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Mercredi 6 Novembre 2013

Inside Credit: Telecoms Buck The Trend As Caution Prevails In European M&A

Transformative mergers and acquisitions (M&A) in the telecommunications and cable sectors in Europe have made headlines recently, as companies search for scale in a competitive environment. In particular, Vodafone AG's sale of its stake in Verizon Wireless has prompted speculation about the wireless carrier's future acquisition strategy.

As a result, Standard & Poor's Ratings Services believes it will continue to see elevated levels of M&A activity in the telecoms sector, including for cable, wireless, and fixed-lined players.

Overall, however, European corporates remain cautious in their M&A strategies in response to economic uncertainty. In general, M&A activity in the year to date has consisted of non-core disposals to reduce leverage, moderate capital expenditure (capex), and focus on core market segments. This is particularly striking in the European retail sector, where the trend of large supermarkets expanding into new markets to increase international diversification has reversed. Because companies are cautious about undertaking M&A, many transactions are positive for ratings. This is because disposals and exits from difficult markets often improve companies' financial risk profiles and reduce their need for ongoing investment. Furthermore, smaller bolt-on acquisitions don't typically require substantial re-leveraging.

Read more: download the report below (PDF 8 pages)
2013_10_30_s 2013-10-30 S  (333.5 Ko)

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