CMS_LawTax_Negativ_over100.eps
Storms brewing: European M & A Outlook 2019
A study of European M & A activity
In cooperation with:
September 2019 Contents
Foreword 3 Market commentary 4 CMS article: European tech M&A has a strong future ahead 6 Market research 1. M&A environment and expectations 8 2. Deal dynamics 22 3. Regional environment: The future of European M&A 28 4. Financing conditions 34
Conclusion 38
Methodology
In the second quarter of 2019, 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 seventh edition of the CMS European M&A Outlook, published in association with Mergermarket.
As GDP growth in Europe moderated from 2.5% in 2017 to 2.2% in 2018, and from 2.4% to 1.8% over the same period in the Eurozone, respondents to our survey have taken a more cautious stance on the prospects for M&A growth.
Stefan Weak economic indicators, geopolitical headwinds, uncertainty surrounding Brexit and Brunnschweiler, growing protectionism in global trade have contributed to a shift in sentiment in the Partner, Global M&A community and have taken a toll on deal activity. European M&A value over the Head of the CMS last 12 months (Q3 2018 to Q2 2019) is down 22% year-on-year to EUR 652.2bn. Corporate/ M&A Group Unsurprisingly, this has contributed to a less optimistic mood among survey respondents than was the case a year ago.
Key findings from our research include:
M&A appetite weakens Financing conditions Distressed M&A and 45% of respondents are not to tighten restructuring to rise considering M&A, compared 72% of respondents expect 95% of respondents said to only 28% last year. Only financing conditions to they expected distressed 27% of respondents to this become more difficult in the M&A to rise, including 64% year’s survey expect the level coming year, even though, who said they expected it of M&A activity in Europe at the moment, interest rates to rise significantly. 94% to increase over the next 12 are low and finance is readily of respondents said they months, and just 1% expect available. This contrasts thought restructurings would it to increase significantly. sharply with last year’s survey, increase in number. The Even those that are open to in which 47% predicted consumer sector has already deals have adopted a more financing conditions would seen an increase in distressed defensive mindset, with a get easier in the coming year. deal flow, which could spill slant towards divestments Most respondents (53%) over into other sectors if and bolt-ons rather than expect that they will have growth continues to stall transformative deals. to finance deals from their and trade spats escalate. own balance sheets. Private equity is also expected to become an increasingly important source of capital during the year ahead.
3 Market commentary
Headwinds may blow hard but European deals will still sail through
Scott Moeller, professor and director at the For now, a company waiting for M&A Research Centre of Cass Business School, a better price and time to do a deal will find that the desired analyses the key trends in European dealmaking. targets are continually snapped up by competitors, or by one of the many private equity firms with dry powder. Both corporates and When asked by a reporter in those private equity firms have built 1897 about his demise, Mark up huge resources over the past Twain famously quipped, ”The decade during the longest post- report of my death was an war period without a recession. exaggeration.“ The same must In the case of private capital, the be said about the M&A market in Financial Times reported in late the past 12 to 18 months, where June 2019 that almost USD 2.5 amid a relatively strong market trillion of dry powder is available Scott Moeller, a year or so ago, many were to be used in deals. Corporate Professor and forecasting a significant decline balance sheets are similarly strong, Director, M&A ”in the next six to nine months“. suggesting that there are solid Research Centre platforms for deals to be done. Cass Business Mark Twain lived for another dozen School years. Although we shouldn’t In spite of these benign conditions, expect the current merger wave M&A is slowing. In last year’s CMS that started in 2013 to last that European M&A Outlook, 72% of long, at the moment, M&A activity respondents said that they were just doesn’t seem to die – although considering M&A, divestments or admittedly, with the start to 2019 both, whereas this year, the figure is being the slowest in six years, it may 55%. Not as strong, but notably still not be as robust as it once was. a majority of companies surveyed.
Conventional wisdom says that a Opportunities to do deals exist. rising market climbs a wall of worry. As this report shows, 67% of Indeed, that wall of worry may be private equity firms believe they helping the markets now by fuelling will find favourable valuations this increased activity in the near term year – driven, perhaps, by their as companies see this time as expectation of a slowdown in the perhaps a final opportunity to do economy. Certainly, this is reflected a deal or two before the recession in the expectation by 64% of the that must and ultimately will come. survey respondents that distressed
4 | European M&A Outlook M&A will increase significantly decision-making of many business activist campaigns frequently compared to only 15% who said the leaders and may no longer be include demands for M&A and same last year. None said it would as disruptive or challenging as it could therefore spur deal activity. decrease. Indeed, almost half of was in the past several years. respondents said that distressed- Societal pressures on companies will driven M&A and non-core asset These factors do have a direct also continue to grow and the past sales would be the greatest impact on M&A activity, with M&A year has seen evidence of this as sell-side drivers of M&A activity in value in H1 2019 falling 32% to EUR well. With climate change and other Europe in the next 12 months. 358bn and volume down 14% to environmental issues expanding 3,488 deals compared to H1 2018. into the corporate consciousness Conversely, the biggest deal drivers (such as the need to reduce plastic on the buy-side are those that The concerns go beyond the overall waste, moves away from meat support companies’ need to stay worries about the economy. At a and dairy products, and demand ahead of competition – specifically, company and sector level, the rise in for alternative energy and battery as can be seen later in this report, protectionism is increasing, with a technology), many companies will in acquiring new technologies more assertive competition regime respond by making acquisitions to and other intellectual property. in the EU expected to continue quickly fix their legacy problems, under the new commissioner. or simply to hedge their future risks. The wall of worry is certainly Discussions across Europe over getting higher, however. Although whether the EU should adopt And finally, the changes resulting corporate earnings remain stricter rules on foreign investment from big data, artificial intelligence, strong, the overall economic, on the grounds of security, along robotics and other technological political and social environment with the US’s recently expanded developments have seen many has been challenging. mandate for CFIUS (the Committee companies conducting M&A to on Foreign Investment in the United remain relevant or ahead of the One of the main challenges is States), are further concerns. competition. Just look at how predictability. Over the past three many banks now have larger IT years, politics has seemingly Supporting the argument for a budgets than big technology overwhelmed the major continuing robust level of M&A companies, with much of their economies that drive much of activity in Europe are other growth in technology coming the global M&A volumes: the non-macroeconomic drivers. by way of acquisition. tacking to the right in Western One example is the increase in democracies, the uncertainty of shareholder activism. Long seen as M&A is still often the quickest unprecedented events such as a uniquely American phenomenon, way to achieve that growth Brexit, and trade wars – both more and more activist investors and success. The wall of worry active and looming. That being are targeting UK and European will remain but that only will said, this wave of unpredictability companies who are often ill- drive the need for more M&A, is now likely factored into the prepared for their onslaught. These not its premature death.
5 CMS article: European tech M&A has a strong future ahead
Following a stellar performance in recent years, the M&A market for TMT in Europe has a lot to live up to in 2019 but regionally the sector has significant strengths with long-term prospects.
