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Digitalisation key to Industrials M&A surge

With Industrials & Chemicals deals across Europe climbing to a total value of €35 billion in 3Q20, way up on the paltry, coronavirus-dented haul of €8.9 billion in 2Q20, the question is not whether there is a recovery in the space but how long-legged it will prove to be.

Industrials was always likely to feel the COVID-19 pinch. While many technology plays lent into the broader themes of digitalisation that were gathering pace before the pandemic and came to define work and leisure during lengthy lockdowns, Industrials & Chemicals are typically cyclical operators.

At a time of subdued demand, this is not the place to be. In terms of deal workflow, Industrials & Chemicals groups require heavy physical due diligence—site visits and the like being especially important when accounting for the value and life expectancy of locations and plant equipment.

Luckily, digitalisation has come to the rescue, with dealmakers ramping up not only the use of virtual data rooms (VDRs), but also online site visits—with drones and other networked equipment assisting due diligence efforts. Transaction execution groups such as London-based The Deal Team are consolidating M&A workflows, building out VDRs and staggering site visits where they must be done in person—for good hygiene from a COVID and deal perspective.

As many Western European countries re-enter lockdown, the spectre of a sustained demand squeeze may dent the recovery. But COVID-19 stasis fatigue and accelerated innovation in getting deals over the line may yet support financial and trade buyers alike keen to put capital to work.

Highlights from Mergermarket:


  • Verkor, a French electric vehicle battery cell manufacturer, is seeking between €20 million and €30 million in a Series A round as it gears up for the launch of a 16-Gigawatt factory in 2023, CEO Benoit Lemaignan told Mergermarket.


  • AVS Verkehrssicherung, a German highway-traffic safety services provider backed by Triton, is preparing for a sale in the first half of 2021, three sources familiar with the situation said.
  • Precision instrumentation and control group Spectris has appointed advisers at EC M&A to sound out offers for German unit Brüel & Kjær Vibro, according to four sources familiar with the matter.


  • Nice, an Italian company specialising in door and gate automation, is actively looking for a minori-ty investor to finance its M&A ambitions, seven sources familiar with the situation told Mergermarket.


  • Babcock could find value in disposing non-core assets to streamline the business and boost an ail-ing share price, according to several sector bankers. Offloading non-essential divisions would hone the UK outsourcing provider’s portfolio. Logical divestment candidates include Babcock’s land-based businesses; infrastructure engineering unit Babcock South Africa and the company’s specialist rail industry training division, four of the bankers said. 
  • Investcorp is weighing options for its stake in UK-based fall protection equipment provider Kee Safety in a move that could lead to an exit as early as H121, four sources familiar with the plans said. Kee is likely to be marketed off EBITDA of £35 million.

Industrials Deal Pipeline