Research from PricewaterhouseCoopers (PwC) has found a decrease in European financial services merger and acquisition (M&A) activity during the first quarter of 2012. M&A activity fell by 40% to €9.7bn in Q112 from €16.5bn in Q411. This is also 1% down on the comparable figure of €9.8bn recorded in Q111.
The figures for this quarter are distorted by the very large deal by Royal Bank of Scotland (RBS), which sold RBS Aviation Capital to Sumitomo Mitsui for €5.8bn. Without this deal, the quarterly deals figure would have been only €3.9bn – one of the lowest quarterly deal figures of the last nine years. There were only four deals valued between €250m and €1bn, compared with eight in Q411 and six in Q111.
The decline in small to mid-market financial services M&A activity continues, which is indicative of ongoing market turmoil, the uncertain economic climate and limited availability of debt finance.
Nick Page, transaction services partner at PwC said: “Signals from the M&A market continue to be mixed. European financial services deal values in the first quarter of 2012 were down on the final quarter of 2011, though it was unlikely that the flurry of activity seen at the end of 2011 would be sustained. What was perhaps most exceptional was the low level of banking deals in Q112. The total value of banking transactions was €1.9bn, much of which came from CaixaBank’s merger with local counterpart Banca Civica, valued at €977m. This compares with an average quarterly deal value of more than €6bn in the banking sector over the past two years.”
In the UK, key findings include:
- UK deal volumes were down 9% in Q112 compared with Q111.
- UK deal volumes were down 13% in Q112 compared with Q411.
- UK banking deal volumes were down 63% in Q112 compared with the same quarter of 2011 and down 67% in Q112 compared with the previous quarter.
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