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Consolidation is taking place in all the sectors in which Swiss companies are most active - healthcare, utilities, chemicals, engineering and services. Companies to watch include ambitious Adecco, cash-rich consolidator Novartis, a refocused ABB and, with its sights set on L'Oreal, a Nestle in search of distribution synergies. And the success of the Swisscom IPO has demonstrated the significance of making shareholder value the priority, setting the mood for corporate takeover activity. Euan Hagger reports.
It has been suggested that the merger between Clariant and Ciba (see p72) will act as a trigger for further consolidation in the industry, yet other companies may not wish to take the diversification route that Clariant and Ciba have chosen. Nevertheless, the move towards larger critical mass and the globalization of the specialty chemicals industry will continue. Companies that increase their scale through mergers or acquisitions that offer significant overlap, and so do the most to retain their focus, will receive the warmest reception from the markets.
Hot on the heels of the specialty chemicals merger came news of an even larger potential merger between the aluminium, chemicals and packaging company Alusuisse-Lonza and Viag of Germany. Although in November it was unclear whether a formal agreement between the two would emerge, if the deal comes out it will add to what is shaping up to be a fruitful period for Swiss M&A.
The highest concentrations of Swiss corporates are to be found in healthcare, utilities, chemicals, engineering and services, and consolidation is taking place in each of these five sectors.
In the services industry, Adecco is likely to seek further growth through acquisition or merger. The company, which was formed through the Swiss-French merger between Adia and Ecco, is a provider of temporary help services.
In the utilities sector, deregulation of power markets is taking place, paving the way for a reduction in the stakes held in power companies at a cantonal government level. Among private utilities, acquisitions and divestitures are anticipated as power companies reorganize along more focused lines in either generation, transmission or the running of the power grid.
In the healthcare sector, the market is still waiting for Novartis to make its next move. The pharmaceuticals company stands as a potential industry consolidator and...