Deal Drivers: EMEA HY 2021

Deal Drivers: EMEA HY 2021

A spotlight on mergers andacquisitions trends in 2021

Contents

Foreword: Dealmaking recovery forges ahead in H1

Outlook: EMEA heat chart

All sectors

Consumer

Energy, mining & utilities

Financial services

Industrials & chemicals

Pharma, medical & biotech

Telecoms, media & technology

About this report

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Foreword: Dealmaking recovery forges ahead in H1 Merger and acquisition activity in Europe, the Middle East, and Africa (EMEA) is very much back. As the data in this report reveals, M&A volumes and values increased significantly during the first six months of 2021, with every industry sector posting higher numbers.

In truth, M&A never really went away. Certainly, activity slowed markedly as the COVID-19 pandemic rocked the region in the first half of last year—deals slowed to a crawl during the second quarter of 2020 in particular. But prior to the pandemic, M&A activity hit record-breaking levels during 2018 and 2019 —and as the world adjusted to the crisis last year, dealmaking picked up again during the second half.

In 2021, that pick-up has accelerated, courtesy of many of the drivers that have been propelling M&A for some time— in particular, the plentiful supply of cash, both for corporates and PE investors, and the need to embrace transformational deals in the context of digital technology.

Indeed, the COVID-19 pandemic has acted as an accelerant here. The huge monetary and fiscal stimulus packages introduced by governments in response to the crisis mean there are now even larger pools of capital available for deployment in M&A. The imperative for transformation has never felt so pressing—many corporates had no choice but to begin that journey during the pandemic.

Moreover, there is good reason to hope that COVID-19 is now in retreat. The rapid roll-out of vaccines across much of the EMEA region paves the way for society to begin to normalize—and for more conventional business and economic conditions to return.

Plenty of uncertainty and downside risk remains—not least over the course of the pandemic itself. But after a very strong first half of 2021, dealmaking in the EMEA region is well on course to match, or even exceed, the levels of activity seen in 2018 and 2019.

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Heat chart based on potential companies for sale

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HotWarmCold

Outlook: EMEA heat chart

UK

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DACH

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Italy

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Bene

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Turk

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77 72 30 69 57 22 104 139 570

68 54 19 35 136 34 35 83 464

31 73 25 42 100 32 41 85 429

38 47 23 28 39 24 33 28 260

56 16 12 21 34 16 44 50 249

36 15 13 17 64 7 48 41 241

38 31 15 24 42 17 31 37 235

7 11 7 12 17 6 22 29 111

18 5 8 3 21 9 6 14 84

6 7 5 6 14 5 17 23 83

6 6 5 3 11 3 13 11 58

4 4 4 1 12 24 49

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387 338 163 264 539 176 406 566 2,839

TMT

Consumer



Financial services


Business services

Construction

Leisure

Transportation

Real estate

Agriculture

Defense

TOTAL

HotWarmCold

Note: The Intelligence Heat Charts are based on ‘companies for sale’ tracked by Mergermarket in the respective regions between January 01, 2021 and June 30, 2021. Opportunities are captured according to the dominant geography and sector of the potential target company.

Three sectors stand out as likely hotbeds of M&A activity in the second half of 2021, based on Mergermarket’s analysis of ‘companies for sale’ stories. Technology, media and telecoms (TMT), consumer, and industrials and chemicals (I&C) all look set for significant dealmaking.

The TMT sector, in particular, continues to attract significant interest, with Mergermarket recording 570 stories about potential deals in the industry. The UK, home to one of Europe’s most important technology sector hubs, accounted for 77 of those stories, but Turkey, the Middle East, and Africa surpassed that total, with 104 pieces of coverage; these include stories related to Israel, where TMT businesses continue to attract worldwide attention.

The consumer sector, meanwhile, generated 464 companies for sale stories during the first half of the year, with Italy and the Iberian peninsula accounting for more than a quarter of this coverage. Consumer businesses across the region continue to consolidate and transform to capitalize on trends such as the rise of ecommerce, which in many cases have been accelerated by the pandemic.

Italy and Iberia also look set to be hotspots for dealmaking in the I&C sector, with companies in those countries accounting for 100 of 429 companies for sale stories recorded by Mergermarket in the first half.

All sectors

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Source: Mergermarket

All sectors M&A activity, 2018 - HY 2021


M&A activity in the EMEA region gathered pace during the first half of 2021, following a strong rebound from the COVID-19 crisis in the second six months of last year.

Overall, the region recorded €578bn worth of deals during the first half, a 15% rise on the second half of 2020—and a 79% increase on the same period of last year, when activity slowed markedly at the height of the COVID-19 crisis.

Deal volumes have also continued to grow: the first half of 2021 saw 4,691 deals across the EMEA region, an increase of 9% on the second half of 2020 and a 42% rise on the same period of last year.

The strength of M&A activity so far in 2021 reflects growing confidence that many countries are now in a strong position to recover from the devastating impacts of the COVID-19 pandemic. With vaccine deployment stepping up across much of the EMEA region, governments have begun to pull back from lockdown restrictions and other COVID-19 counter measures, opening their economies once again.

Vaccine drive signals return to robust growth

Macro tailwinds The International Monetary Fund (IMF) believes this will result in a period of strong economic growth. It expects GDP in Europe to grow by 4.3% during 2021 and by 4% in 2022, following a 5.8% decline last year. Africa’s economy is forecast to bounce back even more strongly, with growth of 4.9% and 4.1% this year and next following a contraction of 1.9% in 2020. And while the IMF anticipates a more sluggish recovery in the Middle East, with growth of 2.5% and 3.4% in 2021 and 2022, those rates would still be a significant turnaround compared to last year’s decline of 4% in this part of the EMEA region.

With growth returning, dealmakers are positioning themselves accordingly after a period of relative inactivity. That includes trade buyers, as businesses across the region reposition themselves for a shifting marketplace, as well as the private equity (PE) sector, which still has record amounts of dry powder to deploy.

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Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1

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All sectors top sectors by value I HY 2021

All sectors top sectors by volume I HY 2021

All sectors top bidders by value I HY 2021

All sectors top bidders by volume I HY 2021

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Deal count

United Kingdom 761USA 591France 448Sweden 392Germany 371

EUR (m)

USA 206,190United Kingdom 51,552Netherlands 44,087France 39,995Italy 39,970

Deal count

TMT 1,105Industrials & chemicals 890Business services 704Consumer 452Pharma, medical & biotech 340

EUR (m)

TMT 170,447Industrials & chemicals 71,154Financial services 64,646Energy, mining & utilities 61,943Real estate 50,473

Private equity powerIndeed, PE activity during the first half of the year was particularly strong. PE firms invested €193.2bn in buyouts during the first six months of 2021—almost matching the €194.5bn of buyout activity recorded during the whole of last year, and was well ahead of the full-year totals for 2019 (€168.8bn) and 2018 (€174.7bn).

This stepping up of buyout activity was accompanied by a marked increase in exits, as PE firms overhauled their portfolios. The sector saw 614 exits worth €101.4bn during the first half, an increase of 77% in volume and 120% in value compared to the same period of 2020. Exit activity has now surpassed pre-pandemic levels.


