The value of M&A in the European industrials & chemicals (I&C) sector fell 23.9% in 2019, as dealmakers looked to navigate the murky waters of a potential hard Brexit and alleviate fears of supply chain disruption caused by trade war concerns.
After several exuberant years in the European M&A markets; the party seems to be ending. Following a disappointing end to 2018, the worst half-yearly figure in five years, there’s some worry that dealmaking may continue to plummet.
France’s politicalvolte face– apparently at the heart of the collapse of theFiat Chrysler Automobiles[NYSE:FCAU] andGroupe Renault[EPR:RNO] tie-up – has added to the maelstrom of confusion for European M&A practitioners hoping to navigate waves of populism and economic nationalism.
News thatSiemens’[ETR:SIE] merger withAlstom [EPA:ALO] has been blocked on competition grounds further highlights the obstacles faced by those intent on creating “European champions” to compete with Chinese and US giants.
Germany is proud of its automotive industry; its small and medium-sized enterprises make up the backbone of Europe’s manufacturing landscape. From production, supply chain management and distribution, Germany’s ‘Mittelstand’ companies predominantly occupy the industrials sector.
This September marked the one-year anniversary when 12 major shareholders in US shale oil and gas producers met in Manhattan to discuss ways to turn fracking operations from cash burners into cash distributors. In the following months since that clandestine meeting, the very same shareholders, including Invesco Ltd., Macquarie Group and others, pressed executives to curtail capital expenditures and instead use that cash to reward investors with dividends and share buybacks.