Last year (2018) marked a banner year competitive within a rapidly developing for TMT M&A in Europe. The aggregate market, business leaders cannot ignore deal value for 2018 increased by 177% how technology is continuously disrupting when compared to 2017, ultimately traditional business models and methods. reaching EUR 169.1bn. This figure far It is a common trope in this day and age outstripped the EUR 61bn achieved in that, to varying degrees, all businesses, Anthony Waller, 2017 and exceeded the all-time record whether traditional or modern, have a TMT Partner, by EUR 36bn. Last year may, however, need to become software businesses. Corporate/ be an outlier year for the sector, buoyed M&A is the obvious way to achieve M&A Group, by a series of megadeals, including this transformation in short order. CMS London Comcast’s EUR 42.2bn acquisition of Sky. Europe’s highly successful start-up scene Perhaps inevitably, results for the first offers attractive prospects for M&A. quarter of this year indicate a reduction A total of 68 ‘Unicorns’ (businesses in aggregate M&A deal values when valued at more than USD 1bn) have been compared to the same period in 2018. established in Europe since 2013. Fourteen Whether this marks a trend for the year of those reached Unicorn status in 2018 is too early to tell. Commentators are and a further seven have achieved the quick to point out that uncertainty in same in 2019 so far. Entrepreneurship the region may be reducing confidence and innovation in Europe is thriving. as investors and strategic acquirers seek to navigate macroeconomic challenges, From a talent perspective, Europe has including most obviously the ever- a strong story to tell. A recent report increasing confusion arising out of Brexit. identified that there are some 5.7 million professional developers based Notwithstanding, there are good reasons in Europe, compared to only 4.4 million to remain optimistic about the prospects currently residing in the US. Government for TMT M&A within Europe. In an age programmes across Europe have focused when we find ourselves in the early on growing this talent pool and the number stages of a ‘Fourth Industrial Revolution’, of new developers entering the market acquiring technology, IP and talent is increasing year-on-year as a result. remains key to the long-term strategy of both incumbent players in the market TMT businesses in Europe are supported and new entrants. To remain relevant and by well-established and highly regarded
6 | European M&A Outlook European M&A trends 2011-2016 YTD
intellectual property regimes, Amazon, Microsoft and Google up’s development. It is thought enabling businesses to build (FAAMG), the US West Coast that this funding gap has held value based on strong, defensible ‘super-acquirers’. Many of European business back from IP. Given that the acquisition these US large-scale acquirers achieving the same rate of growth of IP is a strong driver for continue to retain large pools when compared to competitors M&A, acquiring a business in a of capital in Europe that have based in the US and China. As region where buyers can have been deployed against European noted above, there are fears that confidence in the underlying IP transactions over the last decade. the TMT M&A market will be assets of the business is critical. The repatriation of cash that was quieter in 2019 than in 2018. expected after a change of policy Europe is also home to a wealth by the Trump administration has If you treat 2018 as a successful of businesses in technology not yet transpired to anything anomaly, however, the verticals that are globally like the degree expected. fundamentals of the TMT market attracting significant attention. Acquirers, it seems, see there in Europe remain extremely Europe’s strength in fintech, is a use for their cash within strong. The ongoing need for artificial intelligence (AI) and the European market and most boards to harness the power mobility is well recognised and expect that to be used for M&A. of technology, when combined European companies in these with the opportunities in the fields are attracting material Setting aside the obvious region, is likely to fuel a continued investment. The consolidation of uncertainty posed by Brexit and run of TMT M&A in Europe these markets has already begun, the macroeconomic environment, for the foreseeable future. with a number of landmark there are some other headwinds deals already announced over in the market. There has the last few years. From a global been a marked shift towards perspective, European nations protectionism by the majority are some of the most digitally of the G20 nations, including advanced. This has led to a strong many across Europe, with an demand for digital infrastructure increased focus on foreign assets, including fibre, cloud company control legislation. architecture and data centres. Further, when compared to the US, there remains a significant Europe’s strength in these key lack of investors in Europe verticals has not escaped the prepared to put capital at risk attention of Facebook, Apple, in the early stages of a start-
7 Chapter one
The M&A environment and expectations for the year ahead
Dealmaker optimism for the prospects of Political uncertainty and rising populism across the continent European M&A has ebbed away over the have been major contributors to first six months of 2019, as a combination of the deal drop-off. The UK’s exit slowing economic growth, political uncertainty, from the EU has been delayed and, although its departure is set escalating trade tensions and volatile stock for the end of October, the final markets have put the brakes on deal activity. outcome of Brexit and the UK’s future trading relationship with Europe remains unclear. European Parliament elections in May also saw deals put on hold as investors waited on the outcome, while in Italy the populist 5 Star Movement Top findings Mergermarket data shows that, and far right Lega Nord have in H1 2019, European M&A deal formed an anti-European coalition 27% volume dropped 14% to 3,488 that has pursued aggressive of respondents expect the deals, with value down by 32% spending plans, despite Italy’s level of M&A activity in to EUR 358bn when compared high levels of public debt. Europe to increase over the to the same period last year. next 12 months – compared Escalating trade tensions between to 65% in last year‘s survey. The drop-off comes despite high the US and some of its major expectations a year ago, when trading partners, including 49% almost two-thirds of survey China, Mexico and the EU, cite cash-rich corporate acquirers respondents (65%) said they have exacerbated uncertainty, as one of the top two buy- expected M&A activity in Europe to prompting the world’s largest side drivers of M&A activity. rise, and close to a quarter (22%) asset manager, BlackRock, to predicted a significant rise during rank protectionism as the primary 47% the year ahead. High expectations risk to global economic growth, identify distress-driven M&A and for cross-border M&A have also given the disruption to supply non-core asset sales from larger failed to materialise. Acquisitions of chains and productivity. The companies as key sell-side drivers. European targets by non-European effects have already been bidders fell 17% by volume and felt in Europe, with real GDP 57% 32% by value over H1 2019, even growth moderating from 2.5% expect the number of cross- though 92% of respondents to last in 2017 to 2.2% in 2018. In border deals to increase year’s survey anticipated an increase the Eurozone, growth has over the next 12 months. in inbound and outbound deals. slowed from 2.4% to 1.8%.
8 | European M&A Outlook European M&A trends 2013-H1 2019
2,500 300,000
250,000 2,000
200,000 Deal value EUR m 1,500
150,000
Number of deals 1,000
100,000
500 50,000
0 0 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2
Number of deals Deal value (EUR m)
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% 10% 25% 25% 29% 43% 26% 22% 1%
0%
2018 2019
9 European M&A top deals, H1 2019
Announced date Target company Target sector Target country Bidder company Bidder country Deal value EUR (m)
25/06/2019 Allergan plc Pharma, medical & biotech Ireland (Republic) AbbVie Inc. USA 75,768
28/02/2019 Alcon Inc. Pharma, medical & biotech Switzerland Novartis AG (Shareholders) Switzerland 23,672
A consortium led by EQT Partners AB 16/05/2019 Nestle Skin Health S.A. Pharma, medical & biotech Switzerland Sweden 9,029 and Abu Dhabi Investment Authority
21/06/2019 Metro AG (89.09% stake) Consumer Germany EP Global Commerce, a.s. Czech Republic 8,759
28/03/2019 WABCO Industrials & chemicals Switzerland ZF Friedrichshafen AG Germany 6,445
27/02/2019 UPC Switzerland LLC TMT Switzerland Sunrise Communications AG Switzerland 5,537
08/03/2019 RPC Group Plc Industrials & chemicals United Kingdom Berry Plastics Group, Inc. USA 5,215
Merlin Entertainments Plc Kirkbi - Blackstone - 28/06/2019 Leisure United Kingdom Denmark 5,108 (71.08% stake) CPPIB consortium
Axel Springer SE (54.6% 12/06/2019 TMT Germany Kohlberg Kravis Roberts & Co. L.P. USA 4,952 stake)
24/06/2019 Altran Technologies S.A. Business Services France Capgemini SA France 4,908
Slowing growth is being Rising protectionism and slowing accompanied by greater volatility economic growth make dealmakers in the stock market. In the last few months of 2018, stock markets more cautious than in past years where around the world, including in confidence levels peaked. On the other Europe, saw dramatic falls before hand, such a period of uncertainty, mostly recovering since. But as share prices move up and down combined with the large number of so significantly, assessing value cash-rich companies, may provide and agreeing on price has become unique opportunities for bold investors. more difficult for dealmakers. The number of transactions may Regulatory intervention has also decrease slightly but we do not spooked dealmakers and led to anticipate a drastic drop. the lapse or cancellation of deals. Deutsche Bank and Commerzbank Alain Raemy, Partner, CMS Switzerland called off their tie-up, citing execution risks. UK supermarket chains Asda and Sainsbury’s canned their EUR 8.3bn merger following the intervention of the UK’s Competition and Markets Authority (CMA), while the European Commission blocked a deal
10 | European M&A Outlook between French train manufacturer expect the level of M&A activity Coping with the challenges Alstom and the rail arm of German in Europe to increase over the of digitalisation and conglomerate Siemens. More next 12 months, and just 1% recently, the then-UK culture and expect it to increase significantly. transformation will be one media secretary Jeremy Wright of the main drivers for ordered the CMA to investigate Although the market is subdued, upcoming M&A deals. the EUR 4.9bn (inclusive of debt) there is still appetite to invest if the takeover of satellite operator right deals come up. Buyers are While corporate strategy Inmarsat by a consortium, including becoming more particular about the will focus on establishing a Apax Partners, Warburg Pincus and transactions they will do, favouring competitive advantage the Canada Pension Plan Investment deals in fast growing sectors that Board, on national security grounds. have upside potential but also through acquiring know- some cushion against downside how (e.g. acquihire), the This has had a particularly chilling risks. Of the 10 largest deals in typical strategic objective effect on megadeals, where H1 2019, for example, three were confidence is crucial for dealmakers in the resilient pharma, medical postulating that size writing large cheques. H1 2019 and biotech (PMB) sector, and matters – where growth and saw 59 deals worth EUR 1bn or two were in the hot technology, geographical expansion are more, compared to 89 such deals media and telecommunications in the same period last year. (TMT) space, most notably essential Sunrise Communications’ – will be The slowdown in deal activity EUR 5.5bn purchase of UPC preserved. has taken its toll on dealmaker Switzerland from Liberty Global. sentiment about future M&A Tobias Grau, prospects. Only 27% of Cash-rich corporate acquirers Partner, respondents to this year’s survey are expected to be the main CMS Germany
What do you believe will be the greatest buy-side drivers of M&A activity in Europe over the next 12 months? (Select up to two)
49% 36% 30% 29% 24% 17% 15%
Cash-rich Undervalued targets Consolidation Private equity Increased Relative Digitalisation corporate acquirers in overcrowded buyouts appetite weakness markets from foreign of European acquirers currencies
11 What do you believe will be the The Asia-Pacific region will likely be the greatest sell-side drivers of M&A favourite of European investors in the activity in Europe over the next 12 months? (Select up to two) coming 12 months. In spite of the slowdown in the Chinese economy and the Sino-US trade war, China continues to be open to foreign investors. With Distress-driven M&A the continuing growth of countries in 47% the Asia-Pacific region, there will be ample opportunities for investment. Shirley Lao, Partner, CMS Hong Kong
Non-core asset sales from larger companies drivers of M&A activity (49% of Do you expect the number of 47% respondents rank this among their cross-border M&A into Europe top two drivers). Research from (non-European acquirers) to French private equity firm Argos increase over the next 12 months? Wityu shows that corporates are currently paying 10.1x Ebitda 57% 43% Capital raising for expansion in for European mid-market assets faster-growing areas on average, almost a turn more 30% than private equity firms. Yes No
On the sell-side, distress-driven Regulatory changes M&A and non-core asset sales EU-wide or in from larger companies are each European jurisdictions identified by 47% of respondents 27% as key. Swiss consumer group Nestlé, for example, agreed to total value of such deals to increase sell Nestlé Skin Health to a (compared to 64%). Foreign consortium led by buyout firm EQT bidders have typically moved Private equity for EUR 9bn, in order to focus its for assets that fit key strategic divestments portfolio on its fastest-growing objectives or present opportunities 23% divisions and deflect criticism from to buy at attractive valuations activist investors agitating for an because of underperformance overhaul of the multinational. or currency fluctuations. Japan’s Uncertainty surrounding Mitsubishi UFJ Financial Group the UK leaving the EU Although down on last year, more (MUFG), for example, acquired 23% than half of respondents (57%) the aviation finance division of still expect the number of cross- Germany’s DVB Bank in a EUR border deals to increase over the 5.6bn deal as aviation finance A pick-up in valuations next 12 months (vs 92% in 2018), has been identified as one of its 3% although only 20% expect the key growth areas and supports
12 | European M&A Outlook Which region will be the most active inbound acquirer into its strategy of offering clients Europe over the next 12 months? (Select only one each) bespoke financing products. The US’s Berry Global paid EUR 5.2bn for UK plastics business RPC Group, which had seen its share price in ca eri Am the lead-up to the deal fluctuate h rt o N in the face of tighter regulation of A s ia plastic products and stock market - 66% P a c concerns around cash generation. ifi 32% c
North America is expected to be the most active acquirer for inbound cross-border deals, according to 66% of respondents, and 52% say it will be the most active target region for outbound
2%
a deals (37% said this last year).
