Mergers & acquisitions in the European industrials & chemicals (I&C) sector have hit a six-year low, as CEOs and financial sponsors took a more careful approach to acquisitions in the first half of 2019.
Although the high-liquidity and cheap-credit environment that has boosted deal activity in the last few years remains, I&C could see more subdued months going forward if trade wars and sector-related issues continue to create uncertainty in the second half of the year, according to a recent report by Mergermarket, the leading provider of M&A data and intelligence.
I&C deals amounted to €38.67bn in the first half of the year, around half of the value registered in the first half of last year, according to Mergermarket.
Additionally, no €10bn-plus deals were booked during the first six months of the year, and only two transactions made it to Europe’s top 10 chart.
These were the €6.44bn-acquisition of auto supplier Wabco by ZF Friedrichshafen and the €5.21bn-takeover of packaging group RPC by Berry Global.
Deal count was also down by 24.5% to 662 transactions compared to the first half of last year, making it the least busy half-year since first half of 2013.
Despite the decline, the sector accounted for the largest share of deal count, with 19.8% of the total, and kept its slice of deal value at close to 11%.
In the regional breakdown, the German-speaking countries increased their dominance in value, with 37% of the total share, according to the report.
The UK & Ireland captured 16.2% of I&C deals for the six months to end of June.
This, said the report showed that interest in British engineering capabilities remained strong, despite Brexit. The region’s share of deal value grew to 21.7%, largely as a result of RPC’s sale, which saw Berry and Apollo fighting for the asset at the beginning of the year
The chemicals space, which has been the destination for megadeals in the past, saw its participation shrink, according to Mergermarket.
The segment registered €6.66bn value and 54 transactions, down more than 62% from €17.73bn registered last year.
Private equity firms’ appetite for I&C remained strong, with sponsors taking part either as a buyer or seller in 15 of the 20 largest deals in the sector.