From telecommunications to industry, the desire for extraordinary operations has returned. In a few days the second French telephone company Sfr was sold to the group of the cable operator Numericable, the cement giants Lafarge-Holcim announced their merger at par creating the largest world group in the sector, the ships of the German Hapag- Lloyd and Chilean Csav have joined forces to create the world's fourth largest sea freight operator with a fleet of 200 vessels and 1 million container units. Mega deals signaling the resumption of major merger & acquisition maneuvers. And that pushed the value of global M&A in the first quarter of 2014 up by 54% compared to the same period of 2013 according to data from Thomson Reuters (which also included offers on Time Warner Cable and Sfr). In fact, almost half of M&A comes from transactions exceeding 5 billion dollars. At the same time the number of deals, according to Thomson Reuters data, fell by 14%, at the slowest pace since 2003. Which means that at the moment M&A is driven by large deals. "There have been several deals that have led to radical changes and the companies have made bold and aggressive moves," JpMorgan global M&A head Hernan Cristerna explained to Reuters, speaking of a return of "animal spirits", intended in the Keynesian sense as that push, even unpredictable, of entrepreneurs to invest and do business (a mix of forces and motivations including personal intuition and optimism that push to invest even in areas where market analyzes would not encourage doing ).
MEGA DEAL BUT….
The recent recovery in M&A has been driven above all by the USA but, notes the Financial Times, “we have seen significant improvements in the flow of deals in certain sectors in Europe”. And so the big operations have returned to being seen in Europe as well. According to data collected by Bloomberg, Western European buyers announced 149 billion acquisitions in the first three months of the year, a 60% increase, better than North America and Asia. Overall, the leading sectors are telecommunications, media, technology companies: companies are looking to increase their scale to build high-speed networks, better negotiate with content providers and respond to changing habits of customers. For example, in February Comcast acquired Time Warner Cable for $45,2 billion, creating a broadband Internet, telephone and pay-TV giant with 30 million subscribers. A colossus whose scope is such as to trigger harsh reactions in competitors. In a note, the American group Charter asked the antitrust authority to block the operation because the new company would have "unprecedented gatekeeper power in many important markets" and an "expanded" Comcast would be "the schoolyard bully". Facebook has been awarded the popular instant messaging service Whatsapp for 19,4 billion dollars. Some time earlier, the Irish Actavis, the second largest generic drug maker in the world, took over the American Forest Laboratories for 24 billion dollars, the largest acquisition in its history which will give life to a 15 billion dollar giant of turnover. Also in the pharmaceutical sector, another important recent operation was recorded: the Indian group Sun Pharmaceutical Industries announced the acquisition of the ailing rival group Ranbaxy, becoming number one in India and number five in the world in the generic drugs sector.
Henrik Aslaksen, head of M&A at Deutsche Bank, told Reuters: "We have started to see slow but steady growth in large confidence-boosting deals. These deals have a big impact on the market, but they can distort the picture. reality of the situation. At the moment there is still no surge in M&A”. Especially if you compare it with the period before the crisis. Some traders point out that closing deals still remains difficult. Current favorable factors are undoubtedly the low cost of money, cash-rich companies, a relatively stable macroeconomic environment. And the deals were generally well received by the acquiring company's shareholders with shares trading higher following the announcement. But the full recovery of M&A activity to pre-crisis levels is being held back by high valuations in equity markets, which make it difficult for the offeror to pay a premium, and by regulatory risk.
Even Italy, albeit with smaller transactions, is entering the whirlwind shopping. Of course, for now it is confirmed as more prey than predator. Blackstone has bought 20% of Versace, the Haworth fund has acquired Poltrona Frau and the Irish Jazz Pharmaceuticals has bought the pharmaceutical company Gentium. Overall, Kpmg calculated that 2014 transactions were closed in the first quarter of 105, more than double the same period in 2013 for a value of 10,7 billion euros, three times that of last year. The decision by the People's Bank of China to raise more than 2% of the capital of Eni and Enel for an estimated value of 1,4 and 0,8 billion euros respectively made headlines. Chinese interest in Italy is growing (5,8 billion in value), as is that of Russia (5,7 billion) but the main investor in Italy has turned out to be France with 18,7 billion euro of transactions extraordinary. Among the new initiatives with a view to M&A, in Italy the Australian giant Computershare, led in our country by Luca Lombardo (ex Borsa Italiana), has just launched a web platform, Mergit, which allows accountants to bring together questions and offers on the subject of M&A and financing of their SME clients.
SECTORS ON THE MOVE
Most of the sectors the telecommunications are hot. In Europe, the sector has been under the spotlight for some time, waiting for the consolidation among operators to begin. And Numericable's move to Sfr has shaken up gaming. The French operator was sold for 17 billion euros by Vivendi to Altice, the Luxembourg company that owns the cable operator Numericable with which there would be significant synergies. This is an evaluation of approximately 7 times the enterprise value/ebitda ratio for 2014. Altice will hold 60% of the new group born from the merger between Numericable and Sfr while Vivendi will have 20% and the possibility of exiting the shareholding structure at a later time (the rest will be floating). Also in the telecommunications sector, Europe could soon witness the move by the Japanese telephone giant Softbank, owner of Sprint and among other things, one of the major shareholders of the e-commerce giant Alibaba. The group has announced that it is evaluating possible operations in Europe, waiting to understand whether the Sprint operation with the American T-Mobile will be able to collect the ok from the US Antitrust. Otherwise, the option would be to move to Europe and according to Forbes magazine Softbank is considering an agreement with Vodafone. For some, however, it would be a move too demanding on a financial level and the idea is being advanced that the best prey could instead be Deutsche Telekom. In this context, however, for some analysts it is not excluded that there may also be an interest in the Italian market. Recently, during the last shareholders' meeting, the CEO of Telecom Italia, Marco Patuano, said that Telecom Italia does not rule out acquisition or merger operations on the reference markets, even if at the moment nothing is under discussion.
In addition to pharmaceuticals/health-care and technology, another sector in turmoil is the consumer world. In January, Japan's Sumtory Holding, active in the spirits sector, announced the acquisition of the American Beam for 16 billion dollars to get its hands on brands such as Maker's Mark whiskey. The Italian Campari does not stop collecting new brands: it has just acquired the Italian Fratelli Averna, owner of the Averna and Braulio bitters, valuing it at 103,75 million euros, equal to a multiple of 9,2 times the 2013 pro-forma Ebitda ( 11,3 million). An operation that comes immediately after that of Canadian whiskey Forty Creek. In the sector, which still appears to be consolidating, analysts are now looking at Remy Cointreau which could end up in the crosshairs of Brown-Forman, the producer of Jack Daniel's whiskey. Its prey future could be boosted by problems with cognac sales in China due to the Chinese government's campaign against excessive alcohol use by its officials. The French group said that on a like-for-like basis, sales fell by 16% in the fourth quarter and now Rémy Cointreau expects a 35-40% drop in operating profit for the year. Exane analysts believe that among the possible scenarios there is the consolidation between Bacardi, Brown Forman and Remy Cointreau which, thanks to their perfect complementarity, would create the third largest player in the sector. Supermarkets are also on the move. In the United Kingdom, the Chinese Sanpower took over the majority of the House & Fraser department store chain for 480 million pounds: the largest Chinese foreign investment in the retail sector. In March, US supermarket chain Albertsons, owned by private equity firm Cerberus Capital, offered $9 billion to buy rival Safeway.