c
i
r
e
m
A
n
i Links to Asia-Pacific are expected t
a L a to remain strong, with 32% of ic fr A n respondents predicting that it will be ra ha -Sa the most active inbound acquirer and Sub 37% saying it will be the most active Most active inbound acquirer target region. Small minorities point to Latin America as the key region.
Within the selected bidder region, which country will be the most active acquirer into Europe?
66% 22% 8% 2% 1% 1%
USA China Japan India Mexico Brazil
13 Brexit and UK M&A activity
Since the UK announced its intention to have a referendum on EU membership in 2015, subsequently voting to leave in 2016, the value of deals has been on a rollercoaster ride. We explore six key moments in the Brexit saga and the effect on M&A.
UK M&A trends 2015-H1 2019 1. UK M&A value rises to EUR 165.5bn – the highest on Mergermarket 500 170,000 1 record (since 2006). 160,000
150,000 2. The majority votes to leave the EU in a narrow vote 140,000 400 on 24 June 2016. UK M&A 130,000 value slumps to its lowest 120,000 quarterly total since 2009.
110,000 Deal value EUR m 3. UK M&A value rises to 300 100,000 EUR 50bn in Q3 2016, up 63% 90,000 compared to Q2 2016, possibly 5 80,000 in response to a sharp fall in
Number of deals the value of the pound. 200 70,000 60,000 4. Article 50 triggered. Snap 3 4 50,000 UK election in June 2017. 40,000 100 5. In Q2 2018, UK M&A value 30,000 6 reached its highest levels since 2 20,000 2015 (EUR 79bn). However, it 10,000 has slumped since that date.
0 0 6. The EU agrees to extend Article 50 for Brexit until 31 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 October 2019. On the back of this, UK M&A activity rises marginally in Q2 2019. Number of deals Deal value (EUR m)
14 | European M&A Outlook European M&A trends 2011-2016 YTD
European outbound outlook
In the face of political uncertainty, protectionism and regulatory intervention, European dealmakers may be looking outwards for opportunities.
Outbound M&A value from Which region will be the most active non-European target region for Europe totalled EUR 312bn over European acquirers over the next 12 months? (Select only one) the first half of 2019, a 19% drop on the comparative period in 2018, according to data from ca eri Mergermarket. But although Am h rt headline value was down over o N A s the first six months of the year, ia - 52% P a outbound activity spiked sharply c ifi in Q2 to reach EUR 175bn. 37% c
The uplift in outbound activity in Q2 could be viewed as a reaction to the political uncertainty, protectionism and regulatory intervention that has weighed
10%
on dealmaking within Europe. a
c
i r
The block on the Siemens and e m
A
n
Alstom deal and the failure of i t
a 1% L the Sainsbury‘s/Asda and FIAT a ic fr A Chrysler/Renault deals to close n ra ha has seen European investors turn -Sa Sub elsewhere to get transactions done and find growth. Most active target region
North America has been the primary target for investment by European firms, accounting for 70.4% of outbound European deal value during the last three months. Deals like Germany’s Infineon Technologies, which
15 Which region outside Europe paid EUR 8.3bn for Cypress Asia-Pacific was the next most do you believe will witness the Semiconductor, and the attractive region for outbound highest aggregate value of M&A EUR 5.1bn merger between deals, according to the survey, with transactions over the next 12 France’s Dassault Systèmes 37% choosing it as a key target months in deals with European and Medidata Solutions, were region and 78% saying they expect bidders? (Select top two) among the standout European Asia-Pacific to be among the top investments into the US. two target regions which will see the highest aggregate value The popularity of North America of dealmaking from European as a jurisdiction for European acquirers in the next 12 months. outbound deals was reflected in the survey results. More than Three-quarters of respondents Asia-Pacific half (52%) of respondents say say expansion in new geographies 78% they expect North America to and customer bases is key. In be the top target region for the case of Infineon’s Cypress European bidders. The US market purchase, Infineon said the has remained attractive despite investment opened up new growth the Trump administration’s opportunities in the automotive, imposition of trade tariffs and industrials and Internet of “America first” policies. Things sectors. The deal is still
North America 58% Innovation and the need for growth, combined with low cost of debt and weak local GDP growth expectation, is probably a strong mix that drives European companies to look for investments overseas. We see Latin Latin America 43% America increasingly becoming a more attractive target to fulfil such appetite, both economically and culturally, while geopolitical uncertainty has had limited effect on M&A activity. Sub-Saharan Africa Jorge Allende D., Partner, CMS Chile 18%
MENA 3%
16 | European M&A Outlook European M&A trends 2011-2016 YTD
If you are considering acquisitions outside European markets, subject to review from CFIUS what is the motivation for this? (Select top two) on national security grounds.
A strong IPO market in the US, with Uber and Lyft raising USD Growth in new geographies and customer bases 8.1bn (EUR 7.2bn) and USD 2.3bn 75% (EUR 2.1bn) respectively, provides further evidence of a buoyant US market that European dealmakers Sizeable, transformational acquisitions are eager to gain exposure to. 38% When asked about the top two objectives of cross-border deals, Bolt-on acquisitions in existing geographies and segments 52% say the acquisition of tech/ 37% IP is key, while 43% cite lowering their cost base. Dassault, for example, acquired clinical trials Favourable valuations group Medidata to gain IP that 35% would strengthen its position in the life sciences industry. The Growth in new sectors in existing geographies French firm has executed various 15% deals in order to diversify its technology and software offering.
What will be the most important objectives of your next M&A target outside Europe? (Select top two)
52% 43% 36% 33% 25% 11%
Technology/ Lower cost base Accessing a new Regional Existing plant/ Natural Intellectual property labour force/ distribution real estate resources expertise channels
17 Sector watch
TMT, consumer and PMB tipped to drive dealmaking into 2020
We explore the sectors that executives expect to top the M&A activity in the coming 12 months.
