Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
After 2017, which proved to be a record-breaking year, the number and volume of deals with Austrian involvement is now declining. In 2018, there were 324 M&A transactions involving Austrian companies, compared to 345 in 2017. This corresponds to a 6.1% decrease in M&A transactions.
The transaction volume also fell from EUR14.7 billion in 2017 to EUR7.9 billion in 2018. In 2017, four M&A transactions involving Austrian companies exceeded the volume of EUR1 billion, whereas only two transactions exceeded this threshold in 2018.
In 2018, 38% or 123 of the 324 M&A transactions, compared to 132 transactions (38.3%) in 2017, were inbound M&A transactions, ie, where foreign investors sought to acquire Austrian targets or their shares. The number of outbound M&A transactions (where Austrian investors sought to acquire foreign targets or their shares) increased to 132 (40.7%) in 2018, up from 116 (33.6%) in 2017.
The volume of inbound transactions in 2018 amounted to EUR3.8 billion, compared to EUR6.8 billion in 2017. The top five inbound transactions in 2018 represented a volume of EUR3 billion, whereas in 2017 one transaction on its own (the takeover offer made by Vonovia regarding BUWOG) accounted for EUR5.6 billion. Austrian companies spent EUR3.2 billion on outbound transactions, with the top five outbound transactions accounting for a volume of EUR2.6 billion. By comparison, Austrian companies spent EUR4.5 billion on outbound transactions in 2017.
Domestic M&A transactions, where both the target and the buyer are Austrian, accounted for 21.3% or 69 out of 324 M&A transactions in 2018, compared to a total of 97 domestic transactions in 2017.
Strategic investors are still involved in the vast majority of transactions in the Austrian M&A market. 297 out of 324 transactions in 2018 involved strategic investors, compared to a total of 325 in 2017. However, there was a significant increase in transactions, increasing from 20 in 2017 to 27 in 2018 (+35%) that involved financial investors, such as private equity or venture capital firms.
Further, Austrian companies are still attractive targets for German investors. This is demonstrated by the fact that transactions involving German investors increased in 2018 to 35.7% of all M&A transactions involving foreign investments in Austrian companies.
Furthermore, 39.8% of all M&A transactions involved European investors. The vast majority of transactions in the Austrian M&A market, approximately 72.4%, involved investors whose corporate seat is located in Europe, whereas in 2017 only 60.6% of such transactions involved European investors.
Germany remains the most attractive target for Austrian investors. 44.7% of all transactions occurred in Germany, with a further 40.2% in the European market. Without doubt, Europe is still the top investment target for Austrian investors.
Although the total number of deals dropped from 42 in 2017 to 31 in 2018, the real estate and construction sector proved to be, and hence remains, the most attractive industry for inbound M&A transactions in Austria. Foreign investments in real estate and construction companies in 2018 are closely followed by investments in companies in the industrial sector (29 transactions) and companies in the telecoms, media or technology (TMT) sectors (29 transactions). In 2017, there were 34 inbound transactions involving TMT companies and only 18 transactions involving industrial companies.
As for outbound transactions, Austrian investors are continuously active in the industrial sector, with 37 transactions in 2018 compared to 33 transactions in 2017. Other attractive sectors that saw considerable outbound M&A activity in 2018 include the TMT sectors with 30 transactions, and the real estate and construction sector with 25 transactions. This means that in 2018 outbound transactions increased by 13.8% compared to 2017.
Although most transactions in the past two years have related to the real estate and construction sector, 2018 saw a greater number of transactions in the industrial sector, numbering 81 in total, the volume of which amounted to EUR1.9 billion. The real estate sector still leads in the rankings in terms of deal volume (EUR2.4 billion), with the total number of deals amounting to 72.