Companies [across the Eurozone] remain cautious of any investment and are more risk-adverse. This means that greater attention is being paid to due diligence.
As the credit market remains volatile in the Eurozone, the proportion of all-cash financed deals rose by five percentage points q-on-q in Q2 2012.
It is currently at 76%, second only to Q4 2011 when 83% of the total announced deal value in the region by a public acquirer was all-cash financed.
Deals are taking longer to complete
The Eurozone “speed of completion” Tracker has shown a sharp fall this quarter, down 16% q-on-q. Companies remain cautious of any investment and are more risk adverse. This means that greater attention is being paid to due diligence.
This drop is also partly driven by the large transactions announced in this quarter which are inevitably more complex and difficult to complete. Currently, only 38% of all announced bids were completed in the quarter of their announcement, compared to 46% in Q1 2012.
Cross-border activity up in the Eurozone while domestic activity lags
The fall in M&A volume in the region was mainly driven by a fall in domestic activity. Cross-border activity between Eurozone member states increased significantly in Q2 2012, and is currently at 38% of all announced deals.
M&A Tracker — Q2 2012
UK, Germany and Italy resilient, but France continues to suffer
Deal volume in the UK (domestic and inflow) rose by 13% q-on-q. Total announced deal value rose by 22% q-on-q in Q2 2012 and is currently 32% higher than it was in Q1 2010.
Announced deal value involving Italian and German targets continued to rise, following the trend of the previous quarter, with increases of 65% and 88% respectively in Q2 2012.
The uptick in activity for the UK, Germany and Italy was in direct contrast to France, where deal volume fell by 9% q-on-q. There was a corresponding drop in total announced deal value of 11%.
Central Eastern Europe (CEE) and Commonwealth of Independent states (CIS) are the best value performers
The increase in M&A value activity in CEE and CIS was mainly driven by a few very large transactions, such as Molson Coors Brewing’s US$3.5b bid for StarBev (Czech Republic) and Renault-Nissan’s bid for AvtoVAZ (Russia), valued at US$2b.
Quarter-on-quarter change in M&A value per region
Source: The Ernst & Young M&A Tracker, compiled for Ernst & Young by MARC, the M&A Research Centre at Cass Business School.