A strong first quarter for the European M&A market continues to showcase the talent in the region, despite the impact of the eurozone sovereign debt crisis over the past two years. The development of specialised start-up incubators and shifting policies by states in tech hubs such as Berlin, Paris and London have helped drive strong segments in gaming, mobile apps, cleantech and big data. The region has recorded 54 exits in the first quarter of 2014, 50 of which were acquisitions, three mergers and one IPO. We at Acuity have a long history of tracking European markets and working with clients across the region, having partnered with Canback Dangel, a world leader in management consulting, back in 2009 to develop European predictive analytics projects.
According to tech.eu, of the 54 European exits around two-thirds remain undisclosed, although the vast majority of deals are believed to be fairly small sized. The three biggest deals emanating from the region include the recent King IPO, which raised $500 million to value the UK firm at around $7.1 billion; the acquisition of the largest cable TV provider in the Netherlands, Ziggo, by international media company Liberty Global for $13.7 billion; and telecom provider Vodafone purchasing Spain’s cable operator Ono for $10 billion.
The start-up segment was also well represented in smaller but equally important deals. The acquisition of mobile messaging service Viber by Japanese retailing giant Rakuten for €661 million kicked off the purchasing spree of messengers across the world, while Google’s purchase of DeepMind for €360 million also received much publicity. Forays into the region by Silicon Valley also included the purchase of NaturalMotion by San-Francisco based Zynga for €380 million and the purchase of Cyvera by Palo Alto Networks for €144 million. Google was especially active, buying three companies, adding Spider.io and SlickLogin to its DeepMind acquisition. Twitter also bought two firms, France’s Mesagraph and UK’s SecondSync. Some 40.0% of all exits were to US-based firms. Europe-based buyers were primarily from the major economies – the UK, France and Germany.
In what is representative of the growing influence of the Berlin start-up scene, Germany saw the most exits, with nine, followed by Israel (eight), France (seven) and the UK (six). However, Europe has a healthy spread of start-ups, with previously unheralded locations such as Cyprus, Romania and Poland all delivering tech exits in Q1 2014. Economies are beginning to view start-ups and technical expertise as a viable way of combatting recessionary tendencies and stimulating digital markets. January was the quietest month of the quarter, with only 14 deals, while February saw the most with 21. The second quarter is already looking more active in terms of total exits, especially in the size of transactions, and corporate financiers and sell businesses are set to enjoy strong activity as the European economy gradually moves out of a financial slowdown.
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