What is the current state of the market?
Mergers & Acquisitions (2nd edition)
During 2017, a continuing optimistic outlook for the Norwegian economy, resulting from improved oil and gas prices and weaker currency, in combination with a strong global M&A market and supportive fiscal and monetary policies, continued to drive the Norwegian deal activity. In number of transaction, the market was up 23% compared with 2016. During the same period, the reported deal value increased from €14,489m for FY2016 to €38,747m for FY2017, while the average reported deal sizes increased from €133m for FY2016 to €391m for FY2017. In fact, 2017, turned out to be the year with both the highest M&A volume and the overall highest reported deal values since 2006/2007.
Entering 2018, the Norwegian M&A market seems to continue increasing, at least for now. However, we will not be surprised if the Norwegian deal volumes retracting somewhat in 2018 after seeing record levels in 2017. This trend has, for example, lately been observed in the global markets, with Q3 2017 being the slowest quarter since 2013 in terms of deal count and values.
The market has to an extent slowed over the past few months, in particular in anticipation of the implementation of the MCL.
For the reasons noted in question 1 above, the due diligence requirements for acquisitions of shares in Myanmar companies by foreign investors are complicated where such investment would result in the conversion of a Myanmar company to a foreign company. Investors need to assess the implications of restrictions on foreign companies doing business in Myanmar such as under the TIPRL to their investment. An MIC permit or endorsement may be required for such investments.
In addition, Dica’s practice was to require companies whose classification changed following a share transfer (e.g. from a Myanmar company to a foreign company or vice versa) to apply to amend its registration number. Its previous practice was to not permit a Myanmar company to change its registration to become a foreign company, effectively prohibiting the acquisition of Myanmar companies by foreign investors. Dica’s practice however started to change in early 2017 and the change in classification of a company is now possible.
Share acquisitions are likely to become more common once the MCL comes into force.
Following a long period of economic recession and a number of financial stabilisation programmes, Greece’s business climate for M&As seems to be on the upraise. The main source for transactions is the Hellenic Reconstruction and Development Fund (HRADF), which is responsible for the divestiture of the public stake in several of the most prominent corporate organisations in Greece in a rigid privatisation programme involving the Hellenic Petroleum, the electricity incumbent PPC, the gas transmission operator DESFA, the natural gas supply corporation DEPA,the Hellenic Post corporation ELTA, the telecommunications company OTE and others.
The reported number of transactions concluded in the first half of 2017 has doubled comparing to the same period in 2016 (21 transactions in H1 2017 compared to 10 transactions in H1 2016). The total H1 2017 transaction value has also risen (1.21 US$b compared to 0.23 US$b in H1 2016). The great majority of such transactions (57%) was inbound.
According to the latest statistics from MergerMarket, German M&A is closing in on the record full year value of €94.9bn (672 deals) seen in 2005. At the time of writing, 2017 deals had reached €92.4bn across 602 deals. The surge in dealmaking was largely due to an increase in inbound activity which reached €25.9bn (90 deals) in Q3. This represents a 99.4% share of DACH’s quarterly value. In 2017, German inbound dealmaking exceeded all annual values, helped by Q2’s mega-merger between Praxair and Linde. Germany’s targeted YTD deal value also overtook that seen in France (623 deals, €76.9bn) for the first time since 2013, though France still saw the most deals.
2017 was a very strong M&A year with 24 billion euro of transactions involving a Belgian acquirer, seller or target.* Main transactions were BASF’s acquisition of Solvay’s Polyamide division, Sibelco’s purchase of Fairmount, Carlyle’s acquisition of ADB Safegate and Praesidiad, Bpost’s acquisition of Radial, Clayton, Dubilier & Rice’s 40% investment in Belron and Euronav’s end of the year acquisition of Gener8 Maritime (closing still pending). 2018 should be as active, with 6 announced IPO’s, including the sale of a portion of Belgian state-owned bank Belfius.
* According to the financial newspaper De Tijd and Dealogic
2.1 The M&A market in Vietnam is strong and vibrant, notwithstanding its relatively small size in comparison with more developed markets.
2.2 Numbers and overall value of completed M&A transactions in Vietnam have grown steadily during the last two decades (and in particular during 2016 and 2017), and are expected to continue to grow strongly during 2018 and 2019 and beyond.
2.3 Although Vietnam and participants in its M&A market were disappointed with the withdrawal of the United States from the Trans-Pacific Partnership (the TPP), the fact of the TPP not having come to fruition in its USA-inclusive form as hoped has done nothing to suppress the enthusiasm of the foreign investment community for M&A transactions in Vietnam.
2.4 The Vietnamese Government continues to achieve material progress in simplifying and streamlining administrative and regulatory procedures in Vietnam. These initiatives have made and are expected to continue to make material positive contributions to the strength and vibrancy of the Vietnam M&A market.
2.5 Vietnam-domiciled target companies continue to present excellent value propositions for the international investment community, in an economy which continues to grow consistently at rates above 6% and is clearly destined to become one of the world’s powerhouse economies as the 21st century unfolds.
The Swiss M&A market had a strong start into 2017 with the announcement of the acquisition of Actelion by Johnson & Johnson (deal value: USD 30 billion). In May 2017, Clariant and Huntsman announced another megadeal. However, after the announcement of the planned merger, shareholder opposition by White Tale was formed. During its campaign White Tale increased its participation in Clariant to over 20%. In October 2017 Clariant and Huntsman announced to abandon the merger. Compared to 2016, while deal value went down, the number of deals remained stable. Last year brought prominent campaigns by activists, including Clariant/WhiteTale, Nestlé/ThirdPoint, Credit Suisse/RBR and GAM/RBR. Given the good market conditions and favorable lending terms, the outlook for 2018 is positive.
As of the end of 2017, the M&A market seems to be recovering after the decline of the previous three years, which recovery is stimulated by an improvement in industrial production, comparative cheapness of assets and deferred demand for transactions.
Major M&A transactions include the following:
- An investment consortium comprising ‘Rosneft’, the ‘UCP fund’ and the Singapore trader ‘Trafigura’ acquired Indian ‘Essar Oil’ in August 2017. The share of the Russian party in that transaction is estimated at $ 9.5 billion.
- Acquisition of American service provider ‘Parexel’ made by investment fund ‘Pamplona Capital Management’ for $ 5 billion in September 2017. This was the largest service sector deal in the history of the Russian M&A market.
- Investment holding ‘LetterOne’ acquired the British retail network ‘Holland & Barrett’ for $ 2.3 billion in June 2017. This is not only the second-largest transaction in the first half of 2017, but also the largest deal in retail business since 2009.
Based on the information available at http://mergers.akm.ru, the total volume of transactions in January-November 2017 exceeded by 15.9% the result of the same period of 2016, reaching $ 39.2 billion (as opposed to $ 33.8 billion in 11 months of 2016). The number of transactions for January-November 2017 also increased in the annual comparison - by 6.5% to 410 transactions, compared to 385 in January-November 2016.
The market is going through a favorable period, with a reasonably high number of transactions (carried out both by strategic investors and private equity funds).
The stock market in Qatar has never been a very active market with only 45 listed companies. The last mergers of listed companies being the merger of Qatar Shipping and Qatar Navigation and of Barwa and QREIC took place in 2010. Recently in the government sector the merger of Qatargas and Ras Gas has taken place.