- Following a record-breaking year in 2021: slight decline in mergers and acquisitions with Swiss involvement during first half of 2022, despite great momentum.
- Numerous transactions in the Technology and Industrial Markets sector as well as two mega deals with a volume in excess of USD 10 billion.
- Swiss companies are making substantially more acquisitions of businesses abroad than vice-versa.
Companies conducted 281 mergers and acquisitions with Swiss involvement during the first half of 2022 (first half of 2021: 293 transactions). Despite the slight decline, M&A activities in the first half of 2022 were at their third-highest level since these indicators were first tracked in 2004. More deals were only recorded in the two half-years of 2021. "Investor sentiment remains positive and neither the geopolitical situation nor global recession scenarios have managed to cloud it so far," says Timo Knak, Head of Deal Advisory and M&A at KPMG. One factor that stands out again during this half-year period is the enormous role played by private equity firms, which were involved in nearly one of every three deals.
May 2022: month of the big deals
At around USD 84 billion, the transaction volume during the first half of the year was substantially higher than the ten-year average (USD 57 billion). This is particularly attributable to two mega deals with a transaction volume of more than USD 10 billion.
At around USD 20.7 billion, the biggest deal was the merger between Firmenich, a Geneva-based producer of specialty chemicals, and the Dutch company Royal DSM. The second largest transaction was the takeover of Swedish tobacco manufacturer Swedish Match AB by Philip Morris International for around USD 17.4 billion.
The ten largest mergers and acquisitions accounted for nearly 80% of the entire transaction volume of the first half of the year. May 2022 also lived up to its reputation as a "wedding month": of the ten largest transactions with Swiss involvement, half took place in this month, including the two mega deals.
Greatest activity in the Technology and Industrial Markets sector, followed by Pharmaceuticals and Life Sciences
Industrial Markets and TMT (Technology Media and Telecommunications) were the most active sectors with 49 transactions each. Together, they accounted for a third of all mergers and acquisitions in the Swiss M&A market, with the transaction volume in the Industrial Markets sector amounting to around USD 14.3 billion and some USD 6.7 billion in the TMT sector.
Momentum in the Pharmaceuticals and Life Sciences sector was also at a high level with 34 transactions or 12% of all deals, yet a relatively low deal volume of around USD 3.6 billion. Less activity was seen in the Commodities and Power & Utilities sectors (12 transactions each) as well as the Chemical industry (seven transactions). Here, it should be mentioned that the latter reported the largest volume of all the sectors (total of USD 20.9 billion) due to the 20-billion-dollar deal between Firmenich and Royal DSM.
Shopping spree for Swiss companies
Swiss companies acquired nearly twice as many companies abroad in the first half of 2022 as vice-versa: specifically, Swiss companies made 129 acquisitions abroad (46% of all transactions) compared with foreign companies, which acquired 70 companies in Switzerland (25% of all transactions). Compared to the first half of 2021, the balances have shifted slightly in favor of the Swiss companies (first half of 2021: 43% or 29%, respectively).
Of the mergers and acquisitions, 48 were national transactions (Switzerland/Switzerland) that accounted for 17% of all deals. 12% of all transactions (34 deals) fell within the category of international transactions with Swiss sellers.
Outlook: 2022 can be expected to be an active M&A year
"I expect momentum to remain high in the months to come," forecasts Timo Knak. "Numerous deals are already being prepared, which is why we'll see many mergers and acquisitions in the second half of the year, as well. Inflation isn't currently expected to trigger a slowdown, at least not before the end of the year," says Knak.