M&A Report - Consolidation Pressure in Spain Pushes M&A Activities to New Highs

Since 2012, Spain has seen a strong increase in the number of mergers and acquisitions (M&A). In the majority of such transactions, Spanish firms are involved as buying and selling companies. This development is largely driven by the high consolidation pressure which has been prevalent in many sectors of the Spanish economy since the outbreak of the financial and debt crisis. These are the findings of an analysis carried out by the Mannheim Centre for European Economic Research (ZEW) on the basis of the Zephyr database of Bureau van Dijk (BvD).

The number of transactions involving Spanish companies peaked in 2013, reaching a value of 3217 transactions. This value equals nine times the level reached in 2000. Around 87 per cent of transactions completed between 2012 and 2014 took place without foreign involvement, i.e., only Spanish firms were involved. In 2013, the level of national transactions was eighteen times the year 2000 level.

Transaction levels have increased particularly in those sectors which, as a result of the financial and debt crisis, are subject to a high level of consolidation pressure. Estate agencies top the rankings, participating in nine per cent of transactions completed between 2012 and 2014. These are closely followed by construction firms (8.8 per cent). Wholesalers (8.5 per cent) and retailers (four per cent) rank third and fourth. The financial sector (excluding insurance and pension providers) stands in fifth place, with a share of 3.9 per cent of all transactions.

"This development is specific to Spain. Because of the economic bubble which formed there until 2007, shake-outs had to occur," explains ZEW economist Ulrich Laitenberger.  It is therefore not possible to compare Spain's development to that in other EU countries, which were, or still are, affected by the financial and debt crisis.

Whilst in Greece and Portugal the number of transactions is still significantly lower than it was before the crisis, it has experienced a slight recovery in Ireland. The increase in Ireland is not, however, comparable to the strong increase in Spain. Despite this, ZEW experts expect that in Greece, merger waves may still happen. Due to the high levels of uncertainty resulting from the national debt crisis, these may not yet have been put into effect. Moreover, investment in Greece may become attractive for foreign firms in the long-term again.

Fore more information please contact

Ulrich Laitenberger, Phone +49(0)621/1235-185, E-mail laitenberger@zew.de