In France and around the world, the mergers & acquisitions (M&A) market has been booming since the start of 2021. Transaction volumes and values are on the rise, reaching record levels. Driven by the need to reduce debt and refocus activities in the wake of the health crisis, French manufacturers are increasing the number of divestments.
Engie takes the French M&A market to new heights
In France, M&A (Mergers & Acquisitions) transactions in the first 10 months of 2021 reached a record high, with more than $246 billion, or almost €213 billion between January and November 8. Although the year is not yet over, this level already exceeds that of any 12-month period since the 2008 crisis.
Bouygues recently signed the biggest acquisition since its birth in 1952: the construction giant will pay 7.1 billion euros to buy Engie's services subsidiary, Equans. Veolia's merger with Suez is scheduled for the end of January 2022, following Veolia's purchase of Engie's stake in Suez.
➡️ [Press_release] Following the decision of its Board of Directors, and after a rigorous and competitive process, ENGIE announces that it has entered into exclusive negotiations with @GroupeBouygues for the sale of 100% of @EQUANS_Official @ENGIEgroup https://t.co/oJjrreywSm
- EQUANS (@EQUANS_Official) November 6, 2021
French energy company Engie also sold its 40% stake in GTT, a French engineering company, and continued its strategic refocusing by selling 11.5% of GRTGaz, the French gas transmission system operator, to CNP Assurances and Caisse des Dépôts.
By reducing its debt, Engie will be able to devote more time to developing its international infrastructure, and play a growing role in the renewable energies sector.
French banks: advisory and financing activities booming
For their part, French banks are also benefiting from this M&A boom. They support manufacturers in their M&A strategies through their advisory and financing activities, and are generating ever-increasing revenues in the process.
This is the case for Société Générale, for example, which saw revenues from its advisory and financing activities rise by 31% in Q3 2021. In addition, the banking group is planning to acquire the Dutch fleet management company LeasePlan, via ALD, Société Générale's long-term vehicle leasing subsidiary.
Natexis, a subsidiary of Groupe BPCE, reported 67% growth in M&A sales in Q3 2021, following its support for French automotive supplier Faurecia in its takeover of German competitor Hella.
Following the shock of 2020, a number of French manufacturers have opted for a strategic reorientation of their activities to improve performance and reduce debt. Thalès, for example, decided to sell its rail signalling business to Hitachi Rail of Japan for 1.66 billion euros. SCNF sold its railcar leasing subsidiary Ermewa to a consortium comprising the German asset management company DWS and the Caisse de dépôt et placement du Québec.
Société Générale sold Lyxor, its asset management subsidiary, to the Amundi group, Europe's number 1 asset manager, for 825 million euros. To reduce its debt, Altice, parent company of SFR, sold its towers to Cellnex for 5.2 billion euros, and intends to continue its strategic refocusing by selling the Portuguese operator Meo, which it bought 6 years ago.
The boom in mergers and acquisitions is not confined to France, with worldwide growth in asset disposals by manufacturers expected to reach around 75% by 2020.