Switzerland

Details

  • Type: Press release
  • Date: 4/1/2014

New momentum on Switzerland's M&A market 

Following a relatively calm year in 2013, M&A activities have picked up as expected in the first quarter of 2014. While the number of mergers and acquisitions rose just slightly, the value of those transactions was up significantly compared to the same quarter of the previous year. The main drivers behind this development are larger individual transactions and an active U.S. market.

After last year's comparatively subdued performance, Switzerland's M&A market got off to a stronger start in 2014. While there was a slight increase in the number of mergers and acquisitions, the value of those transactions rose considerably compared to the first quarter of 2013. With transactions totaling USD 26 billion, this quarter recorded the highest total transaction volume since the second quarter of 2012 when the Glencore/Xstrata megadeal was announced. In fact, the 76 transactions reported were generally of a higher level. Several of them were even valued at over USD 1 billion, something that both highlights the market's momentum and shows that the high volume was not merely the result of a few large individual deals.

 

Number and value of deals per quarter

Growing nutrition, health and wellness market

Coming in at a total of USD 8.2 billion, the largest transaction was Nestlé’s acquisition of L’Oreal’s 50% stake in Galderma, a joint venture between the two companies, as well as Nestlé’s sale of 8% of L’Oreal’s share capital in return. This allowed Nestlé to reduce its holdings in the cosmetics producer in exchange for both the stake in Galderma as well as a cash payment. Galderma is a pharmaceuticals company based in Western Switzerland, which is a leader on the dermatology market. This acquisition illustrates the industry's trend toward investing in the growing nutrition, health and wellness market where strategic acquisitions are then made.

 

Top Swiss M&A transactions Q1 2014

 

Announced date Target Stake Target country Bidder Bidder country Value (USDm)

Feb 2014

Share Buy-Back L'Oreal SA

8

 France

L'Oreal SA

France

 8,235

Feb 2014 MultiPlan, Inc.

100

 United States Partners Group Holding; Starr Investment Holdings, LLC Switzerland

 4,400

Mar 2014 Commodities Unit (JP Morgan Chase)

100

 United States Mercuria Energy Trading SA Switzerland

 3,472

Jan 2014 Foster Wheeler AG

100

 Switzerland Amec Plc United Kingdom

2,851

Feb 2014 Swisscom AG

6

 Switzerland Unknown Investors Unknown

1,370

Jan 2014 Sulzer Metco AG

100

 Switzerland OC Oerlikon Corp AG Switzerland

1,104

Feb 2014 Fermaca

>50

 Mexico Partners Group Holding AG Switzerland

 750

Mar 2014 Cloverhill Bakery

100

 United States Aryzta AG Switzerland

 673

Mar 2014 Pineridge Bakery Inc

100

 Canada Aryzta AG Switzerland

 340

Jan 2014 Galderma S.A.

100

 Switzerland CSA Real Estate Switzerland Switzerland

 328

 

 

Coming in at second place is the USD 4.4 billion takeover of America's Multiplan by Partners Group, a global private markets investment management firm, and the investment firm Starr Investment Holdings. Multiplan focuses on healthcare cost management solutions. Other large-scale transactions included the acquisition of the physical commodities unit of the U.S. investment bank JP Morgan Chase by Mercuria, a Swiss commodities trader, for USD 3.5 billion and the takeover of Zug-based Foster Wheeler AG by AMEC of Britain, a plant engineering and construction company. Both companies are positioned in the construction industry where they specialize in power plants, and complex natural gas and crude oil production plants and refineries.

Large-scale acquisitions in North America

The level of M&A activity between Switzerland and North America remains high and the acquisition of Multiplan (USD 4.4 billion) is the highest-value example of this. But Aryzta AG, a Swiss producer of frozen and convenience bakery products, also conducted larger transactions in the USA and Canada with their acquisition of Cloverhill Bakery (USD 673 million) and Pineridge Bakery Inc. (USD 340 million). Merger and acquisition activities between Switzerland and North America continue to be boosted not only by individual strategic considerations but also by ongoing investment requirements in the areas of energy and infrastructure, as well as confidence in the North American consumer market. Apart from transatlantic activities with North America, the lion's share of transactions with Swiss involvement still take place within Switzerland and in Western Europe.

Industry active

The industrial market was the largest contributor toward merger and acquisition activity (21%) during the first quarter of the year. This sector also pulled ahead in terms of the number of transactions conducted, which was 27% higher than in same quarter of the previous year. After a year of extremely high activity, a year-on-year comparison reveals that the consumer goods sector lost some of its momentum during the first quarter. Nevertheless, this sector remains one of the most active ones and accounted for 13% of the quarter’s transactions. Particularly Nestlé’s complete takeover of Galderma, through the corporation’s transaction with L’Oreal, contributed substantially to the total transaction value reported in this sector. The takeover of JP Morgan Chase's physical commodities unit represented another major first-quarter deal, this time in the commodities sector. Otherwise, activity in this sector is currently rather cautious, particularly in the mine business. It can be assumed, however, that the trend toward concentration in the commodities sector will continue in 2014, as well. In light of the size of the players on this market, larger individual transactions – and particularly vertical integrations – cannot be ruled out in the future.

Optimistic outlook for 2014

Given that the first quarter frequently provides an indication of where the year as a whole is headed and the fact that many companies were busy preparing larger transactions in 2013, the market's dynamics look extremely promising and it is likely that this positive momentum will be sustained over the next few quarters. “The trend clearly points toward an increase in transaction activity. Market confidence is on the rise, the capital market is offering attractive financing terms and Swiss companies want to implement their strategic growth objectives,” says Patrik Kerler, Head of M&A at KPMG Switzerland, with conviction.

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

M&A Group

We combine many years of global and national experience in M&A lead advice, due diligence, valuation, M&A tax and legal M&A with specific expertise in many industries.

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