ZEW Financial Market Survey: Financial Experts Expect a Takeover Wave in Germany

Company takeovers are likely to increase considerably from 2002 onwards. This is the result of the monthly ZEW Financial Market Survey by the Centre for European Economic Research (ZEW), Mannheim. The survey includes about 280 financial experts from banks, insurances and industrial sectors, who give their expectations on the future development of acquisitions in Germany.

Almost 90 per cent of the surveyed experts expect the introduction of a tax-free disposal of company shareholdings in 2002 to increase acquisition activities. Experts from the financial sector are particularly optimistic in that regard. However, experts from the industrial sectors are more cautious in their expectations. About 72 per cent of them expect an increase in company takeovers.

According to the market analysts, particularly the financial service providers will benefit from this part of the tax reform, with 88 per cent of the experts believing banks and 87 per cent believing insurances to benefit from the reform. A major reason for this estimation may be the still highly diversified portfolio of banks and insurances regarding company shareholdings. An exemption from capital gains tax allows financial institutions to capitalise their hidden reserves and at the same time to restructure their portfolio.

The financial market experts were also asked to give their opinion on which sectors they believe will see a particularly large number of takeovers. With more than 43 per cent of experts expecting a significant increase in takeovers in the banking sector and almost 27 per cent expecting the same for the insurance sector the financial sector is yet again expected to see the largest increase. An increasing number of takeovers is also expected for the following sectors: information technology (23 per cent), mechanical engineering (20 per cent), telecommunications (18 per cent) and chemical/pharmaceutical industry (17 per cent).

Contact

Dr Jens Köke, E-mail: koeke@zew.de