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Mergers and acquisitions business is picking up

Thanks to the Viessmann sale, business with large mergers and acquisitions in Germany in the first half of the year is more than 30 percent higher than in the previous year. There are hardly any transactions within Germany.

The big mergers and acquisitions business in Germany is starting to pick up again. Not least because of the $13.2 billion takeover of the Hessian heating technology group Viessmann by US rival Carrier Global, the volume on the German M&A market after almost six months is $66 billion, 31 percent higher than a year ago from the “League Tables” of the financial data provider Refinitiv.

Domestic takeovers at lowest level since 2019

In April, the Viessmann family sold the dominant heating technology division of their company of the same name to Carrier Global for twelve billion euros. She had feared that she would be too small in an international comparison when she switched from gas and oil heating to heat pumps. The takeover had sparked a political discussion as to whether the federal government’s “heat transition” was overtaxing German manufacturers. The owners will receive most of the purchase price in cash, and they will receive Carrier shares for the remaining 2.4 billion euros.

The Viessmann case is trendy. The buyers of German companies come mainly from abroad. These are often financial investors who, thanks to their deep pockets, bought 303 German companies for a total of 14 billion dollars in the first half of the year (as of June 14) – more than at any time since records began in 1980.

German companies, on the other hand, are reluctant to make acquisitions this year because of the weakening economy. Over the course of the year, transactions within Germany were down by a third, their lowest level since 2019, and acquisitions abroad were even at a six-year low.

billion takeovers from Qualtrics and Simcorp

The second largest merger concerns the German software giant SAP. Around four years after the takeover, the group sold its US data analysis subsidiary Qualtrics again. The Walldorfers will receive $7.7 billion for their 71 percent stake from the financial investor Silver Lake and its partner, the Canadian pension fund CPPIB. In total, the new owners are putting up $11.6 billion to take Qualtrics public. SAP bought the US company in 2019 for eight billion dollars from company founder Ryan Smith and later took it public.

This is followed by the 3.9 billion euro takeover of the Danish financial software specialist Simcorp, with which Deutsche Börse intends to expand its business with services for asset managers. The offer to SimCorp shareholders is currently ongoing. The company, which is listed on the Copenhagen Stock Exchange, has been working with the Deutsche Börse subsidiary Qontigo for two years. The data and analysis specialist, Simcorp and the voting rights advisor ISS are to be bundled in a new segment.

In addition, there is the US pharmaceutical and medical technology group Baxter International, which is selling its biopharmaceutical division for $4.25 billion to a consortium led by financial investors Advent and Warburg Pincus. A large part of it, Baxter Oncology, is based in Halle in Westphalia, which is why the transaction is included in the German takeover rankings at almost three billion euros.

Main beneficiaries are US banks

The US investment bank JPMorgan benefited particularly from the transactions. Your bankers accompanied twelve takeovers and mergers with German participation with a volume of 31.5 billion dollars. Goldman Sachs, number one in the first quarter, followed in second place with six deals for $26.6 billion. Morgan Stanley ($17.8 billion), a US bank, also ranks third. Deutsche Bank ranks sixth in its home market with seven transactions valued at $6.2 billion.

In the meager business with equity issues and placements (ECM), i.e. IPOs, Morgan Stanley has defended its top position from the first half of 2022. Two transactions with a volume of 1.68 billion dollars were enough to put UniCredit and Barclays in second place by a wide margin. The competition hopes that IPOs will get going after the summer break.

Deutsche Bank is the undisputed leader in debt transactions with 53 issues totaling $15.8 billion. However, their market share fell slightly to 7.5 percent. JPMorgan claims second place with 37 issues over 11.4 billion dollars. Commerzbank is third with 48 bonds worth $10.9 billion.

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