transaction trends · 2020-01-15 · transaction advisory services transaction trends danish...
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Transaction Advisory Services
Transaction TrendsDanish M&A update – Q2 2019
Danish M&A activity overallresilient to geopolitical turmoil – for now
Transaction Trends, published by EY Transaction Advisory Services, is a quarterly publication that aims to identify trends in the Danish transactions market. Data presented in this newsletter cover all transactions announced and registered in Mergermarketwhere Danish companies have participated as either target, buyer or vendor.
Number of TransactionsSource: Mergermarket
Last Twelve Months Number of Transactions by IndustrySource: Mergermarket
17
38
41
79
17
22
19
23
85
16
Government&Public sector
Automotive &Transportation
Business & Prof.Services
ConsumerProducts
Oil & Gas
Engineering &Ind. Products
Life Sciences
FinancialServices
Power & Utilities
Real Estate
Retail
0
TMT
Travel, Leisure &Tourism
0
0
4561 56
7547 53
6653 58 64 60
44
28
30 34
41
2427
3438 25
4829
29
0
100
200
300
400
0
20
40
60
80
100
120
4Q18
LTM
1Q17 3Q17 4Q17
90
3Q16
80
4Q16 2Q17 2Q181Q18 3Q18 1Q19
73
91
116
71
2Q19
10091
83
112
89
73
Domestic Cross Border LTM
During the second quarter of 2019, Danish companies announced a total of 73 transactions. This is 16 deals less than in the previous quarter and 18 deals less than last year’s second quarter. The main driver is the decreased activity in cross border deals.
In terms of activity by industry, TMT and Engineering & Industrial Products saw the highest deal activity (13 and 17 respectively), while the runner-ups Consumer Products and Business & Prof. Services accounted for 8 deals.
The overall number of deals in the Danish market in the LTM period 2Q19 were 357 compared to 342 in LTM 2Q18.
Mergermarket reports that global volumes were slightly below the levels observed in 2017, making 2018 the first year-on-year decline in global deal volume since 2010. This trend has continued for the first quarters of 2019.
Domestic deals refer to deals where both, target and buyer are based in Denmark. Cross border deals, on the other hand, involve at least one party being from outside of Denmark (inbound and outbound deals)
Ann. Date Target Vendor BuyerDeal Dom. Industry
Deal Value*
TargetTurnover
28 Jun Merlin Entertainments Plc (71.08% Stake) ListedKirkbi - Blackstone -
CPPIB consortium
Travel, Leisure &
TourismUSD 5,807m USD 2,142m*
01 Apr Panalpina WeltTransport Holding AG Listed DSV A/SAutomotive &
TransportationUSD 4,742m USD 6,144m*
03 Apr EG A/S Axcel Management A/S Francisco Partners TMT USD 557m DKK 1,221m
11 Apr LR Realkredit A/S
Skandinaviska Enskilda Banken AB;
Danske Bank A/S; Nordea AB; Jyske
Bank; Arbejdernes Landsbank A/S
Nykredit Realkredit
A/SFinancial Services USD 393m DKK 526m
20 MaySaint-Gobain Building Distribution
Deutschland GmbHCompagnie de Saint-Gobain SA Stark Group A/S
Real Estate,
Hospitality &
Construction
USD 374m USD 2,205*
Key highlights and market outlook
On 28 June, an investment consortium including the Denmark-
based founding family of Lego (Kirkbi) announced the acquisition
of Merlin Entertainments Plc, the UK-based leisure and
entertainment company focused on the development of
attractions and theme parks, for a consideration of USD 5,807m.
The deal is ought to enable Merlin’s management to focus on and
execute their strategic vision for the business.
2 | Transaction Trends 1st edition 2019
Top announced transactions last quarter (by deal value, USDm)Source: Mergermarket, CVR Virk
*Mergermarket definition** 2017
Over the last quarter, the Danish market experienced 73
deals. While this is lower than deal volumes seen in the last
quarter and last year’s second quarter, it is only slightly
lower than the average quarterly deal volumes for the past
four years. On a quarterly as well as on an LTM basis, the
market has been driven by transactions within the sectors
Engineering & Industrial Products (2Q19: 13; LTM: 79
deals) and TMT (2Q19: 17; LTM: 85 deals).
In spite of rising geopolitical and regulatory concerns, EY’s
Global Capital Confidence Barometer indicates that the
overall appetite for deal-making will continue to be strong in
2019. As for Denmark, we see a robust pipeline of deals
and expect continued momentum for M&A in 2019.
