Switzerland

Details

  • Service: Advisory, Transactions & Restructuring, Mergers & Acquisitions
  • Type: Press release
  • Date: 10/27/2011

Slight increase in corporate takeovers despite fragile economic situation 

Despite the difficult market environment, year-on-year M&A volumes and the number of transactions increased slightly in the third quarter of 2011 compared to the previous year.

The strong Swiss franc has only had a limited impact on the M&A activities of Swiss companies. Investments in growth markets remain attractive. These are the most recent findings of the «M&A Report» by KPMG and the University of St. Gallen.

 

Despite the fragile economic situation, the number of mergers and acquisitions showed stable and positive growth in the third quarter. Both the number (+17.6 percent) and volume (+16.7 percent) of transactions rose compared to the previous year. Contrary to expectations, no increase in Swiss acquisitions abroad was recorded. Statistically, the strong Swiss franc has had no discernible impact on the M&A activities of Swiss companies.

 

Nor have the high exchange rates put off foreign companies from carrying out acquisitions in Switzerland. In contrast, the fragile state of the economy and the European debt crisis had a marked influence, which is why, despite their strong financial position many Swiss companies were only slightly more active in terms of acquisitions than in the previous year.

Increased expansion in growth markets

An increase in acquisition activity in growth markets such as China, India and Brazil was also identified in the third quarter. Acquisitions in these markets account for a total of 17.9 percent of transaction volume. The companies in question are attempting to use these markets as a means of offsetting the partly stagnating growth rates in domestic markets and are expanding further in the process.

Luxury and consumer goods segment resistant to the crisis

As far as individual sectors are concerned, companies from the luxury and consumer goods market in particular were also active in the third quarter. For example, DKSH Holding acquired the controlling majority shareholding in watchmaker Maurice Lacroix, PPR SA increased its stake in Sowind SA to 50.1 percent and Hermès acquired an interest in Joseph Erard Holding.

Little activity in the financial sector

Despite a lot of talk of takeovers in recent weeks and months, activity in the financial sector remained relatively quiet. A total of eight deals were made in this sector. However, an increase in M&A activity is expected over the next few quarters, due to the wave of regulation facing the financial sector. This applies in particular to private banks.

M&A particularly profitable during times of uncertainty

Against the background of uncertain economic forecasts, it is often feared that future transactions might fail to reach the targets set and that value would even be destroyed. However, another international study by KPMG that was carried out during the last financial and economic crisis shows that M&A transactions during these periods were more successful than in periods when the economy is strong. The companies studied used this period to acquire market share or to grow in new markets. In so doing, they acted with greater caution than in boom periods

 

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KPMG AG

Andreas Hammer

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E-Mail: kpmgmedia@kpmg.ch  

 

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