January 18, 2022

the big comeback of domestic mergers and acquisitions

Business consolidation is no exception. Too rococo, the General Electric version conglomerate is no longer chic; very trendy, on the other hand, the split and its clean lines. Timeless, the marriage of equals, the equivalent of The little black dress of mergers and acquisitions, is worn curved braces close to the body, reinforcements in the back anti-stabbing. And of course, who says fashion says influencer. The most prominent of the moment is called Antoine Frérot.

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By launching, in August 2020, the world leader in environmental services to attack his rival Suez, the boss of Veolia gave the French market the desire for domestic consolidations. Bouygues got into gear. Two times. The owner of TF1 concluded in May 2021, an agreement with the German Bertelsmann to buy the audiovisual group M6-RTL from him. And in December, the family business promised to spend 7.1 billion euros to acquire Equans, the services subsidiary put up for sale by the energy company Engie.

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In the meantime, in September 2021, we discovered that Auchan had been negotiating since the spring for the acquisition of Carrefour, a major transaction for the mass distribution sector if it had come to an end. Quite a symbol, the Carrefour-Promodès merger was moreover one of the flagship operations of the great wave of national mergers of the end of the 1990s (Axa-UAP, Total-Elf, BNP-Paribas…).

Dusty files exhumed

Quickly, quickly, the investment bankers unearthed dusty files from the cupboards, just to bring them up to date. What about the BNP-Société Générale merger? And that of Faurecia and Valeo? Must the Belgian nuclear issue be resolved for Total to swallow Engie? What magic combination to go from four to three telecom operators on the French market? What if Lactalis swallowed Danone? Certainly, most of these sea snakes will return to sleep in their boxes, but not all of them. The environment, in fact, is favorable to large maneuvers near home.

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Firstly, the advantage of such operations is that they generally generate more synergies than a merger with a foreign competitor: a powerful attraction for companies battered by the health crisis. On the other side of the coin, these endogamous transactions can cause a strong social breakdown in France and therefore become difficult to assume politically.

During the recent sale of Equans, the public authorities had indicated that they would prefer to see the Engie subsidiary strengthen a French champion rather than be taken over by an American investment fund.

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