European
23 Which will be the most active non-European target region for European deal value stood at USD 63bn, acquirers over the next 12 months? (Please select only one each) 75.4% of overall European dealmaking. The tie-up between listed payment services provider Worldline and rival Ingenico in ca eri France and the Virgin Media/ Am h rt O2 deal are examples of mega- o N A s mergers involving regional players. ia 63% -P a c i 35% c Eventually, however, European investors will have to turn their attention outbound again in search of growth and deal targets that do not trigger domestic antitrust thresholds. This was a feature of European dealmaking
in 2019, when various regional
a 1%
c
i
r deals were blocked because e
m
A
of competition concerns.
n
i
t
a 1% L
ca ri Af North America appears the most n ara ah attractive overseas market. 63% b-S Su of survey respondents predict
Most active target region it will be the top non-European target region for European acquirers over the next 12 months, with Asia-Pacific a distant second (35%). A negligible share chose Which region do you believe will be Africa and Latin America. the most active inbound acquirer into Europe over the next 12 months? Respondents favoured North America even though inbound
50% 50% activity into the region was down by 64.3% in H1 2020 and Asia-Pacific activity was actually marginally up, showing an increase of 2.3% year-on-year. The upcoming US presidential election in November doesn’t seem to have deterred respondents from opting for North America either.
The responses reflect the North America Asia-Pacific fact that North America is expected to suffer a smaller GDP
24 | European M&A Outlook European M&A trends 2011-2016 YTD
In light of the pandemic, European investors will look outbound in search of growth and deals that do not trigger domestic antitrust thresholds. North America looks to be one of the most attractive markets; it is politically more aligned with Europe and is expected to suffer a smaller GDP contraction and see a quicker recovery. Daniela Murer, Partner, CMS Italy
contraction than Europe and backed French veterinary a swifter recovery, according group Ceva Santé Animale in to Deutsche Bank economic a EUR 5bn funding round. forecasts. North America is also more closely aligned European markets, however, politically with Europe, which have also instituted merger will be a factor in light of rising control rules, which will add geopolitical tension between another layer of complexity to China and Western powers. deals atop COVID-19 challenges. Germany, the UK and Italy have In the other direction, equal all broadened the scope of proportions of respondents deals that can be blocked on identify North America and Asia- national security grounds. Pacific (50% each) as the most active inbound acquirers into Europe over the next 12 months.
Even though inbound M&A into Europe almost halved in H1 2020, Asian and North American buyers have been prominent in the region’s M&A this year. US- headquartered Blackstone Group, the world’s largest alternative asset manager, acquired UK- based student housing provider iQ Student Accomodation for EUR 5.5bn, and Japan’s Mitsui & Co and Singapore’s Temasek
25 Sector watch
Changing consumer behaviour points investors towards bullish TMT and PMB sectors
Remote working accelerates uptake of digital services, while health crisis turns all eyes to pharmaceuticals space
TMT and PMB are the sectors The pandemic has accelerated the already that have experienced the least growing appetite for digital services, amount of disruption to M&A activity through the pandemic. including cloud, mobility and security solutions. Strategic and other industry TMT businesses have traded players are using M&A to expand their strongly through lockdown periods as workers, consumers, offering in new directions and acquire teachers and pupils became more new technologies. Dealmaking decisions reliant on broadband and digital not only address current business needs, services to work, learn and shop. The PMB space has been similarly but also create resilience for the future. robust, highlighting governments’ Eva Talmacsi, Partner, CMS UK commitment to funding healthcare systems as well as COVID-19 treatments and potential vaccines.
Survey participants pointed to TMT (68%) and PMB (38%) as the two sectors where they expect to see the most M&A activity in Europe over the next 12 months.
Spotlight on: TMT TMT was the largest sector in Europe by volume and third largest by value in H1 2020, logging 637 transactions worth EUR 51.7bn, down 17.7% and (just) 2%, respectively, year-on-year.
26 | European M&A Outlook European M&A trends 2011-2016 YTD
Which sectors do you believe will witness the most M&A Pressure is the common theme driving activity in Europe over the next M&A in the telecoms sector. There is 12 months? (Select up to two) pressure on consumer pricing, hyperscalers and alternative technologies. Increased use of technology and the need for infrastructure investment is driving the TMT 68% search for scale economies. Chris Watson, Partner, CMS UK, Head of the CMS TMC Group
Pharma, medical & biotech 38%
The UK recorded the largest transactions underpinned by number of TMT deals (125) as long-term strategic drivers. well as the highest aggregate The increase in demand for Industrial & chemicals 31% value (EUR 18bn). Germany placed broadband when economies were second for both (85 deals worth shuttered, and the fact that scale EUR 7.9bn), while France was is imperative in this market, also third by volume (77 deals worth helped see this deal over the line. EUR 2.7bn) and Spain third by value (EUR 5.5bn from 26 deals). The fact that broadband Consumer/retail connectivity has been in such 30% The largest TMT deal of H1 2020 demand has seen other telecoms was the EUR 11.5bn merger of the deals proceed. The second largest UK operations of Liberty Global deal in the sector in H1 was the (Virgin Media) and Telefónica (O2), EUR 4.7bn take-private offer Financial services creating one of the largest fixed- for Spanish telecoms operator 13% mobile providers in the country. MasMovil by a private equity The merged company is estimated consortium. Private equity was to be worth GBP 31.4bn. also involved in Germany’s Business services largest TMT deal, as EQT and 10% This deal, announced in early OMERS Infrastructure joined May, illustrates TMT companies’ forces to acquire fibre optics Energy, mining & utilities ability to continue trading through provider Deutsche Glasfaser. 10% lockdowns and maintain earnings. This has given interested parties the confidence to proceed with
