Spin-off deals appetite remains strong across Europe despite general M&A slowdown and looming EU referendum

William Turvill
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(FILES) A picture taken 17 April 2007 in...
The UK and Ireland are expected to see the highest volumes of corporate carve-out activity this year (Source: Getty)

The looming EU referendum is not expected to slow spin-off mergers and acquisitions (M&A) activity in Europe.

Following a record 2015 for M&A as a whole, with more than $5 trillion of deals announced, there has been a slowdown in global activity so far this year.

But Aurelius Group, which surveyed 200 respondents from its network of UK and continental European advisory and corporate contacts, has predicted a “buoyant year for European corporate carve-outs”, where companies sell part of their business.

Read more: How EU referendum uncertainty is slowing UK deal activity

It found non-core asset disposals were driving the increase in corporate divestments, with 91 per cent of respondents predicting this activity will either increase (43 per cent) or stay level this year.

Despite the slowdown in M&A generally, 96 per cent of respondents forecast investor appetite for carve-outs to exceed 2015's level or stay the same.

The UK and Ireland are expected to see the highest volumes of corporate carve-out activity this year, despite the upcoming EU referendum. Some 47 per cent said they expected to see most corporate divestment activity in the UK and Ireland this year.

Read more: Br-entrance or Brexit - UK targeted deals from EU sky high in 2015

Tristan Nagler, managing director of Aurelius in the UK, said: “The survey shows that despite the uncertainty generated by the UK’s EU referendum, market activity is expected to remain buoyant as corporates continue to seek the benefits of streamlining their businesses, refocusing their strategies, and freeing up capital through the disposal of non-core assets.

"Accordingly, the survey results show that those involved in this area of the M&A market remain confident that divestment activity will continue, and even potentially increase, across Europe in 2016."

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