Crossroads: Swiss M&A at turning point

Data InsightDealspeak 2 May

Crossroads: Swiss M&A at turning point

Swiss M&A finds itself at the crossroads at midnight, looking east and west. The country, long known for the discretion of its banks, the safety of its currency and its strict neutrality, finds its model under threat.

The usually staid country was briefly the center of the M&A world in March, following UBS’s [SWX:UBSG] dramatic EUR 3bn rescue takeover of its erstwhile rival Credit Suisse [SWX:CSGN].

The Credit Suisse takeover is the largest deal in Switzerland seen so far this year, according to Dealogic data. It was also the second-largest in the past two years, only overshadowed by the EUR 19.3bn merger between Swiss fragrance company Firmenrich and Dutch chemicals firm DSM [AMS:DSM] in 2022, but the effects of this transaction extend far beyond its deal size.

Now shorn of one of its marquee institutions, Switzerland has since been grappling with a sort of national identity crisis, with its prized reputation for stability coming into question and even the Swiss franc struggling to live up to its reputation as a “safe haven” currency for investors.

At the same time, Switzerland's strict neutrality, based on the idea that Swiss arms cannot be supplied to Ukraine because of sanctions to Russia, has faced intense criticism from its European partners.

Got to keep moving

While down from the boom years of 2021 and 2022, activity in Switzerland appears to be weathering the global M&A drought fairly well.

The country recorded 98 deals worth a disclosed EUR 5.18bn in 1Q23, on par with pre-COVID periods such as 1Q18, which saw 79 deals worth EUR 5bn, according to Dealogic data.

Inbound investment continues to pour into the country, with Switzerland recording EUR 31.67bn in cross-border M&A across 198 transactions in 2022 and EUR 436.8m in 46 deals so far in 2023, Dealogic data shows.

Some of the largest deals seen in Switzerland over the past two years, including the sale of convenience retailer Valora Holdings to Mexico’s FEMSA [BMV:FEMSAUB] [NYSE:FMX] for EUR 2.44bn and ABB’s spinoff [SWX:ABBN] of turbine maker Accelleron Industries [SWX:ACLN] for EUR 1.73bn, involved sectors such as healthcare, tech, industrials or consumer, where the Swiss have historically performed well thanks in part to a plethora of large homegrown corporates.

Companies such as biotech firm Alentis Therapeutics, which raised USD 105m (EUR 95m) in April from investors to further develop treatments for advanced kidney, lung and liver fibrosis, demonstrate an enduring appeal to Swiss assets even amid its national reckoning.

Datamars coming to market

Meanwhile, transactions flagged by this news service that could yet cross the finish line this year include the potential sale of ophthalmology group ONO to private or strategic investors; industrial giant ABB’s upcoming carveout of its EUR 160m-revenue emergency lighting unit; and Equistone’s pending exit of print-media specialist Sihl.

Datamars, a Swiss agricultural technology specialist, is the top sponsor-backed candidate ripe for exit in Switzerland with a score of 65 as of time of publication, according to Mergermarket Next-gen’s Likely to Exit (LTE) platform.

Caisse de dépôt et placement du Québec (CDPQ) and Columna Capital-backed Datamars is expected to hit the market in 2023, potentially fetching an enterprise value of EUR 1bn, as reported.

While it may take some time to resolve some of the deeper issues, Swiss dealmakers have enough potential activity to avoid any feeling of the blues.

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