(News Bulletin 247) – After a poor year in 2023 in operations, the mergers and acquisitions market targeting listed companies saw renewed activity over the first eight months of 2024, notes Herbert Smith Freehills Paris.

Last year, public offerings clearly stalled on the Paris Stock Exchange, due to the rise in interest rates and the context of economic and geopolitical uncertainties. Only 23 operations were identified and declared compliant, which constituted an unprecedented low point since 2018.

After a sluggish year in operations, the Herbert Smith Freehills Paris firm is observing a clear rebound in the market for mergers and acquisitions of listed companies (public M&A), over the first eight months of 2024.

For its first half-yearly bulletin dedicated to these operations, the Herbert Smith Freehills Paris team decided to include the months of July and August, opting for a broader reference period than just the first calendar half-year, in order to better reflect activity during this period.

The summer period was particularly rich in projects, with eleven offers declared compliant by the Financial Markets Authority. Between January and the end of August 2024, Herbert Smith Freehills Paris recorded a total of 19 offers which obtained the approval of the AMF. This number is up compared to the same period of the 2023 financial year, with 13 offers opened between January and the end of August.

“The year 2023 reached records in terms of low number of takeover bids (9 over the calendar half-year, 13 offers over the period extended to August 31, 2023 and 23 offers open over the entire calendar year)”, reports Herbert Smith Freehills Paris at News Bulletin 247.

The firm notes that these first eight months of 2024 were driven by a resumption of “public to private” operations, i.e. transactions involving the buyout of a listed company by a private investor. Herbert Smith Freehills Paris also notes that manufacturers have been very active since the start of 2024.

“Issuers are increasingly opting for withdrawal from the Stock Exchange in order to concentrate on long-term strategies far from market pressures,” reports the firm. This argument has been raised numerous times by companies targeted by a public offer. The diagnostic specialist Eurobio Scientific explained that it had “observed that the listing of its shares did not provide it with the flexibility theoretically offered by the Stock Exchange as part of its financing and that it did not have the financial means to support its development” .

Concerning only takeover operations (when a reference shareholder decides to delist the company), Herbert Smith Freehills Paris counts 4 “public to private” operations initiated by funds, whether they are in the majority at the capital of the initiator (Believe, Osmozis) or minorities (Boiron, SII).

Furthermore, Herbert Smith Freehills Paris mentions a closure offer (Altur Investissement) and two public withdrawal offers (the offer on MND following the recapitalization of the company in January 2023 and the offer on Itesoft having previously made subject of a simplified public purchase offer (OPAS) in June 2022 which marked the entry of the minority fund).

From a sectoral point of view, the IT sector remains in the majority with five operations. This sector is on par with that of industries and materials which has concentrated five operations since the start of the year. The finance and audiovisual and telecommunications sectors follow with two operations each.

Significant bonuses

The buyers have remained generous with the shareholders of their targets. The median premium compared to the last listed price before announcement of the operation reached 35.4% for all offers combined, even if the firm notes a slight decline compared to the first half of 2023.

“With regard to operations taking place in a takeover context (normal procedures and mandatory offers submitted according to the simplified procedure), the average premium on the three-month volume-weighted average prices (CMPV) remains high (41.7% for industrial initiators and 43.26% for financiers)”, specifies Herbert Smith Freehills Paris.

Despite this resumption of operations, the firm recalls that the market was affected by the political instability in France marked by the dissolution of the National Assembly in June, recalls Laurence Vincent Corporate/M&A Associate at Herbert Smith Freehills Paris. A context which added uncertainty, and led to the postponement of certain operations “while waiting for better days”, continues the specialist, who however recorded the opening of six offers for the month of June alone and five others for the month of July.

The second half announces better forecasts for “public to private”, explains Herbert Smith Freehills Paris. The firm cites Talan’s offer for Micropole. Moreover, the digital services company will leave the Paris Stock Exchange on November 5 as part of a squeeze-out procedure, marking the epilogue of the takeover bid launched last spring by Talan.

The firm also cites the offer targeting Neoen by the Canadian private equity company Brookfield or that concerning Esker, which will be bought by the Bridgepoint investment fund.

A Parisian coast that is becoming thinner

These two operations will, like Micropole, fuel the procession of public offers, which are followed by the implementation of a compulsory withdrawal. More than half (56%) of the offers declared compliant by the AMF since January 1, 2024 have resulted in a delisting, notes Herbert Smith Freehills Paris.

For the Parisian market, the movement of attrition of the rating therefore continues. The number of IPOs since the start of the year still does not cover delistings. Last year, the Paris Stock Exchange recorded 6 new IPOs (with public offerings and not counting SPACs), compared to 31 listings at the same time, recalled EY in its observatory of public offers, early 2024.