The largest company mergers in 2022 with Swiss participation

Despite the gloomy economic situation, the number of company mergers and acquisitions with Swiss participation reached a new record high in 2022 - there have not been so many mergers and acquisitions in over ten years, as the auditing firm KPMG notes. According to KPMG's analysis, 2022 even surpasses the previous record year of 2021: back then, there were 604 mergers and acquisitions with a volume of just under USD 170 billion. "The brisk activity on the Swiss M&A market shows that mergers and acquisitions are sustainably an integral part of many growth-oriented corporate strategies. The fact that private equity companies are in turn involved in around a third of all deals is also a sign of solid capital availability in the market," explains Timo Knak, Head of Mergers & Acquisitions at KPMG. He also expects active M&A business in 2023: "Investor sentiment remains thoroughly positive despite ongoing supply chain problems, the Ukraine war, and rising interest rates."

Largest M&A activity in the technology sector

Almost half of all transactions were in the telecommunications and technology sector (TMT), industry, pharmaceuticals and life sciences. With 124 transactions and a deal volume of more than USD 14.5 billion, the TMT sector was the most active M&A market, followed by the industrial sector with 89 deals and a volume of USD 6.5 billion. In the pharmaceutical and life sciences sector, 82 deals were completed with a value of just under USD 13 billion.

Swiss companies again bought up significantly more foreign companies in 2022 than vice versa: 283 acquisitions compared with 152 disposals. National transactions (Switzerland/Switzerland) accounted for around one-fifth of all mergers and acquisitions with Swiss participation (127 deals). Around 13% of all transactions were attributable to foreign transactions with Swiss sellers (85 deals).

Two major company mergers in the chemical and consumer goods sectors

The ten largest mergers and acquisitions accounted for just under 60% of the total volume in 2022, at around USD 81.5 billion. The largest transaction with a value of just under USD 21 billion is the acquisition of the fragrance manufacturer Firmenich SA by the Dutch Royal DSM, a leading global supplier of food additives. With a transaction volume of around USD 19 billion, this is followed by the acquisition of Swedish match and tobacco producer Swedish Match AB by Swiss tobacco group Philip Morris International.

Sustainability increasingly important decision criterion for acquisitions

According to a KPMG survey (the company interviewed 151 M&A specialists, mainly in Europe, 38 of them from Switzerland, on the topic of sustainability in the M&A business), 82% of market participants incorporate sustainability considerations into mergers and acquisitions. Thus, 40% of the respondents already regularly conduct ESG due diligence - compared to 28% of the companies surveyed that currently do not do so at all. Based on the survey, KPMG expects this figure to fall to 5% in the future.

"Sustainability considerations also affect the effective transaction price," says Florian Bornhauser, due diligence expert at KPMG. For example, half of the respondents are willing to pay a sustainability premium of 1-5%, 15% of the respondents would pay 5-10% more, and 3% of the respondents would even pay a premium of more than 10% if ESG criteria are met. "On the one hand, this has to do with the fact that buying companies are increasingly aware of ESG risks and their potential financial implications. On the other hand, there are also more and more investors who have realized that positive ESG performance is an indicator of professional management and thus has a direct impact on company value."

At the same time, there are still significant challenges in practice when conducting ESG due diligence. In particular, defining an appropriate scope of review, obtaining reliable data from the target company, and quantifying the results pose challenges for investors. In this context, the survey results also revealed how the most advanced investors - especially international financial investors - are proceeding in this regard to address these challenges.

Source: KPMG