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Will European-Only, Cross-Border M&A Rebound After French Election?

With the conclusion of the 2017 French Presidential campaign and the election of pro-business candidate Emmanuel Marcon as President, political and market commentators opined that the results were a positive sign for continuity of the European Union. From the perspective of merger and acquisition activity regarding cross-border transactions involving only European targets and buyers, the recent results may signal a bottom in a present-day downturn for such deals.

Previously, an indication of the anxiety concerning cross border European M&A deal activity was evident by data from S&P Global Market Intelligence, which showed that the past month saw just 276 announced deals involving cross-border M&A transactions where both the buyer and target were located in Europe. That was the slowest monthly pace for such deals since the aftermath of last year’s Brexit referendum vote, when 240 announced European-only cross-border M&A deals occurred in August 2016. 

Similarly, recent monthly disclosed deal proceeds for European cross-border M&A, where both target and buyers were located in Europe, sank to $13.2 billion. This was the lowest dollar amount since last October, when $12.7 billion in such transactions were announced.

European Cross Border M&A Target and Buyer in Europe billionsSource: S&P Global Market Intelligence

Year-to-date, the largest European cross-border M&A dea involving European-only parties was that of French lens designer Essilor International SA (ENXTPA:EI) entering into an agreement to acquire a 61.9% stake in Italy’s Luxottica Group S.p.A. from Delfin S.a.r.l. for €14.1 billion on January 15, 2017. As for top sectors this year, consumer discretionary ranks first with nearly $22.9 billon, followed by financials with $18.6 billion.

The most active sectors based on number of transactions were industrials with 253, and consumer discretionary with 225 transactions. With announced European M&A deal value at $295 billion year-to-date, up 21% year-over-year, there is some optimism for European deal activity. We'll wait to see whether this recent gain translates into a pickup in European deal making between European partners.

European Cross Border M&A Target and Buyer in Europe DealsSource: S&P Global Market Intelligence

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