The TMT, consumer and PMB The sector remained one of the The fundamentals of the sectors are expected to deliver most active in Europe, despite a TMT market in Europe the most deal activity during 50% fall in value on H1 2018 levels. the next 12 months, according remain extremely strong. to the survey respondents, The largest deal in the space The continued need for with 44% choosing TMT, during H1 2019 was the sale boards to harness the 35% opting for consumer of Swiss telecoms firm UPC and 28% selecting PMB. Switzerland by Liberty Global power of technology, to Sunrise Communications when combined with the The PMB sector did deliver the for EUR 5.5bn. The deal is opportunities in the largest overall deal value in still pending and subject to Europe in H1 2019, but figures regulatory clearance, with the region, is likely to to fuel were skewed by the anomalous Swiss competition authority a continued run of TMT EUR 75.8bn mega acquisition by reviewing the transaction. M&A in Europe for the US-based AbbVie of Allergan, which operates mainly in the The deal shows that there is still foreseeable future. US despite being domiciled in room for consolidation in Europe’s Anthony Ireland for tax purposes. The deal telecommunications market, as Waller, accounted for 64% of PMB value. smaller service providers join Partner, forces to challenge dominant CMS UK The TMT and consumer sectors market incumbents. A tie-up provide a clearer barometer between Sunrise and UPC, for of M&A trends and appetite example, will create a business across the continent. with the scale to compete directly with state-controlled telecoms Spotlight on: TMT group Swisscom. Swisscom has TMT was the second-largest 6.6m customers, while Sunrise sector for M&A in Europe by only has 3.4m. UPC has 1.1m pay both volume and value, registering TV customers. By acquiring UPC, 666 deals worth EUR 57.7bn. Sunrise will be able to enhance
18 | European M&A Outlook European M&A trends 2011-2016 YTD
Which sectors do you believe its “triple play” broadband, TV to private equity investment will witness the most M&A and mobile offering and expand as the typical five-year buyout activity in Europe over the next its customer base for mobile hold period would give it space 12 months? (Select up to two) and broadband services. and time to build out its online classified business, which delivers Private equity firms, meanwhile, around 80% of its profits, and have also shown strong interest to hand-pick acquisitions. For TMT in TMT assets, especially for Inmarsat, which has received 44% take-private transactions. private equity backing previously, buyout backing brings in KKR’s pending EUR 5bn take- capital without the antitrust private bid for a 54.6% stake risks that come when joining in German news media group up with a rival. In an industry Consumer Axel Springer was the second- like satellites, long-term private 35% largest TMT deal of the year equity capital can also help to so far, while the third-largest fund large, capital intensive deal in the sector was the EUR projects and satellite launches. 4.9bn bid for UK-based satellite PMB group Inmarsat by a consortium While trends driving growth in 28% comprising Apax Partners, TMT are global in nature, the Warburg Pincus and Canadian UK saw the most TMT deals in pension funds CPPIB and OTPP. Europe, as well as the largest The deal will require security proportion of deal value. There Financial services clearance before it can proceed. were 135 TMT deals in H1 2019, 22% worth EUR 14.6bn in the UK. The Hellman & Friedman and EUR 4.9bn bid for Inmarsat was Blackstone, meanwhile, the largest deal in the UK in the Industrials and chemicals attempted a EUR 5.7bn take- sector. Switzerland recorded the 18% private of German online second-largest deal value – EUR classifieds business Scout24 5.5bn – with the Sunrise/UPC deal before the offer lapsed primarily driving the numbers. Business services when it failed to reach 16% the minimum acceptance Germany and France came in threshold with shareholders. second and third respectively by volume (95 and 80 deals), Leisure Private equity firms have seen with the Axel Springer takeover 15% value in listed companies and topping the German TMT an opportunity to secure deals deal rankings. In France the Energy, mining at attractive valuations. KKR, largest TMT deal was the and utilities for example, offered a 40% EUR 1.4bn acquisition of a 13% premium to acquire Axel Springer, 70% stake in telco Iliad’s while the consortium bidding towers holding company, Iliad Real estate 5% for Inmarsat offered a 24% TowerCo, by Spanish telecoms premium to the company’s close infrastructure firm Cellnex. Construction 1% share price the day before the Agriculture 1% bid. Axel Springer was open
19 Spotlight on: Consumer rise 105% on H1 2018 levels to acquisition (closing 30 deals The consumer sector was the EUR 16.9bn, with volume up a since 1997) and using M&A to fifth-largest by value, with a total marginal 3%. Investment in large enter new markets and leverage of EUR 28.3bn in M&A in H1 2019, retailers has largely been driven synergies. The Canadian dairy, a 41% rise on H1 2018. Volume, by soft trading and the need one of the ten largest in the however, fell by 10% to 426 deals. for new capital and strategic world, did not have a presence direction. DIA, for example, has in the UK and saw Dairy Crest Germany saw the largest portion suffered weak trading, accounting as an attractive platform to of deal value in the consumer issues and staff layoffs; Lenta’s expand into the UK market. sector of all European countries, exiting shareholder TPG has been with EUR 10bn in total value. The invested in the business for a UK ranked second by value (EUR decade and was looking to sell 4.3bn), with France topping the out; and Metro has been through volume ranking with 79 deals, a period of restructuring that has representing just under a fifth of seen it offload its department all consumer deals in Europe (19%). store business Galeria Kaufhof and For volume, France was followed spin off its consumer electronics by the UK (60 consumer deals) business Ceconomy to focus and Italy (44 consumer deals). on its cash-and-carry offer.
Germany’s high-ranking deal value With bricks-and-mortar retailers was predominantly due to the facing similar strategic pressures pending EUR 10bn acquisition of as customers move online, an 89% stake in supermarket chain distress and restructurings Metro by EP Global Commerce, a are likely to continue driving Czech acquisition vehicle set up by M&A activity in the sector. Daniel Křetínský and Slovak partner Patrik Tkáč. The transaction Food M&A also saw a significant was the largest consumer deal rise in deal value, climbing 180% announced in H1 across Europe. on figures for H1 2018 to EUR 6.5bn. Volume was down 12%. The food retail segment saw several other high profile deals The largest food transaction in H1 this year: Russian investment 2019 was Canada-based Saputo’s vehicle Servergroup acquired EUR 1.4bn acquisition of UK dairy Russian supermarket Lenta for group Dairy Crest, followed by the EUR 2.6bn, while the third-largest EUR 928m sale of Dutch organic retail deal in Europe was the EUR food business Royal Wessanen to a 1.7bn acquisition of a 71% stake PE consortium led by PAI Partners. in Spain-based supermarket group DIA by L1 Retail, a retail-focused PAI’s investment in Wessanen was investment group controlled by driven by shifts in consumer habits Russian billionaire Mikhail Fridman. toward healthier, organic foods and producers using sustainable Large deals like these saw the food production methods. Saputo, value of retail M&A in the region meanwhile, has grown through
20 | European M&A Outlook European M&A trends 2011-2016 YTD
In context: Global M&A
While European deal activity slipped in the past year, overall global dealmaking grew thanks to the dominance of the US market.
Global deal value over the year According to Mergermarket, the USD 88.9bn (EUR 78.5bn) from the start of Q3 2018 through domestic deals accounted for merger between aerospace to the end of Q2 2019 climbed two-thirds of all deals in H1 2019. companies United Technologies 42% year-on-year to EUR 3 This compares to a yearly average and Raytheon. Indeed, all but trillion, on volumes that dropped of 61.3% recorded since 2010. two of the top ten deals in H1 10%. Over the same period, Chinese inbound investment into 2019 were domestic US deals, European M&A was down by Europe, a significant contributor compared to only five in H1 2018. 32% to EUR 358bn. European to European M&A numbers deal volumes dropped by 14%. in recent years, tailed off to The confidence among dealmakers lows not seen for 10 years as in the US to continue pursuing The figures reflect the dominance protectionist and national security blockbuster deals, underpinned of the US over M&A markets, concerns knocked confidence. by readily available financing with the country accounting for and cash-rich balance sheets, more than half (51%) of deal value As a result, Europe’s share of stands in contrast to Europe, in 2019, its largest share of the total global M&A value slid from where political uncertainty (such global deal market on record, 32% in H1 2018 to only 22% in as from Brexit) and cooling according to Mergermarket. H1 2019. Over the same period, economic growth have prompted North American targets rose from a more cautious approach to This has been at the expense of making up 44% of total deal value dealmaking, especially when European dealmaking, as many to 55%. European dealmakers, multiples are still relatively high. US buyers retrenched to domestic however, will take some comfort deals in response to growing from the fact that, although their trade tensions between the US proportion of global value has and its partners. Many bidders dropped off, their percentage of who may have pursued European volume levels have grown slightly, deals in different circumstances from 39% of global dealmaking opted to stay local. This trend in H1 2018 to 40% in H1 2019. has manifested in other markets, The difference in value between with cross-border deals sliding the US and Europe has been across the board as investors driven by the higher number of retrench to more familiar markets. megadeals in the States, including
21 Chapter two
Deal dynamics
The drop in European M&A during H1 2019 is Even for those firms that are still reflective of the heightened geopolitical and considering M&A, the types of deals on the table do have a more macroeconomic risks dealmakers have had to defensive colour, with divestments factor into assessments of potential transactions. as important as acquisitions for 25% of respondents. Just over one in ten respondents (11%) will focus exclusively on divestments, and less than a fifth (19%) will only consider acquisitions.
