Strong 1H 2015 for European M&A

Driven by record-breaking M&A activity in the technology, media and telecoms (TMT), the European tech sector is booming. The subsiding of the eurozone debt crisis and greater optimism regarding the Greek economy has helped to stabilise investments in Europe. The growth of the regional M&A market is also being driven by a greater inflow of finances into Eastern European countries, which offer greater value for established players.

A total of 162 European technology companies secured exits for investors worth €47.95 billion, up from 140 companies and €37.53 billion in the first quarter, has said. This means that 2015 has already seen more money raised through exits than the whole of 2014, said, with €85.48bn compared to €80.14bn.

The number of exits rose by 76%, from 92 in the second quarter of 2014 to 192 in the same period this year, and the total value rose 206% from €15.67bn in Q2 2014 to €47.95bn in Q2 2015, said. The average size of exits has also risen, up 26.45% from €223.8 million in the whole of 2014 to €283 million in the first half of 2015, on exits where the value has been disclosed, the research said.

The top ten largest exits accounted for 78.69% of the total disclosed exits in Q2, said. The largest of these was O2’s sale to Hutchison Whampoa(€14.7bn) followed by Jazztel (€3.4bn) and Telecity Group (€3.4bn). Outside the telecoms sector, the largest deal was the merger of Yoox and Net-a-Porter, at €3.2bn, said.

It is important to note that 62.97% of deal sizes were undisclosed, said. However, this is in line with 2014, allowing comparison between the years. The US remains the biggest buyer of EU companies, but the percentage of US acquisitions dropped from 37% in 2014 in 24.67% in the first half of 2015.

Furthermore, the number of European TMT deals reached a new all-time record of 361 in July, surpassing the previous record set in July 2014. European deals also featured strongly in the list of top global deals by value.

TMT companies can be put off by the high valuations placed on smaller target businesses in mature European markets such as the UK, France and Germany and so are increasingly looking at propositions in other parts of the continent, notably in eastern Europe, for more cost-effective acquisitions. There are a growing number of emerging technology businesses in eastern Europe that are attracting interest from the larger companies in the market owing to the lower market valuations and salary costs and high levels of competency they offer.

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