Spain’s M&A Heyday

Mergers and acquisitions of companies have exploded in Spain growing more than 84 per cent in the first half of this year compared to the same period of last year.

Although the number of transactions is similar to what they were a year ago – 553 compared to 586 – the value of them is more than 45,000 million euros.

The industrial sector is a stand out in this first semester having received the largest volume of investment at 21,436 million euros, an increase of 436 per cent on the same period last year.

Similarly, the volume of investment in Spain by foreign investors has increased almost 400 per cent compared to the first half of 2016 and accounts for more than 65 per cent of the total investment in Spain. Parallel to this, foreign operations in Spain have increased by 11 per cent.

This increase has been enjoyed across Europe with the continent as a whole having registered an increase of 33 per cent in relation to the same period of 2016.

WHY NOW?

Jorge Riopérez is the partner in charge of finance for KPMG in Spain and a member of the global M&A management committee. Speaking about one of the main reasons for this massive rise, he said that with Spain spending much of 2016 without a government, many operations were paralyzed but these have now resurfaced resulting in this fourfold increase in foreign investment.

However Riopérez added that there had been a great variety of sources of investment, adding, ‘It is a rare process in which a Chinese company or investor does not participate.’ The operations mainly involved in this new growth are in the sectors of industry, consumption and health and personal care.

Speaking on the issue, Jonathan Klonowski EMEA Research Editor at Mergermarket said, ‘Strong cross-border figures clearly show that dealmakers are confident investing in Spain and this year the country could come close to record figures last seen pre-crisis.’

And Jaime Artola, Head of M&A Europe at BBVA said, ‘The past 24 months have been marked by a low interest rate environment, which has driven valuations upward and attracted investors looking for yield. This has boosted the activity of infrastructure sectors, which we expect to continue [in a strong way], due to the large amount of dry powder available.’

POWER SURGE

A report from the Europe Finance Society said that Spain’s GDP was expected to keep growing for at least the next four years at a slower yet steady pace. It predicted that domestic demand would lead the recovery.

In fact, this surge has been coming and predicted for some time with Juan Orbea, head of M&A for Santander recently saying ‘There are a lot of operations that were stopped and [are now] going to come out or will be closed in 2017.’

Meanwhile, Baker McKenzie, the second biggest lawfirm in the world and specializing in commercial law, predicts M&A activity in Spain to grow by 41 per cent until 2018. This belief is mainly due to the competitive advantage Spain gained from its labor reform in 2016 which has stimulated growth in employment. They also expect IPO activity to grow significantly during the next three years.

For more information, please contact corporate law firm Argali Abogados.

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