Business acquisitions and sales are slowing significantly in Portugal. The value of operations this year fell almost 60% to 5.4 billion euros by August, according to TTR Data, while the number of transactions dropped almost 30% to around 330 operations. Among the standout foreign buyers are the Spanish with purchases in the order of 380 million euros across 25 transactions, followed by buyers from the United Kingdom and Luxembourg. In the opposite direction, Portuguese companies buying abroad directed over 1.1 billion euros to the Spanish market in 34 transactions, followed by Brazil and Germany. One of the major deals closed this year was the purchase of cement maker Secil from Semapa by the Spanish company Molins for 1.4 billion euros.
Among the reasons for this slowdown are the increased cost of financing due to ECB interest rate hikes, which rose again in June and a further increase is expected in September. The war in the Middle East also pressured fuel prices and drove inflation, while sovereign debt yields rose again worldwide, with yields reaching 15-year highs in Europe. The gap between seller and buyer expectations, combined with the ambitious business plans sellers want to see fulfilled, constitutes another significant obstacle.
Goldman Sachs had already warned in the first half of the year that "persistent inflation and interest rate volatility" would be headwinds for the rest of the year, potentially leading to further interest rate increases, raising the cost of capital and reducing acquisition activity. Despite this, the first half went well globally, with the volume of mergers and acquisitions rising 48%, and the bank believes the trend may continue, with companies trying to get ahead of tougher times to obtain capital.
A study by Roland Berger revealed that over 75% of industry professionals anticipate an increase in the volume of mergers and acquisitions, with Portugal and Spain positioning themselves as "safe harbors" for international capital.