All sectors top 10 announced deals, HY 2021

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Big dealsOne notable trend in the PE sector was the strong activity at the top end of the market. The strong increase in deal values during the first half of the year was achieved on a more modest rise in deal volumes, with 1,035 transactions in 2021 so far compared to 931 in the second half of last year.

More broadly, the return of larger deals was a theme across the whole of the M&A market during the first half of 2021. There were 16 deals worth €5bn or more during the first six months of the year.

Those deals were led by the giant share swap deal between the South African conglomerate Naspers and its Dutch-listed investment unit Prosus, a transaction worth €38.1bn. One aim of the deal was to reduce the outsized impact of Naspers’s valuation on the Johannesburg Stock Exchange. Naspers owns a significant stake in the Chinese technology giant Tencent, the value of which had at one point last year meant that Naspers accounted for a quarter of the total capitalization of the bourse.

Other notable deals during the first half of the year included the €28.9bn merger between Vonovia and Deutsche Wohnen, a deal that will create a powerhouse in the German real estate market, and the €18bn buyout of the Italian infrastructure group Autostrade per l’Italia by a consortium of private equity buyers.

Announceddate

Bidder company Target company Target dominant sector

Vendor company Deal value(€m)

12-May-21 Prosus N.V. Naspers Limited (45.4% Stake)

TMT 38,112

24-May-21 Vonovia SE Deutsche Wohnen SE Real estate 28,896

12-Jun-21 Consortium of investors led by Cassa Depositi e Prestiti S.p.A.

Autostrade per l'Italia S.p.A (88.06% Stake)

Construction Atlantia SpA 17,975

18-Mar-21 National Grid Plc Western Power Distribution plc Energy, mining & utilities

PPL Corporation 16,591

09-Apr-21 A consortium led by EIG Global Energy Partners

Aramco Oil Pipelines Company (49% Stake)


Saudi Arabian Oil Co. 10,423

21-Mar-21 Thoma Bravo Advantage ironSource Ltd. TMT CVC Capital Partners Limited; Viola Group; CBC Capital; Redline Capital Management S.A.; Disruptive; Saban Ventures

8,403

16-Mar-21 FinTech Acquisition Corp. V eToro Group Ltd. TMT 8,194

13-Jan-21 American Tower Corporation Telxius Telecom S.A. (telecommunications towers division in Spain, Brazil, Peru, Chile, and Argentina)

TMT Telxius Telecom S.A. 7,700

23-Feb-21 Gores Holdings V, Inc. Ardagh Metal Packaging S.A. Industrials & chemicals

Ardagh Group S.A. 7,286

29-Mar-21 Ajax I Cazoo Limited TMT Compagnie Nationale a Portefeuille S.A; BlackRock, Inc.; L Catterton Management Limited; General Catalyst Partners; Draper Esprit Plc; Sapphire Ventures, LLC; Novator Partners LLP; Octopus Ventures Limited; Eight Roads Ventures; Entree Capital; Mubadala Capital; dmg ventures; D1 Capital Partners L.P.; Stride.VC; Delin Ventures

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Source: Mergermarket Source: Mergermarket

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HY 2021202020192018

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€501m-€2,000m

€5m-€250m

€2,001m-€5,000m

€251m-€500m

>€5,001m

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22018759

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2,231

1,910

5,9455,256

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3,270

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(bn)

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600

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HY 2021202020192018

€5m-€250m

€2,001m-€5,000m

€251m-€500m

>€5,001m

€501m-€2,000m

141.7

144.1

65.7

67.8

119.7

183.2

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138.4

97.8

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308.3261.4

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78.5

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174.0

217.6

335.7

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45.9

All sectors M&A volume split by deal sizeAll sectors M&A value split by deal size


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All sectors PE exitsBased on announced exits, excluding those that lapsed or were withdrawn, where the dominant location of the target is in Europe.

All sectors PE buyoutsBased on announced buyouts, excluding those that lapsed or were withdrawn, where the dominant location of the target is in Europe.

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All sectors league tables

Financial advisors by value Financial advisors by volume

Legal advisors by value Legal advisors by volume

2021 2020 Company name Value (€m) Deal count

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The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover all sectors. Source: Mergermarket




HY 2021 HY 2020 Company name Value (€m) Deal count

1 1 Freshfields Bruckhaus Deringer 109,056 107

2 11 Kirkland & Ellis 89,886 77

3 4 Latham & Watkins 89,646 128

4 7 White & Case 81,365 131

5 3 Allen & Overy 78,100 124

6 15 Cravath, Swaine & Moore 77,366 12

7 23 Sullivan & Cromwell 72,745 23

8 18 Davis Polk & Wardwell 65,621 21

9 26 Hengeler Mueller 61,385 41

10 2 Clifford Chance 57,685 83


1 1 DLA Piper 20,567 216

2 3 CMS 10,782 138

3 2 White & Case 81,365 131


5 4 Allen & Overy 78,100 124

6 12 Eversheds Sutherland 8,695 110


8 5 Baker McKenzie 13,474 105

9 6 Linklaters 51,042 97



1 3 PwC 24,200 211

2 2 Deloitte 20,318 202

3 5 Rothschild & Co 86,969 172

4 1 KPMG 35,715 168

5 4 EY 12,903 119

6 6 JPMorgan 227,297 105

7 8 Goldman Sachs & Co 277,804 92

8 21 GCA Corporation 2,291 70

9 10 Clearwater International 926 68

10 14 Alantra 2,941 67



2 2 JPMorgan 227,297 105

3 3 Morgan Stanley 160,040 60

4 7 Bank of America 114,691 40

5 5 Citi 100,612 56

6 9 Lazard 99,288 56


8 6 Credit Suisse 78,080 36

9 10 Deutsche Bank 60,396 28

10 8 UBS Investment Bank 55,631 35


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Legal advisors by value—mid-market (€5m-€250m) Legal advisors by volume—mid-market (€5m-€250m)

Financial advisors by volume—mid-market (€5m-€250m)

All sectors league tables—mid-market

Financial advisors by value—mid-market (€5m-€250m)


1 3 DLA Piper 4,058 66




5 9 White & Case 2,769 26

6 4 Allen & Overy 2,580 24


8 21 Orrick Herrington & Sutcliffe 2,324 22

9 7 CMS 1,896 26

10 77 Herzog Fox & Neeman 1,729 23


1 2 DLA Piper 4,058 66




5 5 White & Case 2,769 26

6 3 CMS 1,896 26



9 6 Allen & Overy 2,580 24

10 44 Herzog Fox & Neeman 1,729 23


1 4 PwC 4,096 48


3 1 Deloitte 2,760 42

4 3 KPMG 2,753 37

5 2 EY 2,166 30

6 6 Oaklins 699 16

7 11 JPMorgan 2,362 15


9 27 Lincoln International 664 13

10 9 Lazard 1,534 12



2 4 PwC 4,096 48

3 1 Deloitte 2,760 42

4 3 KPMG 2,753 37

5 10 JPMorgan 2,362 15

6 2 EY 2,166 30

7 6 Lazard 1,534 12

8 124 Citi 1,534 8


10 17 Natixis 1,270 10


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PR advisors by volume

PR advisors by volume—mid-market (€5m-€250m)PR advisors by value—mid-market (€5m-€250m)

