With 133 transactions during the first half of 2012, there were 8% fewer transactions involving Swiss companies than during the same period of the previous year. The current number of transactions is nearly the same as the levels seen during the first halves of both 2009 and 2010. The volume of transactions totaled USD 83 billion during the first half of the year, 47% higher than the previous year, thanks to the major transaction announced by Glencore/Xstrata which accounted for half of this volume. Since the transaction is currently being renegotiated with the Gulf state of Qatar, an Xstrata shareholder, no final figures are available. The current transaction volume of USD 83 billion for the first half of 2012 represents the highest level since records were first kept in 2007.
In addition to Glencore’s announced takeover of Xstrata, other considerable acquisitions and sales also took place during the first half of the year. Examples include Nestlé’s acquisition of Pfizer’s nutrition unit (USD 11.9 billion) or Walgreen’s 45% stake in Alliance Boots, a pharmacy-led health and beauty group located in Zug (USD 6.7 billion).
Overall, Swiss companies acted as buyers in the majority of the transactions. They were responsible for 67% of all takeovers and shareholdings during the first half of 2012 – 27% in Switzerland and 40% abroad. The strong franc certainly had a positive impact in this respect. Swiss companies’ continued appetite for takeovers can be attributed to their overall good positioning and healthy finances. Strategic acquisitions and sales are still on their agendas as a result.
What stands out is that eight of the ten largest transactions took place between Swiss and North American companies. It seems as though the American economic cycle might be one step ahead of Europe’s and as if the U.S. economy might be regaining its footing a little faster. Many Swiss companies consider this situation an opportunity for investments in one of the world’s largest economies. The lack of alternatives is also a factor driving this trend. The Asian market, in particular, is currently regarded as relatively expensive and uncertainty about future market development is still prevalent in Europe.
So far there have been no major mergers or acquisitions among banks with the exception of the sale of Sarasin which has not yet been concluded. The financial sector is undoubtedly in a phase of realignment and concentration driven by new regulatory requirements, low yields on capital markets as well as a changed environment in cross-border banking. International private banks, in particular, are currently rethinking their business models and optimizing their value chains. Substantial movement has taken place both in the industrial sector (20% of all transactions) as well as in the media and telecommunications sector (16%). Examples here include the takeover of America’s Thomas & Betts Corp by ABB or Ringier’s stake in Poland’s Grupo onet.pl.
This year will be shaped by a strong Swiss franc, developments in the eurozone as well as expectations regarding recovery on the North American market. With respect to the economic situation in North America, Swiss companies are optimistic and likely to conduct further transactions in this region, in particular. Nevertheless, many companies will proceed cautiously with the result that a generally stable M&A market can be anticipated in Switzerland.
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