The higher priority given to Top findings Rising protectionism and escalating divestments suggests that tariff spats between the major corporates are using M&A not 45% economies of Europe, the US and just as a tool for expansion but as of respondents say that China have taken cross-border a way to streamline operations, M&A does not currently fit deals off the table for many, while focus on profitable core divisions, into their corporate strategy a growing number of broken deals consolidate control of their home – up from 28% last year. have also made senior management markets and make sure they are hyper alert for fear of repeating the lean and “recession-ready” at a For firms that are considering failed transactions of colleagues time of macroeconomic instability. M&A, 11% will focus exclusively and rivals. High-profile European Indeed, among those considering on divestments, while 19% deals that have failed to close this divestments, 60% say they want will only consider acquisitions. year include FIAT Chrysler/Renault, to focus on core operations, Sainsbury‘s/Asda, Alstom/Siemens’ while 42% say the main driver 60% rail business and Deutsche Bank/ is capital raising for increased of respondents that are Commerzbank. A private equity financial flexibility, followed by considering divestments say (PE) bid for satellite business 32% who cite regulatory pressure. they want to focus on core Inmarsat is now also subject operations. 42% say the to scrutiny from regulators. Pressure from activist investors, main driver is capital raising for which was one of the drivers behind increased financial flexibility. Given the lengthening list of Nestlé’s move to carve out its failed deals and reduced appetite skincare business, has also prompted for cross-border investment, companies to look at divesting, as it is unsurprising that 45% of has growing appetite among private respondents to the survey say equity firms for carve-outs. As they are not considering M&A. growth in Europe slows, corporates This is up from 28% last year. are also turning to divestments
22 | European M&A Outlook Where does M&A currently If you are considering acquisitions, what is the fit into your corporate motivation for this? (Select up to two) strategy? (Select only one) 80% Private equity firm 70% Corporate Not considering 60% M&A at this time 45% 50%
40% Currently considering 30% both divestments and acquisitions 20% 25% 10%
0% Currently considering acquisitions 19% Sizeable, acquisitions
Currently considering and segments Growth in new customer bases transformational divestments geographies and existing geographies 11% existing geographies Favourable valuations Bolt-on acquisitions in Growth in new sectors
What will be the most important aspect of your next European M&A target? (Select up to two) Corporate
60% 47% 42% 36% 35% 40% 34% 34% 27% 26% 2% 16%
Technology/ Lower Accessing a new Existing plant/ Regional Natural Intellectual cost base labour force/ real estate distribution resources property expertise channels
23 Underperforming businesses to drive financial performance. Expansion in new geographies Research from consultancy firm and customer bases were and geopolitical shifts Bain & Company, for example, selected by a smaller number remain a driver for found that companies with a of survey participants (61% divestments and result in focused divestment programme of corporate respondents and outperform those without one 24% of PE respondents). corporates being able to by 15% over a 10-year period. focus on their core For firms that have chosen to operations and to mitigate For the dealmakers that are looking pursue headline deals, 60% of to pursue M&A for growth, most PE firms and 47% of corporates risks. We also see an are focused on smaller bolt-on say technology/IP is among their increasing number of acquisitions in existing markets top two most important aspects. companies strategically (58% of private equity respondents Infineon’s EUR 8.3bn acquisition and 49% of corporate respondents), of semiconductor group Cypress managing their portfolio and again reflecting the inward-looking in the US, for example, was driven considering divestments to character of more recent deals. by Infineon’s plan to acquire IP raise capital in order to give enabling it to service a broader Favourable valuations are another range of industries. The continued them financial flexibility driver, with 67% of private equity performance of tech sector M&A, in unstable financial times. and 35% of corporate respondents which accounted for 19% of all citing this as a reason to transact. deal volume during H1 2019, is also Daniela Murer, This could be one explanation indicative of the priority dealmakers Partner, for the rise in public-to-private are placing on technology and IP. CMS Italy deals – with valuations in private markets so high, public company After technology and IP, 42% of valuations are beginning to look corporates and 36% of PE firms more and more affordable to PEs, point to a lower cost base and even factoring in a premium to 40% of corporates and 35% of share prices. There have been 18 PE firms point to the ability to public-to-private deals this year, access a new labour force/expertise valued at a combined EUR 23bn, as reasons for pursuing deals. the highest year-to-date volume and value since the financial crisis.
If you are considering divestments, what is the motivation for this? (Select up to two)
Rebalancing portfolio Capital raising for increased Exiting lower growth Exiting lower between UK and the Focusing on core operations financial flexibility Regulatory pressure geographies growth sectors EU 27 due to Brexit 60% 42% 32% 26% 23% 14%
24 | European M&A Outlook European M&A trends 2011-2016 YTD
In context: private equity
Despite sitting on unprecedented amounts of capital, European private equity firms are being cautious about buyouts.
Number of deals Even though private capital dry European buyout trends Deal value (EUR m) powder is sitting at a record high of USD 2.1 trillion, according 500 70,000 to research from Preqin, with European-focused capital accounting for around a quarter 60,000 of that total, buyout and exit activity has fallen across Europe 400 over the first six months of 2019. 50,000 European buyout volume saw a decrease of 14% to 664 deals in 300
H1 2019, with value down 12% on Deal value EUR m 40,000 the same period in 2018 to EUR 82.5bn. This is the second-largest buyout value on record for any half year period going back to 30,000 2013. Exit volume was 10% down 200 over the first six months of 2018, Number of deals with value falling 9% to EUR 61bn compared to H1 2018. H1 2019 has 20,000 the third-lowest exit total of any half year period since H1 2013. 100
10,000 Even though high levels of dry powder usually predict high deal volume and value, the same macroeconomic and geopolitical 0 0 uncertainties that have weighed
on the wider European M&A 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2
25 European private equity top 10 deals, H1 2019
Announced Target company Target sector Target country Bidder company Bidder country Deal value date EUR (m)
A consortium led by EQT Partners Pharma, medical & 16/05/2019 Nestle Skin Health S.A. Switzerland AB and Abu Dhabi Investment Sweden 9,029 biotech Authority
Merlin Entertainments Plc (71.08% Kirkbi - Blackstone - CPPIB 28/06/2019 Leisure United Kingdom Denmark 5,108 stake) consortium
12/06/2019 Axel Springer SE (54.6% stake) TMT Germany Kohlberg Kravis Roberts & Co. L.P. USA 4,952
24/06/2019 Altran Technologies S.A. Business services France Capgemini SA France 4,908
Apax - Warburg Pincus - CPPIB and 25/03/2019 Inmarsat Plc TMT United Kingdom Canada 4,896 OTPP consortium
Evonik Industries AG 04/03/2019 Industrials & chemicals Germany Advent International Corporation USA 3,000 (Methacrylates Verbund)
01/04/2019 OOO Lenta (92.57% stake) Consumer Russia Severgroup OOO Russia 2,637
29/03/2019 gategroup Holding AG Business services Switzerland RRJ Capital Hong Kong 2,494
United 26/06/2019 BCA Marketplace Plc Business services United Kingdom TDR Capital LLP 2,386 Kingdom
Compania Espanola de Petroleos, Energy, mining & 08/04/2019 Spain The Carlyle Group USA 2,275 S.A.U. (30% stake) utilities
Exits drove a lot of 2018 market have seen buyout houses Private equity houses are also adopt a cautious approach to seeking to avoid aggressive activity with real urgency. new investments, especially when auction processes and secondary Following that, there was multiples continue to push high buyouts, by focusing on primary always likely to be some lull levels. According to France-based deals and more complex private equity firm Argos Wityu, transactions such as public-to- while funds look to spend which publishes a quarterly index privates and carve-outs in order the dry powder, particularly tracking the multiples paid for mid- to find more proprietary deals given the structural market privately-owned European and better entry multiples. Data companies (valued in the EUR from the Centre for Management challenges facing them – 15m to EUR 500m range), assets Buy-Out Research (CMBOR) at ever increasing are trading at a record average Imperial College recorded 76 competition of 10.1x Ebitda. Private equity secondary buyouts worth EUR firms, however, are paying only 14.9bn over H1 2019, representing and high 9.3x Ebitda on average versus the 38% of European buyout value. prices. 11x Ebitda average for strategic This is down from 45% in H1 buyers. This suggests that buyout 2018. The proportion of public-to- James Grimwood, firms are less aggressive than privates, meanwhile, has seen a Partner, CMS UK cash-rich corporates and are being climb in share from 16% to 21%. trumped by corporates that are comfortable paying fuller prices.
26 | European M&A Outlook European M&A trends 2011-2016 YTD
Many European PE firms High-profile public-to-private Brexit has had a cooling effect on tackle the pressure to deploy deals include: a consortium led private equity activity. The UK and by Blackstone agreeing to delist Ireland, Europe’s largest private their capital by following a Merlin Entertainments for EUR equity market, still accounted for diversified approach. They 5.1bn, eight years after listing the 29% of total European buyout invest resources to identify theme park operator; and KKR’s value over H1 2019, ahead of bid to take publisher Axel Springer Switzerland (15%) and Germany proprietary deals, co-invest private in a deal valuing the (14%), but Brexit uncertainty has alongside other PE firms or German-based group at EUR 4.9bn. seen firms adopt a “wait and see” even strategic investors, approach and sit on deals until Notable carve-out deals include the market picture is clearer. identify add-ons for their the largest private equity buyout in portfolio companies, and H1 2019, which saw a consortium This caution has also coloured the participate in led by EQT Partners and ADIA sectors buyout firms have targeted agree to acquire Nestlé Skin Health over the last six months, with TMT auction business from Nestlé in a deal and healthcare the most popular processes. valuing the unit at EUR 9bn. This spaces targeted by PE investors. was the second-largest PE deal in Tobias Schneider, Europe since the financial crisis. TMT accounted for 25% of the Partner, CMS total value of buyouts in Europe Germany in H1 2019 (EUR 20.8bn), up from 12% in H1 2018 (EUR 10.8bn). The sector has attracted interest European exit trends Number of deals because of attractive growth Deal value (EUR m) drivers, such as the move to the 300 70,000 cloud, software-as-a-service and digitisation across all industries; and the growing value of data 60,000 250 and analytics. TMT businesses have also demonstrated resilience
50,000 and customer stickiness,
200 Deal value EUR m providing dealmakers with downside protection should 40,000 the economic cycle move into a 150 downswing as many anticipate.