PR advisors by value

All sectors league tables—PR advisors


1 2 Brunswick Group 1,906 16

2 1 FTI Consulting 1,293 19

3 93 Hudson Sandler 780 9

4 7 Teneo 756 8

5 57 Camarco 723 9

6 10 Kekst CNC (Publicis) 668 5

7 12 Buchanan Communications 640 8

8 8 Finsbury Glover Hering 637 5

9 52 MHP Communications 624 16

10 5 Tulchan Communications 553 9




3 5 MHP Communications 624 16

4 48 SEC Newgate S.p.A. 260 11

5 93 Hudson Sandler 780 9

6 15 Camarco 723 9

7 8 Tulchan Communications 553 9

8 16 Teneo 756 8

9 11 Buchanan Communications 640 8

10 3 Citigate Dewe Rogerson 519 7




3 5 Kekst CNC (Publicis) 45,068 34

4 6 Barabino & Partners 10,766 27

5 14 Tulchan Communications 18,472 26

6 4 Maitland (AMO) 4,554 25

7 17 LLYC 15,216 23

8 18 Kreab 6,238 23

9 2 Finsbury Glover Hering 32,048 21

10 9 IWK (formerly Ira Wülfing Kommunikation) 520 21



2 6 Kekst CNC (Publicis) 45,068 34

3 1 Finsbury Glover Hering 32,048 21

4 - ICR 29,214 13


6 7 Sard Verbinnen & Co 25,393 17

7 20 Teneo 25,033 11

8 45 Tulchan Communications 18,472 26

9 4 Joele Frank Wilkinson Brimmer Katcher 18,011 16

10 13 LLYC 15,216 23

Consumer

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The consumer sector is in a particularly strong position to benefit as COVID-19 lockdown restrictions are relaxed. Parts of the industry held up well during the crisis, with ecommerce playing an increasing role in driving revenues—and sales of essential goods maintained—but the return of physical retail should accelerate demand for a broad range of consumer products; supply chain pressures should also begin to ease.

Consumer confidence is also increasing. While many remain nervous, confidence indices recorded their strongest readings since the COVID-19 pandemic began during the second quarter of the year.

Against this backdrop, M&A activity in the sector was strong during the first half of the year. In all, there were 452 transactions in consumer industries over the first six months of 2021, a 30% increase on the same period of last year. Total deal values rose 53% to €26.2bn.

Consumer M&A rises as pandemic restrictions lift

PE leads consumer comeback Almost half of that figure was accounted for by PE activity. PE buyers accounted for €12.3bn of M&A dealmaking in the consumer sector during the first half, almost three times the €4.5bn seen in the same period of 2020; deal volumes with PE buyers nearly doubled from 50 to 96 transactions. PE exit value also accelerated, from €2.3bn to €6.2bn, year-on-year, with transactions increasing from 27 to 58.

With the consumer sector in the midst of an unprecedented transformation—confronting issues ranging from the need for digitalization to pressure for supply chain modernization—PE firms are repositioning. Indeed, the PE industry accounted for the top three deals in the sector during the first half.

At the top of the table, L Catterton, the PE firm part-owned by Louis Vuitton and Christian Dior owner LVMH, agreed to pay €3.8bn for German sandal maker Birkenstock, ending the company’s independence after almost 250 years of trading. Sales of Birkenstock sandals have soared over the last 18 months, with consumers focused on comfort and heritage during such tumultuous times.

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Consumer M&A activity, 2018 - HY 2021

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EUR (m)

USA 8,943China 3,707United Kingdom 3,613Italy 2,101France 1,714

Consumer top bidders by volume I HY 2021

Deal count

United Kingdom 50France 49Italy 48Sweden 33Germany 33

Consumer top bidders by value I HY 2021International buyers sweep in In the second-biggest consumer sector deal of the first half, the Chinese PE firm Hillhouse Capital agreed to pay €3.7bn for the domestic appliance business of Philips, which makes everything from toasters to vacuum cleaners. The deal ensures Philips is able to focus its energies on its medical products division, which offers higher margins and strong growth potential. Hillhouse, meanwhile, believes it can drive value at its acquisition through digital transformation, leveraging its experience at similar businesses within its portfolio.

Elsewhere, US-based Bain Capital announced the €1.7bn acquisition of Valeo Foods, an Irish producer of food and drink products. Bain already has investments in a string of prominent consumer brands, including Burger King and Domino’s Pizza, and Valeo’s brands, including Batchelors and Jacobs, will now join that stable.

Such deals underline the increasingly global nature of the consumer sector, with businesses and investors in the industry focused on growth in new markets. Indeed, it is notable that in value terms at least, US and Chinese buyers were more active than their EMEA counterparts during the first half. Together, these acquirers accounted for €12.7bn worth of deals, more than half the total amount recorded across the consumer sector. In volume terms, international buyers were a little less significant, reflecting their focus on the largest consumer businesses.


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Announceddate

Bidder company Target company Target dominant country


26-Feb-21 L Catterton Management Limited; Financiere Agache

Birkenstock GmbH & Co. KG Germany 3,785

25-Mar-21 Hillhouse Capital Management, Ltd.

Koninklijke Philips N.V. (Domestic Appliances & Personal Care (DAP))

Netherlands Koninklijke Philips N.V. 3,700

10-May-21 Bain Capital, L.P. Valeo Foods Group Limited Ireland (Republic)

CapVest Partners LLP 1,700

26-May-21 Mondelez International, Inc. Chipita S.A. Greece The Olayan Group 1,636

03-May-21 ams AG Osram GmbH (28% Stake)

Germany 1,379

18-May-21 Magnit PJSC DIXY Holding Limited

Cyprus Mercury Group 1,025

25-Jan-21 Altamir Amboise; Olivier Bertrand (Private Investor)

THOM Europe SAS France Bridgepoint Advisers Limited; Apax Partners SAS; Qualium Investissement

1,000

24-Jun-21 Cinven Partners LLP; Fressnapf Holding SE

Agrifarma SpA Italy Permira Advisers LLP 1,000

03-Feb-21 Euro Garages Limited Asda (Forecourt business) United Kingdom

ASDA Group Limited 851

23-Feb-21 Moncler S.p.A. Sportswear Company S.p.A. (70% Stake)

Italy Rivetti Family; Carlo Rivetti (Private Investor)

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New sales channels fuel M&A Looking forward, there is every reason to expect further M&A activity amongst consumer companies during the second half of 2021 and beyond. Trade buyers and PE investors alike continue to focus on emerging trends in the sector: omni-channel retailing is driving new approaches to the marketplace, consumer companies that once distributed purely through retailers are launching direct-to-consumer operations, and social purpose and sustainability are increasingly important.

Given these trends, many management teams are concluding their existing business mix is not fit for purpose, requiring them to exit certain businesses and to focus on acquisitions in areas where they lack key competencies.