27 Spotlight on: PMB group Polyplus from healthcare PMB deals are thriving at The PMB sector was the fifth specialist Archimed and CBPE levels roughly comparable largest by volume and value in Capital off-loaded SpaMedica to H1 2020. 208 deals worth EUR Ober Scharrer, a platform business to pre-pandemic times. 15.4bn were announced, year- backed by Nordic Capital. Most are fuelled by on-year declines of 29.7% and market and innovation 87%, respectively, although Regarding activity levels in 2019 figures were inflated by individual European nations, potential of the AbbVie’s EUR 75.8bn acquisition Germany recorded the greatest acquisition targets – with of Allergan and the EUR volume of PMB deals announced their prospects being 23.7bn Novartis/Alcon deal. in H1, with 44 transactions worth EUR 2bn in aggregate. France even more critical to deal The pharmaceuticals sub-sector saw the highest total for PMB decision-making in the accounted for the lion’s share deal value, recording 23 deals current climate. There is a of deal value (EUR 7.5bn from worth EUR 6.9bn. Deals targeting 39 deals), while the medical French companies accounted lot of activity with start- sub-sector accounted for the for three of the seven largest up and scale-up majority of deal volume (136 PMB transactions in H1 2020. companies. deals worth EUR 3.5bn). Despite COVID-19 disruption, Ellen Gielen, The largest PMB deal saw France’s healthcare stocks are up more Partner, CMS Ceva Santé Animale raise a EUR than 8% over the last 12 months Netherlands 5bn funding round from Japan’s on MSCI indices. Dealmakers, Mitsui & Co and Singapore’s therefore, have some visibility Temasek. The next largest PMB on current earnings in the transaction in H1 saw Netherlands- sector and can pursue deals based Royal DSM acquire Austrian with greater confidence than animal nutrition specialist in less steadfast industries. Erber Group for EUR 980m.
Healthcare assets have also proven very attractive to private equity buyers, who have been drawn by the sector’s growth potential coupled with protection against downside risk.
In January, French private equity firms Ardian, UI Gestion SA and Groupe HLD acquired a majority stake in Lyon-headquartered homecare treatment company Elivie for EUR 950m. Global investor Warburg Pincus, meanwhile, led a EUR 550m secondary buyout of biotech
28 | European M&A Outlook European M&A trends 2011-2016 YTD
In context: Global M&A
While wary of the risk of a COVID-19 resurgence, Europe‘s outlook is already much improved from the early phases of the pandemic
Globally, 6,943 M&A deals worth forecasting a 12% decline. This who want to acquire prized EUR 766.3bn were announced was the largest upward regional European assets at low prices in H1 2020. European M&A revision to the bank’s global amid the COVID-19 slump. accounted for 2,800 of those deals forecasts and should offer (40%), worth EUR 262.9bn in dealmakers some encouragement. In Italy, for example, the coalition aggregate (34%). During the same government introduced ‘golden period last year, 10,154 deals worth Europe, however, will not be power’ rules allowing it to block EUR 1.8 trillion were announced able to escape the impact of inbound deals involving companies globally, of which European M&A deteriorating international relations deemed to be of strategic interest. contributed 39.8% of the volume between China and the West. The new rules cover numerous (4,046 deals) and 20.6% of the Tensions between China and sectors, including banking, aggregate value (EUR 371bn). the US, and to a lesser extent insurance, healthcare and food. Europe, have been escalating. The continent faces stiff challenges The spread of coronavirus, trade These protectionist leanings, ahead, but it is positioned to disputes, protests in Hong Kong, however, are not unique to at least maintain its share of and allegations of cyber attacks Europe. The US and Australia, too, the global M&A market for the and industrial espionage have introduced similar merger controls rest of 2020 and into 2021. all been points of contention. before the onset of the pandemic.
Although a second wave of Against this backdrop, the EU Inbound activity has been coronavirus infections seems to issued a white paper outlining an important source of M&A be spreading, European countries ways to tackle ‘distortions’ to investment for Europe in 2020, are better prepared to react and competitive dynamics caused with foreign investors involved limit the need for very wide- by overseas companies that in either the buy or sell side ranging lockdown measures. benefit unfairly from government in six of the ten largest deals subsidies. The UK government, announced so far this year. The economic outlook for the meanwhile, banned mobile region is also brighter than network operators from That being said, for the foreseeable expected earlier in the year. purchasing technology from future, Europe may not be able Deutsche Bank has revised its GDP Chinese telecoms giant Huawei, to rely on cross-border activity forecasts and expects the European and several European countries to lift M&A volumes, albeit that economy to contract by 8.6% in have introduced tougher most M&A markets globally are 2020, versus an earlier prediction rules for foreign investors likely to share that experience.
