Mergers and acquisitions by Swiss industrial companies are set to rise by as much as 20 percent next year as their chiefs use their strong balance sheets to make purchases overseas, according to KPMG.
“I think the opportunity of distributing to shareholders is not what they prefer,” Patrik Kerler, head of mergers and acquisitions in Switzerland at financial advisory firm KPMG, said in an interview in Zurich. “They are deciding on whether to keep cash back for what’s coming up the road or to spend on acquisitions in growth markets.”
Companies in industrial and consumer markets completed the largest number of Swiss deals in 2012, according to data from KPMG. Zurich-based power-grid maker ABB Ltd.’s $3.9 billion takeover of Thomas & Betts Corp., a U.S. maker of electrical components, was the largest Swiss industrial deal. In commodities, that was eclipsed by Baar-based trader Glencore International Plc’s proposed takeover of Swiss mining company Xstrata Plc in a deal worth more than 29 billion pounds ($46.7 billion), according to data compiled by Bloomberg.
ABB may spend as much as $10 billion by 2015 on takeovers, Chief Financial Officer Michael Demare said last May. Lock-maker Kaba Holding AG and electronic-components supplier Daetwyler Holding AG have also said they are scouting for deals to build market share.
“I think the directions for these investments will be the U.S. and South America where there is a growth market and decent prices,” Kerler said, adding that the high liquidity of Swiss companies gives them an advantage in acquisitions.
Swiss companies did 352 transactions with a total volume of $116 billion in 2012, or 56 percent more than the previous year, KPMG said in a yearbook of Swiss deals published yesterday.