Global interest in EMEA-based consumer companies is also set to continue. With European stock market valuations still lagging US prices, American buyers are looking to the region for value. Buyers from developing economies, including China, see the opportunity to bring Western brands to markets where the rapid growth of middle-class consumers with increasing spending power represents an enormous opportunity.

Consumer top 10 announced deals, HY 2021


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1 - De Brauw Blackstone Westbroek 5,508 3


3 113 Houthoff 4,400 3


5 120 Deloitte Legal 3,785 6

6 32 Noerr 3,785 3

7= 140 Arendt & Medernach 3,785 1

7= - Gibbons 3,785 1

9 43 Fangda Partners 3,700 1

10 70 Mayer Brown 3,590 5


1 5 Allen & Overy 552 16

2 4 DLA Piper 1,157 15


4 3 Baker McKenzie 853 11


6 15 Nctm Studio Legale 140 9

7= 1 CMS - 9

7= 14 PwC legal - 9

9 17 Pedersoli Studio Legale 1,346 8

10 12 Cuatrecasas - 8


1 3 Deloitte 5,647 29


3 6 PwC 349 24

4 1 KPMG 1,701 16

5 2 EY 149 12



8 14 Alantra 854 8

9 96 GCA Corporation 200 8

10 4 Oaklins 48 8




3 44 Deloitte 5,647 29


5 1 JPMorgan 4,042 4

6 - Moelis & Company 3,700 1


8 63 Houlihan Lokey 2,783 7


10= - Banco BTG Pactual 2,258 1

10= - BR Partners 2,258 1

Consumer league tables

The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover the consumer sector. Source: Mergermarket

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EMU deals show signs of recovery on back of green investments and strong oil price

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Energy, mining and utilities (EMU) companies have been significantly impacted by the COVID-19 pandemic, with oil prices crashing to record lows in the spring of 2020 as demand fell—a problem exacerbated by a price war between Saudi Arabia and Russia.

Since then, M&A in the sector has recovered gradually alongside commodity prices. The sector is benefiting as demand increases once again and operational challenges are less pronounced, though the industry remains vulnerable to disruption as infection rates ebb and flow across the region.

Against this backdrop, while the first half of 2021 did see a recovery in EMU sector M&A activity, the bounceback was not as marked as in other industries.

There were 292 deals recorded in the sector during the first six months of the year, with a total value of €61.9bn—representing a 29% increase, year-on-year, in volumes, and 16% in terms of value.

Decarbonization spurs deals More than the disruptions it brought to the sector, the pandemic has also accelerated existing trends towards decarbonization and investment in renewable energy. Two of the most active areas in the EMU market reflect the strategic transformation that many businesses in the sector now consider essential.

First, utility businesses featured in a significant number of transactions, including the biggest EMU deal of all during the first half, National Grid’s €16.6bn acquisition of Western Power Distribution. The deal is typical of the sort of repositioning now ongoing at many businesses—National Grid said the deal would transform its UK portfolio, giving it a significant scale position in UK electricity distribution and helping it move towards its climate goal changes.

Second, renewable energy assets are attracting significant interest, as the whole EMU sector comes under pressure to focus on its carbon footprint. The third-biggest deal of the first half, IFM Investors’ purchase of a 22.7% stake in Spanish utility firm Naturgy for €5.1bn, is a good example. While Naturgy has the largest gas distribution and third-largest electricity distribution networks in Spain, it is also a major investor in renewables, with an existing portfolio of 4.6GW of capacity, including wind, solar, and hydroelectric.

EMU M&A activity, 2018 - HY 2021

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Stiff competition for best assets There were several other significant renewables-focused transactions in the EMU sector during the first half of the year, with investment buyers featuring prominently. For example, Norges Bank invested €1.4bn in two of Orsted’s offshore wind farms, while EQT paid €1.2bn to acquire the Spanish renewables firm Solarpack.

These areas of the market are likely to see continued deal activity during the second half of the year. The renewables sector, in particular, is seeing stiff competition for the best assets—trade buyers are anxious to move away from fossil fuel dependency, but investors are attracted to the stable cash flows, often underpinned by government or regulatory guarantees, that parts of the sector offer.

The EU’s ambitious plans to reduce greenhouse gas emissions by 55% by 2030 (compared to 1990 levels) and reach net neutral by 2050 will provide additional incentive for investment in green energy.

EUR (m)

United Kingdom 21,155USA 10,774Australia 5,060Norway 2,335Thailand 2,026

Deal count

United Kingdom 50Norway 22Italy 22Spain 19Germany 18

EMU top bidders by volume I HY 2021

EMU top bidders by value I HY 2021


22

Fossil fuel producers consolidate The other notable deal driver for EMU businesses is the ongoing recovery of the oil price. The price of a barrel of WTI oil briefly slipped below US$0 in April 2020 as the global economy slipped into a COVID-19-induced recession, but has since recovered strongly. By the end of the first half of this year, the oil price had risen above US$75, a six-year high.

Last year’s oil price collapse paved the way for a wave of consolidation, with businesses across the sector—upstream and downstream—combining in order to manage cost and protect margins to get through the crisis. That wave of M&A activity is continuing, with the oil price recovery supporting dealmaking—and pressure for consolidation, efficiency, and cost reduction continuing.

Even the biggest businesses are focusing on cash. The second-biggest deal in the first half saw the world’s largest oil producer Saudi Aramco sell a 49% stake in its oil pipelines business to EIG Global Energy Partners for €10.4bn. Aramco continues to fundraise in order to finance new investments, as well as its dividend obligations to the Saudi government.

Announceddate



18-Mar-21 National Grid Plc Western Power Distribution plc United Kingdom

PPL Corporation 16,591

09-Apr-21 A consortium led by EIG Global Energy Partners

Aramco Oil Pipelines Company (49% Stake) Saudi Arabia Saudi Arabian Oil Co.

10,423

26-Jan-21 IFM Investors Naturgy Energy Group (22.69% Stake) Spain 5,060

01-Feb-21 PTT Exploration and Production PCL Block 61 Sultanate of Oman Oman BP Plc 2,026

18-Mar-21 CK Asset Holdings Limited Northumbrian Water Limited (20% Stake); Wales & West Utilities Limited (10% Stake); UK Power Networks Holdings Limited (20% Stake); Dutch Enviro Energy (10% Stake)

United Kingdom

Li Ka Shing Foundation Limited

1,834

11-Mar-21 Frank's International N.V. Expro International Group Ltd. United Kingdom

1,783

07-Apr-21 Norges Bank Investment Management AS

Orsted A/S (752 MW Borssele 1 & 2 Offshore Wind Farm) (50% Stake)

Netherlands Orsted A/S 1,375

04-Mar-21 Chubu Electric Power Co., Inc.; Diamond Transmission Corporation Limited

Hornsea 1 offshore electricity transmission link asset

United Kingdom

Hornsea 1 1,362

16-Jun-21 EQT Partners AB Solarpack Corporacion Tecnologica, S.A.