29 Chapter two
Deal dynamics
The fall in European deal activity this year has 74% of private equity survey meant that, in instances where deals have gone respondents. Only 14% of corporates, however, are interested ahead, buyers and sellers have only transacted in taking on troubled companies. when there are clear strategic rationales or vendors have to sell to raise capital Fundraising for distressed and special situations deal strategies climbed in Q2 2020. Companies in the retail, real estate, leisure and travel sectors have been heavily impacted by lockdowns and will be candidates for Top findings Almost two-thirds (65%) of restructuring. High-profile respondents are not considering businesses that have already fallen 65% M&A, up from 45% in last into insolvency include German of survey respondents are not year’s survey. For 72% of department store Galeria Karstadt considering M&A at this time those people, the outbreak of Kaufhof, French media company COVID-19, unsurprisingly, is the Technicolor and UK airline Flybe. 12% main reason for this hiatus. are currently considering Restructuring deals in these acquisitions For those who remain open to troubled sectors, such as the debt- M&A in Europe, the acquisition of for-equity swap involving low- 74% new technologies and corporate cost airline Norwegian Air and its of private equity respondents venture capital investment is the aircraft lease holders, are starting cite distressed/turnaround main driver of activity (cited by to filter through and are likely opportunities as one of the 83% of corporates respondents). to continue rising as businesses two greatest motivations Worldline’s EUR 9.2bn acquisition of exhaust cash reserves. Private for acquisitions Ingenico, for example, consolidates equity will see opportunities to its position in the competitive and fund similar business rescues. 83% fragmented payments processing of corporate respondents space. Combining the companies’ Falls in valuations that favour identify the acquisition of new technology platforms creates a buyers could likewise drive technologies as one of their player with the scale to lock in a activity. The Argos Index shows two principal deal drivers large portion of the value chain. that valuations had already started to drop in Q2 2020, with Distressed and turnaround the multiples paid for European opportunities emerged as a strong businesses valued between EUR deal driver, being identified by 15m and EUR 500m down almost
30 | European M&A Outlook Where does M&A currently fit into your corporate strategy? (Please select only one)
Currently Not considering Currently Currently considering M&A at considering considering both divestments this time divestments acquisitions and acquisitions 65% 19% 12% 4%
If you answered “Not considering If you are considering acquisitions in Europe, what is the M&A at this time”, is this due motivation for this? (Please select the two most important) to the COVID-19 outbreak? 100% Private equity firm
80% Corporate
Yes 60% 72% 40%
20%
0% No 28% Sizeable, acquisitions opportunities and segments VC investment Growth in new customer bases transformational geographies and Acquisition of new existing geographies Favourable valuations Bolt-on acquisitions in Distressed/Turnaround Growth in new sectors in existing geographies technologies/Corporate
31 If you are considering divestments, a full turn at just above 9x Ebitda firms Advent International and what is the motivation for versus more than 10x Ebitda at Cinven, for example, will be used this? (Select up to two) the end of 2019. Such favourable to fund pension obligations and valuations were identified as a reduce debt. Energy company BP, Countering key deal driver for 54% of private meanwhile, is rolling out a USD the effect of equity respondents, versus just 15bn programme of divestments COVID-19 25% of corporate respondents. to finance debt repayments. It 83% recently sold its petrochemicals Corporates and private equity arm to INEOS for EUR 4.44bn. firms are more closely aligned on turning to M&A to lower Other notable carve-outs include Capital raising for increased financial costs bases. 47% of corporate Canadian engineering group flexibility respondents and 59% of private Bombardier passing on its German 55% equity respondents cite this as transportation business to France’s one of the two most important Alstom in a EUR 7.6bn deal, and objectives informing their next deal. KKR’s EUR 2.3bn purchase of a 60% stake in Coty’s professional Regulatory pressure Divestment is also emerging as a and retail hair and beauty business. 28% key post-coronavirus theme. Among Like BP, Coty has committed to Exiting lower those considering divestments, a long-term divestment strategy. growth sectors 83% say they want to counter The programme will help Coty 15% the effect of COVID-19, 55% to focus on its core beauty Focusing on are looking to raise capital for business and lock in cash to core operations increased financial flexibility, and strengthen its balance sheet. 12% 28% cite regulatory pressure. Exiting lower growth geographies 7% ThyssenKrupp’s disposal of its elevator business to private equity
Considering the COVID-19 crisis, what will be the most important objective for your next European M&A target? (Please select the top two)
Private equity firm Corporate 59% 47% 57% 44% 35% 29% 23% 36% 23% 30% 3% 14%
Lower cost base Technology/ Regional Accessing a new Existing plant/ Natural Intellectual distribution labour force/ Real estate resources property channels expertise
32 | European M&A Outlook European M&A trends 2011-2016 YTD
In context: Private equity
Although private equity firms are sitting on record sums of dry powder (USD 1.45 trillion, according to Preqin), buyout activity and exit activity has dropped sharply this year
Number of deals European buyout volume saw a European buyout trends, 2015-2020 YTD* Deal value (EUR m) year-on-year decrease of 25.3% in volume, falling to 547 deals in H1 2020. Compared to the same 500 70,000 period in 2019, aggregate value decreased 10% to EUR 78.9bn. Exit volume plunged by 31.9% and value 60,000 by 27.3% in H1 2020, dropping to 325 deals worth EUR 51.6bn. Q2 400 saw the lowest volume of exits on record for a quarter since 2013. 50,000
Most private equity activity was concentrated in Germany, 300 Deal value EUR m the UK and France, which 40,000 accounted for 29%, 23% and 17% of deal value, respectively. 30,000 Social distancing and travel 200 restrictions have made it difficult Number of deals for private equity firms to transact with confidence, as relationships 20,000 with management teams are a primary driver of value creation. 100
Uncertainty around future 10,000 earnings has given firms further reason for pause. So, too, has the slowdown in debt markets, which has made it more difficult 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 to find leverage for buyouts. 2015 2016 2017 2018 2019 2020 *Data correct as of 8 September 2020
33 Top buyout deals, 2020 YTD*
Announced Target company Target sector Target country Bidder company Bidder Deal value date country EUR (bn)
Industrials & Cinven Partners LLP; Advent International 27/02/2020 ThyssenKrupp Elevator AG Germany USA 17.2 chemicals Corporation; RAG-Stiftung
26/02/2020 iQ Student Accommodation Limited Leisure United Kingdom Blackstone Group L.P. USA 5.5
Mitsui & Co., Ltd.; Temasek Holdings Pte. Ltd.; Sofiproteol SA; EMZ Partners; Sagard Private Equity Partners; Public Pharma, medical Sector Pension Investment Board; Klocke 04/02/2020 Ceva Sante Animale S.A. France Singapore 5.0 & biotech Gruppe; ContiGroup Companies, Inc; Hopu Investment Management Co., Ltd.; Tethys Investment Management LLC; Merieux Equity Partners S.A.S.
