The total value of merger and acquisition (M&A) transactions in the Nordic region – Denmark, Finland, Norway and Sweden – grew by 28% in 2012, according to a report by S&P Capital IQ, a financial data and analytics provider. Over the same period, the total value of M&A transactions in western Europe contracted by 30%.
The rise in Nordic M&A deal value is directly connected to the strong performance of the region's economies. The Organisation for Economic Co-operation and Development has forecast that GDP in the Nordic region will grow by 1.7% in 2013, while GDP in the eurozone is expected to decrease by 0.3%. According to the S&P Capital IQ report, the increased M&A activity in the Nordics is also closely connected to the strong revenue growth and short-term liquidity profiles of companies operating in the region.
Excluding deals by banks and issuance companies, Sweden recorded $9bn-worth of M&A transactions in 2012, the largest amount in the Nordic region. Norway recorded nearly $5bn-worth of deals and Denmark $4.5bn. With just $65m-worth of deals in the year, Finland's M&A activity was well below the regional average, however, according to Pavle Sabic, an application specialist at S&P Capital IQ and author of the report, Finland “invested heavily in research and development, which we think could suggest an increase in M&A in the long term”.
The largest Nordic M&A deals in 2012 included the $4.09bn acquisition of Swedish manufacturer of medical equipment Gambro by US healthcare company Baxter International, the $2.71bn acquisition of Norwegian energy company Statoil Fuel & Retail by Canada-based retailer Couche-Tard, and the institutional buy out of Swedish trading company Ahlsell by private equity firm CVC Partners worth $2.4bn. But, despite these large deal sizes, the S&P Capital IQ report states that one of the characteristics of M&A transactions in the region is that the majority target small and medium enterprises (SMEs). Over the past years, 82% of all deals in Nordic countries involved SMEs.
S&P Capital IQ's report concluded that Nordic economies are likely to outperform those in western Europe in the near future. “The Nordic region is not only defiantly standing its ground but showing positive signs of things to come," the report stated. “Our research shows that the buoyant revenue growth of privately held and listed companies in all four countries in 2012 came at the expense of high indebtedness for those in Sweden and Norway," the report stated.