European M&A reaches post-crisis high

M&A activity in Western Europe surged in Q3 on the back of strong PE interest and low UK stock prices

Dealmaking in Western Europe reached a post-crisis record in the third quarter of the year as dealmaker confidence continues to rise in the region. A total of US$380.1 billion in deals were announced in Q3—the highest quarterly value since Q2 2007.

A total of 15 megadeals (US$5 billion+) worth US$173.2 billion were announced during the quarter, marking the third-highest deal count on record following Q1 2021 and Q2 2007.

As a result of this strong third-quarter activity, year-to-date deal value has already overtaken the US$769.6 billion-worth of deals announced in 2020, with three months of dealmaking left in the pipeline.

Private equity powers ahead

Q3’s impressive dealmaking was underpinned by healthy activity in the European private equity market. A total of 2,238 PE deals valued at US$456.6 billion were announced in Q1-Q3 2021—already overtaking all annual volume and values on record.

Primary buyout activity was particularly strong. A total of US$87.2 billion in deals targeting Western European assets almost tripled the US$30.4 billion announced in Q3 2020, while volume increased from 312 deals to 402.

In line with the overall European trend, the largest PE deal of the quarter—Clayton, Dubilier & Rice’s US$14 billion takeover of UK supermarket Morrisons—was conducted by a US bidder. The buyout group fought off competition from another US rival, a consortium led by Fortress Investment, to secure the deal.

The bidding war for Morrisons is emblematic of US PE firms’ interest in UK listed companies. A weaker pound has made UK-based targets more attractive, as has the underperformance of UK stocks. The FTSE 100 is still trading lower than it was before the pandemic began, unlike the S&P 500 and the Euro Stoxx 50, both of which are trading far higher than they were in February 2020.

US bidders set their sights on the UK

Overall, the UK generated the highest activity across the region during the third quarter, in terms of both value and volume. A total of 371 deals valued at US$130.2 billion changed hands—more than doubling the US$60.3 billion-worth of deals secured in Q3 2020 while accounting for 96 more deals.

Interest in UK dealmaking has been consistently strong throughout 2021, with US$308.5 billion in deals announced in the first three quarters already overtaking 2020’s annual total of US$264.7 billion.

PE firms weren’t the only ones buying. US buyers in general have been a major driving force behind this activity, securing 90 deals worth US$93.1 billion in Q3—the highest quarterly value total on record, and accounting for 71% of total deal value targeting UK assets in the third quarter.

The largest of these deals was sports betting firm DraftKings’ US$25.4 billion takeover offer for gambling group Entain. While Entain rejected the initial offer from its US rival, it is said to be carefully considering the revised offer of £28 a share.

Industrials & chemicals dealmaking posts new record

Industrials and chemicals generated the highest value across all sectors in Q3, overtaking the TMT sector, which was dominant in the first two quarters. A total of 354 industrials and chemicals deals valued at US$97.1 billion were recorded—the highest quarterly value on record and registering an increase of 25% year-on-year.

The largest deal of the quarter was Parker Hannifin’s US$9.9 billion takeover offer for UK aerospace and defense group Meggitt. The US aerospace group had been locked in a takeover battle with US rival TransDigm, but the latter withdrew its offer in early September, citing limited access to due diligence information.

While the UK government is said to be closely monitoring the deal on the grounds of national security, Parker Hannifin has made a series of pledges regarding job creation and national security in order to alleviate such concerns and secure the deal.

Another notable Q3 deal within the industrials and chemical space was French auto equipment maker Faurecia’s US$8.4 billion takeover offer for German automotive supplier HELLA. The deal reflects growing consolidation in the European automotive industry as it shifts its focus away from combustion engines to the production of electric vehicles (EVs)


Fueled by robust capital and debt markets, low interest rates, and record dry powder, dealmaking in 2021 could be on track to top the pre-crisis record set in 2007. The COVID vaccine rollout across Europe has enabled societies to gradually reopen, supporting economic growth across the continent. While uncertainty clearly remains, M&A is an effective tool for dealmakers looking to secure growth in increasingly competitive markets.

Private equity has been an important driver of this activity, with buyout firms racing to deploy cash accumulated during the pandemic—seen in competitive auction processes such as CDR’s takeover of Morrisons. With these underlying drivers continuing to encourage activity, global dealmakers should prepare themselves for a busy final quarter of the year

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