01/06/2020 Masmovil Ibercom SA (90.8% Stake) TMT Spain Lorca telecom BidCo USA 4.7
Industrials & Kohlberg Kravis Roberts & Co. L.P.; 18/03/2020 Viridor Waste Management Limited United Kingdom USA 4.6 chemicals Hermes Infrastructure
09/01/2020 Veeam Software AG TMT Switzerland Insight Partners USA 4.5
Pharma, medical 17/07/2020 Elsan SAS France Kohlberg Kravis Roberts & Co. L.P.; Ardian USA 3.3 & biotech
EQT Partners AB; TA Associates 14/07/2020 Industrial & Financial Systems AB TMT Sweden USA 3.0 Management, LP.
EQT Partners AB; OMERS Infrastructure 10/02/2020 Deutsche Glasfaser Holding GmbH TMT Germany Sweden 2.8 Management Inc.
Coty Inc. (professional and retail hair 01/06/2020 Consumer United Kingdom Kohlberg Kravis Roberts & Co. L.P. USA 2.3 beauty business) (60% Stake)
*Data correct as of 8 September 2020
European fund managers are having to look for opportunities in a congested market. For many that means being more innovative and looking beyond their typical hunting ground. Whether that is taking strategic stakes in stressed businesses, taking undervalued listed companies private or executing complex carve-outs, there are opportunities for those willing to be bold. Narinder Jugpal, Partner, CMS UK
34 | European M&A Outlook European M&A trends 2011-2016 YTD
Recessions do not affect all Exits have also slowed, with firms teams and advisers has become sectors in the same way. As reluctant to bring prized assets to easier as lockdowns have eased, market at a time when valuations and a correction in asset prices funds are available, PE could be whittled down because could throw up opportunities investors will compete for of COVID-19 concerns. The fact to buy good companies at new investments in that corporates and private equity attractive valuations. firms are focused on protecting industries that will not suffer existing lines of business and Industrials interest a downturn, including TMT, portfolios has also seen the Industrials & chemicals pharma and life sciences. universe of potential buyers for accounted for just under one- companies shrink. Rather than third (32%) of total European Accordingly, prices for such selling when buyer numbers are buyout deal value in H1 2020, targets could even exceed limited, and then trying to buy a with EUR 25.6bn worth of pre-crisis levels. replacement for the portfolio of transactions. This was almost similar quality, private equity firms double the 17% market share Ralf Kurney, are riding their winners for longer. the sector enjoyed in H1 2019. Partner, CMS Germany, , The outlook for activity in H2 Figures for industrials buyouts Co-Head of the 2020 and into 2021, however, is have been inflated by a handful CMS Private brighter. Meeting management of megadeals, including the EUR Equity Group 17.2bn carve-out of ThyssenKrupp Elevators and KKR’s EUR 4.6bn swoop for Viridor Waste European exit trends, 2015-2020 YTD* Number of deals Management, but the sector is Deal value (EUR m) likely to keep generating deal opportunities for buyout firms. 300 70,000 The industrials sector has suffered
60,000 a fall in demand as well as 250 supply chain disruption during the pandemic. Corporates in the 50,000 space have prioritised their core 200 Deal value EUR m businesses and many are looking
40,000 at possibly selling off non-core assets to shore up balance sheets. 150 Consolidation could also follow. 30,000
Number of deals Private equity firms will be eager to 100 20,000 participate in any reshaping of the industry and are well-positioned
50 to acquire and consolidate non- 10,000 core assets. Attractive valuations could spur further interest in the
0 0 space from buyout investors. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2015 2016 2017 2018 2019 2020
*Data correct as of 8 September 2020
35 Chapter three
Regional environment: The future of European M&A
Chômage Partial and Ireland’s Across Europe, governments and central temporary wage subsidy have banks have taken extraordinary steps to extended more than EUR 100bn in wage support to employees support companies through the steepest put in stasis by lockdowns. Credit and most sudden economic decline since rating agency Fitch Ratings the Great Depression of the 1930s estimates that more than 40m workers have received such support in the four largest euro area economies plus the UK.
Top findings The European Central Bank has European states have moved to relax provided EUR 1.35 trillion to insolvency rules to help companies 50% relieve government debt and survive lockdown and related of survey respondents say their laid on a further EUR 120bn for travel restrictions. The UK, Italy, appetite for European M&A quantitative easing and EUR 20bn Spain, France and Germany have would increase the most if the for debt purchases. The European all amended regulations to prevent EU does much more together Commission temporarily waived businesses from going into forced across all policy areas to address EU fiscal rules, allowed more insolvencies or continue trading the effects of the COVID-19 crisis flexibility on state aid rules and even when they can’t service debts. made a EUR 100bn financial facility 69% available to member states to cover The M&A community has applauded disagree with the introduction spikes in public spending resulting authorities’ coordinated response, of a mechanism for the from worker support schemes. with a consensus that stimulus screening of foreign direct measures have helped stabilise investment into the EU In July, the EU agreed a further economies and provided some EUR 750bn programme to support downside protection against risk. 50% businesses as they emerge from of those surveyed cite antitrust lockdowns. This will consist Survey respondents were clear as one of the two most of EUR 390bn in grants and about the importance of such challenging forms of regulation EUR 360bn worth of loans. a policy response. Half of the when transacting in Europe participants say their appetite for Individual governments have European M&A would increase undertaken similar steps to shield the most if the EU does much businesses and workers from the more together across all policy coronavirus fallout. Programmes areas (the survey was taken such as the UK’s furlough scheme, before the EUR 750bn pandemic Germany’s Kuzarbeit, France’s recovery fund was announced).
