Italian M&A sees an uptick in Q3 activity, while PE activity drops

Mergermarket, the leading provider of M&A data and intelligence, has found that Italian M&A has seen an uptick in activity in Q3, marking the strongest quarter by value since 4Q18. A total of 146 deals were recorded in Q3 worth EUR 11.6bn, pushing YTD figures to EUR 24bn and 423 deals. This represents a 45.7% decrease in value compared to the equivalent period in 2018 (EUR 44.1bn). The slowdown in M&A mirrors European dealmaking, which has reduced by around 25% by value year-to-date.

Significant movements in the telecoms and energy, mining and utilities (EMU) spaces helped drive this quarter’s activity. The EUR 5.3bn tie-up between Telecom Italia, through its subsidiary INWIT, and Vodafone is the largest deal so far this year, and the second largest targeting the Italian TMT industry since 2016. The transaction follows a wider industry trend which is seeing companies striking deals in a bid to share the investment costs needed for 5G rollout.

The majority of activity has been generated by domestic dealmaking, with EUR 14.6bn disbursed across 259 deals between Italian firms, compared to EUR 9.3bn and 164 deals attributable to foreign investment. This is the first time since 2016 in which domestic M&A has overtaken inbound by value. The data was announced at Mergermarket’s 12th Annual Italian M&A and Private Equity Forum held in Milan on 6th November.

Source: Mergermarket

Private equity dealmaking has experienced a slowdown in Q3 with 28 buyouts worth EUR 648m recorded, the lowest quarterly value since 4Q16 (22 buyouts, EUR 673m). This year’s figures stand at 84 buyouts worth EUR 4.9bn, down from the EUR 15.2bn and 77 transactions during the equivalent period last year.

Massimo Benedetti, PwC Deals Leader stated: “The M&A market in Italy is expected to stay strong in 2021. Brexit is shifting some focus from UK to Continental Europe. Search for yield from private equity will benefit the Italian market supported also by some build up investment in still fragmented markets. Increased focus on their core business will drive carve out activities in key industrial groups.”

Filippo Modulo, Managing Partner at CHIOMENTI commented: “Uncertainty does not help, however we continue to notice strong interest from foreign investors, both PE and industrial, into the Italian market. We are also seeing assets with a clear space for consolidation and successions in selected areas of business; moving forward from interest to completion is just a matter of time”.

Alessandra Castelli, EMEA Public Markets Editor at Acuris commented: “The domestic political uncertainty, following the collapse of the Lega Nord/M5S government on election threats and the subsequent formation a new, more moderate coalition between PD and M5S, coupled with a subdued macroeconomic outlook have contributed to a fall in dealmaking so far this year. However, small to medium size deals are expected to continue contributing to the bulk of the Italian M&A activity.”