USA as driver in strong Swiss M&A business 

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High levels of activities were also seen in the consumer goods market where it intersects with the pharmaceutical industry. Especially attention-grabbing is Nestlé’s USD 11.8 billion takeover of US baby food producer Pfizer Nutrition which is particularly well-established in emerging markets. The decision by US-based Walgreen Company to increase its stake in Alliance Boots GmbH, a pharmaceutical company located in Switzerland, to 45% can also be attributed to this industry.

USA instead of Europe

Especially in the industrial sector and the area of commodity trading, the uncertain economic situation in the eurozone has prompted many companies to shift their focus to countries abroad where they have boosted their presence not only in North America, in particular, but also in Asia as has been the case in past years. Energy and infrastructures seem to be especially attractive areas of growth in the US. For USD 5.2 billion Tyco Flow Control, for instance, acquired a majority stake in Pentair, a US corporation that specializes in water pump, filter and control systems. In this context, ABB should also be mentioned: For a price tag of USD 3.9 billion, this provider of power and automation technology purchased Thomas & Betts Corp., an electronics group also domiciled in the US. The Vieterra takeover mentioned fits this pattern, as well.

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Financial sector cautious

In comparison, the financial sector reports a quiet M&A year. Due to ongoing efforts toward strategic realignments, the largest financial groups have not yet stepped forward with any major transactions. Deals by Julius Baer attracted attention, particularly its purchase of the non-US portion of Bank of America Merrill Lynch’s wealth management business. Also noteworthy are the USD 1.3 billion in acquisitions announced by ACE, an insurance company based in Switzerland, with the intent of strengthening the company’s presence in Mexico and Indonesia.

 

Outlook: 2013 to be eventful

In the search for growth and profitability, 2013 will prove to be a year of outward focus for the Swiss corporate landscape with more frequent restructuring efforts and accelerated globalization. The financial and electrical industries are still in the midst of fundamental upheaval and will form new structures through M&A. All things considered, KPMG expects another slight increase in M&A activities in Switzerland in 2013. It is unlikely, however, that the value record (set by Glencore/Xstrata) will be broken again. Confidence in a continuation of the Swiss economy’s positive development as well as the possibility of recovery in the eurozone will have an increasingly positive impact on Switzerland’s M&A market.

 

• Following a period of refocusing and on the basis of their new strategies, the willingness of universal banks to acquire and sell companies and parts thereof will be back on the rise. There will also be an increase in client portfolio acquisitions in the area of wealth management. Insurance companies will intensify their focus on growth markets. Independent asset managers are likely to become the target of a greater number of acquisitions since a variety of regulations have made the market ripe for consolidation.

 

• It can be assumed that the commodity trading companies located in the greater Geneva area and Central Switzerland will continue to gain mass in 2013, as well. The tendency toward centralization and diversification in their areas of activity along their value chains will also continue this year. Increasing political pressure on Switzerland’s attractive tax system – which has encouraged the relocation of numerous international commodity groups – and possible changes to this system could soon have an impact on the structure of this industrial branch, however, and influence the value of M&A transactions in Switzerland over the course of the next three years.

 

• Pharmaceutical companies will continue to be active players on the market. Price pressure, regulatory changes and expiring patents will force the sector to grow in new segments. Providers of generic products will be attractive acquisition targets in 2013, as well.