36 | European M&A Outlook Foreign investment concerns Looking at the future direction of the EU, which of the following Survey respondents, however, scenarios would most increase your appetite for M&A in express concern about steps taken Europe over the next three years? (Please select one) by the EU and member states to 50% screen foreign direct investment (FDI) into the continent. 40%
30% The European Commission introduced guidelines in March 20% outlining how member states should screen FDI so as to 10% protect companies and critical 0% assets during the pandemic. Healthcare, medical research, biotechnology and infrastructure policy areas EU focuses on were highlighted as industries that deepening the in specific areas working together its current agenda EU continues with together across all single market only might need to be shielded from current agenda by Coalitions of willing EU does much more states go beyond the across all policy areas for implementing and
opportunistic overseas investment. (develops stronger tools enforcing its decisions in EU does less more efficiently a reduced number of areas)
To what extent do you agree with the introduction of a mechanism for European screening of foreign direct investments into the EU?
1% 12% 18% 23% 46%
Strongly Agree Neither agree Disagree Strongly disagree agree nor disagree
37 What do you believe will be the principal obstacles to M&A activity in Europe over the next 12 months? (Rate the following on a scale of 1-10, where 10 = most significant)
8 9
The COVID-19 crisis 9.37
Financing difficulties 9.27
Politics in Europe 9.21
Regulatory changes 9.08
The outcome of the US election 8.91 Future trading relations 8.77 between the UK and EU Pressure to focus on returning 8.71 funds to shareholders Currency fluctuations 8.65
Vendor/acquirer price dislocation 8.65
Chinese economy slowdown 8.20
Which form of regulation do you find most challenging when doing a deal in Europe? (Please select the top two)
50% 34% 33% 30% 23% 20% 10%
Antitrust Export controls/ Financial Environmental Data protection Labour & Bribery & foreign direct regulation regulations employment corruption investment regimes regulation
38 | European M&A Outlook There were already FDI screening The survey findings on antitrust various government support mechanisms in place in 14 member follow a year when a number of measures have provided liquidity. states pre-pandemic, focusing high-profile deals were delayed IPO markets, however, are mainly on national security. The or called off, with antitrust becalmed and securing lending EU had also introduced foreign among the main reasons for for M&A has been challenging. investment screening regulations transactions failing to cross the in 2019 to help coordinate line. UK supermarket chains Asda The survey findings suggest that measures across member states. and Sainsbury’s, for example, respondents are waiting to see how abandoned a GBP 7.3bn mega- the financing landscape looks when The guidelines encouraged merger because of antitrust risk, government support measures countries with FDI screening and the European Commission unwind and the full extent of measures in place to “make full blocked a merger between French COVID-19’s impact on economies use of tools available to them train maker Alstom and the rail and liquidity becomes clearer. under EU and national law to business of Germany’s Siemens. prevent capital flows from non-EU countries that could undermine During the pandemic, competition Europe’s security or public authorities have agreed to take a order”. The Commission also pragmatic approach to antitrust called on member states without and allowed coordination between screening regimes to consider all competing businesses where this options to address cases where has been done to deal with the acquisitions by overseas investors COVID-19 crisis and maintain could increase security risk. supply chains. These allowances, however, are only temporary. As However, 69% of respondents the impact of COVID-19 subsides, disagree with the introduction of antitrust will remain a risk area a mechanism for the screening dealmakers will have to assess and of FDI into the EU, including negotiate over the long term. 46% who strongly disagree. COVID-19 has already laid Access to finance low inbound investment into According to survey respondents, Europe, and the survey findings the second most significant obstacle indicate that dealmakers and to M&A activity in Europe over the advisers are worried about the next 12 months will be financing impact of screening measures difficulties, which received a mean on overseas investor appetite. score of 9.27 out of 10, where 10 is the most significant. Invariably, This dovetailed with another area leading the pack was the COVID-19 that concerned dealmakers, namely crisis, which scored 9.37. antitrust. Half of those surveyed cite antitrust as the form of regulation Leveraged finance markets began that was most challenging to exhibit signs of recovery when transacting in Europe. towards the end of Q2 and
39 Regional round-up
Compared to H1 2019, M&A activity in Europe fell by almost one-third in both volume and value terms in the first half of 2020.
Although certainly far from immune to the impact of the pandemic, the UK & Ireland remains the region‘s lead market, accounting for 33.7% of total deal value and 20.4% of total deal volume.
