Deutsche Expands Nordic Focus as Bank Lands Biggest Merger Deal
Deutsche Expands Nordic Focus as Bank Lands Biggest Merger
Hannelore Foerster/Bloomberg
Deutsche Bank’s ambition to grow in Scandinavia may help it reclaim the title of the region’s top dealmaker.
Deutsche Bank’s ambition to grow in Scandinavia may help it reclaim the title of the region’s top dealmaker. Photographer: Hannelore Foerster/Bloomberg
Deutsche Bank AG (DBK), which won 2011’s biggest Scandinavian corporate-finance deal when it led DuPont Co.’s bid for Danisco A/S, is boosting its Nordic unit as the pace of mergers in the region tops that of Europe and the U.S.
“The Nordic market is playing a more important role relative to the rest of Europe,” said Jan Olsson, head of Deutsche Bank’s Nordic investment banking division, in an interview in Stockholm.
Deutsche Bank is competing for mergers and acquisition advisory fees against global peers, including Goldman Sachs Group Inc. (GS), and local rivals such as Sweden’s SEB AB after the Nordic market for announced takeovers rose 39 percent in 2010 to $78 billion, according to data compiled by Bloomberg. The Frankfurt-based company says the figure will keep growing, prompting it to hire employees from Nordea Bank AB (NDA), Swedbank AB (SWEDA) and SEB. Deutsche Bank opened its first office in Copenhagen last year.
“Over the long run, being local and being a part of the community is critical,” Olsson said in the April 11 interview.
Deutsche Bank set up a four-person currency team in Stockholm last year. The company also started offering corporate finance services at its Oslo branch, which until 2010 only provided banking to the country’s shipping industry.
Copenhagen-based Danisco, the world’s largest maker of food ingredients, hired Deutsche Bank in December to find a buyer after the Danish company’s board deemed a bid by an entity it hasn’t identified to be too low. DuPont bid 665 kroner ($106) a share in January, valuing Danisco at 31.7 billion kroner and making it this year’s biggest Nordic M&A takeover. The deal still needs regulatory and shareholder approval.
Nordics Top Growth
In the first quarter, announced Nordic M&A deals doubled in value to $25.4 billion, data compiled by Bloomberg show. The value of European deals rose 19 percent to $261 billion in the same period and U.S. deals increased 18 percent to $354 billion.
“We expect the Nordic M&A market to grow in 2011 and 2012,” said Michael Eriksen, a partner at the Copenhagen branch of PricewaterhouseCoopers LLP. “Company results are improving, financing is becoming more available and trade investors as well as private equity investors are coming out of the crisis with strengthened balance sheets and cash and plans for acquisitions.”
The Danisco transaction alone propelled Deutsche Bank to rank as the Nordic region’s second-biggest dealmaker after New York-based Goldman Sachs, which also advised DuPont in its bid. Deutsche Bank placed sixth among merger advisers last year and ranked 22nd in 2009, according to Bloomberg data.
‘Attractive Targets’
“Recent deal flow exemplifies the trends we are seeing in M&A: strong corporates poised to grow through acquisitions using healthy balance sheets to acquire attractive targets,” said Helena Svancar, head of Deutsche Bank’s Nordic M&A unit, in an interview. “There are many such companies in the region.”
Deutsche Bank’s ambition to grow in Scandinavia may help it reclaim the title of the region’s top dealmaker, which it held in 2008 following the Carlsberg A/S and Heineken NV (HEIA) acquisition of Scottish & Newcastle Plc. Deutsche Bank also was involved in 2005’s biggest Nordic deal, the private-equity buyout of phone company TDC A/S.
The German bank says Scandinavia is poised for a surge in mergers as sound corporate finances create some of the most attractive opportunities to cash-heavy potential buyers. Sweden’s Alfa Laval AB (ALFA), the world’s biggest maker of heat exchangers, agreed in December to buy Denmark’s Aalborg Industries Holding A/S for about $800 million in cash, while Swedish bearing maker SKF AB (SKFB) bought U.S. Lincoln Industrial Corp. in October for $1 billion in cash.
“Nordic corporates were very careful during the crisis and that was the right strategy,” said Olsson. “They have healthy balance sheets and that positions them well as both buyers and sellers.”
Deutsche Bank has been involved in 109 Nordic deals worth a combined $141 billion since 2002, according to Bloomberg data. The bank, Germany’s largest, generated 61 percent of revenue from investment banking in 2010, its earnings report shows.
To contact the reporters on this story: Adam Ewing at aewing5@bloomberg.net; Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Tim Quinson at tquinson@bloomberg.net
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