2018 in Review

The deals that shook European M&A in 2018

December 17, 2018
The past 12 months on the European M&A scene might appear unremarkable at first glance. However, despite being on track to record a fourth consecutive drop in both volume and value of completed deals, the storylines around the mega-mergers have made compelling viewing for observers.

One of the main dramas was the unraveling of the Qualcomm-NXP deal, almost two years in the making, which was canned after becoming stuck in the middle of the US-China trade spat. Yet outside that $44 billion failure, there have also been several successful deals this year that have gone through a number of tribulations just to get over the line.

With that in mind, here's a serving of some of the most notable M&A deals Europe has seen in 2018 and the stories behind them.

Essilor-Luxottica

The eye-popping eyewear merger between the two industry giants—2018's largest deal in Europe at €48 billion—finally crossed the line in October after initially being agreed to in January 2017. Essilor and Luxottica had to extend the approval deadlines as Chinese, Brazilian and Turkish authorities dragged their heels mulling over the deal's fairness. The combination has created a mammoth business, one with almost 150,000 employees and revenues of more than €16 billion.

Sky

Few deals had as many twists and turns as Sky's eventual £30 billion takeover by US giant Comcast.

For one, Comcast wasn't even the original acquirer. Back in December 2016, media conglomerate and Sky minority stakeholder 21st Century Fox shook on a deal in principle to take overall control of the UK broadcaster, agreeing to pay £11.7 billion for the 61% of the business it did not already own.

Nearly a year later, the deal was stuck in regulatory purgatory as it increasingly became a political football. Then, things really began to get interesting. Disney struck a $52.4 billion deal for the film, TV and international business of Fox, which included its Sky stake. This was followed early this year by the UK's Competition and Markets Authority saying the original Sky/Fox deal should be blocked on news impartiality grounds. Murdoch's company made concessions and promises, yet a week later in February, Comcast announced a $31 billion proposal to buy Sky.

Both sides tabled further improved bids throughout the year, however, and to stop an arms race, the CMA sanctioned a blind auction in September, in which Comcast blew Fox out of the water.

WorldPay

Arguably one of the first mega-deals in the payments segment of fintech, Vantiv's £9.3 billion takeover of WorldPay, which closed in January, opened many eyes to just how lucrative the sector can be.

Indeed, the deal's announcement last August was sandwiched between two other agreements in the sector: Hellman & Friedman's deal to by Denmark's Nets, and CVC Capital Partners' and The Blackstone Group's £3 billion play for Paysafe.

This has spread into this year as well, with PayPal acquiring iZettle for some $2.2 billion.

GKN

The GKN-Melrose battle showed us that hostile takeovers are still very much alive and well in Europe. Melrose, a turnaround specialist in the engineering space, set its sights on GKN after issues at the latter's US arm left it leaderless and its share price in tatters. The proposal? A £7 billion offer directly to shareholders, pitting Melrose against the GKN board.

GKN fought hard, offering to merge its Driveline unit with US rival Dana, as well as selling its powder metallurgy business. In response, Melrose bumped up its bid to £8.1 billion.

With shareholders accepting the deal and the offer becoming unconditional, the entire GKN board resigned as Melrose took control. The investor has been looking to spin off a number of GKN assets since, including its metallurgy business.

Bayer units

Two of the largest deals in Europe came out of necessity to assuage regulators to pass through one of the largest deals in the world: namely, Bayer's $66 billion acquisition of US-based Monsanto. Regulators were not going to let this one ride home untouched, however, and demanded several concessions to ensure consumers and farmers were not hurt.

Enter BASF. Bayer's German contemporary agreed to acquire its vegetable seeds business and various seeds and herbicide assets for a combined €15.2 billion.

Zodiac Aerospace

Back in 2017, Safran agreed to buy Zodiac Aerospace for nearly €10 billion. This seemed like a pretty straightforward deal until financial fortunes forced a revisiting. After initially getting a spike from the deal, Zodiac shares plunged in the following months—wiping out any premium the original offer gave—while a rise in Safran's stock reportedly threatened the tax benefits of the deal to Zodiac's selling family shareholders. Ultimately, the teams agreed to a revised deal worth $7.7 billion in May 2017, which closed in February this year.

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