Europe seen as hot spot in down year for company mergers

LONDON — Europe, often a laggard compared with the U.S. in mergers and acquisitions, has turned out to be the hot spot for deals this year.

A more stable economic outlook and growing confidence in Europe have boosted deal-making on the continent. Buyers have announced $680 billion of acquisitions targeting European companies in 2017, up 23 percent from last year’s total, according to data compiled by Bloomberg.

In contrast, the value of announced deals in North America has fallen almost 30 percent to $1.1 trillion this year, the lowest since 2013. While North America still accounts for 44 percent of the volume of global mergers and acquisitions, that’s down by almost a tenth from this time last year and is the smallest proportion since 2010. Europe, meanwhile, is at a sixyear high, contributing 27 percent of total deal-making.

“Europe is going through a period of economic resurgence, and this will continue through 2018,” said William Rucker, chief executive officer of Lazard Ltd. in the United Kingdom. “Macroeconomic conditions are supportive of M&A activity, and business confidence is back.”

Despite the surge in Europe, global mergers and acquisitions are still on track for the slowest year since 2013. Just $2.5 trillion in mergers and acquisitions have been announced, well below the $3 trillion-plus figures recorded in 2015 and 2016. Overseas acquisitions by Chinese companies, in particular, have significantly dropped as deal-makers struggle to cope with tighter capital controls and increasingly wary coun-

terparties.

The year started with some of the biggest European deals. French lens-maker Essilor International agreed to purchase Luxottica Group, the Italian producer of RayBan sunglasses, for about $24 billion. Johnson & Johnson bought Swiss biotech firm Actelion for $30 billion.

The outcome of other European megadeals won’t be clear until next year. A winner has yet to be decided in the race for Spanish toll-road operator Abertis Infraestructuras, which is being sought by Italy’s Atlantia and by Hochtief, the German unit of Spanish builder ACS. Still, deal-makers are optimistic that 2018 will continue the trend in Europe.

“With economic growth back on track and good financing conditions, we are in for a good M&A year in

Europe in 2018 as companies try to create European champions on the continent,” said Alison Harding-Jones, Citigroup’s London-based head of mergers and acquisitions for Europe, the Middle East and Africa. “CEOs have realized the need to form bigger, stronger European competitors to compete globally.”

In the U.S., companies shied away from large-scale mergers as they spent much of the year waiting to see how regulatory enforcement would take shape under President Donald Trump and whether the administration would be able to deliver on promises to change the tax code. Just three U.S. deals valued at more than $30 billion have been announced in 2017 — all of them since September.

CVS Health waited until this month to announce its $68 billion deal to buy insurer Aetna after an antitrust lawsuit forced Aetna in February to abandon its takeover

of Humana. Walt Disney Co.’s acquisition of much of 21st Century Fox was announced last week.

Broadcom’s $105 billion unsolicited bid for Qualcomm would be the biggest tech deal on record if it goes ahead next year.

Uncertainty doesn’t always dampen deal-making. In the U.K., even amid the turmoil caused by the country’s planned departure from the European Union, deal-making has increased 9.5 percent this year to $176 billion, though the growth is lower than in most other European countries.

Spain is leading the pack. Deals involving Spanish targets have totaled almost $115 billion in 2017, the highest total in a decade, Bloomberg data show. In addition to the potential Abertis takeover, Cerberus Capital Management is spending $4.7 billion on real estate assets from Spanish lender Banco Bilbao Vizcaya Argentaria.