DealZone

Noted: Deutsche sees M&A “wave”

November 5, 2009

Like UBS and Societe Generale, Deutsche Bank’s researchers are now forecasting a resurgence in M&A and say investors should “prepare to ride the wave”.

They concede that “picking actual as opposed to potential M&A targets is a notoriously difficult exercise” but have come up with 30 potential European targets, based on strategic and financial criteria. While bank lending remains a problem, they say that is not always an insurmountable hurdle, and should spur more stock-based deals (see graph below).

In a note dated Nov. 4, the DB team writes:

“Following two years of below-normal levels of merger and acquisition (M&A) activity in Europe, we believe the conditions are in place for deals to return to the fore as a major driver of returns: Public markets are well and truly open for financing, low organic growth should spur expansion by acquisition, rising equity markets and sub-peak valuations make stock an attractive acquisition currency, and confidence is returning to boardrooms and executive offices.”

Here are their 30 top targets:

db-european-ma-equity-basket-constituents

db-stock-deals-as-percentage-of-total-deal-volume

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