Spain 1,238

19-Jan-21 ZCCM Investments Holdings Plc Mopani Copper Mines Plc (90% Stake) Zambia Carlisa Investments Corp.

1,211

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1 - Davis Polk & Wardwell 31,618 3


3 25 Herbert Smith Freehills 21,417 10

4 - Skadden Arps Slate Meagher & Flom 21,038 3

5 - Cravath, Swaine & Moore 20,918 2


7 7 Ashurst 17,013 5


9 - BDGS Associes 10,940 2

10= - Darrois Villey Maillot Brochier 10,700 1

10= - Weil Gotshal & Manges 10,700 1




3 3 CMS 2,891 15

4 13 White & Case 10,679 14

5 5 Norton Rose Fulbright 3,826 14

6 27 Thommessen 176 13

7 8 Herbert Smith Freehills 21,417 10


9 7 Watson, Farley & Williams 828 10

10 15 DLA Piper 684 10



2 2 KPMG 1,511 17

3 3 EY 564 14

4 14 BNP Paribas 17,690 11

5 4 JPMorgan 35,960 10

6 16 Jefferies 2,511 10

7 1 PwC 1,526 10

8 6 Deloitte 238 10


10 8 Citi 8,699 8


1 1 JPMorgan 35,960 10


3 30 Barclays 21,864 3

4 31 Robey Warshaw 20,918 2

5 6 BNP Paribas 17,690 11


7 13 Moelis & Company 12,341 3

8 4 HSBC 12,257 3


10 7 Lazard 11,281 5

The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover the EMU sector. Source: Mergermarket

EMU league tables

Financial services

25


The financial services sector saw strong levels of M&A activity during the first half of the year, despite concerns about valuations in a sector that was not impacted as severely by the COVID-19 crisis as some others.

Overall, there were 301 deals in the sector during the first six months of the year, a 33% increase on the same period of 2020.

Deal values reached €64.6bn—although this was a slight drop on the first-half 2020 total of €65.4bn, €33.1bn of that total came from a single deal announcement, Aon’s attempted acquisition of Willis Towers Watson, which ultimately collapsed in early Q3.

It would be wrong to consider financial services as immune to COVID-19. Investment banks, for example, were rocked by the loss of advisory fees as the broader M&A market dived during the pandemic; elsewhere, trading revenues suffered as financial markets declined; and there was widespread anxiety about the potential impact on the sector of loan defaults.

Financial services deal volume ticks up as consolidation heats up

Seeking scaleNevertheless, most of the industry was able to continue operating and by the second half of 2020, as the immediate disruptions caused by the pandemic subsided, M&A activity was rebounding strongly. Banks looked to continue with consolidation plans in a market where scale matters, for example, and the whole industry focused on the pressure for digital transformation; fintech businesses figured prominently in many deals.

These trends continued—and in many cases accelerated—during the first half of 2021. Not least, the pandemic has undoubtedly convinced banks of the wisdom of their consolidation activity, prompting many to redouble their efforts in this area. In one prominent example, Allied Irish Banks acquired Ulster Bank Ireland’s commercial lending business for €4.1bn; the deal reflected AIB’s desire for greater scale and the decision of Ulster Bank owner Royal Bank of Scotland to exit the Irish market.

Nor is banking the only area of the financial services market where businesses are considering their strategic options. In insurance, for example, the €3.2bn sale by Aviva of its French operation reflects the determination of the UK company to focus on markets where it has the greatest scale.

Financial services M&A activity, 2018 - HY 2021

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26

PE activity triples Indeed, PE buyout activity nearly tripled from €4.7bn in the first half of 2020 to €12.2bn in the same period of this year. The number of buyouts rose from 37 to 44 year-on-year. PE firm exit activity also rose, with the number of such transactions increasing from 19 to 28 in the first half of 2021. The total value of these exit deals more than doubled, from €3.4bn in the first half of 2020 to €9.5bn a year later.

The most prominent of these transactions saw Canadian PE firm Brookfield Partners agree to pay €4.2bn for Modulaire Group, a pan-European business specializing in modular workspace. The deal is typical of increasing interest in a broadening range of infrastructure assets, with subsectors such as warehousing and hybrid working space in particular demand in the light of the COVID-19 crisis.

The pandemic also played a role in driving the biggest financial services sector deal of all of the first half, with Italy’s state lender Cassa Depositi e Prestiti selling the export agency SACE to the Italian Treasury for €4.3bn. That deal reflects the Italian government’s determination to take greater control of the agency given its importance in supporting economic recovery; SACE also plays a key role in helping Italian companies to access credit, which has become more challenging given the pressures of the pandemic.

EUR (m)

USA 17,829France 9,077Italy 6,816United Kingdom 5,243Canada 4,561

Deal count

United Kingdom 76USA 34France 30Italy 14Spain 14Netherlands 14

FS top bidders by volume I HY 2021

FS top bidders by value I HY 2021


27

Consolidation set to continue Looking forward, the financial services industry expects M&A to continue to grow during the second half of the year and beyond. The sector continues to see consolidation as a means with which to address the challenges it faces, from increasing regulation to the imperative to invest in new technology. On the latter priority, moreover, deals with disruptive fintechs and other challengers offer a means to jumpstart digital transformation.

Certain parts of the sector could be particularly rife for dealmaking. The asset and wealth management industry, in particular, continues to see elevated levels of activity as firms focus on distribution, market reach, and transformational technologies such as robo-advice.

Announceddate



03-Mar-21 Ministero dell'Economia e delle Finanze

SACE S.p.A. Italy Cassa Depositi e Prestiti S.p.A.

4,250

27-Jun-21 Brookfield Business Partners L.P. Modulaire Group United Kingdom

TDR Capital LLP 4,189

28-Jun-21 Allied Irish Banks Plc Ulster Bank Ireland DAC (performing commercial lending business)

Ireland (Republic)

Royal Bank of Scotland Group Plc

4,100

09-Feb-21 BPCE Group Natixis S.A. (29.3% Stake) France 3,706

23-Feb-21 Aema Groupe Aviva France France Aviva Plc 3,200

05-Mar-21 TDR—I Squared consortium Aggreko PLC United Kingdom

3,130

12-May-21 Arthur J. Gallagher & Co. Willis Re Limited; Willis Towers Watson Public Limited Company (corporate risk and broking and health and benefits services)

United Kingdom

Willis Towers Watson Public Limited Company; Aon plc

2,949

26-Mar-21 Allianz SE Aviva Poland Poland Aviva Plc 2,500

19-May-21 KKR & Co., Inc. John Laing Group plc United Kingdom

2,332

29-Mar-21 Carlyle Aviation Partners Fly Leasing Limited Ireland (Republic)

1,951

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1 22 Slaughter and May 10,262 9

2 27 Allen & Overy 8,896 20

3 3 Skadden Arps Slate Meagher & Flom 8,384 4


5 126 Bredin Prat 7,146 3


7 - Wiersholm 6,399 4

8 1 Cleary Gottlieb Steen & Hamilton 5,678 3

9 14 White & Case 5,592 10



1 4 Allen & Overy 8,896 20

2 37 Eversheds Sutherland 507 16

3 6 DLA Piper 334 13




7 1 White & Case 5,592 10


9 - Gorrissen Federspiel 2,124 8

10 19 CMS 342 8


1 4 JPMorgan 28,474 19



4 1 KPMG 6,760 14

5 5 PwC 832 13


7 19 Barclays 10,039 10

8 10 EY 1,724 9


10 17 Evercore 6,246 7


1 5 JPMorgan 28,474 19




5 16 Barclays 10,039 10

6 18 Lazard 6,906 3

7 4 KPMG 6,760 14

8 13 Evercore 6,246 7


10 7 Citi 5,730 7

Financial services league tables

The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover the financial services sector. Source: Mergermarket

30


With economies across Europe largely on the road to recovery courtesy of COVID-19 vaccine programs, industrial production has begun to ramp up in recent months. Clearly, major uncertainties remain, but the rebound looks strong. In April, for example, European Union industrial production was up 39% compared to the same month a year previously, when the pandemic sent much of the continent into near total lockdown.