Germany and France were the UK & Ireland next most important markets, Volume % Value EUR bn % contributing 19.1% and 12.4%, respectively, of Europe‘s aggregate 704 -38% 97.9 -47% deal value. Both markets were buttressed by the presence of some of H1‘s largest pre-lockdown transactions. Benelux France Volume % Value EUR bn % Volume % Value EUR bn %
383 -33% 7.7 -79% 391 -37% 38.5 -5%
Iberia Italy Volume % Value EUR bn % Volume % Value EUR bn %
-34% -39% -11% 259 26.7 2% 260 21.9
40 | European M&A Outlook Nordics Russia & Ukraine Volume % Value EUR bn % Volume % Value EUR bn %
536 -36% 17.5 -65% 74 -43% 9.2 -37%
Germany CEE Volume % Value EUR bn % Volume % Value EUR bn %
-29% -34% -32% 477 52.2 31% 208 8.5
Austria & Switzerland Volume % Value EUR bn %
142 -31% 26.4 -52%
SEE Volume % Value EUR bn %
67 -37% 4.8 -26%
This infographic compares the period Jan-Aug 2019 with Jan-Aug 2020
41 Chapter four
Financing conditions
The sharp falls in equities and M&A COVID-19 will have an impact activity in H1 2020 have filtered down on financing in 2020, but to debt and financing markets availability and terms are likely to vary significantly between sectors. Future uncertainties will make banks less keen to underwrite and we are likely to see more club deals with a Top findings According to Debtwire, Europe’s leveraged finance markets ground greater reliance on local 60% to a near halt in March, April and liquidity or May. High-yield bond issuance of survey respondents expect alternative financing conditions to be managed to come in at EUR 41.1bn much harder in Europe in for H1 2020, an 8% year-on-year lenders. increase, but most of this activity 2020 compared to last year Paul Stallebrass, came in Q2 when corporates Partner, CMS rushed to shore up balance sheets. 71% Czech Republic identify underlying economic The loan market over the same weakness as one of the period also climbed year-on-year, two greatest impediments up 27% to EUR 75.53bn, but to financing acquisitions again this was primarily due to 55% of survey participants over the next 12 months strong demand from corporates for anticipating a decrease in new general business use. Meanwhile, listings, including 12% that 77% loans issued for M&A were expect the fall to be significant. expect the volume of down 39% over the period. So far, European investors have distressed M&A activity to focused more on supporting the increase significantly over The European IPO market has rights issues of companies in their the next 12 months had an even tougher time. portfolio rather than funding new According to PwC, European stock market hopefuls in debut 55% IPO proceeds more than halved flotations. Further offer proceeds anticipate a decrease in from EUR 12.2bn in H1 2019 to climbed from EUR 45bn in H1 the number of new IPOs EUR 5.4bn in H1 2020, with IPO 2019 to EUR 65bn in H1 2020. over the next 12 months, volumes down from 53 to 28. including 12% who expect Given the conditions, securing the fall to be significant Expectations regarding possible financing for deals is unsurprisingly IPO activity are way down, with a major concern for dealmakers.
42 | European M&A Outlook How do you expect financing Almost four-fifths of survey guiding existing portfolios through market conditions to be in respondents (79%) believe the downturn. Fitch Ratings 2020 compared to 2019? financing conditions are tougher forecasts that annual European this year than they were in 2019. high-yield and leveraged loan Close to three-quarters (71%) defaults will rise by between 4% say the weakness of underlying and 5% this year and are likely Much harder European economies will be to continue increasing in 2021. 60% among the two main challenges Fitch also downgraded more to financing acquisitions during than 90 leveraged finance credits the next 12 months, with 59% between early March and June. citing the availability and cost of Slightly harder leverage as one of the two main As defaults and downgrades rise, 19% headwinds facing financing. the survey shows that the primary drivers of restructurings in Europe Banks and institutional lenders over the next 12 months are No change remain cautious, especially as expected to be debt or liquidity 21% downgrades and defaults start issues and macroeconomic to rise and resources are shifted conditions, cited by 40% and 32% away from funding new deals to of respondents, respectively.
What do you view as the greatest challenge to financing acquisitions over the next 12 months? (Please select the top two) We are anticipating
71% 59% 40% 26% 4% an even more risk-averse, though sector-based, financing environment in an economic downturn.
Underlying Availability/ Attitudes Company Hike in Dr Joachim Kaetzler, Partner, CMS economic cost of of lenders performance US Germany, Head of CMS Banking weakness leverage interest rates & Finance Group
43 What sources of financing do Which of the following will be the primary driver of you think will be most available restructurings in Europe over the next 12 months? over the next 12 months? (Please select the top two) 40% 32% 14% 14%
Private equity 59%
Debt or liquidity issues Macroeconomic Regulatory Industry-specific Non-bank lenders/ conditions or political conditions/ credit funds developments competitive 46% pressures
Private capital to the rescue while private debt dry powder Bank lending With banks and leveraged finance totals around USD 261bn. 29% markets vulnerable to opening and closing unexpectedly, survey Direct lenders appear to have respondents see private equity stepped up to take on credits that funds, non-bank lenders and credit likely would otherwise have opted Debt capital markets funds as the key providers of capital for leveraged loans or bonds. For 24% during this period of uncertainty. example, Ardonagh Group, the Close to 60% say private equity independent UK insurance broker, will be among the top-two secured a GBP 1.87bn unitranche Cash reserves sources of deal funding, with 46% funding facility to fund a refinancing 21% looking to private debt funds. and support expansion plans. Direct lender Ares Management was Family offices Both these sources of finance the lead arranger for the facility, 13% entered the COVID-19 crisis cash which also received support from rich. Globally, private equity and CDPQ and KKR. The unitranche Equity capital markets venture capital funds have dry for Ardonagh, which is backed 8% powder cash piles of almost USD by private equity firms Madison 1.5 trillion, according to Preqin, Dearborn and HPS Investment
The COVID-19 pandemic will have a profound effect on debt markets. Whilst we may see banks stepping back to concentrate on shoring up their balance sheets, we expect that debt funds and other direct lenders will be in a position to continue their support of sponsors and corporates when deal volumes return. Patrick Donegan, Partner, CMS UK
44 | European M&A Outlook For each of the following transaction types, please rate your expectations for activity over the next 12 months.
