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September 7, 2018

H1 2018 saw a record total value of European deals in the TMT sector for more than a decade. Transaction value almost tripled to €103 billion (473 deals) from €35 billion (618 deals) last year.

Technology: The need for pan- European platforms drive growth in the payment industry

The payment industry remained very active in the first half of 2018, with multiple transactions involving both corporate and Private Equity (PE) firms reflecting the consolidation of the payment ecosystem in Europe.

  • In April, Swiss-based SIX Group announced an agreement with Atos Worldline to sell a portion of its payment service unit valued at €2.3 billion.
  • In May, Sweden’s Izettle was sold to Paypal for a €1.9 billion valuation indicating the high premium commanded by VC-backed company in this industry.
  • In June, Concardis, an Advent international and Bain Capital portfolio company focused on the DACH region of Europe, announced it would merge with Hellman Friedman-owned Nets (focused on the Nordics) to form a European leader payment service provider with €500 million of EBITDA and €1.3 billion of net revenue.

The technology for finance sector is set to remain active: FNZ Group, the UK provider of technology and administration services to the wealth management industry, owned by HIG Europe and General Atlantic has retained advisors to organise a majority stake sale valued at £2 billion (€2.25 billion) in the last quarter of 2018.

Media: The Disney / Fox merger and the battle for Sky are the focus of the media industry

Two main transactions drove media activities since the beginning of 2018:

  • While Disney’s acquisition of Century fox assets was confirmed, the bidding war for Sky between Comcast and Fox / Disney has been developing for several months. As of the end of August, Comcast’s bid is slightly higher than Fox’s (£26 billion vs. £24 billion) but Fox, who already owns 39% of Sky, has until the end of September to improve their offer. A number of reports suggested that Sky may be more synergistic with Comcast (pay tv focus) while the largest opportunities of value creation for the Disney Fox combination would be on the film side including digital platform Hulu.
  • B2B publishing and event company Informa plc completed the acquisition of B2B events organiser UBM in June 2018, in a transaction worth $5.2 billion. Reflecting the attractiveness and the consolidation at play in the sector, UBM valuation at 16x EBITDA was quite high compared to a market average of 11.5x (according to Mergermarket).

Telecommunications: The need for multi-play offers drives M&A activities in Nordics and Eastern Europe

Telecommnuications carrier M&A transaction value increased 4.5 times in H1 2018, compared to the previous year, recording a €37.7 billion deal value (vs. €6.8 billion in 1H17). Most of the transactions that drove this increase, involved players in Eastern Europe and or the Nordics.

The main transaction was the long-awaited Vodafone- Liberty Global agreement. The assets sale valued Liberty Global’s cable operators in Germany, Romania, Hungary and the Czech Republic at €14.8 billion. The acquisition allows Vodafone to drive consolidation in Germany and Central and Eastern Europe (CEE) and to significantly reinforce their multi-play offering in those countries. The combination of Vodafone mobile assets, and Liberty Global’s cable offering, will create a very credible challenger to Deutsche Telekom / T-Mobile in Germany and CEE.

Another large transaction was driven by the need to offer converged, multi-play services. Sweden’s Kinnevik plans to combine two of their companies Tele2 (mobile telecommunications company) and Com Hem (triple play cable operator) to create a quadruple play service provider in Sweden able to rival market leader Telia. The transaction, expected to close in the last quarter of 2018, values Com Hem at $3.2 billion.

Norwegian telecom company, Telenor exited Eastern Europe as they sold their mobile, operations in Hungary, Bulgaria, Montenegro and Serbia to Czech Republic-based, CEE focused investment fund PPF Group for €2.8 billion. Telenor will now focus on emerging mobile markets (e.g. Myanmar, Pakistan) and the Nordics where it offers multi-play services. The new assets will allow PPF group to diversify its telecom portfolio that includes mobile operator O2 Czech Republic and CETIN (Czech Telecommunications Infrastructure) the owner of fixed, fibre-optic and mobile networks.

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