Blockbuster deals drive EMEA M&A resurgence

So far this year, EMEA’s M&A market has presented a mixed picture. Capital is being deployed at a decent pace, marking a potential turning point. This is characterized by a notable increase in blockbuster deals, which is suggestive of a strategic recalibration among corporate buyers, with many capitalizing on improving market conditions to pursue transformative acquisitions. Anticipated interest rate cuts in Europe were finally met in June when the ECB lowered its key rates by 25 basis points, stoking hopes of more easing to follow, bolstering investor confidence and somewhat improving access to deal financing.

In H1, deal volume declined but aggregate deal value moved up. There were 7,818 deals announced, with these worth €474bn, compared to 9,079 deals worth €363bn in H1 2023. This represents a 13.9% decrease in deal volume year-on-year, but a 30.6% surge in total deal value.

Dry powder deployment

Private equity (PE) firms, sitting on record levels of dry powder, are under pressure to deploy but also monetize existing investments and return capital to investors. PE buyouts in EMEA have rebounded sharply from a value perspective, rising 93.9% year-on-year to €123.6bn in H1. Volume was also up, by 13% to 1,531 buyouts. However, taking into consideration the region’s PE dealmaking slump in H1 2023, optimism about the year-over-year improvement should be tempered.

Deal activity has been concentrated in the TMT and energy, mining & utilities (EMU) sectors. The former led with 1,821 deal announcements, an 11.8% decrease from H1 2023. I&C and business services followed in second and third place, with 1,196 and 1,164 transactions, marking respective declines of 14.9% and 20.3%.

In value terms, TMT set the pace with €110.5bn worth of deals, a substantial 68.7% increase on the same period last year. EMU recorded an even more dramatic rise, with total value surging by 77.8% to €70.7bn, while I&C’s €61.7bn contribution represents a
more modest 16.6% gain on H1 2023.

Euro billions

GCC nations’ efforts to move beyond fossil fuels continue to bear fruit. The Abu Dhabi National Oil Company (ADNOC) took control of German chemical company Covestro earlier this year for €14.4bn. The deal will diversify ADNOC’s core operations toward materials benefitting from rising demand for sustainable and innovative materials used in automotive, electronics, and healthcare industries.

Meanwhile, Europe’s banking league table has been redrawn after BBVA agreed to pay €11.4bn for competitor Banco de Sabadell in May. The acquisition makes BBVA the third-largest eurozone bank, with assets exceeding €1trn. Sabadell has shown significant improvement in profitability, driven by favorable interest rates and a focus on SME loans.

In the third biggest deal in EMEA of H1, Denmark’s Novo Nordisk invested €10.2bn to purchase three fill-finish facilities from its major shareholder, Novo Holdings, as part of the latter’s acquisition of Catalent, a pharma manufacturing services company. This strategic move secures crucial production capacity for Novo Nordisk, particularly for the final manufacturing stage of its highly successful diabetes and obesity treatments, including Wegovy.

Published in association with Datasite, Deal Drivers EMEA provides an in-depth review of M&A activity in the first half of 2024, as well as an outlook for the year ahead.

The report is also available on datasite.com.