M&A keeps moving in the Nordic region

The mid-market continues to swim against the tide as larger deals are washed away, writes Mark Dunne

The mid-market continues to swim against the tide as larger deals are washed away, writes Mark Dunne

In the past six weeks, Anders Engel Christensen, partner at financial adviser Atrium Partners in Copenhagen, has worked on some prestigious deals, but he still can’t help wishing it was summer 2007 again.

This month, his firm advised on Dansk Generationsskifte’s acquisition of lighting supplier Nordlux. This followed its work on the sale of RTX Healthcare, a developer of wireless systems that monitor cardiac patients, and Consolidated Holdings’ takeover of DAN-Palletiser, an equipment maker for the logistics industry, in June.

These deals show how robust the Nordic market is in the current economic climate, but Christensen believes activity is falling: “Denmark hasn’t been hit the same way as the US and UK by the credit crisis. It’s easier for buyers to finance deals here, but the market is down compared with a year ago.”

Figures released by research house Zephyr confirm Christensen’s view, with more than 1,700 deals completed in the first six months of this year in the region, a drop from some 3,100 during the same period in 2007. Announced values fell by £1 billion, with the first half of this year totalling some £3.4 billion, down from £4.5 billion.

Bigger problems

David Ramm, partner at Ernst & Young in Stockholm, agrees that there has been a reasonable level of activity in the Nordic region, but slightly less than the same period last year.

“I guess it’s partly the credit crunch hitting top-end deals,” he says. “We’ve seen fewer larger transactions, but mid-sized deals have been holding up well, probably to the same levels as last year.”

Michael Eriksen, head of corporate finance at PwC in Denmark, supports Ramm’s view that only the larger deals are experiencing problems. “When you get above €200 million (£160 million) the market becomes sluggish, but the mid-market is reasonably active.

“We know from the private equity side that a few larger deals have been postponed due to it not being a good environment to start a deal process.”

Christensen puts these failures down to private equity firms not being able to invest as much or achieve the same level of bank debt support, which has led to a drop of larger deals. But he stresses that funding levels for mid-market deals have not changed at all.

It is an opinion shared by Ramm, who has also seen no change in the prices vendors are putting on their businesses, but he believes this will happen soon. “We have had a few deals pulled simply because vendors haven’t adjusted to the new market conditions.”

Playing it safe

One reason the Nordic market is currently thriving is due to Scandinavian banks not being exposed to the sub-prime market.

“British and US banks had quite a bit of their lending placed in sub-prime products, whereas the Scandinavian banks were not as involved, if at all,” Christensen says. “This has given them a stronger balance sheet to perform acquisition finance.”

But it is not only local firms backing deals in the region, with Christensen seeing more international funds in Scandinavia recently: “They have been very active here, especially in the past year where we have seen more or less all of them coming to Scandinavia.”

Industries these funds are investing in include real estate, healthcare, energy and retail, with Eriksen highlighting banking as a sector to keep an eye on.

“There are several small banks in difficulty due to writedowns, and one has already been taken over,” he says. “So in the next 12 months, you could see activity in the financial industry sector, in terms of banks merging.”

Meanwhile, Christensen is seeing more defensive industries, such as food and retail, being favoured by private equity backing.

“The split of M&A transactions along the different industries today is more or less the same as it was three years ago, with private equity directing funds into more defensive sectors rather than focusing on growth industries.”

Christensen is confident his pipeline will be full, but Ramm does not share his optimism: “We’ve got some visibility on the next quarter and it looks as if it will be okay, but after that, who knows?”


Population: 9 million
GDP: £154.5 billion
GDP growth rate: 2.5%
Dominant sectors:
Steel, electrical equipment, wood pulp and paper products


Population: 4.7 million
GDP: £195.5 billion
GDP growth rate: 3.5%
Dominant sectors:
Metals, timber, chemicals, textiles, shipbuilding, electronics and fishing

Population: 5.4 million
GDP: £155.8 billion
GDP growth rate: 1.8%.
Dominant sectors: Industrial machinery, furniture, windmills, pharmaceuticals and toys



Investor AB, an industrial holding company, bought 50 per cent of Lindorff, an Oslo-based debt collection agency, in June. The deal was worth some €360 million (£287.3 million), with the target company’s management also investing in the deal.
It bought its shareholding from private equity firm Altor, which plans to use the proceeds to make fresh investments.


Swedish private equity house Accent Equity has backed the management of Australian group Amcor Flexibles’ packaging business in buying the company. The acquired entity now trades as Flextrus. The business, which has plants in Somerset and Sweden, produces and markets flexible materials primarily for the food manufacturing industry. It has been owned by Amcor Flexibles since 2001.


Almondy, a bakery business that makes 75,000 frozen cakes a day for global markets, was bought by private equity firm Segulah in June. The Gothenburg-based company was sold by its main shareholder, London-based private equity firm Smedvig Capital. This is the firm’s eighth investment made by its Segulah III fund.


Nordform, a Swedish supplier of ground and water systems for infrastructure projects, bought Skandinavisk Kommunalteknik in May. The deal created one of the leading providers of sewage and drainage pumping stations in the country. The financial terms of the deal have not been disclosed, but the funding need was provided by private equity firm Segulah.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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