Highlights

Economic headwinds and increasing protectionism had a strong impact on the DACH region in H1 2019. For example, the European Commission’s efforts to block the Siemens / Alstom merger, and the resulting call for reforms to EU competition law and European industrial policy illustrate the intensifying protectionism in the region. This sentiment is even stronger on a global level, especially with regards to the continued interest from Chinese state-backed companies in German technology firms. As a response, Germany has tightened its foreign direct screening rules, that came into effect in late 2018, and has proposed to set up a fund to hinder foreign takeovers.

Despite these developments, mid-market M&A activity levels remained strong in the DACH region on the back of fierce competition among European PE investors for assets based in a predictable political environment. Combined with high levels of dry powder and a general sense of shortage of high-quality targets, valuations are likely to climb higher.

Additionally, the EU Shareholder Rights Directive and the reform of the German Corporate Governance Kodex has led to a rise in shareholder activism. As a result, the number of Public-to-Private transactions, spin-offs and corporate divestments is expected to contribute substantially to the dealmaking activity in the coming months.

The key transactions that took place during the period include:

Healthcare

  • Ardian acquired Sintetica, the Switzerland-based company engaged in research, manufacturing and marketing of sterile injectable solutions, for an undisclosed consideration

Industrial Products & Services

  • DPE Deutsche Private Equity acquired a majority stake in Massenberg, the Germany-based provider of restoration and renovation services of civil engineering structures, for an undisclosed consideration
  • Gimv acquired a majority stake in Smart Battery Solutions, the Germany-based developer and manufacturer of battery systems, for an undisclosed consideration
  • H.I.G Capital acquired European Polyurethane Systems Business, the German-based developer and producer of polymer and plastic materials, from Covestro for an undisclosed consideration
  • IK Investment Partners acquired LAP Laser Applikationen, the Germany-based company engaged in development of laser-based projection and measuring systems for medical and industrial applications, from capiton, for an estimated consideration of €180m

Services

  • AUCTUS Capital Partners acquired QuinScape, the German-based IT services provider and software development company, for an undisclosed consideration

TMT

  • Capvis Equity Partners acquired Xovis, the Switzerland-based manufacturer and developer of tracking sensors, measurement tools and analysis software, from EMERAM Capital Partners, for an undisclosed consideration