Tales of a three trillion euro market

The data was compiled in a recent report by Clifford Chance. As a result of Brexit and elections in Spain among other factors, overall activity in Europe was cut by 11 per cent in 2016. However, once a government had been formed in Spain, the M&A market recovered to the levels of the previous year. This also included many large announced operations that will close during the first half of 2017.

The leading sectors of the merger business by volume in Europe were telecommunications at just over three per cent and energy and industry, each taking up four per cent.

NO LULL IN CHINA’S SHOP

One of the main trends highlighted by the Clifford Chance report is Asian investors’ European ventures where over 70,000 million euros were invested. Across the world, Chinese investments soared to 195,233 million euros, an increase of 114 per cent on 2015. Of particular focus from this source was the industrial sector and telecommunications.

As previously reported here, Spain is an attractive market for Chinese investors with their 2015 activity increasing by 57 per cent on the previous year while at the same time they slowed down activity in other major European countries.

However, of significant Chinese operations in 2016, the Three Gorges Corporation, known on the Iberian Peninsula as a shareholder of EDP Renovables, purchased Germany’s WindMW. In the industrial sector China already has a great technological profile which includes the acquisition of German robot manufacturer Kuka by Midea for 4.5 billion euros.

All these operations are part of the Chinese government’s strategy to strengthen the manufacturing industry through the introduction of new technologies.

THE WORLD IS CHANGING

Joachim Fleury, head of Clifford Chance’s TMT sector worldwide, is very optimistic for this year saying he expects it to be ‘a great year for technology mergers, perhaps the best.’

He added, ‘The technological revolution is changing the barriers of innovation, regulation and corporate strategy. Opportunities are endless if you identify the benefits of using technology and if you design a structure to maximize profit. The commitment to innovation has already become a necessity for companies around the world who know that if they are not digitized, they will stay out of the competition.’

Looking at the worldwide situation, global head of corporate of Clifford Chance, Guy Norman, said, ‘The geo-political landscape is in flux and there is a sense that the uncertain outlook marks a significant global shift.’

He continued, ‘US tax and wider policy reforms, the forthcoming European elections and the possible re-set of key global trading relationships will make some businesses pause their M&A plans. Others will make their strategic moves while financing fundamentals remain strong and markets are in their favour.

‘Overall, we expect a reasonably healthy level of M&A in 2017 as creative deal-makers continue to pursue growth opportunities and technological advancement amid ongoing disruption.’

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

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