M&A market experiencing a strong recovery
Category: Corporate law
Several billion-dollar deals were recently concluded in the United States, and there are at least seven large transactions currently in the pipeline in the Netherlands, together with a multitude of smaller deals.
This contrasts with the downturn experienced in the M&A market flowing from the economic effects of the corona crisis. The uncertainty throughout this period saw the withdrawal of parties from deals and the postponement of others. Litigation and disputes arising from this period are ongoing. The FD article refers to an ongoing arbitration case between the GrandVision and EssilorLuxottica and a dispute between the travel companies Corendon and Sunweb. Another prominent case heard in the Netherlands was that between Tennor Holding B.V. and McCourt Global Sports & Media LLC. Heard in the Netherlands Commercial Court, this case concerned Tennor’s withdrawal from a deal for a 50% stake in an equestrian show-jumping business in March.
Reasons for the recovery
The FD article partly attributes the recovery of the M&A market to the large amount of capital available, particularly in private-equity firms. Data supplier Preqin reports that investors have over EUR 259 billion available to invest in the European market. The total in the Netherlands alone is reported to be EUR 10 billion. For the European market, this is an increase of EUR 13 billion from last year, and an increase of EUR 124 billion from five years ago.
In addition to this, the FD states that investors are recognising the prospects of recovery and the consequences of the corona crisis have now become clearer, including which sectors have been the most impacted by the crisis. Sectors that are now seeing particular investment include technology, health care, and companies involved in energy transition. Other sectors, such as the car sector, are still struggling.
The FD reports that in the Netherlands, there are seven large deals currently in the pipeline, of which three are likely to be completed this year. These three deals include the sale of spread company Johma and energy price-fighter Nutsgroep, along with the sale of Hema. The FD states that, of the four other deals still in progress, the biggest is the sale of Philips’ household articles division, estimated at around $4 billion.
In the US, the FD reports a similar story. Cloud-based software company Salesforce recently announced that it is taking over Slack, a digital communications provider, for $27.7 billion, while data company S&P Global recently made a $44 billion bid for its competitor IHS Markit.
These recent deals show how the M&A market has adapted to the realities of the corona crisis and the greater confidence exhibited in the market by investors.
At Blenheim, we have extensive experience with the entire transaction process. We have assisted companies in navigating the particular difficulties that have arisen from the corona crisis.
For questions regarding this topic, or assistance with a pending or concluded transaction, please do not hesitate to contact Blenheim’s corporate team.