Everything seems to be smiling in America. Dynamic growth, a strong dollar and a massive influx of investments… The markets have every reason to be optimistic. Innovation thrives, and President-elect Donald Trump’s promises of tax cuts and deregulation have only increased the excitement.
The contrast with Europe is striking. “Modest”, “mediocre”… the vocabulary of economists to describe the growth prospects on this side of the Atlantic is eloquent. Between political uncertainty and low productivity, the picture is gloomy for the Twenty-Seven. Even the President of the European Central Bank (ECB), Christine Lagarde, admitted this in a newspaper interview The World : “the withdrawal of Europe is a reality”. This disparity is reflected on the stock market: the American S&P 500 index jumped by more than 25% in 2024, to new highs, when the Stoxx 600 posted a timid increase of around 5%. How surprising, in this context, is it to see companies like TotalEnergies or Tikehau coveting a listing on Wall Street.
We know that European companies are largely undervalued compared to their American counterparts. This gap could continue to widen, at least during the first part of next year, according to several experts. “This underperformance would make European companies more vulnerable to hostile or friendly acquisitions by American competitors who are significantly better valued than them,” analyzes Vincent Mortier, director of management at Amundi. For the United States, the hunt for “bargains” is on. “For American investors, it’s the sales in Europe,” said Kevin Thozet, member of the Carmignac investment committee. Acquiring innovative companies on the continent can therefore cost less than developing an innovation internally.
Ideal hunting ground
In Europe, merger and acquisition transactions increased by 43% over the year in 2024, according to asset manager Carmignac. And the attractiveness of the continent in the eyes of American investors in particular is not new: for more than a decade, the United States has been both the first country of origin and the first country of destination for these transactions with France, recalls Guillaume Molinier, managing director at Lazard. Alstom, Latécoère and Exxelia are just a few examples of our companies now controlled by American investors or industrialists. More recently, the electrical equipment distributor Rexel was approached by QXO. An offer which he however rejected.
In addition to valuation gaps, the currency effect further favors the United States in these transatlantic movements. The greenback strengthened against the euro, going from 1.1 dollars to 1.04 in less than a year. “This phenomenon could become more pronounced if the Fed pauses in its rate cuts, for fear of an inflationary policy from Donald Trump, and on the other hand the ECB continues on its path of rate cuts – a scenario probable given the declarations of the two banks”, envisages Olivier Malteste, investment director at Yomoni.
American movements in Europe are less strategic than opportunistic
Guillaume Molinier, managing director at Lazard
Finally, a relaxation of anti-trust regulation in the United States would be decisive. Following the election of Donald Trump, the shares of investment banks JP Morgan Chase and Evercore jumped by 12% and 16% respectively, reflecting this expectation of a resumption of mergers and acquisitions. “The return of Donald Trump suggests a more accommodating competition policy,” explains Anthony Penel, European equity manager at Edmond de Rothschild AM. The market has in mind the merger of T-Mobile and Sprint during his first mandate, which will not “probably would not have obtained a green light under a Democratic administration. American companies will therefore consider that they have a four-year window to have the mergers accepted by Antitrust. Beyond that, no one knows if the plateau will return. .
In Europe too, constraints could be eased. “There is a real political will to reduce anti-trust pressures in Europe in the months and years to come. This is evidenced by the mandate of the new Competition Commissioner, who advocates a ‘new approach to competition policy, more favorable to companies developing on global markets'”, adds Kevin Thozet.
Health and tech coveted
What will the Americans target? Companies exposed to the United States, or at least not exclusively focused on the European market. A common case in the health and technology sectors: the latter alone account for 40 to 50% of merger-acquisition operations worldwide each year, according to Carmignac calculations.
To safeguard its supremacy over new technologies, particularly artificial intelligence, America is on the lookout for any opportunity. “One of the ways to stay at the forefront in this area is to integrate everything that is happening elsewhere, including in Europe,” says Gilles Moëc, chief economist at Axa. And there is no shortage of prey. “In France, we could think of gems like Mistral AI [NDLR : une licorne qui a conclu un partenariat avec Microsoft]or Dust [NDLR: une start-up de l’IA générative]”, envisages Olivier Malteste.
The renewable energy sector, which has seen its prices fall very low, could also arouse desire, estimates Alexandre Baradez, head of market analysis at IG France. “It is difficult to imagine that the sector could recover at the start of Trump’s mandate. These valuation levels could generate interest from investment funds or encourage mergers within the sector, leading to the start of a recovery in prices” . The French producer Neoen, for example, was the subject of a public takeover bid (OPA) from the Canadian management fund Brookfield.
However, American investors will be vigilant. Although the current context may favor certain takeovers, their movements in Europe “are less strategic than opportunistic, believes Guillaume Molinier. The bundle of economic, political and fiscal uncertainties encourages them to think twice before launching.”
Brakes on this momentum
Faced with American appetite, Europe is not helpless. States have the means to protect their flagships by controlling foreign investments. In Spain, an “anti-takeover shield”, allowing the State to veto acquisitions, was used this summer. “Europe is today at a moment where the question of sovereignty is being highlighted. Governments will be less hesitant to use these means of blocking, especially if we have a phase of muscular negotiations with Trump,” imagines Gilles Moëc.
For their part, companies also have their strategies to counter hostile takeovers. This is evidenced by the complex maneuver by Vivendi which created, during its split, a foundation under Dutch law to preserve the independence of Havas. Many others have implemented shares with double voting rights. What if the best defense was the counterattack? “Europeans make much greater investments in value in the United States than the opposite. We also expect this phenomenon to continue, since for Europeans, the first order issue is to increase their exposure to the American economic situation”, says Guillaume Molinier. To escape the gloom of their home markets, they clearly have an interest in it.