Deal Drivers: EMEA HY 2022

Deal Drivers: EMEA HY 2022A spotlight on mergers andacquisitions trends in 2022 ContentsForeword: EMEA M&A remains resilient despite Ukrainian shadowOutlook: EMEA heat chartAll sectorsConsumerEnergy, mining & utilitiesFinancial servicesIndustrials & chemicalsPharma, medical & biotechReal estateTelecoms, media & technologyAbout this report0304051520253035404550 Foreword: EMEA M&A remains resilient despite Ukrainian shadowEurope, the Middle East, and Africa (EMEA) has turned in a strong dealmaking performance so far this year, despite the odds. Clearly the past seven months have been tainted by Russia’s invasion of Ukraine and by default this has disproportionately affected the region. In many ways, however, EMEA is seeing the same dynamics in its M&A activity as other regions.Growth is slowing. For example, in its Spring 2022 Economic Forecast, the European Commission predicted that “real GDP growth in both the EU and the euro area is now expected at 2.7% in 2022 and 2.3% in 2023, down from 4.0% and 2.8% respectively,” in the Winter 2022 interim forecast.Meanwhile, the Eurostoxx 50 followed other major stock market indices downwards through the beginning of the year, erasing virtually all of the gains made in 2021. However, even at the best of times, Europe is a slower growing economy than either North America or APAC, and the Ukraine war therefore is creating significant drag as major economies such as Germany and Italy rely heavily on Russian gas supplies, which have now been severely disrupted.3Inflation crunchInflation is spiking across the continent—in June, the euro area inflation rate stood at 8.6%, up from 2.2% a year ago, according to Eurostat—complicating matters is Europe’s unified monetary approach and divergent public budgets and deficits. The European Central Bank (ECB) is attempting to bring prices down while controlling yield spreads between fiscally disparate bloc members, which is proving challenging.The Middle East and Africa find themselves in a unique position in this context. The vast majority of OPEC members are either Middle Eastern or North African and, after years of struggling against the tide of a low oil price, are riding high on the strident rally that fossil fuels witnessed through 2021. This has renewed confidence among energy companies in particular.Undoubtedly, 2022 has been challenging and will continue to be so—inflation is biting and dampening economic demand, the related cost of living crisis is sweeping across the region, and there is no end in sight to the Ukraine conflict. However, in terms of M&A, EMEA is withstanding the headwinds impressively. 4Outlook: EMEA heat chartHotWarmCold1478780557062231451488177610344101273430857157197453575432724866649866322226272720545633034532514272536342727554271023178143578266361816242712638502274126161156162112476410114119339594431085232086852211537226511251612284312105793832483532832231695486063,392UK & IrelandDACHFranceItalyIberiaNordicsBeneluxCEE & SEETurkey, Middle East & AfricaTOTALNote: The Intelligence Heat Charts are based on ‘companies for sale’ tracked by Mergermarket in the respective regions between December 01, 2021 and June 30, 2022. Opportunities are captured according to the dominant geography and sector of the potential target company.The technology, media & telecommunications (TMT) and industrial & chemicals (I&C) sectors are expected to deliver the highest M&A volume over the remainder of 2022, continuing the trend established in the top half of the year.Based on Mergermarket’s analysis of ‘companies for sale’ stories, TMT should continue to be the busiest of all sectors, with no fewer than 817 reports of assets coming to market or being proactively circled by buyers, representing 24% of all deal stories.Turkey, Middle East & Africa including Israel and sub-Saharan Africa has no fewer than 148 TMT potential future deals. Israel, in particular, is punching well above its weight in the technology domain. The UK & Ireland and Central & Eastern Europe (CEE) lay claim to 147 and 145 TMT deal stories respectively, both being hotbeds for tech innovation, with CEE having emerged as a leading software development hub.The I&C pipeline is also well stocked, with 571 potential deals, according to Mergermarket intel. However, the market split for these is markedly different than for TMT. It is the DACH region (103) and Italy (101) that are expected to see the most industrial transactions, which speaks to these markets’ strength. Across all geographies in EMEA, I&C stories account for 16.8% of all forward-looking deal reports.Heat chart based on potential companies for saleTMTIndustrials & chemicalsConsumerBusiness servicesPharma, medical & biotechFinancial servicesEnergy, mining & utilitiesLeisureTransportationConstructionReal estateAgricultureDefenseTOTAL All sectors All sectors M&A activity, 2019-HY 20226Source: MergermarketIt should come as little surprise that deal numbers are down across EMEA compared to H1 2021. La