France has swapped places with Germany behind the UK in the European buyout league tables for 2002, registering a more than 100 per cent increase in the value of transactions whilst German deals halved.
The Europe Buyout Review 2003 published by research group Initiative Europe shows that the level of buyout activity in France increased by over E6bn to E11.8bn, the result of a number of multi-billion Euro buyouts including the sale of electronics firm Legrand to the KKR-Wendel consortium and France Telecom’s E1.9bn sale of TDF’s broadcasting division to Charterhouse Development Capital, CDC IXIS Equity Capital and the financial group Caisse des Dépôts.
By contrast, Germany saw its value of buyout activity fall by E6bn to E5.6bn, the result of investor unease at changes to German tax laws and a drop in valuations which has seen Mittelstand investors less inclined to sell. Among the biggest deals in Germany was Bayer’s sale of Haarmann & Reimer to EQT Northern Europe Private Equity Funds in a transaction that will net the German chemicals and pharmaceuticals group E1.66bn.
Overall, total volume for European buyouts in 2002 fell by 22 per cent to E53bn. Belgium, Finland, the Netherlands, Norway and the UK recorded significant declines in the value of their buyout markets, although the UK remains the top location for buyout activity, with deals totaling E19.5bn completed during the year.
The average size of deals decreased to E171m in 2002, with only three E3bn-plus buyouts completed over the year compared to five in 2001. The volume of buyouts surged in the last quarter of the year to 98 deals. Q4 also recorded the highest buyout market value of 2002, accounting for an estimated 40 per cent of the total value for the whole year.
Buyouts from institutional vendors increased in prominence, accounting for just under 20 per cent of the total buyout market value in 2002, compared with seven per cent in 2001.
Dorothy Engmann editor of the Europe Buyout Review attributed the fall in activity to an increased level of caution among investors: “Corporate scandals, economic uncertainty and poorly performing stock markets have led to private equity players becoming even more cautious about the completion of deals and exits. Nevertheless, the surge in the volume and total value of buyout deals completed in the fourth quarter of 2002 may indicate an increasing optimism about the market by buyout players in Europe.”