GERMANY Trends and Developments Contributed by: Carsten Berrar, Peter Klormann and Lea Detambel, Sullivan & Cromwell LLP
Another high-profile case was the takeover battle for ProSiebenSat.1, in which MediaForEurope (MFE) ulti - mately prevailed with an improved offer over a concur - rent counterbid by the co-shareholder PPF to acquire additional shares. Examples of takeover attempts that were rejected or withdrawn prior to a formal bid stage in 2025 include the approaches for Evotec and Salzgitter. Regulatory Developments Merger control Antitrust authorities, including the European Commis - sion and the German Federal Cartel Office, have taken an increasingly strict stance towards consolidation in recent years. Against this backdrop, the European Commission launched a public consultation in May 2025 on a revision of its core EU merger control guide - lines, aiming to modernise the substantive assess - ment framework and potentially incorporate broader economic and societal considerations. Draft revised guidelines are expected in the first half of 2026. FDI screening While global FDI screenings have established a place alongside merger control reviews in almost every cross-border M&A transaction, the trend has not yet come to an end. The German Ministry of Economics (BMWE) is working on a revised German FDI frame - work, including a new comprehensive Investment Screening Act ( Investitionsprüfungsgesetz ), for which the draft is still expected in the first half of 2026. In this context, the BMWE is also exploring further areas for expanding the regime, including IP/licences, research collaboration and greenfield investments, where it has identified potential for circumventing the current approval requirements. In light of the increasing vol - ume of transactions and investments in the sector, the German Federal Ministry of Defence also issued dedicated guidance on foreign direct investment (FDI) reviews in the defence industry for the first time. In terms of screening intensity, Germany retains an investor-friendly policy. This was again evidenced by the annual official statistics of the BMWE: in 2025, the level of German FDI notifications increased by roughly 30%, with 339 filings in 2025 compared to 261 in 2024. 40% of cases were cleared within 30 days. The number of filings that required an in-depth
assessment (Phase II) remains low, at approximately 9% in 2025 compared to 7% in 2024, and remedies are required only in selected individual cases (eight in 2025; 16 in 2024). At the EU level, the revision of the European Invest - ment Screening Regulation has advanced signifi - cantly. In December 2025, the Council and Parliament reached a political agreement on a reform introduc - ing mandatory screening mechanisms for all member states and procedural changes. Formal adoption is expected in the first half of 2026, with entry into force in 2027. Foreign Subsidies Regulation Since October 2023, approval requirements under the Foreign Subsidies Regulation have created a substantial burden for M&A transactions, as illus - trated by the extensive review in high-profile cases such as ADNOC’s acquisition of German chemical supplier Covestro. Although intended to address dis - tortive subsidies from third countries, the regime also captures EU-based companies due to low thresholds and broad aggregation requirements. In response, the European Commission launched consultations in the summer of 2025 to prepare further guidance and review the regime. Outlook The macroeconomic backdrop has become more supportive for M&A as Germany enters 2026. Inflation has eased, interest rates have declined, and capital markets have generally stabilised. Although geopoliti - cal and policy uncertainties persist, deal makers have become more resilient, and the environment is more conducive to deal activity than in recent years. This also supports optimism for the German market. In fact, the start of the year is already reported to be one of the strongest in terms of M&A volume with Ger - man participation. The strategic need for transforma - tive transactions, infrastructure and defence invest - ment, and substantial private equity liquidity underpin transaction activity. Structural change continues to drive targeted, capability-focused acquisitions and disposals. If the German M&A market can maintain this momentum, it could result in a very strong year for German M&A.
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