Weak M&A Activity Involving German Companies Continues in 2019

The number of mergers and acquisitions (M&A) involving German firms has fallen slightly since the end of last year. This means that the weak M&A activity already observed in the fourth quarter of 2018 has continued to decline in 2019. M&A activity was particularly weak in November 2018, which saw the lowest monthly level for two years and the second-lowest volume in six years; only November 2016 had seen even fewer mergers and acquisitions. However, December 2018 and the beginning of 2019 were not much busier either and failed to compensate for the lacklustre autumn.

This trend is clearly reflected in the ZEW-ZEPHYR M&A Index, which tracks the monthly number of M&A deals completed in Germany. The index is compiled by the ZEW – Leibniz Centre for European Economic Research on the basis of the Zephyr database of Bureau van Dijk.

Although the twelve-month moving average had been edging up to 116 points until August 2018, it has been declining ever since, falling to as low as 109 points in January 2019.

By far the largest deal in the past six months – amounting to some 28 billion euros – was the acquisition of Abertis, a Spanish toll-road operator, by Germany’s Hochtief AG, which is headquartered in Essen. Hochtief in turn forms part of Atlantia, an Italian holding company in which the Benetton family is a major shareholder. The acquisition of SSN Group AG – headquartered in Zug, Switzerland – by Berlin-based Consul Real Estate AG, which aims to strengthen its position as Germany’s largest property developer, was a deal worth just over one billion euros, while the acquisition of CIT RAIL Holdings (Europe) by Hamburg-based VTG AG amounted to a transaction value of just under one billion euros. The deal increased this railcar leasing company’s fleet to 94,000 railcars worldwide.

“M&A activity in Germany has weakened slightly over the last few months. This is fully consistent with the general economic climate, although we are witnessing only a slightly weaker business activity rather than a sharp economic downturn,” says Dr. Niklas Dürr, a researcher in ZEW’s Research Department “Economics of Innovation and Industrial Dynamics” and project leader of the biannual M&A Report.