Multiple: European buyouts watch Q3 2012
European buyouts watch Q3 2012
The European buyout market continues to be hit by ongoing macro-economic concerns. Across the board, deal volumes and values are down on the same period last year.
During the third quarter, both the number of deals at 124 and total value at €13b are down 30% on the same quarter of 2011. However, the value for Q3 crept up from the previous quarter in 2012. At €10.6b, this was the lowest quarterly figure since Q4 2009.
"Despite fewer deals overall this year, the value of buyouts in Q3 has surpassed that of the previous quarter but it is unlikely 2012 will reach the deal levels achieved in 2011." - Sachin Date, EMEIA Private Equity Leader at Ernst & Young, UK
So far this year, there have been 418 buyouts recorded by the Centre for Management Buyout Research (CMBOR), with a total value of €38b. That is over €10b less year-on-year. Any hope of surpassing 2011 levels will require a significant return of deal activity during the remainder of this year.
Deal activity at a glance:
- Balance shifts towards larger deals: There have been 10 buyouts, each totaling €1b or more in value so far this year. This puts 2012 on course to match or outstrip the 12 deals recorded for 2011 and 11 in 2010.
The total value of deals in this size bracket (€14.3b) accounts for 38% of the overall market — the highest proportion since 2007. In contrast, the lower and upper-mid-market have seen the number of buyouts progressively slow down during 2012.
- UK deals dominate the quarter by value: The UK accounted for more than a third of all European buyouts in Q3 with a combined value of €4.2b. This is in contrast to 2011, when the UK accounted for only 23% of the market.
- France substantially underperforms the market: Despite a strong year in 2011, France has not performed well so far this year. Deals here have totaled just €4.7b in value — just 32% of the value reached in the whole of 2011 (€14.9b).
As a proportion of European deal flow in 2012 so far, French deals represent only 12% of the overall value (€4.7b of €37.1b) and 20% of the overall volume (83 of 418).
- Retail and TMT sectors (technology, media and telecommunications) outperform subdued market: Their share of the buyout market by value increased to 12% and 17%, respectively, (from 11% and 10%).
The Manufacturing sector and Business and Support Services, which excelled in 2011, have seen market share diminish to 13% and 15%, respectively, (from 22% and 18%).
- Exit market picked up in the third quarter: With a combined value of €19.2b compared to only €9.2b in Q2, this comes after a particularly strong exit market in 2011, when a total value of €78.9b was recorded (2012: €41.2b to date).
Pipeline prospects: what the future holds
There are a number of deals that, if completed, will help boost the market during the fourth quarter. Teachers, the Canadian pension fund, is set to acquire outdoor clothing company Helly Hansen from Altor.
German drug maker Aenova is set to be bought by BC Partners from Bridgepoint. The exit of Orange Austria, which will see Hutchinson Whampoa take over the company from majority owner Mid Europa Partners, continues to be held up by regulatory issues.
Spain’s Telefonica (TEF) has reached an agreement with investment firm Bain Capital to sell Atento Call Centre for €1b. If this deal completes within 2012, it will continue to drive the volume of deals over €1b.
Note: Year 2012 to end Q3 only
Source: CMBOR; Equistone Partners Europe: Ernst & Young.