30,000 PMB deals, meanwhile, offer similar Number of deals 100 downside protection characteristics. 20,000 Anything healthcare-related is generally buffeted by the long- 50 10,000 term demographic trend of an ageing population, personalised medicine and appetite from big 0 0 pharma to outsource functions like new drug testing, medical
2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 trials and regulatory compliance.
27 Chapter three
Regional environment: The future of European M&A
it will decrease their dealmaking Worries about a potential weakening of the appetite in the UK (up from 3% in economy and of the impact of trade wars last year’s survey). Less than a third (30%) say Brexit will have no impact are two of the biggest challenges to M&A in on their dealmaking appetite. Europe, according to our survey respondents. The UK is not the only major European country in political flux. Spain’s politicians have failed to form a government after weeks of negotiations and Italy is governed Top findings In its Spring 2019 economic by a fragile coalition of the populist forecast, the European Commission 5 Star Movement and right-wing 34% (EC) has revised its projection Lega Nord. The European elections of respondents say that Brexit for growth in the EU to 1.2% in earlier this year would have seen will increase their dealmaking 2019 from 1.9% in its Autumn dealmakers sit on their hands in appetite in the EU, while 2018 forecast. This was seen as the lead-up to the poll. Brexit 19% say it will decrease their the principle obstacle to M&A in uncertainty (8.83 out of 10) and dealmaking appetite in the UK. Europe by the survey respondents, politics in Europe (8.90 out of 10) who said slowing European were high up the list of obstacles to 53% economic growth was the most deals cited by survey participants cite antitrust as one of significant factor impacting on the two most challenging M&A, scoring a 9.11 out of 10. Political volatility has been a forms of regulation that major contributor to the fall in they face in Europe. Political uncertainty has hit European deals in 2019. Surviving confidence. With less than 100 days a challenging political environment 40% to go before the UK is scheduled has become standard for corporates say that “the EU doing much to leave the EU, the future trading and PE houses, many of whom are more together across all relationship between the UK taking a “wait and see” approach policy areas” would increase and Europe is still to be finalised, to political machinations before their appetite for M&A and with Boris Johnson as prime committing to deals again. over the next three years minister, a no-deal Brexit is now (up from 23% last year). a possibility. Survey respondents Antitrust concerns are also on were split on how Brexit will impact dealmaker radars. According to their dealmaking. More than a third the survey, antitrust is the form (34%) of the survey respondents say of regulation which dealmakers Brexit will increase their dealmaking find among their most challenging appetite in the EU and 19% say in Europe (53% say it is one
28 | European M&A Outlook What impact will Brexit have on Which form of regulation do you find most challenging your dealmaking appetite? when doing a deal in Europe? (Select up to two) (Select only one)
Increased dealmaking appetite for M&A 53% 40% 26% 24% 23% 20% 14% in the EU 34%
No impact 30%
Less dealmaking appetite for M&A in the UK 19%
Less dealmaking appetite for M&A in the EU Antitrust Environmental Bribery & Labour & Financial Data Export 17% regulations corruption employment regulation protection controls regulation
of the top two), followed by environmental regulation (40%) Cross-border M&A into Europe (including and bribery and corruption (26%). the UK) has suffered a big hit in H1 2019 and is down by about 37% against H1 Various dealmakers have butted heads with competition authorities 2018. Domestic markets remain strong in recent months, with the but the political uncertainty created by Sainsbury‘s/Asda, FIAT Chrysler/ Brexit and US trade policy is impacting Renault and Alstom/Siemens Rail deals all coming unstuck after investor confidence materially. Post-Brexit, regulatory pressure. Dealmakers however, expect an uptick in EU bound are eager to avoid investing time deals as businesses scramble to secure and resource into deals where there is risk of regulators stepping single market access. in, which has had a chilling John Hammond, Partner, CMS Germany effect on new investment.
29 What do you believe will be the principal obstacles to M&A Protectionism is clearly a activity in Europe over the next 12 months? (Rate the following global trend spanning on a scale of 1-10, where 10 = most significant) across Europe, not leaving 8 9 developing jurisdictions untouched. For example, Politics in Europe 8.90 Russia increasingly reviews Regulatory changes 8.86 Uncertainty surrounding foreign investments from a 8.83 the UK leaving the EU national security, rather Pressure to focus on returning 8.69 funds to shareholders than economic, perspective. Vendor/acquirer price dislocation 8.67 Still, as the largest economy Financing difficulties 8.50 in the CIS region, Russia Currency fluctuations 8.49 enjoyed the top number of deals in 2018. It remains a destination of choice for the
Which external factors are most likely to impact negatively on the most active cross-border performance of European businesses over the next 12 months? investors from China and (Rate the following on a scale of 1-10, where 10 = most significant) the Middle East.
8 9 Vladimir Zenin, Partner, Slowing of the European economy 9.11 CMS Russia
Trade wars 9.09
Volatility in global capital markets 8.94 Uncertainty surrounding the UK leaving the EU 8.89 Russian sanctions and counter sanctions 8.84 Negative interest rates from central banks 8.73 Shortage of labour/ 8.72 increased labour costs Slowing of the Chinese economy 8.60 Tightened credit conditions by the 8.40 US Federal Reserve
30 | European M&A Outlook Cross-border M&A into Europe (including the UK) has suffered a big hit in H1 2019 and is down by about 37% against H1 2018. Domestic markets remain strong but the political uncertainty created by Brexit and US trade policy is impacting investor confidence materially. Post-Brexit, however, expect an uptick in EU bound deals as businesses scramble to secure single market access. John Hammond, Partner, CMS Germany
Looking at the future direction of the EU, which of the The trade war between the following scenarios would most increase your appetite for US and China has already M&A in Europe over the next three years? (Select one) had an impact on cross- 40% 2018 border M&A between these 2019 35% two countries. Chinese 30%
25% outbound investors are
20% more cautious investing in 15% the US, because of concerns 10% that they may not be 5% 0% welcome. An impact on Chinese outbound investments into Europe can policy areas EU does less specific areas EU focuses on all policy areas deepening the also be seen to have arisen, more efficiently together across all single market only current agenda by for implementing and Coalitions of willing working together in EU does much more enforcing its decisions in (develops stronger tools
EU continues with its because Chinese investors states go beyond the current agenda across a reduced number of areas) are generally more cautious in the face of decreasing The impact of trade tensions manager predicts impacts on global economic growth in most between the US and China supply chains and productivity on European M&A should as a result of protectionism. This parts of the world. not be underestimated either. could be one explanation for Ulrike Gluck, Respondents ranked trade wars the drop in inbound activity into Partner, second among the external factors Europe. If it had not been for the CMS China most likely to negatively impact outlying AbbVie/Allergan megadeal, on the performance of European quarterly inbound value would have businesses over the coming 12 fallen below EUR 50bn for the first months, after the slowing of the time since the final quarter of 2013. European economy. Volatility in global capital markets came in third. Dealmakers believe Europe is in a position to reignite deal activity if With the Trump administration it addresses the abovementioned recently putting plans to pursue an concerns. When asked about the aggressive protectionist trade policy future direction of the EU, 40% with other countries, including of respondents say that “the Mexico and India, on the table, EU doing much more together trade spats show no sign of abating. across all policy areas” would This has already had an impact increase appetite for M&A the on global economic growth and most (up from 23% last year). prompted central banks to adopt Meanwhile, 8% favour the EU a dovish stance on interest rates focusing on deepening the if needed to cushion economies, single market only, compared to according to BlackRock. The asset 21% who said this last year.
31 Regional round-up
Compared to H1 2018, M&A activity fell across Europe in the first half of 2019. Only France and Austria & Switzerland saw an increase in overall deal value (up 12% and 195%, respectively). The UK & Ireland region continues to lead the pack in terms of both volume (732 deals) and value (EUR 136.7bn), although this still represents a drop against the same period in 2018.
The UK & Ireland ranked seventh UK & Ireland in terms of survey optimism, Volume % Value EUR bn % behind Germany, Benelux, Austria & Switzerland, CEE, 732 -19% 136,652 -31% the Nordics and France.
Benelux France Volume % Value EUR bn % Volume % Value EUR bn %
-10% -27% -9% 358 16,912 424 25,492 12%
Iberia Italy Volume % Value EUR bn % Volume % Value EUR bn %
222 -32% 20,844 -70% 269 -17% 11,837 -53%
32 | European M&A Outlook Nordics Russia & Ukraine Volume % Value EUR bn % Volume % Value EUR bn %
584 -6% 33,215 -34% 81 -15% 11,230 -32%
Germany CEE Volume % Value EUR bn % Volume % Value EUR bn %
429 -11% 29,722 -63% 174 -12% 9,755 -5%
Austria & Switzerland Volume % Value EUR bn %
-9% 138 58,935 195%
SEE Volume % Value EUR bn %
68 -4% 3,327 -61%
33 Chapter four
Financing conditions
Despite slowing economic growth and a concern year. The growth of the private that the credit cycle may be at its peak, financing debt market, meanwhile, further boosted the supply of finance conditions have remained relatively benign and competition in the market, this year. Debt for deals has remained plentiful to the advantage of borrowers. and available on attractive terms and pricing. According to Preqin, there is USD 269bn worth of dry powder sitting in private debt funds, ready for deployment in deals.
