Domestic deals imply long-term M&A growth
Despite Banco Santander?s headline-grabbing takeover offer for Abbey National, it is the consistent growth in domestic M&A that is the real good news for Europe.
According to a Mergermarket report the recent rise in domestic M&A mirrors that of the early nineties, when big, cross-border takeovers only came after domestic levels had risen for a number of years.
Twice yearly figures show that European domestic M&A figures have exceeded cross-border activity ever since the second-half of 2002. In the first six months of 2004 domestic deals accounted for ?120 billion ($144.4 billion), with cross-border mergers only coming to ?85 billion.
Equity analysts at Dresdner Kleinwort Wasserstein said M&A trends often occur this way round because a period of consolidation, usually associated with domestic M&A, usually precedes the more expansive, cross-border deals.
Domestic growth over the past few years is therefore a good sign for those hoping for strong future M&A growth.
Dresdner Bank CEO Herbert Walter had some insight into the reasons behind the trend. He said that although the bank favours cross-border deals, German banks have a lot of consolidation and growth to do at home first. ?For now the German banks can accomplish many improvements on their own,? he said.