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Annual Review 2012

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Type: Press release
Date: 8/9/2011

M&A activity highest since first half of 2008

Swiss M&A activity continued to grow in 2011. According to figures published by KPMG and the University of St. Gallen, the first half of the year brought an increase in both the number and the value of transactions compared to the first half of 2010. So far, the strong Swiss franc doesn’t seem to have scared away foreign investors. The positive trend is likely to remain intact during the second half of the year as well.

While the value of global M&A activities grew during the first half of 2011, the overall number of transactions saw a decline during the same period. In Switzerland, however, increases were recorded for both the number (14%) and value (27%) of announced transactions. This is a finding reached by the KPMG data as well as the international “Global M&A Predictor” study.

Value data provided in the various charts and tables represent the aggregate value of the deals for which a value was announced. Please note that values are disclosed for approximately 50% of all deals.

The first half of 2011 has already seen some remarkable takeovers so far. The fact that there have already been as many transactions in excess of USD1 billion during this period as during the whole of last year is testimony to the strength and attractiveness of the Swiss market. The number of transactions below USD50 million has already outstripped those in each of the full years 2008 and 2009 and has already reached full-year 2010 levels. Both are clear signs of faith and confidence in the Swiss M&A market.

Greatest transaction volumes in the industrial sector

After the Alcon/Novartis mega deal worth USD41.2 billion in 2010, the two largest transactions during the first half of 2011 also took place in the Healthcare and Life Sciences sectors. Johnson & Johnson acquired Swiss-based Synthes for USD21.2 billion, and Japan’s Takeda Pharmaceutical purchased privately-owned Nycomed, based in Zurich, for USD13.7 billion. Although the number of deals in this sector fell slightly compared to last year, these two transactions reflect the attractiveness of Switzerland’s Healthcare and Life Sciences sector.

The third-largest deal was a USD3.2 billion merger in the Financial Services sector between Switzerland’s Allied World Assurance and the USA’s Transatlantic Holdings to create a global insurance and reinsurance group. Moreover, four of the ten largest Swiss transactions during the first half of the year came from the Financial Services sector.

Although not as prominent in terms of takeover sizes, Industrial Sector deals dominated the first half of 2011 by volume. Around a quarter of all announced transactions took place in this sector. An example of this is provided by the activities of ABB which conducted five transactions during the first half of this year in Australia, the USA, Netherlands, Sweden and Switzerland. Close behind the Industrial sector are the Financial Services sector (12 percent) and the Healthcare and Life Sciences sector (10 percent).

Increase in acquisitions by foreign businesses despite strong franc

An analysis of M&A activities in Switzerland has revealed that Swiss companies have made more acquisitions abroad over the past few years than foreign companies in Switzerland. This trend has been observed for years and experience has shown that it is independent of exchange rates. Now, too, foreign companies have not been frightened away by the rising Swiss franc, and announced more acquisitions of Swiss companies during the first half of 2011 than during the two previous halves of 2010 together.

Signs for second half of 2011 positive

The uptick in M&A activity looks set to continue during the second half of the year. The difficult market environment and strong Swiss franc will not deter foreign companies from moving ahead with future acquisitions in Switzerland, and Swiss businesses making acquisitions abroad will be further supported by the strength of the Swiss franc.

Many significant acquisitions could still be on the horizon in a variety of sectors. This is the case in the Financial Services sector, for instance, where weakened banks are up for sale, particularly in Europe and North America. In addition, after a rocky few years, private equity firms may increasingly return to the acquisition scene, being better able to sell individual portfolios in the improved economic climate and with many, particularly foreign private equity firms, sitting on often substantial war chests.

Beyond the findings of the KPMG data, the new international KPMG study “Global M&A Predictor” shows that disappointed sellers have now realized that the M&A market is once again open for business. Some specialists, however, would like to see even more activity.

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For further information, please contact:

KPMG AG

Andreas Hammer

Head of Public Relations & Public Affairs

Telephone: +41 44 249 48 20

Mobile: +41 79 335 75 06

E-Mail: kpmgmedia@kpmg.ch

www.kpmg.ch

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