ZEW-ZEPHYR M&A-Index - Increasing Dynamics on German M&A Market

An increasing number of concluded mergers and acquisitions (M&A) can be expected until the end of 2012 in Germany. This is the result of a forecast by the Centre for European Economic Research (ZEW) in Mannheim, Germany. ZEW calculates the M&A-Index for Germany (further information at the bottom of the press release) on the basis of Bureau van Dijk’s database, and forecasts its further course for the next 12 months.

While the euro crisis has left its marks within determined sectors, companies of other economic sectors are already registering sales records. Additionally, the number of rumours and announcements of forthcoming M&A deals has been on a high level since a few months. This is a signal for possibly increasing dynamics of M&A activities in 2012. The current forecast, which portrays the development of the M&A Index Germany from January to December 2012, shows a higher M&A intensity in Germany until the end of 2012.

At the moment, the M&A-Index for Germany is at nearly 60 points, ranging below its initial level of 100 points in 2000. During the previous months the index has gone through ups and downs. One of the reasons for this development was that the rapid decline of the German stock index (DAX) in August 2011, which was driven by fears of recession and the euro crisis. But the average development of the M&A-Index for Germany was only scarcely affected. The index’ moving average has thus levelled off at around 60 points since December 2011. Deals that were planned and to some extent successfully concluded during the previous year have been a positive stimulus. Even though the merger plan of Deutsche Börse failed, there have been positive news, for example Volkswagen’s permit to acquire MAN.

Another important decision is still pending: If competition authorities approve the deal, a new global market leader will come into existence when ThyssenKrupp sell high-quality steel-producer Inoxum GmbH to Finnish Enterprise Outokumpu. 

The Bundeskartellamt (German Federal Antitrust Agency) has also been occupied with several deals. The Bundeskartellamt, e.g. imposed obligations on the acquisition of Kabel-BW by Liberty Global, who provide clients in Hesse and North-Rhine Westphalia with TV connections. The acquisition of E-Plus by mobile communication provider Telefonica O2 is likely to occupy competition authorities if the market rumours turn out to be true.  

For further information please contact

Dr. Vigen Nikogosian, E-mail nikogosian@zew.de

The ZEW-ZEPHYR M&A-Index

The ZEW-ZEPHYR M&A-Index was developed specifically for Germany and has been tracking the development of mergers and acquisitions since 2000, based on the Zephyr database by Bureau van Dijk (BvD). The ZEW-ZEPHYR M&A-Index for Germany is calculated using the number of M&A transactions in Germany, only factoring in mergers and acquisitions of German firms. The origin country of buyers or partner does not play a role in the calculation. This means that both German and foreign buyers, but only target firms located in Germany are taken into account.

In particular, macroeconomic conditions like the economic development or the development of financial markets determine M&A activities. Based on an empirical study, the forecast of M&A activities in Germany is calculated by means of the OECD composite leading indicator (CLI) for Germany, the long-term level of interest rates, the development of DAX and the number of rumours of future mergers.