European M&A Hunters Take Aim At US

European companies have spent almost $176 billionon US takeovers during 2017.

European companies made notable strategic moves into the US during October. While it might be too soon to indicate a trend, these acquisitions could foretell more to come.

The biggest recent transaction, according to PitchBook, is the $306 million deal by UK’s Dialog Semiconductor to take over Silego Technology, which diversifies the acquirer’s portfolio beyond its core mobile device business into Internet of Things functions. But other acquisitions, including the $80 million deal by the UK’s BTG to pick up Roxwood Medical, suggest that this is not an isolated event.

The rumor mill is rife with additional stories, such as Italian power utility Enel searching for opportunities in the US and elsewhere in the Americas, and European companies such as Merlin Entertainments of the UK bidding for some or all of SeaWorld’s assets.

PitchBook’s analytics indicate that European companies have spent almost €150 billion ($176 billion) on US takeovers during 2017, roughly 1.5 times what they spent on acquisitions closer to home. Data ranging from 2014 to now do not suggest a trend in European strategic investment in the US, but they do present a sharp drop in intra-European buyouts. There has certainly not been an abrupt halt; France’s AccorHotels recently paid €100 million for Franco-German online booker Gekko Group.

The question, then, is to what degree these deals are purely strategic moves to develop European companies’ product and geographic portfolios, and to what degree the deals are opportunistic attempts to take advantage of macroeconomic factors that favor investment in the dollar zone. The greenback’s recent retrenchment could make this the opportune moment to buy into US companies, and the sluggish rate of European GDP growth might make the American economic environment more inviting by comparison. The answer is probably different industry-by-industry and deal-by-deal.

“I don’t think the economic environment would have affected whether the [BTG-Roxwood] deal occurred,” Julie Simmonds, London-based healthcare analyst at investment bank Panmure Gordon, tells Global Finance. “Healthcare expenditure is not usually significantly affected by the economic environment. … Consequently, acquisitions are less dependent on macro events in healthcare than [in] other sectors.”