Mergers and Acquisitions Boosting Europe’s Economic Recovery

Europe is leading the world when it comes to mergers and acquisitions deals, new figures show. Is the business outlook finally improving?

Europe has been struggling to return to growth in the past few years. Though powerhouses such as Germany have continued to lead the way, economies like Greece, Spain, Italy and Cyprus show that not everyone has been so resilient.

But with the tide beginning to change in some of Europe’s most severely affected economies, it’s encouraging to see that sentiment is improving among businesses.

Data compiled by Bloomberg shows that buyers in Western Europe announced acquisitions worth a total of $149 billion (£90 billion) in the first quarter of 2014. Compared to the same period in 2013, this represents a dramatic increase of close to 60 per cent – a much more dramatic improvement than those seen either in Asia or North America.

The global picture is also impressive. The value of the acquisitions announced internationally in the first three months of the year rose by more than a quarter, taking the total to $637 billion. That’s the best first quarter since 2007, making it the strongest since the global financial crisis began.

Media, technology and telecommunications businesses were the real leading lights around the world and this trend looks set to continue, both in Europe and elsewhere. Indeed in Europe, though it had been thought that Altice would complete negotiations to acquire Vivendi’s mobile phone unit SFR, French conglomerate Bouygues has recently renewed its bid and it remains to be seen whether the price will rise as a result.

It’s definitely encouraging news for Europe’s businesses, proving that business confidence is returning and companies are more willing to take risks than they have been in the past six or seven years. Low interest rates have contributed to this, as have promises from the European Central Bank to purchase bonds from countries that have been affected by the financial crisis.

Shares in a number of companies currently working on M&A deals also rose today to kick off the second quarter. French engineer Alstom was the top stock on the FTSE Eurofirst 300, having announced plans to sell its boiler equipment unit to German private equity group Triton. Hopefully this means that European businesses are in a position to build on this success.