Europe set for worst M&A doldrums since credit crunch

Bloomberg

European dealmaking is on course for its worst first quarter since the height of the credit crisis. Unless something dramatic happens by the end of the week, Europe’s on track to have the worst quarter for M&A since 2013, when unemployment and austerity plans were causing protests and countries were asking the European Union to bail out their banks. UBS Group AG’s Chief Executive Officer, Sergio Ermotti called this year “one of the worst first-quarter environments in recent history” at a conference last week.
Mergers and acquisitions on the continent are down 35 percent so far this year compared to the same period in 2018, according to data compiled by Bloomberg. Without Europe’s influence, deals globally would be up 9 percent — thanks to a boom in the Middle East and Africa and a jump in US dealmaking — but as it stands they’re down 5 percent.
“Heat is coming out of the M&A market,” said Andy Ryde, a partner and head of the corporate practice at Slaughter and May.
“After a pretty hot streak in 2018 and the year before, we have seen some signs of deal lethargy in the last three months.”
The problem, Ryde said, is wide-ranging, from fears about the ripple effects from Brexit, to broader worries about Europe’s economy, and trade war concerns in the US There’s also been a dearth of large deals. This is the first quarter since 2013 without a single announced deal valued above $10 billion in Europe, the data show.
The uncertainty about the economic outlook and a lack of confidence in securing support for deals is likely to continue for the rest of the year, said Alison Harding-Jones, head of M&A for Europe, the Middle East and Africa at Citigroup Inc.
This quarter’s doldrums follow a stellar period for deals, with M&A involving European firms topping $1 trillion in three of the last five years, according to the data.
“The macro environment and geopolitical events we’ve seen unfold over the last few months in Europe make large cross-border deals harder to pull off,” said Robin Rousseau, head of M&A for Deutsche Bank AG in Europe, the Middle East and Africa.