IPOs 1% 15% 29% 43% 12%
Refinancing 1% 19% 43% 30% 7%
Rights issues 1% 43% 50% 6%
Corporate defaults 16% 66% 17% 1%
Restructurings 14% 76% 10%
Distressed M&A 77% 23%
0% 20% 40% 60% 80% 100%
Increase significantly Increase Remain the same Decrease Decrease significantly
Many banks are still prepared Partners, is believed to be the pricing were skewed in favour of to finance transactions and largest ever facility of its kind. borrowers as investors competed for a limited pool of transactions. look at deals. As long as Distressed debt surge COVID-19 remains an issue, it Two areas of private debt But financing markets are not will be key for borrowers to fundraising that have been gaining totally shut and there is still momentum are distressed debt appetite for yield in what remains give comfort to lenders that and special situations. According a low interest rate environment. there is enough liquidity to to Preqin, five special situations overcome any further funds and nine distressed debt High-quality credits in the right funds secured USD 12bn and USD sectors, and those with credible lockdown measures or other 9.7bn respectively in Q2 alone, sponsors, are continuing to receive restrictions that may have an accounting for the bulk of private funding. Cinven and Advent’s adverse debt fundraising in that period. buyout of ThyssenKrupp Elevator is proceeding with a multibillion short-term Our survey reflects a similar trend. leveraged finance issue. There effect on the All respondents say there will be besides, various blue-chip business. an increase in distressed M&A in companies, such as cruise ship the next year. Nine in ten predict operator Carnival, have been Günther Hanslik, an increase in restructuring able to tap bond markets. Partner, activity, and 82% predict an CMS Austria increase in corporate defaults. The market, however, is showing signs of bifurcation, with investors Any source of financing, however, crowding around a select pool of is likely to be more expensive and high-quality businesses. Companies subject to tighter covenants and and borrowers that don’t meet the terms. This is completely different quality threshold are likely to find to the pre-pandemic dynamics in it increasingly difficult to secure financing markets, when terms and finance in the coming months.
45 Conclusion
The findings exhibited in our 2020 CMS European M&A Outlook reflect the deep impact that COVID-19 has had on M&A activity. Stock market volatility, contracting GDP and sudden falls in company earnings have transformed M&A market dynamics
The vast majority of dealmakers best-placed to benefit from the these assets, will benefit from are ready to sit on their hands and recovery. Lockdowns have given steady deal flow opportunities see out the rest of the year before private equity firms and corporate in the coming months. re-engaging with M&A. Managing M&A teams a rare chance to step existing portfolios and protecting off the auction process treadmill Going digital value are now at the top of the and invest more time in building Technology has been an essential agenda for corporates and private relationships with vendors and tool for businesses, employees equity firms, with investments engage in direct origination. One and consumers through lockdown in new deals on pause. silver lining to the crisis is that periods. Companies have seen there has been time to invest how effective homeworking In this period of uncertainty, in building up deal pipelines. and digital engagement with however, survey participants customers can be. Tech-enabled do believe that opportunities Divestment drivers companies, meanwhile, have for distressed and special COVID-19 has forced corporates shown their ability to continue situations investors will emerge. across the board to assess their trading well through downturns. Bold dealmakers will uncover portfolios, focus their efforts on There is no going back and chances to pick off good assets core business and strengthen companies that are not up to at attractive prices when vendors balance sheets. Coty, BP, Nestlé, speed digitally will be eager to are willing to, or must, sell. Siemens and ThyssenKrupp are find M&A targets that can move just some of the well-known them up the curve. Investment in With dealmakers on the corporate names to commence broadband connectivity, telecoms defensive, here are three divestment programmes with and essential digital infrastructure takeaways to bear in mind for these aims in mind, and once will prove a rich vein of deal flow the rest of 2020 and into 2021: such plans are announced to in the months and years to come. stock markets it is difficult for Prepare for the recovery companies to put the process A rebound in deal activity may still into reverse. Buyers with the be someway off, but dealmakers skills to execute carve-outs, and that prepare now will be the with a vision for a future for
46 | European M&A Outlook About CMS
CMS is a full service top global law firm with more than We strive to develop long-term relationships with our 4,800 lawyers in 77 offices providing clients with clients, giving prompt, straightforward and commercial specialist business focused advice. With more than legal advice. We draw on renowned industry expertise 1,000 corporate lawyers, CMS advises on all aspects of in a number of sectors including Financial Institutions M&A, corporate finance and private equity transactions and Services, Energy and Climate Change, Technology, and is regularly ranked amongst the top M&A advisers Media and Communications (TMC), Life Sciences & in Europe and beyond. CMS features among the league Healthcare, Consumer Products, Construction and table leaders both for Europe as a whole and for many Development, Hotels, Leisure and Sport, Infrastructure of the individual European countries. We are service- and Project Finance. driven and relationship focused, priding ourselves on our responsiveness and “can do” attitude. For more information, visit www.cms.law
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47 Our latest CMS Corporate/M&A headline deals