On 03 April, Francisco Partners, the US-based private equity
firm, has announced to acquire EG A/S, the Denmark-based
provider of proprietary software solutions, from the
Denmark-based private equity firm Axcel Management A/S.
The transaction enables EG to further develop and grow the
business organically and through add-on acquisitions by
leveraging Francisco Partners’ expertise.
On 11 April, Nykredit Realkredit A/S, a Denmark-based
provider of banking and mortgage lending services,
announced the acquisition of LR Realkredit A/S, a Denmark-
based provider of mortgage loans. The acquisition enables
growth in Nykredit’s lending in areas where it has very
strong expertise and strengthens Nykredit’s regulatory
capital position. Under single ownership, LR Realkredit A/S
seeks to develop and expand its business further and utilize
existing assets more effectively.
On 01 April, DSV A/S, the Denmark-based freight and
logistics company, announced the acquisition of Panalpina
WeltTransport Holding AG, the Swiss transport and logistic
company, for a consideration of USD 4,742m. The
transaction enables DSV to increase their revenue by close
to 50%, which will rank them in the industry-wide top four
and strengthen their Air & Sea division substantially.
On 20 May, Stark Group A/S, a Denmark-based retailer and
distributer of timber and building products, announced the
acquisition of Saint-Gobain Building Distribution Deutschland
GmbH, a Germany-based distributer of building products, for
a consideration of USD 374m. The acquisition enables Stark
to expand in the European market and creates significant
value for its customers and owners.
Transaction Type by VolumeSource: Mergermarket
Buyer Region – Danish and Foreign TargetsSource: Mergermarket
Activity Breakdown
In the second quarter of 2019, 49 of 73 deals (67%) were
made by Danish buyers. In the LTM period, 63% of all bidders
were Danish. The absolute number remained at a constant
level (49 in 2Q19 vs. 50 in 1Q19). The decreasing share of
foreign buyers mainly corresponds to a decrease in buyers
from Asia-Pacific. Deal appetite in the Americas remained at a
similar level as observed over the LTM period.
The share of private deals decreased from 72% to 60% in the
second quarter of 2019 and is also lower than in the LTM
period (71%).
The decrease in the share of cross border deals in 2Q19 (60%)
indicates that Danish companies are more cautious with cross
border M&A facing trade tensions and protectionism.
However, 59% of the cross border deals have been outbound
compared 41% in the LTM period, demonstrating an interest in
foreign targets.
Transaction Trends 1st edition 2019 | 3
67%
12%
12%
8%0%0%
Denmark
Nordics (excl. Denmark)
Europe (excl. Nordics)
Americas
Asia-Pacific
Other
Q2 2019
63%12%
15%
7%2%0%
LTM
Transaction Arena by VolumeSource: Mergermarket
40%
29%
28%
60%
71%
72%
LTM
Q2 2019
2017 - YTD
PrivatePublic
40%
37%
37%
60%
63%
63%
LTM
Q2 2019
2016 - YTD
Cross BorderDomestic
Note: Public deals refer to deals where either target or bidders is public, i.e. a listed company
Note: Domestic deals refer to deals where both target and buyer are based in Denmark. Cross border deals involve at least one party being from outside Denmark (inbound and outbound deals)
5%4%
4 | Transaction Trends 1st edition 2019
Target Region – Danish and Foreign BuyersSource: Mergermarket
Activity Breakdown
73%
8%
14%
5%0%0%
Asia-Pacific
Denmark
Nordics (excl. Denmark)
Americas
Europe (excl. Nordics) Other
Q2 2019
74%
7%
13%
6%1%
0%
LTM
The share of Danish targets (acquired by foreign and Danish
buyers) decreased slightly from 76% (1Q19) to 73%.
Throughout the past three years, this percentage has
remained at a similar level, mainly fluctuating between 70%
and 80%. In the LTM period, the share of Danish targets is at
74% and therefore, slightly below average since 2016 (77%).
The share of American targets (5%) in the second quarter
remained at a high level compared to the average since 2016
(4%), while being slightly lower than in the LTM period. The
level of Nordic targets (excl. Denmark) has slightly recovered
from the previous lowest quarterly percentage (8% in 2Q19
vs. 4% in 1Q19).
Engineering & Industrial Products as well as TMT were the
industries showing the highest activity in 2Q19, while Travel,
Leisure & Tourism indicates the highest QoQ-growth amongst
all industries (200%).
