It was shaping up to be another disastrous quarter for Europe. Anyone who had looked at Bloomberg's latest figures on mergers and acquisitions (M&A) registered in Western Europe since the start of 2012 would have discovered that this business was at lows not seen since 2000, which is the year that Bloomberg began recording this data.
But final numbers from the end of the first quarter show a more promising view: 1,266 corporate transactions were recorded, moving 98.9 billion euros with an average premium of 27.4%. This means that, by volume, the Q1 shows signs of recovery since falling activity in Q3 and Q4 2011. On a continent eager for good news after continual suffering, the brunt of the sovereign debt crisis that could encourage companies to go shopping, could be interpreted as a sign that companies are beginning to do deals.
In the first quarter of the year, deal volume did not exceed 100 billion euros, a figure that is smaller than pre-crisis averages. Since Lehman Brothers fell, or more specific, since the stock market hit historic lows in March of 2009, mergers and acquisitions in Europe have only registered similar volumes on two occasions: Q3 2010 and Q2 2011.
A third occasion hits suddenly
So what explains the rising number of M&A deals in Europe? Well, the Swiss basic materials company Glencore buying Xstrata, which was made public on February 7. The contracted sale amount is 34.178 billion euros, just 34.55% of total M&A deal volume for the quarter. The deal, called the Wedding of the Year, occurs less than a year after Glencore went public on the London stock market, the Ftse 100, although for many years the news of their union was a well-known secret.
