European M&A slides in H1

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Figures published by Mergermarket suggest M&A activity in Europe slipped in the first half relative to the same period last year, on concerns about a Grexit, UK euro scepticism, and the fall in the value of the single currency.

Deals in the region hit $449.8bn over the period, down 8.1% against the same period last year, Mergermarket said.

Another barrier to growth in M&A has been the tighter scrutiny of so called inversion deals, which effectively tie US and European businesses together on the basis of improved tax positions. However US regulations on inversions mean that inbound M&A from the US to Europe fell by two-thirds, 67.1%, against the same period last year, to $64.3bn. This is some 40% of all inbound M&A, estimated at some $160.7bn.

“The expected Monsanto/Syngenta deal could be an indication of how future inversion deals are likely to turn out, pending approvals,” Mergermarket said.

Meanwhile, the outbound M&A, of European companies buying other companies outside the region, has been hit by the weaker euro. Outbound M&A in the first two quarters of 2015 were the lowest quarterly values in 18 months, sending total first half outbound M&A down over 42% to $73.2bn.

One bright spot for the region, however, has been the continued increase in Chinese and Japanese companies seeking to buy European companies seen as having a technological edge. Europe’s technology M&A overtook the US in the first half, with the value of deals hitting over $41bn, up over 20% from the whole of 2014.

Overall, Chinese and Japanese companies have done $6.6bn worth of deals, taking their share of M&A to a record high of nearly 16%.

The UK also saw a new peak reached, with the highest level of recorded M&A since 2008, with deals valued at $201.5bn, or some 44.8% of the total European M&A so far this year.

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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