Yet, after a strong run, private debt funding in Europe slumped in Q2, according to Preqin, with only seven funds raising USD 3.6bn between them. This was down on the 12 funds that secured USD 14bn in Q1. In the European Top findings Interest rates remain low, keeping leverage loan market, meanwhile, financing costs down, and both H1 2019 issuance is down on 72% the Federal Reserve in the US and levels seen in H1 2018, despite of respondents expect financing the European Central Bank (ECB) the strong month in June. M&A conditions to get harder in have signalled that they are willing related issuance is 43% lower year- 2019 compared to 2018. to cut or keep rates low to cushion on-year and leveraged issuance the economy against any slowdown is 26% down over the period. 64% caused by escalating global trade say that weaker underlying tensions. The ECB has kept options Against this mixed backdrop, economic conditions will be open for lower rates and has even those polled are feeling cautious the greatest challenge to restarted quantitative easing. regarding lending conditions. raising acquisition finance. The majority expect financing This has given acquisition finance conditions to tighten, with 72% of 53% markets a boost, with Debtwire respondents to this year’s survey believe cash reserves and/or data showing an uptick in leverage saying market conditions will get private equity will be the most loan issuance in June after a slow harder in 2019 compared to 2018, available source of funding. start to the year. Some EUR 23.7bn while 24% expect no change. This of leverage loans were issued in contrasts sharply with last year’s June to bring Q2 issuance up to survey, in which 47% predicted EUR 50bn for Q2 2019, a rise on financing conditions would get the EUR 35bn posted in Q1 this easier in the coming year.
34 | European M&A Outlook How do you expect financing market conditions The key factor remains the underlying to be in 2019 compared to 2018? quality of the asset. Conditions from lenders may tighten but this is coming Much harder 38% from a fairly borrower-friendly threshold over the last 12 months, so it should not Slightly harder cause significant issues. 34% Paul Stallebrass, Partner, CMS Czech Republic No change 24%
Slightly easier 4%
What do you view as the greatest challenge to financing acquisitions over the next 12 months? (Select top two)
64% 50% 39% 39% 8%
Underlying economic Availability/cost Attitudes of lenders Company Hike in US weakness of leverage performance interest rates
35 What sources of financing do you think will be most available over the next 12 months? (Select top two)
53% 53% 30% 28% 22% 10% 3%
Private equity Cash reserves Non-bank lenders/ Family offices Debt capital Bank Equity credit funds markets lending capital markets
For each of the following transaction types, rate your expectations for activity over the next 12 months.
Rights issues 15% 69% 15% 1%
IPOs 14% 58% 27% 1%
Corporate defaults 3% 52% 40% 5%
Distressed M&A 65% 31% 4%
Refinancing 10% 36% 38% 16%
Restructurings 26% 68% 6%
0% 20% 40% 60% 80% 100%
Increase Increase Remain the same Decrease Decrease significantly significantly
36 | European M&A Outlook Respondents indicated that weaker deals over the coming Somewhat contrary to what underlying economic conditions months. This trend has already the markets expected only a (64%) and the availability/cost been observed in countries like of leverage (50%) would be the Italy, where pressure on the few months ago, interest biggest challenges to financing balance sheets of domestic banks rates have again dropped to M&A over the coming months. has obliged corporates to look unexpected lows in the As a result, more than half of elsewhere for capital, to the benefit respondents (53%) cite cash of private equity investors. Against summer of 2019, which has reserves as one of the top two a weaker economic backdrop, made some properly-timed primary sources of financing over distressed M&A and restructurings transactions the next five months. The same are also expected to feature number of respondents chose heavily over the next 12 months. even more private equity as the primary attractive. source of funding for M&A. During the next 12 months, the Günther Hanslik, bar for receiving finance will move Partner, Indeed, deal figures suggest higher. Funders, whether they are CMS Austria companies will turn to private private equity firms, debt funds or equity in increasing numbers to banks, will become more selective finance deals when they do not of the companies they will finance. have sufficient cash reserves on According to Debtwire, leverage their own balance sheets. Global loan lenders have been eager to private equity deal activity has finance high quality credits during increased over each of the three H1 2019, but more comfortable last quarters, and in a low-interest about pushing back on pricing they rate environment PE funds are see as too aggressive for the quality continuing to enjoy strong support of the underlying asset. First-lien from investors when fundraising. loans have priced at between 420bps and 430bps on average With cash at its disposal, private over the last six months, noticeably equity is well-positioned to account higher than the 352bps and 401bps for an increasingly large share of range observed in H1 2018.
37 Conclusion
European M&A has performed strongly over recent years, but a drop in activity in 2019 and a volatile geopolitical and macroeconomic backdrop has prompted buyers and sellers to take a more cautious stance when considering transactions.
This year’s survey shows that Against this backdrop, here opportunities. As the credit cycle respondents are less positive about are three points for potential nears a peak, trade tariffs start to the prospects for M&A over the dealmakers to consider: hit economic growth and political next 12 months, with the number uncertainty sparks volatility, this is of participants not expecting to There is value in complexity an opportune time for companies do a deal significantly up on a Although M&A volume and value to form a clear view of their most year ago. Even those who are has dropped in 2019, valuations profitable divisions and core considering deals have adopted a remain high and competition for markets. With eager buyers in more defensive mindset, with their assets is intense. For mainstream the market, particularly cash-rich focus on divestments and smaller deals, it can be easy to be sucked private equity houses, this is a good bolt-on acquisitions rather than the into competitive sales processes opportunity to offload non-core blockbuster transformative deals and pay full prices at the top of the or underperforming businesses that have characterised the market cycle. Complex transactions do take and streamline operations. in recent years. Respondents are more time and thought, but offer streamlining their organisations – an alternative to aggressive auction Run hard at assets you want focusing on core business and local processes and an opportunity to Although headwinds are building, markets – and only buying when buy assets at more promising entry this is still a good time to do deals, the target holds strategic tech valuations. Public-to-private and with low interest rates and plentiful or IP, or presents an opportunity carve-out deal activity is already on financing. As long as the quality to invest at good value. the up, rewarding buyers who are threshold is set high and a target willing to move off the beaten track. fits in with an acquirer’s long- As protectionism and weaker term strategic plan, dealmakers economic growth take their Focus on the core should feel confident about toll on confidence, dealmakers Research from Bain & Company running hard at assets they want. are setting the bar high and shows that businesses with only moving for the highest active divestment programmes quality assets that fulfil key outperform companies that do strategic objectives. not regularly monitor divestment
38 | European M&A Outlook Our latest CMS Corporate/M&A headline deals
Advance Publications Ei Group Pioneer & Onkyo Europe Advised US entertainment Advising FTSE-listed client Sale of the business activities group Advance Publications Ei Group on its GBP 1.3bn of hi-fi and home cinema on the acquisition of musical recommended all cash offer brands Pioneer, Onkyo, Integra, productions group Stage from Stonegate Pub Company TEAC and Esoteric to Aqipa. Entertainment from CVC Ltd. to effect a combination Capital Partners and Stage of two of the UK‘s industry- founder Joop van den Ende. leading pub companies. SMA Solar Technology AG Advised SMA Solar Technology AG, a leading global specialist Advent International EnBW in photovoltaic system Advised Advent International on Acquisition of Plusnet from technology, on the sale of the acquisition of the European IT service provider QSC, for 100% of its shares in its generics business of Zentiva strengthening its position in two China subsidiaries. from global biopharmaceutical the Germany-wide telecoms company Sanofi. market and developing its role as an established Sun Dreams infrastructure provider. Advised Sun Dreams on the Blackstone merger with Marina del Sol, Advised Blackstone on the creating the largest gaming acquisition of a stake in US Gamesys and hospitality group in the investment fund FRS Capital. Advising Gamesys and its region with an enterprise majority shareholders on the value above USD 1.2bn. entry into an agreement to sell Gamesys, excluding its sports Bruker betting and games content Advised Bruker on its acquisition business, to JPJ Group plc. Western Siberian of PMOD Technologies LLC, a Commercial Bank (WSCB) highly respected provider of Advised shareholders of research-use-only software Western Siberian Commercial for preclinical and molecular Kiwi.com Bank (WSCB) on the sale of imaging, with a focus on Advised the shareholders their shares, representing a molecular quantification and of Kiwi.com on the sale total of 71.8% of the bank‘s pharmacokinetic modelling. of a majority stake in the share capital to VTB Bank. company to General Atlantic.
