Activity on the Swiss M&A market remains restrained. The third quarter of 2016 fell short of the previous year’s results both in terms of the number of deals and transaction values. A few interesting mergers and acquisitions of traditional Swiss companies were reported, however.
Both the number of transactions conducted between July and September as well as the traded value decreased significantly compared to the second quarter of 2016 (from 107 to 80 deals and from USD 22.2 billion to USD 9.3 billion, respectively). While major deals involving a transaction value in the double digit billions were nowhere to be seen in the third quarter, transactions of this magnitude cannot be expected to take place on a quarterly basis on Switzerland’s relatively small market. Compared to the same quarter of the previous year which was dominated by the ACE Limited acquisition of the Chubb Corporation, this development’s biggest impact was on the total transaction value which declined by USD 32.2 billion.
Several medium-sized Swiss companies put their chips on M&A between July and September: One of these was the merger between AFG Arbonia-Forster, a supplier in the construction industry, and Looser Holding, a door manufacturer from Thurgau. This USD 538.8 million transaction was one of the ten largest deals with Swiss involvement during the third quarter of 2016, a list that also includes the divestiture of ABB’s cable business to NKT Cables for USD 932 million. Also worth mentioning is the announced takeover of Charles Vögele, a company with a long tradition, by Sempione Retail AG, an Italian group of investors that also owns the OVS fashion group. Worth a total of USD 211 million, this transaction just barely missed inclusion in the Top 10. In the area of sports, the quarter additionally featured the acquisition of Switzerland’s Sauber Formula 1 team by the Longbow Finance SA investment company. All in all and as was already the case in the first six months of 2016, the highest level of activity was reported in the industrial and consumer goods segment.
Regular activities by private equity investors proved to be a dominating factor on the market. Of the ten largest deals, four transactions had private equity involvement: With two deals in the Top 10, Partners Group Holding AG made a particularly active showing and was also responsible for the third quarter’s largest transaction, the USD 2.08 billion takeover of Foncia Groupe SA.
In geographic terms, the main focus this quarter was on the Western European market. More than half of all transactions took place between a Swiss buyer or seller and a company from a Western European country. The markets in North America and the Asian-Pacific region came in second (21%) and third (16%).
Following China National Chemical Corporation’s announced takeover of Syngenta at the start of the year, Chinese investments in Switzerland also continued their upward trend into the third quarter with the HNA Aviation Group acquiring SR Technics for an undisclosed amount. This Chinese aviation company had already acquired Gategroup during the second quarter of the year.
Restraint on the M&A market is partly attributable to political and economic uncertainties. “Despite the fact that Brexit is a done deal on the political front, we still can’t predict with any accuracy which economic and legal consequences the decision will have. The result is underlying uncertainty in the M&A market,” said Patrik Kerler, Head of M&A at KPMG Switzerland, as he summed up the current situation.
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