The urge to merge in Switzerland

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Mergers and acquisitions (M&A) are a key factor of Switzerland’s economy and can offer excellent opportunities for Chinese investors. The Swiss economy has always been highly integrated into the global economy. Its per capita import and export volumes and its import and export rate as a percentage of GDP are among the highest in the world. Exports play a crucial economic role for this small country whose economy is based on a highly qualified labour force performing highly skilled work.

Hans-Jakob Diem Lenz & Staehelin
Hans-Jakob Diem
Shelby R. du Pasquier Lenz & Staehelin
Shelby R. du Pasquier

The main industries include micro-technology, high-tech, biotechnology and pharmaceuticals, and banking and insurance. In 2008, some 310,000 private businesses were operating in Switzerland. This compares to about 290 public enterprises that are listed on the SIX Swiss Exchange and includes some of the largest and best-known multinationals in the world such as ABB, Credit Suisse, Glencore, Nestlé, Novartis, Roche and UBS. In addition, due to its central location in Europe, the stable political system, the competitive tax regime and several other factors, Switzerland is regarded as one of the most attractive headquarter locations for Europe and world-wide. It has attracted a large number of foreign global players including Google, IBM, McDonalds, Kraft Foods, Nissan and Yahoo to name a few.

Against this background it is not astonishing that M&A activity in Switzerland is, relative to the size of the country, extremely high both in terms of domestic and cross-border transactions. However, the global financial crises and the European debt crisis have led to a decline, although moderate, of the Swiss M&A market, starting in 2008, both in the number of transactions and in value. The economic downturn did not affect Switzerland as badly as other parts of the world, however, and a number of notable domestic and inbound transactions continue to be announced.

Big deals

Deals during 2011 are noted as being increasingly driven by interest in and from high-growth markets, notably China, India and Brazil. Nestlé’s major stake acquisition in the Chinese confectionery manufacturer Hsu Fu Chi and the acquisition of Sarasin by Brazil’s Grupo Safra are major deals that reflect the continued attractiveness of the Swiss industry. Other notable transactions last year include the acquisition of Nycomed by Takeda for US$13.7 billion or the acquisition of Synthes by Johnson and Johnson for US$21.3b.

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