Colgate-Palmolive XING SE Advised Colgate- Krones AG Advised XING on its acquisition Palmolive on its EUR 1.5bn Advised Krones AG, a German of Honeypot, one of the largest acquisition of Laboratoires packaging and bottling tech-focused job platforms Filorga Cosmétiques. machine manufacturer, on in the German-speaking the acquisition of Shanghai countries and the Netherlands. Xiantong Equipment Installation, a Chinese manufacturer of power equipment. About CMS Sharing knowledge
CMS European M & A Emerging Europe M & A Study 2019 Report 2018 / 19
CMS is a full service top global law firm with more than We strive to develop long-term relationships with our CMS_LawTax_Negative_28-100.eps This year’s Study reflects Our latest report analyses 4,800 lawyers in 72 offices providing clients with clients, giving prompt, straightforward and commercial data from 458 deals in trends in 15 emerging specialist business focused advice. With more than legal advice. We draw on renowned industry expertise in 2018 on which CMS CEE / SEE countries based advised. This is the largest on EMIS M& A data for 1,000 corporate lawyers, CMS advises on all aspects of a number of sectors including Financial Institutions and CMS European Emerging Europe M&A, corporate finance and private equity transactions Services, Energy and Utilities, Technology, Media and M & A Study 2019 number of deals ever M&A Report 2012 – 2018, and through 2018/19 and is regularly ranked amongst the top M&A advisers Communications (TMC), Life Sciences, Consumer covered by the Study, a series of articles based in Europe and beyond. CMS features among the league Products, Construction and Development, Hotels, which is reflective of CMS’s on interviews with CMS table leaders both for Europe as a whole and for many Leisure and Sport, Infrastructure and Project Finance. gain in market share and partners takes a deeper In cooperation with: Eleventh Edition corresponding rise up the dive into the hot topics of the individual European countries. We are service- January 2019 driven and relationship focused, priding ourselves on our For more information, visit www.cms.law M & A league tables. and issues impacting M& A responsiveness and “can do” attitude. activity in the region. In analysing the 2018 market, we report on current market standards on risk allocation in M & A deals, Contact us: comparing 2018 against 2017 and the previous eight- year average for 2010 – 2017. CMS Austria CMS Germany CMS Russia Peter Huber Thomas Meyding Natalia Kozyrenko The study is still the most comprehensive of its kind T +43 1 40443 1650 T +49 711 9764 388 T +7 495 786 4000 and is based on a proprietary database comprising more E [email protected] E [email protected] E [email protected] than 4,000 deals over a 12-year period.
Alexander Rakosi Vladimir Zenin T +43 1 40443 4350 CMS Italy T +7 495 786 4000 E [email protected] Pietro Cavasola E [email protected] Transparency Register Cash Pooling T +39 06 4781 51 – Overview of Foreign Cash pooling enables E [email protected] CMS_LawTax_Negative_28-100.eps Reporting CMS_LawTax_Negative_28-100.eps corporate groups to CMS Belgium CMS Spain Requirements minimise expenditure Vincent Dirckx Carlos Peña Boada Among other measures incurred in connection T +32 2 74369 85 CMS Netherlands T +34 91 4519 290 designed to combat with banking facilities Transparency E [email protected] Roman Tarlavski E [email protected] Register money laundering and Cash Pooling through economies of T +31 20 3016 312 Selected by Member States terrorist financing, the A CMS Corporate / M & A Publication scale. Cash pooling E [email protected] 4th Money Laundering agreements must be CMS CEE CMS Switzerland Directive requires the EU carefully structured in CMS Czech Republic Stefan Brunnschweiler October 2017 member states to set up Fourth Edition order to minimise the Helen Rodwell CMS Portugal T +41 44 285 11 11 registers of the ultimate risks of civil or criminal T +420 2 96798 818 Francisco Xavier de Almeida E [email protected] beneficial owners of legal liability of the E [email protected] T +351 21 09581 00 entities. It was left up to the individual member states participating group companies and their officers, also E [email protected] how to implement the directive, and in doing so, considering tax issues. In this context, this brochure CMS Serbia CMS United Kingdom member states have taken different approaches. provides an overview of the risks of civil / criminal liability Radivoje Petrikić Mark Bertram associated with cash pooling in 27 jurisdictions in which T +38 1 3208 900 T +44 20 7067 3464 In order to give an initial overview, CMS has CMS is represented and discusses the various means by E [email protected] E [email protected] summarised the regulations in selected member states. which such liability may be avoided. Of particular relevance to shareholders are those countries in which direct and indirect shareholders have CMS France an active obligation to make any necessary notification. Jean-Robert Bousquet T +33 1 47 38 55 00 E [email protected] To receive copies of the publications shown, please contact our CMS Corporate / M & A team at: [email protected]
40 | European M&A Outlook 1 Sharing knowledge
CMS European M & A Emerging Europe M & A Study 2019 Report 2018 / 19
CMS_LawTax_Negative_28-100.eps This year’s Study reflects Our latest report analyses data from 458 deals in trends in 15 emerging 2018 on which CMS CEE / SEE countries based advised. This is the largest on EMIS M& A data for CMS European Emerging Europe M & A Study 2019 number of deals ever M&A Report 2012 – 2018, and through covered by the Study, 2018/19 a series of articles based which is reflective of CMS’s on interviews with CMS gain in market share and partners takes a deeper
In cooperation with: Eleventh Edition corresponding rise up the dive into the hot topics January 2019 M & A league tables. and issues impacting M& A activity in the region. In analysing the 2018 market, we report on current market standards on risk allocation in M & A deals, comparing 2018 against 2017 and the previous eight- year average for 2010 – 2017.
The study is still the most comprehensive of its kind and is based on a proprietary database comprising more than 4,000 deals over a 12-year period.
Transparency Register Cash Pooling – Overview of Foreign Cash pooling enables
CMS_LawTax_Negative_28-100.eps Reporting CMS_LawTax_Negative_28-100.eps corporate groups to Requirements minimise expenditure Among other measures incurred in connection designed to combat with banking facilities Transparency Register money laundering and Cash Pooling through economies of Selected by Member States terrorist financing, the A CMS Corporate / M & A Publication scale. Cash pooling 4th Money Laundering agreements must be Directive requires the EU carefully structured in October 2017 member states to set up Fourth Edition order to minimise the registers of the ultimate risks of civil or criminal beneficial owners of legal liability of the entities. It was left up to the individual member states participating group companies and their officers, also how to implement the directive, and in doing so, considering tax issues. In this context, this brochure member states have taken different approaches. provides an overview of the risks of civil / criminal liability associated with cash pooling in 27 jurisdictions in which In order to give an initial overview, CMS has CMS is represented and discusses the various means by summarised the regulations in selected member states. which such liability may be avoided. Of particular relevance to shareholders are those countries in which direct and indirect shareholders have an active obligation to make any necessary notification.
To receive copies of the publications shown, please contact our CMS Corporate / M & A team at: [email protected]
41 1 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.
Acuris Studios, the events and publications arm of Acuris, offers a range of publishing, research and events services that enable clients to enhance their own profile, and to develop new business opportunities with their target audience.
To find out more, please visit www.acuris.com/publications
For more information, please contact:
Karina Ross Head of Sales EMEA, Acuris Studios T +44 20 3741 1058 E [email protected]
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.
42 | European M&A Outlook CMS_LawTax_Negative_28-100.eps
A global leader in M & A
As CMS, we advise some of the world’s leading companies on mergers & acquisitions, often in challenging and cross- border situations. With more than 1,000 lawyers offering best-in-class legal expertise across 41 jurisdictions, we provide a seamless experience for our clients and have once again achieved top rankings by Bloomberg, Mergermarket and Thomson Reuters.
#1 Europe, UK, Germany, DACH, CEE, Poland #7 Global
Sources: Bloomberg, Mergermarket and Thomson Reuters, by deal count cms.law © CMS Legal Services EEIG (September 2019) – MEMA cms.law Zurich. and Zagreb Singapore, Shanghai, Skopje, Sheffield, Sofia, Vienna,Tirana, Utrecht, Strasbourg, Warsaw, Stuttgart, Seville, Sarajevo, Chile, de Santiago Rome, Riyadh, Janeiro, de Rio Reading, Prague, Poznan, Podgorica, Paris, Muscat, Munich, Moscow, Monaco, Milan, City, Mexico Manchester, Madrid, Lyon, Luxembourg, Luanda, London, Ljubljana, Lisbon, Lima, Kyiv, Leipzig, Istanbul, Kong, Hong Hamburg, Glasgow, Geneva, Funchal, Frankfurt, Edinburgh, Duesseldorf, Dubai, Cologne, Casablanca, Budapest, Bucharest, Brussels, Bristol, Bratislava, Bogotá, Berlin, Belgrade, Beijing, Barcelona, Antwerp, Amsterdam, Algiers, Aberdeen, locations: CMS offices. their or firms member the of all or some to refer to used are “firm” “CMS” term the name and brand The other. each of those not and omissions or acts own their for only liable are firm member each and EEIG CMS other. any bind to authority any has entity such no and entities, distinct legally and separate are firms member its of each and EEIG CMS jurisdictions. respective their in firms member EEIG’s CMS by provided solely are services Such services. client no provides EEIG CMS firms. law independent of organisation an coordinates that Grouping Interest Economic aEuropean is EEIG) (CMS EEIG Services Legal CMS cms-lawnow.com email. by delivered topics of avariety on A subscription for service legal articles Your free online legal information service.