• Type: Press release
  • Date: 7/15/2013

M&A market subdued during first half of year 

Swiss companies were involved in a total of 145 deals in Switzerland and abroad during the first half of 2013, a 14.7% decrease year-on-year. The last time such a low level of mergers and acquisitions was seen was during the second half of 2010. And at USD 14.9 billion, the value of transactions even hit its lowest level since the second half of 2009.
The first six months of the year were marked by two trends in particular: Swiss companies continued their shopping spree in North America on the one hand and, on the other, they engaged in a comparably high number of transactions on the real estate market. While this market was not particularly active in comparison with previous years, real estate transactions accounted for a more significant share of overall activity in a generally weaker market environment. Most mergers and acquisitions were reported in two sectors, industry (21%) and financial services (14%).

No major transactions

The largest deal in Q2 2013 was conducted by Serena S.à.r.l., a subsidiary of Belgium’s Groupe Bruxelles Lambert SA. This Group now owns a 15% stake in Switzerland’s SGS, the global leader for the inspection, verification, testing and certification of goods. Serena acquired this 15% stake for USD 2.6 billion from Exor, the Agnelli family holding company. Similar to Q1 2013, however, none of the deals in Q2 was worth more than a single-digit billion amount.

Acquisitions and investments in US companies

For more than a year, now, increased activity has been seen on the M&A market between Swiss and North American companies. With the Swatch Group’s takeover of jeweler Harry Winston Inc. in Q1 2013 and the purchase of the Power-One Inc. energy company by ABB in Q2, two of the largest transactions in the first half of 2013 were takeovers of American companies by Swiss buyers. One main reason behind this is probably the fact that the American economy – as opposed to European or, to some extent, even Asian economies – is once again experiencing an economic upswing. Consumption levels are back up in the USA while unemployment levels are dropping. This makes investments on the American market particularly attractive.

Significant real estate transactions with Swiss involvement

The growing importance of real estate transactions with Swiss involvement as measured against the overall value of M&A deals can primarily be explained by lower values in the other sectors. This trend has nothing to do with growing values or rising numbers of real estate transactions.

With Europe experiencing a slight downturn, Switzerland – where real estate transaction values are on the rise – is bucking the trend for results more in line with the global economy which is benefiting from increased investment activities by China and the USA. The largest local deal during the first half of 2013 was the acquisition of the Tertianum Group, Switzerland’s leading provider of assisted living facilities for the elderly, by Swiss Prime Site (SPS) for USD 530 million.  The primary reasons given for this transaction were growth efforts by SPS and diversification aspects.

The sale of Frankfurt’s 'Skyper' high-rise building by UBS to the Allianz Group for USD 394 million took second place on the list of the largest real estate transactions.  Private equity investor Corestate of Zug conducted several transactions in Germany within the scope of its mixed real estate portfolio with purchases totaling USD 373 million and sales of USD 328 million.

Recovery possible during fourth quarter

All in all, declining numbers of mergers and acquisitions as well as the low value of those transactions made for a very subdued first half of 2013. The market is nervous and uncertain. A glance at stock exchanges, where the trend correlates with that of M&A activities, confirms this: While the SMI was still stable in Q1 2013 and even hit a multi-year high in Q2, it dropped significantly again at the end of May. Behavior on the M&A market was similarly hesitant: investors were cautious, performed more precise analyses and needed longer to conduct negotiations before making any investments.

Currently, in the midst of an upswing, prospects on the American market look more positive. However, one factor that could curtail M&A activities is uncertainty with regard to American monetary policy. International markets first have to stabilize themselves without the intervention of central banks – and that could potentially have negative consequences for the economy. Whether the appetite for takeovers would rise after that remains to be seen.

KPMG does not expect M&A activities in the third quarter to exceed the level seen during the past two quarters. Q4 2013, on the other hand, could be exciting because depending on how the economy develops, a few interesting deals could be reached toward the end of the year.

M&A Report

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The quarterly report provides an overview of the M&A activities in Switzerland.

Simone Glarner

Simone Glarner

Head of Media Relations

+41 58 249 55 71

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