Euronext: Like IPOs, takeover bids fall in 2023

(BFM Bourse) – In 2023, only 23 IPOs were identified as being declared compliant, according to the IPO Monitor published by EY. However, the median premium offered over the stock’s last price turned out to be higher, hitting a 10-year high of over 40%.

Like IPOs, public offerings marked the Paris Stock Exchange’s time last year very clearly.

Only 23 IPOs for Paris-listed companies were identified and announced last year, an unprecedented low since 2018 (22). This number is significantly lower than the 32 operations in 2022 and, above all, it is almost half less than in 2021 (43), which was then the record year for the number of operations for 5 years in this area. “2023 is therefore a slow year,” concludes EY.

To calculate this, the firm is based on the number of offers that received the approval of the Financial Markets Authority (AMF) in this study, whose 15th annual edition*.

“In the face of rising interest rates during 2023 and in the context of economic and geopolitical uncertainties, the number of IPOs has significantly decreased compared to 2022. The market continued its downward trend compared to 32 operations recorded in 2022 and 43 IPOs recorded in in 2021″, EY experts explain.

During 2023, offers were mainly concentrated in the second half of the year, with 30% of visas granted by the AMF in the 3rd quarter and 30% of visas also in the last three months of 2023.

Small operations

The total value of shares acquired during 2023 reached 9.4 billion euros, according to EY. An amount that represents a sharp decrease of 39% compared to 2022 (15.6 billion euros). It also includes operations declared compliant in 2022 but completed in 2023 (Theradiag, Altur Investissement, Atari and EDF).

The state’s offer for EDF also represents 68% of the total value of the shares acquired during public offers, or 6.5 billion euros (excluding Oceane buybacks and hybrid bonds). Without this large-scale operation, the results would have been less flattering with the amount falling to just €3 billion.

In detail, the 2023 operations without EDF were limited in size, EY notes, as no operation exceeded one billion euros. The two most significant operations of the year are the public offer of Concordia, the holding company of the Rothschild family (in agreement with other investors), in the Rothschild & Co bank for the amount of 688 million euros and the simplified public offer for the purchase of Bolloré SE for its own shares for a total of 570 million euros.

“The withdrawal of the family bank Rothschild & Co was motivated by the desire to preserve the independence of the group, to benefit in particular from historical allies. The Bolloré group has launched a share buyback, which has the effect of strengthening the participation of the family holding company Financière de l’Odet”, specifies EY.

The firm also recalls that the ranking for 2022 was largely dominated by the operations of CNP Assurances and Albioma, for which the amount of the acquisition was 1.9 and 1.5 billion euros.

Record average premium

However, buyers have been more generous to their targets’ shareholders. The median premium compared to the last quoted price before the surgery was announced reached 42.9%, the highest point seen in 10 years. This median premium according to the same criteria reached 30.5% in 2022.

On the other hand, the median premium without extremes compared to the intrinsic value of the target companies calculated by independent experts is 9.1%, i.e. a level 10 points lower compared to 2022, but in line with the historical average (11.5%) , reports the company.

“The difference between the two premium levels reflects the difference between the perception of valuations in stock markets and experts based on the business plans of the target companies,” explains EY.

In almost all cases, EY notes that the initiator of the offer is the reference shareholder of the company (or the company itself through a public share buyback offer), while 2 operations were carried out by a third-party company.

“In the context of macroeconomic and geopolitical uncertainties in 2023, companies prefer internal operations. These operations initiated by the company itself or its reference shareholder are linked to various strategic motivations: maintaining independence, gaining management flexibility by increasing the capital of the target company or even delisting it, to carry out accretive operation considering that the stock market is undervaluing the company, or even offer liquidity to its minority shareholders (OPRA),” EY experts note. Although for the most part, manufacturers were less active last year, as 60% of the offers were launched by these players, which the number is significantly lower than in 2021 (81%).

From a sectoral perspective, the technology sector (IT and biotech/medtech) remains in the majority as in previous years, as targets in this sector account for approximately 35% of operations compared to 31% in 2022, highlighting the “attractiveness for innovative companies, namely even in a complex economic context,” adds the study. This sector is on par with the industry and materials sector, which concentrated 35% of operations in 2023. And that is four times more than in 2022.

On the other hand, the financial sector is less stimulated by these operations. The share of public offerings in this universe decreases from 13% of transactions in 2022 to 9% in 2023. EY also notes that no transactions were recorded in luxury, consumer goods and energy. The firm also notes that these public offers come from French players in 78% of cases.

A rating that keeps getting worse…

A total of 31 companies exited the Euronext Paris and Euronext Growth markets in 2023, i.e. 6 more exits than in 2022. EY took care to exclude SPACs (investment vehicle) from its sample. Transition Shares, which merged with Averne Group.

In detail, 14 companies were eliminated based on the public offer, of which 12 followed bids launched in 2023 and 2 followed bids launched in 2022 (EDF and Somfy). The public offers concern the following companies: Groupe Flo, Manutan International, UFF, Serma Group, CS Group, Vilmorin & Cie, Rothschild & Co, Biocorp, Evolis, Paragon ID, PCAS and Colas. Thus, slightly more than 60% – 63% to be exact – of public offers are subject to withdrawal, i.e. 12 operations out of 19 operations started in 2023 and completed.

At the same time, 6 companies made a voluntary delisting, 2 companies were delisted after a merger and finally 9 were liquidated (CNIM Groupe, Deinove, Klimvest, NFTY, Reclylex, Cesar, Lysogene and Navya).

Among these various delistings, EY includes the voluntary liquidation of 2 SPACs (Accor Acquisition Company and eureKING) that did not complete their acquisition projects within the agreed time frame, according to the EY study.

Like last year, the number of IPOs over the past year did not cover the 31 delistings, EY regrets. The Paris Stock Exchange recorded 6 new IPOs. This is five less than in 2022, reminds the firm, which emphasizes “the caution of issuers in the face of persistent economic uncertainty”.

Highlighting this study, on the regulated department of Euronext Paris, it is simply a blank year. Since Lhyfe’s IPO in May 2022, no public offering operation has been recorded. US cosmetics specialist Coty has actually favored Euronext’s professional division to offer a dual listing in Paris (in addition to New York). All new entrants thus took their first steps on the stock market within Euronext Growth, the small and mid-cap division.

The net flow between inputs and outputs is therefore already negative (-25) for the second year in a row. We have to go back to 2021 to have a trace of positive net flow (+5), numerous IPO operations (33) then acted as buffers and offset the 28 exits from the Paris stock market.

“It should be noted that there were no transactions on Euronext this year, compared to 6 transactions on Euronext Growth, confirming the increased dynamism seen in this market since 2018,” notes EY. The company has also seen the increasing appeal of listed companies with a moderate level of market capitalization for this segment with lighter restrictions compared to regulated markets. In 2023, the firm identified 11 transfers, including 9 from Euronext to Euronext Growth and 1 from Euronext Access to Euronext Growth. In the latter case, Airwell Group wanted to end its adventure on Euronext Access – the least restrictive space in the Euronext galaxy – and move to the next level in June 2023.

“The success of Euronext Growth should be highlighted, with 10 of the 11 transfers earmarked for it reflecting companies’ appetite for this market with less significant regulatory obligations,” concludes the firm, which “hopes to resume trading in 2024” based on good performance of stock markets at the end of 2023.

*This study was conducted entirely from documents published by the AMF and the companies targeted by the operations. It only takes into account offers that the AMF declares to be compliant in 2023.

Sabrina Sadgui – ©2024 BFM Bourse

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