GERMANY Trends and Developments Contributed by: Carsten Berrar, Peter Klormann and Lea Detambel, Sullivan & Cromwell LLP
scape in 2025. While geopolitical tensions and shifts in US trade policy continued to be closely monitored, the dynamic economic environment and continued strength of the US market remained attractive for German acquirers. In 2025, standout transatlantic deals by German companies included Merck KGaA’s acquisition of US-based SpringWorks Therapeutics (approximately EUR3.5 billion) and Siemens’ acquisi - tion of Dotmatics (approximately EUR4.3 billion). After several years of scepticism, strategic acquirers from the United States also slowly showed renewed interest in German targets, seeking access to tech - nological leadership and the European market. While inbound deal numbers remained stable, total deal val- ue increased, with North American investors account - ing for more than 20% of transactions and over 35% of aggregate deal value, according to reports. However, these figures were largely driven by US-based private equity firms. A broader, sustainable return of strategic US buyers to the German market is still awaited. Industry transformation, defence and infrastructure The ongoing industrial transformation remained a key theme for strategic M&A in Germany in 2025. Under continued structural pressure, many compa - nies streamlined group structures, divested non-core activities and focused on core businesses. Carve- outs, spin-offs and disposals increased, with compa - nies in some cases pursuing “triple-track” processes that considered spin-offs, IPOs and trade sales in par - allel. The automotive and industrial sectors continue to provide key examples. Continental completed the spin-off of its automotive business, AUMOVIO, and announced plans to sell its ContiTech division, with the traditional tyre business remaining the company’s core focus in the future. Further transactions includ - ed ThyssenKrupp’s separation of its marine division, Siemens’ planned spin-off of its stake in Siemens Healthineers, and Volkswagen’s announced sale of Everllence. Against the backdrop of new geopolitical realities, the defence sector gained new prominence in M&A. Increased spending and a strategic reorientation in Europe have attracted both strategic investors and – with careful selectivity – private equity firms. In this
context, not only classic defence companies are of interest, but often companies offering dual-use tech - nologies – ie, products that can be used for both civil and military purposes. At the same time, a growing number of traditional industrial players are assessing whether and to what extent their existing products and technologies can be adapted for defence-related applications, triggering elements of strategic transfor - mation within these businesses. Other central M&A themes in Germany are the energy transition and infrastructure modernisation. In 2025, the market was resilient but also selective. High-quali - ty assets such as data centres, battery energy storage systems (BESS), grid balancing and transmission infra - structure, as well as renewable generation platforms, continue to attract strong investor interest. In addi - tion, the German federal government’s EUR500 billion infrastructure fund ( Sondervermögen ) is expected to provide further impetus for investment in energy, digi - tal and transport infrastructure, potentially supporting deal activity in the medium term. Capital needs have also led to increasing involvement of financial inves - tors as partners for infrastructure and transformation- driven projects. Recent examples include RWE’s joint venture with Apollo regarding its stake in transmission operator Amprion and its partnership with KKR for offshore wind projects in the UK. Moreover, the German government has become more active as a strategic investor to secure influence in critical infrastructure, defence and other security- sensitive sectors. Recent examples are the agreed acquisition of a 25.1% blocking minority stake in the transmission system operator TenneT Germany by the state-owned promotional and development bank KfW, and the reported interest of KfW in an invest - ment of similar size and blocking function in KNDS, a European defence industry holding created through the merger of two German and French land defence systems providers ten years ago, which is preparing an IPO. Shareholder activism Activist investors have demonstrated a growing pres - ence in Germany in recent years. 2025 was a high- profile year for shareholder activism across Europe, with 116 new public campaigns launched – a 43%
507 CHAMBERS.COM
Powered by FlippingBook