With private equity activities reaching a record high and mounting pressure to innovate and transform, the 2017 M&A year in Switzerland was a lively one. While the number of transactions with Swiss involvement rose from 362 to 395 (+9%) over the previous year, the value of those deals declined slightly – from USD 119.1 billion in 2016 to USD 101.5 billion (-15%). Efforts to restructure business and operating models are expected to intensify across every industry in 2018 and usher in additional M&A activities.
Over the past year, a flurry of M&A activities could be seen among Swiss companies from every industry: Year on year, the total number of transactions with Swiss involvement rose by 9%, from 362 to 395 deals. The value of those transactions, on the other hand, was down slightly from USD 119.1 billion in 2016 to USD 101.5 billion, a 15% decline.
Remarkable transactions could be seen in the consumer goods, technology & media and pharmaceutical industries, in particular. Buoyed by favorable market conditions and financing terms, record-breaking inflows from funds resulted in the highest number of private equity-related M&A deals in Switzerland since 2007.
One deal that stood out in particular was the spin-off of the R&D division of Actelion, which then opened the doors for Actelion’s takeover by Johnson & Johnson. Worth just under USD 30 billion, this deal is the year’s largest transaction and even weighs in as one of Switzerland’s five largest M&A deals of all time.
A series of takeovers in the food industry is also noteworthy in that it demonstrates how value chains can be merged or integrated if the food industry, retailing and the healthcare sector converge. Nestlé’s M&A activities of the past year offer a prime example of this trend: The corporation acquired Blue Bottle Coffee, a California-based coffee house start-up; Sweet Earth, a manufacturer of plant-based foods; and Atrium Innovations, a vitamin maker, in 2017. These deals highlight how changed consumer preferences can lead to interesting M&A transactions.
The media industry, too, still finds itself in the midst of a dramatic transformation. Radical changes in consumer preferences are forcing the companies to reassess how and where they operate, how they define their core competencies and how digitalization can help strengthen their products and services. These changes prompted two media groups, NZZ and AZ, to launch a joint venture last year aimed at strengthening their regional publishing business. Tamedia also announced a public takeover bid for Goldbach, an integrated marketing company.
Efforts to restructure business and operating models can be expected to intensify across all industries in 2018 and lead to further strategic partnerships, joint ventures and acquisitions.
This transformation will by no means be limited to the large corporations however: “Multinational organizations might hit the headlines more often, but Switzerland has a large number of small and medium-sized enterprises that are helping to reshape their industries. And many of them are extremely hungry for growth and development,” says Patrik Kerler, Head of M&A at KPMG Switzerland, when summing up the situation. “We’re optimistic that Swiss companies won’t just help develop their own industries, rather actively contribute toward efforts to push this transformation ahead.”
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