Euro­pean ‘cham­pi­ons’ form to re­pel US and Asian preda­tors

The Sunday Telegraph - Money & Business - - Business - By Lucy Bur­ton

SE­NIOR bankers are pre­par­ing for a swathe of new Euro­pean “cham­pi­ons” to be cre­ated as the con­ti­nent looks to pro­tect it­self from Amer­i­can and Asian preda­tors.

The pre­dic­tions come months after French pres­i­dent Em­manuel Macron said in a speech at Paris’s Sor­bonne Univer­sity that boost­ing the in­dus­trial and eco­nomic power of Europe meant con­sol­i­dat­ing a com­pet­i­tive Euro­pean in­dus­try on a “global scale”. His call for a “re­foun­da­tion of Europe” co­in­cided with the news that French trans­port firm Al­stom had agreed to a deal with Ger­man engi­neer­ing gi­ant Siemens.

The agree­ment be­tween the two firms aims to create a new “Euro­pean cham­pion in the rail in­dus­try” that would pit it against China’s gi­gan­tic state-owned op­er­a­tor CRRC.

A day later it emerged that France’s big­gest ship­yard STX had struck a deal with Ital­ian group Fin­cantieri. City bankers say more is to come, with Brexit adding ex­tra im­pe­tus for firms to bulk up and com­pete on a global scale. Franco-ger­man mergers are par­tic­u­larly likely to take place, ad­vis­ers pre­dict.

“Europe needs to re­spond to a more ag­gres­sive ex­pan­sion­ary agenda from Asian com­pa­nies and they need to re­spond to the US in­creas­ingly cre­at­ing their own na­tional cham­pi­ons,” said JP Mor­gan’s David Lomer.

“This com­bi­na­tion will ac­cel­er­ate pan-euro­pean con­sol­i­da­tion as the con­ti­nent thinks about how it too can create its own pan-euro­pean cham­pi­ons.” Cit­i­group’s Jan Skar­bek added: “We may see more in­tra-europe deals – par­tic­u­larly be­tween France and Ger­many – which have his­tor­i­cally been hard. We may see a rush.

“What­ever pre­cise shape and form Brexit takes, if you’re France or Ger­many you have an in­cen­tive to see pa­neu­ro­pean busi­nesses form.”

Dealogic data shows that the value of M&A deals be­tween Euro­pean coun­tries last year rose 128pc to its high­est level since 2014. Big deals recorded in 2017 in­cluded the French lens maker Es­silor’s $25bn (£18.4m) swoop on Ital­ian glasses gi­ant Lux­ot­tica, the brand be­hind Ray Ban’s sun­glasses. And the mo­men­tum looks set to con­tinue.

“There is re­vi­talised in­ter­est in Europe, es­pe­cially from large US and UK com­pa­nies, post the French elec­tions, which in it­self may en­cour­age more in­ter-euro­pean con­sol­i­da­tion of EU com­pa­nies as a de­fen­sive move,” said HSBC’S Philip Noblet.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.