Germany on track to M&A success
In the first week of September, German companies announced M&A deals amounting to $72bn – a significant contribution to the country’s global share in M&A, which has now doubled.
So far in 2016, German organisations have been linked to 8.1 per cent of M&A deals across the world. This makes 2016 the most successful year for German M&A since 2002, and almost triples the country’s global M&A market share from this same time last year. Interestingly, where German deals have continued to grow year on year, deals across the rest of the world have fallen by 27 per cent. So, what are the Germans doing so well?
Certainly, economic factors have contributed. Interest rates have been incredibly low in Germany, and the country’s large corporate organisations have access to plenty of cheap financing. In particular, German businesses have completed a number of deals with Chinese companies, who also continue to have a stellar M&A year. Over the last few years German-Chinese relations have evolved dramatically, and since 2002 China has been Germany’s second largest export market outside of Europe and, at present, Germany is China’s largest European trading partner.
While German M&A continues its upward trajectory, the German government has, this month, put in place a bill that will amend the criteria that determines whether a transaction is subject to German merger control. The new bill will screen deals that are unlikely to result in anticompetitive effects, and therefore should not be subject to costly and time-consuming procedures. The changes will seek to implement the more effective regulation of deals, however experts suggest that they are unlikely to derail any future transactions.
Germany is set to have one of its most positive M&A years to date, and all factors, from its economy to its foreign relations, appear to be aligned to support its deal successes. In addition, the evolving attitude of German organisations is significantly contributing to the record deal announcements; it is speculated that Siemens may separate its healthcare activities from its main organisation, while the industrial group ThyssenKrupp is expected to completely split its steel-making division. This divide and conquer strategy is strengthening German businesses and presenting them as far more appealing prospects for M&A.
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