2006 Record Year for European Buyouts
2006 was a record year for European buyouts with the total value of deals topping over €160 billion for the first time ever, according to the latest European Buyout Review due to published in March 2007 by Incisive Media in association with Bridgepoint.
The record value of buyouts has been driven by an increase in the number of €1 billion plus deals with over half the European buyout market by value resulting from these transactions. The overall value of €1 billion plus deals more than doubled from €48.8 billion in 2005 to over €99.9 billion in 2006 and the volume rose by 28% to 36 deals.
The most popular sources of buyout transactions in Europe remain acquisitions from family or private vendors. Buyouts from other institutional investors were the second most frequent but have become increasingly popular with a 46% increase by value and 27% increase by volume compared to 2005.
Although the number of public-to-private transactions across Europe was unchanged, the deal size for these transactions increased by 47% in 2006 reflecting large scale ‘take private' deals such as the €10.1 billion buyout of TDC in Denmark, the €8.7 billion buyout of VNU in the Netherlands and the €3.6 billion buyout of Eircom in Ireland. In the UK market, sizeable public to privates included the €1.6 billion buyout of McCarthy & Stone and the €1.3 billon buyout of Gondola Holdings.
In the UK, the mid-market saw the highest level of growth with the volume of deals in the €50-500 million range up by 27% compared to a modest decline (13%) in the €500 million to €1 billion investment range.
By sector:
- Over a third of all buyouts in Europe were in the industrial goods and services sector which has consistently been one of the most attractive sectors for private equity investment.
- The Personal & Household Goods and Technology sectors saw a significant rise in investment with the former increasing from 50 to 74 deals in 2006 and the latter growing by 82% to reach 51 deals.
- By value, the industrial goods and services sector topped the European league table at €34.5 billion with the media and technology sectors second and third with aggregate deal values of €24.9 billion and €22.7 billion respectively.
- In the media sector, the overall value of buyouts trebled from €8.3 billion to €24.9 billion indicative of large scale deals such as the €8.7 billion buyout of VNU, the €4.9 billion and €3.3 billion buyouts of TDF and Pages Jaunes respectively in France. In healthcare, the overall value of deals almost doubled to €17.9 billion in one year.
- Average deal size was highest in the telecommunications sector at €986.9 million reflecting sizeable deals such as the €3.6 billion buyout of Eircom in Ireland and the €2.1 billion buyout of Casema in the Netherlands, followed by the media sector at €638 million. In the technology sector, the average deal size more than doubled from €209 million in 2005 to €445 million in 2006.
- In the UK, buyouts in the industrial goods and services sector were the most prolific with an increase of 42% by volume to 61 deals, representing 30% of all UK buyouts. The second highest volume of deals in the UK in 2006 was seen in the personal and household goods sector almost tripling from the previous year.
By country / region:
- The UK (including Ireland) remains the largest buyout market in Europe with a 26% share by value (€44.3 billion up by over 37% on 2005) and 29% share by volume (206 deals compared with 182 in 2005)
- Germany saw the greatest increase in the value of buyouts up by 63% to €25.5 billion year-on-year. By volume, buyouts in Germany rose by 28% to 101 deals. It is now the third largest buyout market in Europe by volume.
- The value and volume of buyouts in France was up by 40% and 25% respectively in 2006 to overall deal value of €30.1 billion and 168 deals (compared to 203 in the UK). This reflects a less significant increase than 2004/5 when deal value rose by 90% and deal volume by 53%. Nevertheless, it remains the second largest buyout market in Europe.
- The Nordic region is now the third largest market for buyouts by value, alongside Germany. In 2006 it recorded 96 buyouts (up 41% on 2005) worth a total of €27.5 billion (up 43% on 2005).
- The Netherlands and Denmark recorded the highest average deal size in Europe with a mean enterprise value of €777 million and €660.7 million respectively largely resulting from a number of significant transactions in these markets including the €8.7 billion buyout of VNU and €8.3 billion acquisition of Phillips Semiconductors in the Netherlands and, in Denmark, the €10.1 billion buyout of TDC.
Commenting on the research findings, Kevin Reynolds, partner at Bridgepoint, said:
“The buyout market in Europe has continued to grow at a significant rate, with €1 billion plus deals becoming a far more common feature of the market. The mid-market - which Bridgepoint defines as deals valued up to €1 billion -still reflects the greater proportion of buyouts by volume and demonstrates consistent growth, especially in the €50-500 million range.”
Julian Longhurst, Head of Data & Research at Incisive Media, added:
“With the recent rise in interest rates, the availability of bank debt will undoubtedly remain a key determinant in the ability of private equity firms to complete buyouts across Europe. However, we anticipate that the European buyout market will remain buoyant throughout 2007 given the appetite for deals and funds raised.”
The European Buyout Review, published annually by Incisive Media, provides comprehensive statistics on the level and use of private equity in buyouts across Europe.