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Europe’s model region is still enjoying a post-Covid boom, with its high-quality, high-value assets attracting both domestic and foreign investors.
The DACH region recovered more rapidly than most from the Covid-related global slump and its resurgence is continuing. Its well-run public healthcare systems and high levels of trust in government ameliorated the impact of the pandemic, especially in Germany.
Last year’s M&A was down compared with 2020, in both volume and value, but the end of the year saw an economic recovery continuing throughout 2021 and still going strong. The IMF’s last World Economic Outlook had German GDP declining by 4.6% in 2020 but expected to grow by 3.1% in 2021 and 4.6% in 2022.
The DACH M&A market saw more transactions than in all three preceding years, with an aggregate value 77% higher than the €129bn recorded in 2020 – the highest total on record.
Germany, as usual, took the lion’s share, accounting for 72.1% of regional M&A, though this was down slightly from 2020. Switzerland’s share was up, but at the expense of Austria.
Much of the high-level M&A activity in the region was due to external investment. Of the 10 largest deals announced, three involved US bidders for German and Swiss assets, and two were Swedish bidders for German assets.
The key sectors were industrials and chemicals (29%) and real estate (22.8%) plus pharma, medical and biotech, and technology.
The huge volume of transactions in industrials and chemicals was led by the €5.6bn bid for Atotech from the American manufacturer, MKS Instruments. Just a handful of megadeals accounted for the real estate share, with two of the deals among the top 10 for the region, including the largest – the Vonovia-Deutsche Wohnen merger.
Private equity buyouts reached their highest volume on record, though these were mostly during the first three quarters of the year, suggesting that the post-pandemic boom may be slowing somewhat.
Outlook
Bucking the global trend, the DACH region’s post-Covid resurgence looks set to continue. Dealmakers are still cautious about the possible impact of new Covid variants, but we expect a significant number of high-value transactions in the first half of 2022.
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