This recovery first began to feed through into elevated M&A activity in the industrials and chemicals (I&C) sector during the second half of last year, but dealmaking gathered significant pace over the first six months of 2021. So much so that the sector was the second-busiest for M&A activity, in both value and volume terms, in the EMEA region during this period—only TMT registered greater levels of dealmaking.

The data tells the story. In total, the I&C sector registered €71.2bn worth of transactions during the first six months of 2021, 40% more than in the same period of last year. And the increase wasn’t dependent on just a handful of larger deals.

Deal volumes rose even more strongly: the 890 transactions seen during the first half of the year represented a 50% increase on the first half of 2020.

Industrials & chemicals sector roars back as economy rebounds

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3131

EUR (m)

USA 43,329Canada 3,676France 3,264United Kingdom 3,220Japan 2,880

Deal count

Sweden 108Germany 105USA 99United Kingdom 97France 91

I&C top bidders by volume I HY 2021

I&C top bidders by value I HY 2021 US inbound interest One notable part of this story has been the very strong US interest in EMEA acquisitions in the I&C sector. Some 99 of first-half deals in the sector featured a US acquirer—only Sweden and Germany figured more highly—and these buyers spent €43.3bn on I&C companies, more than 10 times as much as bidders from any other single country.

One driver of this trend has undoubtedly been the lower valuations of public market companies in the EMEA region compared to the US. In May, for example, the US market as a whole traded on a forward price to earnings ratio of 21, against 18 in France, 15 in Germany, and 13 in both the UK and Italy. In addition, US investors have so much capital to deploy that they must look internationally for opportunities.

The biggest deal of the first half in the I&C sector is a good example of how these drivers are playing out in practice. Gores Holdings V, a special purpose acquisition company (SPAC) backed by the billionaire Alec Gores, agreed to pay €7.3bn for Ardagh Group, the Luxembourg-based global packaging company. SPACs, or blank-check firms, are shell companies that raise funds through an initial public offering to make acquisitions.


32

PE pushes up value Similarly, PE firms—both in the US and from the EMEA region itself—have been significant players in I&C M&A activity. The total value of PE buyouts in the I&C sector reached €29.8bn during the first half of 2021; that was a 16% rise on the first half of 2020 even though last year’s figure was boosted by the US$17.2bn takeover of ThyssenKrupp’s elevators business by a group of PE investors. Exit activity also accelerated, with PE selling out of 91 I&C companies in the first half of the year, up from 50 in the same period of 2020.

This year’s PE deals included the second-largest deal of all in the I&C sector during the first half, with a consortium led by Blackstone Infrastructure paying €5.1bn for an 81% stake in Signature Aviation. The next biggest deal was also a PE transaction, with Cinven and Bain Capital leading a consortium that agreed to pay €3.9bn for the specialty ingredients business of the Swiss chemicals company Lonza.

Dealmaking in the I&C sector is set to continue in the wake of the COVID-19 pandemic, as the industry continues to redefine its value chain, move on from operational disruption, and address supply chain concerns.

With strong competition for assets in the sector—corporates are vying with private equity, while the pool of bidders for many companies is global—valuations have increased sharply over the past year, encouraging disposals, but not necessarily deterring acquirers given that other areas of the market look much more fully priced.

I&C top 10 announced deals, HY 2021

Announceddate



23-Feb-21 Gores Holdings V, Inc. Ardagh Metal Packaging S.A. Luxembourg Ardagh Group S.A. 7,286

05-Feb-21 Blackstone Infrastructure—Blackstone Core Equity—GIP—Cascade Consortium

Signature Aviation plc (81.27% Stake)

United Kingdom

5,068

08-Feb-21 Cinven Partners LLP; Bain Capital, L.P.; Public Sector Pension Investment Board

Lonza Specialty Ingredients Switzerland Lonza Group Limited 3,877

06-Jun-21 Platinum Equity, LLC Urbaser S.A. Spain China Tianying Inc. 3,500

19-Apr-21 Madison Industries Melrose Plc (Nortek Air Management business)

United Kingdom

Melrose Plc 3,036

03-Feb-21 10X Capital Venture Acquisition Corp. REE Automotive Ltd. Israel 2,494

05-Apr-21 SoftBank Group Corp. AutoStore AS (40% Stake) Norway EQT Partners AB; Thomas H. Lee Partners, L.P.

2,377

01-Feb-21 Eaton Corporation Cobham Mission Systems Wimborne Limited

United Kingdom

Cobham Limited 2,340

09-Jun-21 Volkswagen AG; Scania AB; Baillie Gifford & Co., Ltd.; Compagnia Di San Paolo; AMF Pensionsforsakring AB; Baron Capital Group; ATP Group; Goldman Sachs Asset Management, L.P.; Fjarde AP-fonden; Forsta AP Fonden 1; AP Fonden 2; Tredje AP-fonden; OMERS Private Equity Inc.; PCS Holding AG; Daniel Ek (Private Investor); EIT InnoEnergy SE; IMAS Foundation; Norrsken VC; Cristina Stenbeck (Private Investor); Bridford Investments; Stena Metall Finans

Northvolt AB Sweden 2,257

30-Mar-21 Qell Acquisition Corp. Lilium GmbH Germany 2,082

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2 44 Weil Gotshal & Manges 13,071 10



5 3 White & Case 10,353 26

6 30 Shearman & Sterling 8,902 6

7 80 Loyens & Loeff 8,765 9


9 124 Cuatrecasas 6,676 8



1 1 DLA Piper 2,773 42

2 3 White & Case 10,353 26

3 2 CMS 99 25

4 5 Eversheds Sutherland 456 24


6 319 Hengeler Mueller 929 20


8 23 Schjodt 880 17

9 321 Heuking Kuhn Luer Wojtek 55 17



1 1 Deloitte 4,390 49

2 2 PwC 1,650 41

3 4 KPMG 413 33


5 10 Alantra 50 22

6 15 Lincoln International 1,395 20

7 3 EY 241 19

8 14 Baker Tilly International 19 16

9 7 GCG 17 15

10 8 Oaklins 9 14


1 12 Citi 20,572 9



4 2 UBS Investment Bank 12,997 11

5 5 JPMorgan 12,150 11


7 6 Deutsche Bank 9,430 6

8 14 Barclays 8,497 8


10 38 Jefferies 6,772 5

The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover the I&C sector. Source: Mergermarket

I&C league tables

35


New products, new structures The biggest deal of the year to date has been Nasdaq-listed Jazz Pharmaceuticals’s €5.3bn purchase of the UK’s GW Pharmaceuticals, which develops drugs based on cannabinoids. For Jazz, the deal represents an opportunity to build out further its market-leading position in medicines for treatment of neuro conditions such as epilepsy. The need for companies to consolidate their focus in particular therapeutic areas is a consistent driver of transaction activity in the sector.

