ZEW and Bureau van Dijk Electronic Publishing Present German M&A Balance - Sell out of German economy Not Confirmed

Since the year 2002 foreign investors have on average acquired about 200 German firms per year. That is, the number of foreign acquisitions in Germany exceeds the number of German acquisitions abroad by about 50 firms per year. This is the result of the M&A balance presented by the Centre for European Economic Research (ZEW) and Bureau van Dijk Electronic Publishing as part of the latest M&A Report.

German firms have thus in the past five years increasingly been the target of foreign investors. Significant however, besides the raw number of acquisitions, are also the transaction values which reflect the paid purchase prices. In this respect, at 71 billion euros German firms have since 2002 invested about 9 billion euros more for acquisitions abroad than foreign firms in Germany. A "sell out" of the German economy can therefore not be confirmed. Instead, the German M&A balance has to be assessed in more differentiated terms.

The asymmetry between the number of transactions and the transaction values indicates a structural difference with respect to the transaction activities of German and foreign firms. The latter concentrate primarily on medium-sized firms in Germany, such that acquisitions by British or US-American private equity companies targeting firms of Germany's traditional "Mittelstand" are frequently commented in the domestic press. In contrast, among German investors abroad oftentimes large corporations are represented, which capture much attention by large scale acquisitions. For example, the energy firm E.ON AG presently pursues a multi-billion euro acquisition of the Spanish firm Endesa, after having already acquired the British firm PowerGen in the year 2002 for several billion euros.

Additional topics of the October 2006 issue of the M&A Report include an analysis of the merger activities in the energy and telecommunications sector as well as an overview of the goals of private equity companies. Furthermore, the report contains a detailed analysis regarding the changes in the worldwide stock market landscape which are also characterised by numerous mergers and acquisitions.

Contact

Dr. Patrick Beschorner, E-mail: beschorner@zew.de