European Deals Worth $300bn Left Exposed by War in Ukraine

Russia’s invasion of Ukraine has left dealmakers in Europe unsure about if and when roughly $300bn of mergers, acquisitions and listings will go ahead.

Fresh volatility in the market, rising energy prices and worries about a drawn-out war are pushing corporate boards and previously free-spending private equity firms into wait-and-watch mode. That’s raising questions about an M&A pipeline with some high-value transactions in the works.

They include Walgreens Boots Alliance Inc.’s sale of its international Boots drugstore unit, Novartis AG’s potential disposal of its Sandoz generics arm and National Grid Plc’s efforts to offload a stake in its gas transmission business.

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These alone represent about $45 billion of deal value, according to Bloomberg News reports, and have the potential to boost a slowing market for M&A in Europe.

Even before the invasion, the deals boom had started to show signs of fatigue in the region as gloomy economic and geopolitical forecasts soured sentiment. European deal values were down 22% year-on-year through Wednesday, data compiled by Bloomberg show.

Another roughly $50 billion of possible deals could come from German national railway operator Deutsche Bahn AG selling or listing its logistics arm, KKR & Co.’s pursuit of Telecom Italia SpA, and any sale by Reckitt Benckiser Group Plc of its infant nutrition unit. And then there’s the potential for a blockbuster sale or spinoff of GlaxoSmithKline Plc’s 50 billion-pound ($67 billion) consumer health unit.

Elsewhere, Russia’s military attack on Ukraine has effectively shut the market for initial public offerings in Europe.

Among the big IPOs set to kick off in the coming months in Europe are Thyssenkrupp AG’s electrolysis plant business Nucera, Eni SpA’s renewables division Plenitude, Olam International Ltd.’s food ingredients and EQT AB’s skincare business Galderma. These IPOs have the potential to create listed companies with a combined value of about $50 billion.

Volkswagen AG, meanwhile, continues to explore a blockbuster IPO of Porsche that could value the sportscar brand at more than $95 billion.

It’s unlikely big offerings will go ahead in the next few weeks. Volatility in the short to medium term could also hurt the IPO ambitions of private equity firms including CVC Capital Partners and Ardian SAS.

Source: Yahoo Finance

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