The second-biggest transaction of the first half saw drug wholesaler AmerisourceBergen pay €5.3bn for the majority of Walgreens Boots Alliance’s Alliance Healthcare wholesale distribution business. Again, consolidation was the key driver: in a market where scale and reach drive efficiency and effectiveness, the company believes the deal will enable it to offer better support to customers.

By contrast, the next biggest first-half deal in PMB reflects a different driver, with the SPAC Montes Archimedes Acquisition paying €5.2bn for the Swiss biotech Roivant. The rise and rise of SPACs over the past 18 months has lead to ever-growing pools of capital looking for investment opportunities, with PMB sector companies often targeted; Roivant is the latest such transaction.

PMB deal value jumps up, despite lack of megadeals

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Pharmaceutical, medical and biotech (PMB) businesses have been at the forefront of the battle against the COVID-19 pandemic over the past 18 months, racing to develop vaccines, treatments, and testing to combat the virus. But while this role has naturally focused attention on the sector, the crisis has also caused disruption, with practical impacts hampering operations, supply chains, and distribution.

Amid the uncertainties of the pandemic, M&A activity in the PMB sector slowed sharply during the first half of last year, as in other industries. But the second half of 2020 saw a recovery and the evidence of the first half data for 2021 is that this bounceback has picked up pace.

The first six months of 2021 saw €50.2bn worth of PMB transactions in the EMEA region, spread across 340 deals—a 209% increase in value terms on the same period of last year, and a 37% increase in volume.

As this data suggests, larger transactions are once again becoming more common, though as yet, there has been no return to the megadeals that have played out in the sector at certain times over the past few years.

3636

Buyout value surges In a similar vein, PE buyers continue to be keen participants in PMB M&A activity, increasing their exposure to the sector during the first half of 2020. The value of PE buyouts in the sector almost tripled year-on-year to reach €26.3bn during the period; that reflected a 35% increase in transaction volumes. Exit activity also spiked higher: PE firms sold out of 55 positions, with sale proceeds of €6.5bn, three times the total achieved in the first half of 2020.

Looking ahead, the potential tailwinds for further M&A outnumber the headwinds. On the negative side, regulatory intervention poses a risk, particularly for US acquirers, with the Federal Trade Commission signaling its intention to work with international competition authorities to review mergers, and the new Biden Administration intending to focus on drug pricing. More positively, however, the need for M&A to help PMB businesses drive innovation and increase the value of their portfolios remains pressing; capital is in plentiful supply, providing a ready source of acquisition funding for biotechs; and fast-developing healthcare technologies such as cell and gene therapy add further impetus.

EUR (m)

USA 22,048France 6,264Sweden 6,078Ireland (Republic) 5,615United Kingdom 2,698

Deal count

United Kingdom 51USA 50France 44Germany 30Sweden 23

PMB top bidders by volume I HY 2021

PMB top bidders by value I HY 2021


37

Post-pandemic planningAnother potential source of M&A activity is the focus of many large pharmaceutical businesses on their supply chains in the wake of the pandemic. Many are looking to secure more localized supplies of key ingredients following problems in markets such as India, on which they have traditionally depended.

In this landscape, M&A activity is likely to continue to accelerate. And while activity has been taking place across the EMEA regions, it has been most marked in countries such as the UK, where the PMB sector is particularly well-developed. No fewer than six of the ten biggest PMB transactions during the first half of 2021 involved UK targets.

Announceddate



03-Feb-21 Jazz Pharmaceuticals, Inc. GW Pharmaceuticals Plc United Kingdom

5,336

06-Jan-21 AmerisourceBergen Corporation Walgreens Boots Alliance, Inc. (majority of Alliance Healthcare businesses)

United Kingdom

Walgreens Boots Alliance, Inc.

5,255

03-May-21 Montes Archimedes Acquisition Corp. Roivant Sciences, Ltd. Switzerland 5,233

31-May-21 Intermediate Capital Group Plc; Yves Journel (Private Investor); Merieux Equity Partners S.A.S.; BNP Paribas Agility Capital

DomusVi SAS France 4,300

07-Apr-21 CA Healthcare Acquisition Corp. LumiraDx Limited United Kingdom

4,210

09-Feb-21 Nestle Purina PetCare Company; EQT Partners AB; Silver Lake Partners

Independent Vetcare Limited

United Kingdom

3,500

26-May-21 Ramsay Health Care Limited Spire Healthcare Group plc United Kingdom

2,392

11-Mar-21 CVC Capital Partners Limited; Avista Capital Partners L.P.; Yvan Vindevogel (Private Investor)

Cooper Consumer Health SAS

France Charterhouse Capital Partners LLP

2,000

27-Jan-21 Nordic Capital ADVANZ PHARMA Corp United Kingdom

1,671

01-Mar-21 Altaris Capital Partners, LLC Perrigo Company plc (Generic Rx Pharmaceuticals business)

Israel Perrigo Company plc 1,244

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3 89 Cravath, Swaine & Moore 10,591 2

4 4 Goodwin Procter 9,952 8

5 140 Gide Loyrette Nouel 8,810 4



8 - Simpson Thacher & Bartlett 8,037 2

9 10 White & Case 7,898 7

10 7 Cleary Gottlieb Steen & Hamilton 7,506 5



2 1 DLA Piper 524 13



5 36 Plesner 792 10

6 7 CMS 207 10


8 11 McDermott Will & Emery 1,262 9




1 1 PwC 955 24

2 5 JPMorgan 20,466 15


4 2 Deloitte 563 13

5 7 KPMG 619 10



8 4 EY 72 7

9 - Translink Corporate Finance - 6




2 5 JPMorgan 20,466 15

3 26 Centerview Partners 12,332 4


5 2 Lazard 11,345 5


7 - Evercore 9,546 2

8 74 Raymond James 5,881 2

9 - Guggenheim Partners 5,806 3

10 17 SVB Leerink 5,674 4

The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover the PMB sector. Source: Mergermarket

PMB league tables

Telecoms, media & technology

40


Another global driver of TMT deals has been the sector’s resilience in the face of COVID-19. Indeed, several parts of the sector have seen positive impacts from the pandemic. Enterprise technology providers have benefited as employers have been forced to rethink working practices. The media sector has seen consumption boom in areas such as streaming. Ecommerce facilitators have been in huge demand. More broadly, the pandemic has accelerated the imperative for businesses from a broad range of sectors to embrace digital transformation, with TMT sector players often required to provide support.

