Alston & Bird’s second annual study of M&A activity between the Nordic countries and the United States shows that while the number of reported deals remained largely unchanged in 2018 over the previous year, the value of those deals declined by 27 percent.
The 2018 Nordic–U.S. M&A Study – which tracks both inbound and outbound M&A activity between Denmark, Finland, Norway, and Sweden and the United States during 2015–2018 – tallies the number of reported deals for 2018 at 105, just one shy of 2017’s deal count of 106. But the value of those deals dropped considerably – from $16.6 billion in 2017 to $12.1 billion in 2018 – a loss of 27 percent.
A breakdown of the study’s findings show a rise of 25 percent in the number of acquisitions of U.S. targets by Nordic buyers last year – 55 transactions versus 44 in 2017 – but a 19 percent drop in total deal value, from $6.3 billion in 2017 to $5.1 billion in 2018.
Acquisitions of Nordic targets by U.S. buyers, on the other hand, declined by 19 percent, from 62 reported transactions in 2017 to 50 in 2018. Deal value also declined, from $10.3 billion in 2017 to $7 billion in 2018 – a decrease of 32 percent.
“Although Nordic buyers were more active than their U.S. counterparts last year, the robust jump in the number of Nordic acquisitions wasn’t enough to offset the drop in U.S. deal counts, nor was it enough to make up for the drop in deal value on both sides,” said Soren Lindstrom, Alston & Bird partner in the firm’s Corporate Transactions & Securities Group and a Denmark native who advises Nordic and other European companies in U.S. legal matters, including M&A transactions. “However, over the past four years, U.S. buyers have overwhelmingly led the Nordic countries in both deal numbers and value, even though U.S. deal counts and value fell last year to their lowest levels since 2015.”
Indeed, as the study shows, during 2015–2018 U.S. buyers were significantly more acquisitive in the Nordic region than Nordic buyers in the U.S. During that time, U.S. buyers acquired a total of 247 Nordic targets for a total of $37.3 billion. Meanwhile, Nordic buyers acquired a total of 174 U.S. targets for a total of $23.3 billion. In other words, U.S. buyers invested approximately 60 percent more in the Nordic region than Nordic buyers in the U.S. during the same period.
Among the report’s other findings:
- From 2015 to 2018, companies in Sweden were far more acquisitive in the U.S. than companies in the other Nordic countries. Of the total 174 reported acquisitions of U.S. targets by Nordic buyers during the period, 104 were by Swedish buyers for a total of $17.2 billion (approximately 74 percent of the total investments made by Nordic buyers in the U.S.). Swedish companies were also the most attractive targets for U.S. buyers. Of the total 247 reported acquisitions of Nordic targets by U.S. buyers, 94 were Swedish targets for a total purchase price of $17.4 billion, followed by 75 Danish targets for a total purchase price of $8.6 billion.
- During the same period, the average purchase price for a Swedish target was $185 million, whereas the average purchase price for a Danish target was $115 million. Put another way, the average purchase price for a Swedish target was a whopping 61 percent higher than a Danish target.
- M&A transactions between the U.S. and Sweden remained solid during 2015–2018. Only Sweden experienced an increase in acquisitions by U.S. buyers in 2018. The three other Nordic countries all experienced a decline or stagnation in 2018.
- Overall, the deal value for Danish targets has been steadily declining since 2016, and there appears to be waning interest in Danish targets by U.S. buyers.
- Norway and Finland lag significantly behind Sweden and Denmark in the number of M&A transactions and deal value overall during the four-year period (except for one large Finnish deal in 2017).
- Private-equity-backed transactions increased significantly from 2015 to 2018 (both inbound and outbound between the U.S. and Nordic countries). Except for one acquisition by a Danish PE firm in 2017, all of the 17 reported PE-backed acquisitions of U.S. targets were by Swedish PE firms. U.S. PE firms accounted for the two largest M&A transactions reported ($5.9 billion in 2016 for a Swedish target and $4.1 billion in 2017 for a Finnish target).
- Targets in the information technology and industrial products and services industries were, by far, the most common during the period.