EMEA buyouts down in 2012

Despite a surge in overall M&A in the fourth quarter, a recent study found European private equity posted negative growth in activity for the whole of last year.

The Europe, Middle East and Africa region saw an upsurge in M&A activity at the end of last year, according to recent research by Mergermarket. Deals were up 5.4 percent in value and 88.9 percent in volume compared to Q4 2011. 

The quarterly volume of transactions was the highest observed since 2010, underpinned by improved confidence about the future of the Eurozone and receding odds of a US fiscal cliff, the study said. Deals late last year included the €1.6 billion buyout of German retailer Douglas Holding by Advent International, and the €1 billion acquisition of Telefonica’s customer relationship business by Bain Capital.

But the overall M&A trend failed to lift buyout full-year activity in positive territory.  The number of private equity deals sunk to 877 in 2012, compared to 1,105 in 2011 – a 21 percent decrease. Value also was down 10 percent on the year, from €70.7 billion to €78.6 billion. 

Exits did not fare much better: they dropped to 542 deals for the whole of 2012, down from 655 transactions in 2011. 

These findings echo recent studies covering buyout activity in the North American market. Despite a significant hike in Q4 2012 – for which it posted a 56 percent increase year-on-year – overall US deal volume fell by 13 percent in 2012. Total deal value also fell from $359 million to $313 million. 

The number of private equity deals sunk by 21 percent in 2012

Both markets, however, have shown signs of revival since then, with a number of large deals due to be completed in the coming months. 

Last week Warren Buffett’s Berkshire Hathaway and Brazilian firm 3G offered to pay $28 billion ($23 billion plus the assumption of debt) for food processing company H. J. Heinz. This trumped the $24 billion Dell buyout announced at the beginning of February by US firm Silver Lake and company founder Michael Dell. 

In Europe, the Financial Times reported Wednesday that a joint bid by UK firms CVC Capital Partners and BC Partners for Elior, a French catering group, could value the company at €3.5 billion. 

CVC and BC Partners declined to comment.

Elior would be a secondary purchase from Charterhouse Capital Partners, which took the company private in 2006, in what would represent the biggest buyout in continental Europe since the fall of Lehman Brothers. 

It also was reported earlier this month that a number of buyout firms, including a group led by Apax Partners and Kohlberg Kravis Roberts and another formed by The Blackstone Group and CVC, are preparing a possible £10 billion (€11.43 billion, $15.30 billion) bid for Everything Everywhere, the UK’s largest mobile operator.