Technology, media and telecoms (TMT) was by some distance the busiest sector of the EMEA market for M&A activity during the first half of 2021.

TMT registered 1,105 transactions worth €170.5bn over the first six months of the year—representing an increase of 49% in deal volume and a remarkable 198% rise in deal values.

Surging TMT deal activity reflects a number of factors. First, the EMEA region is by no means alone in seeing such frenzied dealmaking—TMT also dominated the global M&A statistics during the first half, partly due to a series of blockbuster media deals such as Discovery’s US$96.2bn acquisition of AT&T’s WarnerMedia division, as well as large transactions in the software industry. To some extent, elevated deal activity in the EMEA region is simply part of that global shake-out.

M&A in TMT sector surges ahead, fueled by US buyers

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Deal count

USA 255United Kingdom 183Germany 81Sweden 79France 70

EUR (m)

USA 75,838Netherlands 40,429Spain 11,198United Kingdom 7,242France 7,062

TMT top bidders by volume I HY 2021

TMT top bidders by value I HY 2021Lots of liquidity A third significant factor in TMT’s resurgent M&A activity has been the sheer weight of money competing for deals in the sector. Corporate acquirers focused on consolidation, scale, or simply the desire to acquire new intellectual property have had to compete with PE firms showing huge appetite for the sector. Indeed, PE buyouts in TMT in the first half of 2021 almost doubled, to €40.5bn from €20.5bn in the same period a year ago. Exits also increased, with PE firm disposals increasing 58% to 215 transactions.

Further competition for the best assets has come from the SPACs launched in such large numbers over the past 18 months, particularly in the US. SPAC mergers are well suited to fast-growing early-stage companies—unsurprisingly they have been active in targeting tech start-ups.

The biggest first-half deals in the EMEA TMT sector reflect these themes. The biggest deal of all was the €38.1bn share swap between South African conglomerate Naspers and its Dutch subsidiary Prosus. Naspers has a significant holding in Chinese technology giant Tencent, which has soared in value over the past year to such an extent that the South African firm accounted for 25% of the value of the Johannesburg Stock Exchange prior to the Prosus deal.

In second place, Thoma Bravo Advantage, the US SPAC backed by the PE firm Thoma Bravo, paid €8.4bn for the Israeli software firm ironSource, which helps mobile content creators develop apps. The third-largest deal also involved a SPAC, with FinTech Acquisition Corp merging with the fintech business eToro in a deal worth €8.2bn.


42

American appetite Elevated interest in EMEA TMT businesses amongst US SPACs—three of the top ten deals in the first half were of this nature—was part of a broader American focus on the sector. US acquirers deployed €75.8bn worth of capital in EMEA TMT M&A during the first six months of the year, snapping up no fewer than 255 opportunities. No other country—including any EMEA nation—came close to hosting such significant bidder activity.

One explanation for this US interest in the region lies in the valuation differential—the reality that EMEA TMT businesses trade on lower multiples than their North American counterparts, whether public or private. But there is also growing recognition in the US of the maturation of the EMEA technology sector: the first quarter of the year alone saw 27 technology companies in the region become unicorns—that is, achieve valuations of US$1bn or more as a private company.

Looking forward, TMT deal activity remains in an acceleration phase. Deal volumes in the first half of 2021 were 17% higher than in the second half of last year. And with capital for deals still plentiful, corporates still desperate for transformative deals to reposition themselves for the post-pandemic world, and PE firms and SPACs providing stiff competition for the best assets, TMT sector M&A looks likely to remain breathless.

Announceddate



12-May-21 Prosus N.V. Naspers Limited (45.4% Stake) South Africa

38,112

21-Mar-21 Thoma Bravo Advantage

ironSource Ltd. Israel CVC Capital Partners Limited; Viola Group; CBC Capital; Redline Capital Management S.A.; Disruptive; Saban Ventures

8,403

16-Mar-21 FinTech Acquisition Corp. V

eToro Group Ltd. United Kingdom

8,194

13-Jan-21 American Tower Corporation

Telxius Telecom S.A. (telecommunications towers division in Spain, Brazil, Peru, Chile, and Argentina)

Germany Telxius Telecom S.A. 7,700

29-Mar-21 Ajax I Cazoo Limited United Kingdom

Compagnie Nationale a Portefeuille S.A; BlackRock, Inc.; L Catterton Management Limited; General Catalyst Partners; Draper Esprit Plc; Sapphire Ventures, LLC; Novator Partners LLP; Octopus Ventures Limited; Eight Roads Ventures; Entree Capital; Mubadala Capital; dmg ventures; D1 Capital Partners L.P.; Stride.VC; Delin Ventures

5,932

03-Feb-21 Cellnex Telecom, S.A. Hivory S.A.S. France KKR & Co., Inc.; Altice France S.A. 5,200

11-Feb-21 Nexi S.p.A. SIA S.p.A. Italy Mediolanum SpA; Deutsche Bank S.p.A.; CDP Equity S.p.A.; FSIA Investimenti

4,917

08-Feb-21 Renesas Electronics Corporation

Dialog Semiconductor Plc United Kingdom

4,886

29-Mar-21 Masmovil Ibercom S.A. Euskaltel, S.A. Spain 3,460

03-Jun-21 Alkuri Global Acquisition Corp.

Babylon Healthcare Services Limited United Kingdom

Canada Pension Plan Investment Board

3,183

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TMT top 10 announced deals, HY 2021


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1 4 Allen & Overy 58,366 38

2 - Cravath, Swaine & Moore 44,044 4

3 212 Webber Wentzel 38,211 4



6 72 Meitar | Law Offices 21,326 22


8 11 White & Case 18,370 44

9 3 Davis Polk & Wardwell 17,910 8

10 49 Skadden Arps Slate Meagher & Flom 14,052 15


1 1 DLA Piper 12,607 66


3 5 White & Case 18,370 44


5 8 Allen & Overy 58,366 38

6 2 CMS 2,010 35






1 4 PwC 8,163 43


3 3 Deloitte 678 33

4 1 KPMG 5,453 31

5 2 EY 2,962 28


7 15 JPMorgan 45,033 25


9 56 Citi 32,595 16

10 31 Jefferies 16,081 14




3 1 JPMorgan 45,033 25

4 5 Citi 32,595 16

5 12 Lazard 31,275 12



8 51 Jefferies 16,081 14

9 7 BNP Paribas 15,484 8

10 21 Nomura Holdings 12,024 4

TMT league tables

The advisor league tables by value and volume have been run from 01/01/2021 to 30/06/2021 and exclude lapsed and withdrawn deals. The tables are pan-European and cover the TMT sector. Source: Mergermarket

About this reportProduced in partnership with Mergermarket, an Acuris companyEditors (Acuris Studios): Julian Frazer, Yining Su

For a full version of the Mergermarket M&A deal database inclusion and league table criteria, go to: www.mergermarket.com/pdf/deal_criteria.pdf

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Deal Drivers: EMEA HY 2021

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