GERMANY Trends and Developments Contributed by: Carsten Berrar, Peter Klormann and Lea Detambel, Sullivan & Cromwell LLP
Introduction In 2025, global M&A activity rebounded to its strong - est level since 2021, with an overall reported deal volume of more than USD4.5 trillion. The numbers were particularly driven by US mega-deals and strong private equity activity. Easing inflation, lower interest rates and stabilised capital markets supported deal activity, despite temporary disruptions arising from international tariff disputes. While M&A in Europe picked up some of the global upswing, the German market continued to lag behind amid the country’s third consecutive year of recession and deep ongoing industrial transformation. Nevertheless, overall deal values with German participation rose by more than 50% year-over-year and can be seen as a tangible sign of renewed momentum. General Market Trends and Observations In terms of transaction volumes, the global trend of mega-deals has not yet arrived in Germany, where there were hardly any transactions in the double-digit billion range. The German M&A market saw a couple of transactions in the higher single-digit billion area, such as: • the pending acquisition of 46% of German trans - mission system operator TenneT by a consortium of international investors with an equity commit - ment of up to EUR9.5 billion; • the pending acquisition of a majority stake in Ger - man pharmaceutical company STADA Arzneimittel by CapVest for approximately EUR7 billion report - ed consideration; and • the completion of the sale of German energy ser - vices company Techem to an investor consortium for approximately EUR6.7 billion. Some other transactions came into the mid-single- digit billion range, with reported total considerations of between approximately EUR3 billion and EUR7 billion. These transactions included: • the acquisition of US-based SpringWorks Thera - peutics by Merck; • BASF’s sale of the majority of its automotive and surface coatings business to investor Carlyle;
• Cinven’s sale of its stake in German life insurance run-off platform Viridium to a consortium led by Allianz; and • the pending acquisition by Deutsche Boerse of UK- based Allfunds Group. Further notable deals were recorded at reported con - siderations of between EUR1 billion and EUR2 billion. Such transactions included, for example, Zalando’s public takeover offer for its peer ABOUT YOU, and the business combination of two US-listed German biotech firms, BioNTech and CureVac. M&A strategies In the recent uncertain economic and political land - scape, strategic acquirers have been continuously adapting their M&A strategies. Instead of primarily seeking cost synergies in scale deals and revenue synergies in scope deals, companies in many cases needed to offer both in order to be attractive targets. Transactions are increasingly driven by clearly defined strategic objectives beyond simple growth consid - erations, such as strengthening core capabilities, divesting non-core assets, enhancing supply chain resilience or accessing or securing regional market positions. In Germany, this shift was reflected in a move towards more transformative transactions and strategic disposals of large corporates. At least in some industries, the long-standing “valua - tion gap” between sellers and buyers appears to have narrowed further, supported by more stable financing conditions and improving confidence. While valuation levels in high-growth areas such as software, tech and artificial intelligence (AI) remain robust, pricing expectations in other sectors continue to align more closely with market realities. Still, many buyers and sellers remain hesitant and, in some industries, M&A remains fragile due to ongoing uncertainties. Agreeing to and executing large, significant transactions is often complex, requiring longer negotiations, more creative solutions and more thorough navigation of different political and regulatory frameworks. Transatlantic M&A The United States remains Germany’s most impor - tant partner for cross-border transactions, and this trend remained a defining feature of the M&A land -
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