Advent International Biogroup Essent Advised Advent and its Advised Biogroup, the second- Advised Essent, part of portfolio company Zentiva largest medical biology Innogy, on the acquisition on the acquisition of group in France and the first of renewable energy supply Alvogen’s CEE business. independent group with more company Vandebron. than 600 medical biology sites throughout France, in agta record connection with its merger Everbridge Advised the shareholders of with the medical biology group Advised Everbridge, NASDAQ- agta record on the sale of Laborizon, which comprises listed global software company, their majority stake in agta more than 100 medical on the acquisition of Techwan, record to the Swedish group biology sites and nearly 10 a Swiss software company. Assa Abloy valuing agta record technical platforms located at more than EUR 940m. mainly in the west of France. Galliford Try Advised Galliford Try on its Alpla Holdings Blackstone GBP 1.1bn sale of its Linden Advised Alpla Holdings on Advised Blackstone on the Homes and Partnerships & the 100% buyout of their JV acquisition of a stake in US Regeneration businesses partner, Zamil Group, from investment fund FRS Capital. Zamil ALPLA, a platform to Bovis Homes. comprising five factories across the UAE and KSA. Colgate-Palmolive Advised Colgate- Immatics Biotechnologies Palmolive on its EUR 1.5bn Advised Immatics on the Apollo Global Management acquisition of Laboratoires business combination with Advised Apollo Global Filorga Cosmétiques. Arya Sciences Acquisition Management on its acquisition Corporation and listing on the of a substantial portion NASDAQ Capital Market. CymbiQ Group of SPX FLOW‘s former Advised CymbiQ Group, a Power and Energy Isolated portfolio company of Germany Segment with an enterprise private equity investor capiton, Krones value of USD 475m. on the acquisition of Aspectra. Advised Krones, a German packaging and bottling machine manufacturer, on the acquisition Banca Popolare di Vicenza Dürr of Shanghai Xiantong Advised Banca Popolare di Advised the Turkish subsidiary Equipment Installation, Vicenza in the public bidding of Dürr on the acquisition of a a Chinese manufacturer procedure under control of the specific business line operated of power equipment. Bank of Italy for the disposal by its Turkish distributor. of its subsidiary Immobiliare Stampa, owning an extensive Lone Star portfolio of more than 200 Ei Group Advised Lone Star on real estate assets in six Italian Advised Ei Group on its GBP the acquisition of BASF’s regions and a platform for the 3bn acquisition by Stonegate Construction Chemicals provision of real estate services. Pub Company Limited. business for EUR 3.17bn.
48 | European M&A Outlook European M&A trends 2011-2016 YTD
Macquarie’s Green Shopback Telefónica Deutschland Investment Group Advised Shopback on the Advised on the sale of Advised Macquarie’s Green acquisition of interests in its passive infrastructure Investment Group on the multiple Mongolian coal assets comprising around 10,000 acquisition of the entire share from an ASX-listed vendor. rooftop sites and up to capital of a project company 80 tower sites to Telxius holding 48MW onshore wind Telecom for a purchase farm in Zajączkowo, Poland. Singapore-based price of EUR 1.5bn. resources company Advised leading APAC Nordex e-commerce rewards and Thermo Fisher Scientific Advised Nordex on the sale incentives group on its Series Advised the Massachusetts- of its European wind and D fundraisings and the based provider of laboratory photovoltaic development acquisition of Ebates Korea products and services pipeline to RWE, comprising (from Ebates – now known on the acquisition of a approx. 2.6 GW of wind as Rakuten Rewards). leading developer of mass capacity, including one spectrometry software. of the largest pipelines in France of approx. 1.8 GW, in SMA Solar Technology AG addition to a 0.1 GW solar Advised SMA Solar Technology Vivacom photovoltaic pipeline. AG, a leading global specialist Advised the sellers on the sale in photovoltaic system of Vivacom for EUR 1.2bn to technology, on the sale of United Group backed by its Quadient Inc 100% of its shares in its major shareholder, BC Partners. Advised Quadient on two China subsidiaries. its acquisition of YayPay Inc in Ukraine. x+bricks and SCP Sun Dreams Advised on the acquisition of Advised Sun Dreams on the the real group from Metro AG. Repsol merger with Marina del Sol, The consortium is acquiring Advised international oil creating the largest gaming the entire operative business company, Repsol, on the and hospitality group in the with an annual turnover of divestment of its USD 100m region with an enterprise approx. EUR 7bn and the entire Kurdamir oil and gas block in value above USD 1.2bn. real estate portfolio of the Kurdistan to WesternZagros. supermarket chain comprising 80 owned properties and 219 leased properties. Satisfaction Group Advised on the acquisition of Sony Pictures Television France and Starling.
49 About Mergermarket
Mergermarket is an unparalleled, independent mergers & acquisitions (M&A) proprietary intelligence tool. Unlike any other service of its kind, Mergermarket provides a complete overview of the M&A market by offering both a forward-looking intelligence database and a historical deals database, achieving real revenues for Mergermarket clients.
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To find out more, please visit www.acuris.com/publications
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Disclaimer This publication contains general information and is not intended to be comprehensive nor to provide financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any investment or other decision or action that may affect you or your business. Before taking any such decision, you should consult a suitably qualified professional adviser. While reasonable effort has been made to ensure the accuracy of the information contained in this publication, this cannot be guaranteed and none of Mergermarket, CMS nor any of their subsidiaries or any affiliates thereof or other related entity shall have any liability to any person or entity which relies on the information contained in this publication, including incidental or consequential damages arising from errors or omissions. Any such reliance is solely at the user‘s risk. The editorial content contained within this publication has been created by Acuris Studios staff in collaboration with CMS.
50 | European M&A Outlook CMS_LawTax_Negative_28-100.eps
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Top-ranked again by Bloomberg, Mergermarket and Thomson Reuters, the Corporate / M & A group of CMS can work for you in over 70 cities across 43 countries and via 77 offi ces worldwide. More than 1,000 lawyers provide a seamless experience and offer a full range of corporate services in both the high-end and upper-mid-markets, advising on all aspects of corporate law and transactions.
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