Germany: large-cap deals on the rise

Carmen Reichman
29 April 2013

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CVC’s €3.1bn buy-back of German metering business Ista this month has sparked speculation about a revival of Germany’s large-cap market.

Indeed, figures from unquote" data show large-cap buyouts have been on a steady rise in Germany since 2010. The region recorded only one buyout valued at more than €500m in 2010 but this figure rose to five in 2011 and to an even healthier seven last year.

Industry professionals told unquote" they expected the German Mittelstand to continue to be the best performing market segment in Germany in the near future, though they believed deal values were on the rise within the segment.

Germany has seen 21 transactions valued at more than €500m in the past five years, according to unquote" data, and these deals had a combined value of almost €24.1bn.

Most larger deals (16 out of 21) were transacted between institutional investors, and SBOs are expected to continue being the driving force behind dealflow in Germany over the coming years. Carve-outs of DAX-listed companies may see a revival too – in the past five years, however, they were the source of only three deals, as recorded by unquote" data. Nevertheless, in terms of aggregate value, companies sold by local parents came in strong at €6.12bn compared with €15.9bn for 16 SBOs over the same period.

The strongest performing sector was support services, which recorded five deals at a total value of €6.45bn. Retail proved attractive too, recording three deals worth €2.82bn, including the €650m secondary buyout of home shopping channel HSE24 by Providence Equity from Axa PE in 2012, the Apax-backed SBO of fashion retailer Takko in 2010, and the €920m buyout of Neckermann's by Sun European Partners in 2008 (the business however filed for insolvency in 2012).

The biggest deals in the country over the five-year period, discounting Ista's SBO, were gas pipeline and transportation services business Open Grid Europe – a mega-deal valued at €3.2bn when Macquarie Group, Abu Dhabi Investment Authority and others bought it from gas & power company E.ON in 2012 – and Springer Science & Business Media, a professional publisher that EQT bought alongside GIC from Candover and Cinven for €2.3bn in 2009.