Cross-border M&A plummets 80% in Europe
European bankers heartened by signs of a return to mergers and acquisitions activity in domestic markets will be disappointed to note that companies in the region have all-but stopped buying overseas targets, suggesting a recovery in deal-making is some way off.
According to data provider Dealogic, European outbound M&A volume stands at $41.5bn (€29.3bn) year to date, a sharp fall of 82% from the same point last year and its lowest level since 2003.
This compares to a decline of 41% for all European-targeted M&A and a 35% drop in domestic European M&A, where both bidder and target are from the region.
The drop off in overseas M&A, particularly of companies in emerging markets, tends to be more pronounced during a difficult economic climate than any fall in domestic M&A because cross-border transactions are often more complex, time-consuming and perceived to carry more risk.
UK pharmaceutical company GlaxoSmithKline’s $3.6bn bid for US skincare maker Stiefel Laboratories, which won approval from the European Commission on July 17, is the largest European outbound M&A deal in 2009 so far.
The second largest is UK telecom company Vodafone’s acquisition of Australian peer Hutchison 3G for $3.1bn, which completed in June.
This compares to last year, when the two largest deals were brewer InBev’s $59.8bn bid for US rival Anheuser-Busch and Swiss pharma group Roche Holding’s $46.7bn bid for US-based Genentech.
--write to lvaughan@efinancialnews.com
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