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Pharmaceutical industry and private equity as driving forces on the Swiss M&A market

Driving forces on the Swiss M&A market

M&A activity on the Swiss market has weakened somewhat in the first half of the year compared with the previous year. While the number of transactions dropped slightly, the transaction volume actually increased by 5.3%. The first half of the M&A year featured major deals in the pharmaceutical industry and activity on the part of private equity investors remained brisk.

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There were 149 M&A deals with Swiss involvement during the first half of 2019 worth a total of USD 82.1 billion. This means that there were fewer but larger transactions compared to the previous year (2018: 168 deals worth a total of USD 78 billion). The year 2019 can be expected to bring a growing number of multi-billion deals.

The Sunrise telecommunications company acquired UPC Switzerland, a Swiss cable operator, for USD 6.3 billion from Liberty Global in February 2019 to create new convergent products and services for both residential and business customers (see table Top 10 M&A transactions 2019). The transaction was also aimed at strengthening the position of Sunrise as the country’s second-place provider of mobile, TV, broadband Internet and landline telephone services. This merger will also give Sunrise a strategic edge in light of the nationwide rollout of the 5G network.

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Top 10 M&A transactions 2019

Top 10 M&A transactions 2019

Pharmaceutical industry focuses on rare diseases

The first half of 2019 brought four transactions in the pharmaceutical industry with volumes in excess of USD 3 billion each, with one standing out in particular: as part of its refocusing strategy, Novartis decided to spin off its Alcon division as an independent, publicly traded company. The transaction volume of this spin-off amounted to USD 26.9 billion and it was the largest deal with Swiss involvement during the first half of the year.

Roche Holding AG acquired US biotech company Spark Therapeutics for USD 4.3 billion to expand its gene therapy expertise. This acquisition simultaneously underscores pharmaceutical companies’ growing interest in gene therapies for rare diseases. Novartis had already acquired AveXis, a company also dedicated to gene therapies, in 2018. All in all, the first half of the year featured M&A activities with Swiss involvement worth a total of around USD 47.1 billion in the pharmaceutical industry. 

Private equity investors remain extremely active

Activity among private equity investors has continued to be brisk this year as well, with the Swiss M&A market reporting relevant private equity transactions again during the first six months. EQT and a subsidiary of the Abu Dhabi Investment Authority (ADIA) have formed a consortium together with PSP Investments (a wholly owned subsidiary of the Public Sector Pension Investment Board), Santo Holding and other institutional investors. EQT paid USD 10.1 billion for its acquisition of Nestlé Skin Health, Nestlé’s skin care division, with the goal of ushering in a new phase of growth and innovation.

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