Daily Management Review

Europe proves M&A growth is possible even without China


04/03/2017


In the first quarter of this year, volume of mergers and acquisitions in Europe exceeded $ 215 billion, thus having increased by 16% compared to the previous year. European companies were the main target of acquisitions in most cases, and the most active buyers were American investors. As for the Chinese companies, they virtually abandoned the European M&A market. Number of transactions in Europe with their participation decreased by 87%, while the growth rate of their number exceeded 200% the year before.



pixabay
pixabay
A year ago Chinese investors were the most active in Europe, having increased their acquisitions volume by more than three times in Europe. Now, however, they have actually left this market. As a result of the first quarter of 2017, this indicator fell by 87%, which can be explained by a tight control over foreign investment by the Chinese government. Nevertheless, actual withdrawal of Chinese players did not seriously hinder the European M&A market as American companies came to the place their Chinese counterparts.

Results of the first quarter showed that volume of M&A transactions in Europe, according to Thomson Reuters, reached $ 215.3 billion, which is 16% higher than last year's figure. This is a record level for the European market since the global financial crisis. The largest deals in Europe were purchase of Swiss Actelion, which cost Johnson & Johnson $ 30 billion, and merger of Italian sunglasses manufacturer Luxottica with French Essilor, which was valued at $ 50 billion. Such a successful beginning of the year for Europe became possible thanks to American investors. US companies spent about $ 114 billion for foreign purchases over these three months, with the bulk of this amount coming from Europe.

"Companies now live in a more stable environment, which gives them the confidence to make larger strategic deals, which, under other circumstances, could take much longer time", explained Alasdair Warren, co-director of European corporate and investment division of Deutsche Bank, commenting on increased activity of companies in Europe.

Earlier, John Reiss of White & Case LLP said that Chinese companies could spend $ 275 billion a year on mergers and acquisitions outside the country in the next decade, despite the fact that the PRC authorities are trying to limit the outflow of capital

"We expect dramatic activity in the M&A sphere coming from China", said Reiss, who heads the M&A department at the law firm, in an interview with Bloomberg Television. "There are some factors that need to be considered in the short term, such as capital outflow restrictions, high levels of debt of companies in China and some questions about the country’s financial system".  

The Chinese authorities began to strengthen control over movement of capital in the second half of 2016 after three years of outflow and depreciation of the renminbi. Of the $ 220 billion deals announced by Chinese buyers last year, $ 40-75 billion transactions were canceled or withdrawn, the law firm Linklaters LLP reported last week. 

source: bloomberg.com






Science & Technology

With China Set To Dominate, 1 Billion Could Be Using 5G By 2023

Deutsche Telekom unveils next gen 5G mobile antennas in Europe

Diamonds are now the new gold

Expert Body Says Driving In A Driverless Car In An Inebriated Condition Or On Drugs Should Be Legalized

SEC’s EDGAR database vulnerable to cyber threats

Research Says The Risk Of Severe Turbulence On Planes Will Increase Due To Climate Change

Barclays and CLS Group aim to replace SWIFT with blockchain

Designing Of Cars Being Done With Hologram Goggles At Ford

The Already Surging Cyber Attacks Are Set To Rise Even Further, Says A Study

Chinese to equip smartphones with OLED displays

World Politics

World & Politics

Scholar Says Political Appointees Not As Important As Financial Ones In China For The Economy

An Expected Change In Brussels Could Be Crucial For The Euro Zone

Destroying People Who Wouldn't Help One Of His Bankrupt Businesses Was All Trump Talked About When He Met Him In 1990s: Branson

Russia Is Worried About America’s Unpredictability

No oil contracts with Iraqi Kurdistan: Iraq’s oil ministry

Donald Trump lost $ 600 million during his presidency

Britain puts its weight behind Europe in the battle between Boeing and Bombardier

EU hopes to keep the Iran nuclear deal afloat