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M&A: average premiums in Europe 2017-2018, by industry

A purchase premium in terms of mergers and acquisitions refers to the excess paid by an acquirer over the cost of the shares being acquired. In other words, if company (A) has a share price of one hundred dollars and company (B) pays 150 dollars per share to acquire the company, the purchase premium paid was 50 percent. In 2018, premiums for high technology companies were the highest of any industry.

Global premiums paid

Worldwide, purchase premiums to four-week stock price was highest in the healthcare industry. This was mainly due to the high premiums paid in the healthcare industry in M&A deals conducted in the United States. Regionally, premiums varied, with lower premiums paid in Asia and the United Kingdom (UK) seeing the highest.

Valuing target companies

Enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) is a key valuation metric used by investors and analysits to compare companies within the same industry against each other. In Europe, EV/EBITDA valuations tend to be high, meaning acquiring companies are likely to be overpaying.

Average merger and acquisition (M&A) premiums to four week stock price in Europe in 2017 and 2018, by industry

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Source

Release date

December 2018

Region

Europe

Survey time period

2017 and 2018

Supplementary notes

The source added the following information "The data given refers to the time period 01/01/2017 - 12/31/2018 and all spinoffs, splitoffs, open market repurchases, exchange offers and equity carveouts are excluded. Average premium to 4 week stock price prior to announcement is capped at 100%."

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Statistics on "KPI's of Europe's largest insurers"

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