First M&A half-year: Numerous IPOs and substantial private equity activity

in Advisory, 02.07.2018

M&A activity in Switzerland remains at a high level, with both the volume and number of transactions rising slightly over the same period in the previous year. The M&A year to date has been characterized by larger deals in the pharmaceutical and consumer goods industries, a number of IPOs and an ongoing high level of activity among private equity investors.

There were 168 M&A deals with Swiss involvement in the first half of 2018, worth a total of USD 77.97 billion. These figures represent an increase in both the number and value of transactions over the previous year (2017: 160 deals worth a total of USD 69.3 billion). Given the increased efforts to transform business and operating models, there will likely be additional strategic partnerships, joint ventures and acquisitions in the second half of the year.

Consumer goods industry undergoes structural change

Ongoing convergence between the food industry, the retail sector and healthcare as well as a focus on innovation and technology led to several interesting deals in the consumer goods sector in the last half year. For example, Italy’s Ferrero SpA acquired Nestlé’s US confectionery business for USD 2.5 billion. Nestlé then went on to form a strategic alliance with Starbucks. In the non-food business, the luxury goods group Richemont acquired all remaining shares of Italian online retailer Yoox Net-A-Porter Group in a deal worth USD 3.2 billion.

Transaction volume of USD 26 billion in the pharmaceutical industry

The past six months saw four deals in the pharmaceutical industry worth over USD 1 billion each. For example, Novartis sold its stake in a consumer healthcare joint venture with GlaxoSmithKline plc to the latter for USD 13 billion in order to focus on its strategic priorities. This transaction was the largest deal of the first half of 2018. In total, M&A activities in the pharmaceutical industry involving Swiss companies amounted to nearly USD 26 billion in the past six months.

Many IPOs and active private equity investors

There were several Swiss IPOs in the first half of 2018, including new stocks from MedTech group Medartis, logistics service provider Ceva and sensor maker Sinsirion. In addition to the performance of the individual companies, this development was due to the global economic upswing, available investor funds and high valuations.

Private equity investors continue to be very active. The Swiss M&A market saw considerable private equity activity in the first half of 2018 as well, with 50 transactions involving private equity investors. The interest rate environment continues to be favorable, so there is a lot of capital for M&A activities. Private equity investors, in particular, are benefiting from this, as they typically have a high debt ratio.



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