Activity by Target Industry – Domestic and Cross Border DealsSource: Mergermarket
Number of Transactions
Target Industry Q2 2019 LTM 2018 Avg. 2016 – 2018 Trend indicator
Automotive & Transportation 5 17 24 22
Business & Professional Services 8 38 43 42
Consumer Products 8 41 53 58
Engineering & Industrial Products 13 79 73 70
Financial Services 2 17 23 20
Government, Public sector & Organisations 0 0 0 0
Life Sciences 5 22 21 25
Oil & Gas 0 0 0 0
Power & Utilities 2 19 16 14
Real Estate, Hospitality & Construction 7 23 25 20
Retail 0 0 0 0
TMT 17 85 91 80
Travel, Leisure & Tourism 6 16 17 13
Total 73 357 386 364
Note: Trend indicators refer to the comparison between the LTM vs. the avg. 2016 – 2018 number of transactions
Public Market Update
New listings at Nasdaq Copenhagen
Issues by value, Nasdaq CopenhagenSource: Capital IQ, Mergermarket
Avg. multiples of listed Danish companiesSource: S&P Capital IQ
Transaction Trends 1st edition 2019 | 5
OMX C20 Index Source: S&P Capital IQ
Foreign exchange rates (indexed) Source: Capital IQ
12 2
3 3
9
32
3 3
2
1
2014
0
2018
0
2013 2015 2016 2017 YTD19
First North
Main market
Source: Nasdaq Nordics
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
20172013 2014 20162015 2018 2019
DKK/GBP
DKK/USD
DKK/SEK
2016 20182015
1.100
2013 2014
1.000
200
20170
2019
100
300
400
500
600
700
800
900
13.2x
1.8x
21.3x
11.3x
1.7x
19.7x
12.8x
1.9x
21.2x
15.8x
2.6x
23.7x
P/E
EV/EBITDA
P/B
2018
2017
2015
2016
Nasdaq Copenhagen (“CSE”) saw four new listings in the
second quarter of 2019, one on the Main market and three on
First North.
The companies listed were Maersk Drilling A/S (April 4) on the
Main market and Konsolidator A/S (May 10), Waturu A/S (May
20) and Danish Aerospace Company A/S (May 27) on First
North.
The amount of equity capital raised in YTD19 amounted to
DKK 24.2bn compared to DKK 11.2bn in 2018. This is
primarily driven by the spin-off of Maersk Drilling (DKK
23.9bn).
The OMXC20 decreased by approximately 1% during the
second quarter, subsequent to an increase of 14% in the
previous quarter. Domestic markets seem to be robust to the
current rise of political uncertainty and rising interest rates.
Going forward, the interest rate developments, and the
potential continuance of market turmoil, will be key items to
follow.
0
10
20
30
40
50
60
70
80
49.1
2013 201620152014 2017 2018
38.1
YTD19
36.1
76.4
56.4
48.545.3
SEO
Private Placement
Spin-Off/Split-Off
Buyback
IPO
Transaction Diligence
Contact list - EY Transaction Advisory Services
Complete and integrated services covering preparation to closing
EY Transaction Advisory Services
Transaction Trends 1st edition 2019 | 9
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+45 25 29 37 26
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+45 30 70 04 12
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+45 25 29 34 91
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+45 51 58 29 31
Corporate Finance
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+45 20 40 80 41
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+45 91 97 66 66
Transaction Tax
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+45 25 29 37 64
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+45 25 29 39 97
Valuation, Modelling & Economics
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+45 25 29 31 35
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+45 25 29 39 05
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+45 25 29 34 85
Strategy and Operations
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+45 22 70 64 88
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+45 25 29 37 30
Tech
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+45 30 93 52 17
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+45 25 29 34 28
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About this publication
Transaction Trends is a quarterly publication that aims to identify trends in the
Danish transactions market. Transactions covered in this publication are public
and private transactions announced by all Danish companies, defined as a
transaction where either the buyer, target or vendor company is a Denmark
based company. Public transactions are defined as transactions where either the
buyer, target or vendor company is listed on a public stock exchange. All other
transactions have been classified as private. Domestic transactions are defined
as transactions conducted within a national boundary, i.e. deals involving two or
more incumbent nationals, while cross border transactions involve companies
from at least two different nationalities. Deal Value is taken as the sum of the
consideration paid by the acquirer for the equity stake in the target plus the
value of the net debt in the target, where applicable. Inclusion of net debt in the
deal value will depend on the stake acquired or the target company type.
Transaction Statistics are based on Mergermarket and EY data. Public marketdata are sourced from S&P Capital IQ and Nasdaq.
Transaction Trends is published by EY Transaction Advisory Services.
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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.
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