The buying spree is over Swiss companies are now making a major clean-out - these are the reasons
After years of acquisitions, Swiss companies are once again focusing on their core business and are making a major clean-out. This also has to do with the uncertain situation - and with Donald Trump.
No time? blue News summarizes for you
- Thanks to low interest rates and therefore cheap loans, large Swiss companies were on a shopping spree for a long time.
- After years of acquisitions and business diversification, Swiss companies are now rethinking their approach.
- Instead of expanding, companies are increasingly concentrating on their core business and in some cases are shedding their acquisitions.
- The uncertain economic and political situation is contributing to this trend reversal.
For years, Swiss companies were on a shopping spree abroad. Favored by low interest rates, Migros, Lonza and many other companies wanted to diversify their business - and bought other companies.
The large retailer Migros, for example, went on a veritable buying spree and soon owned companies such as Mibelle, Hotelplan, Melectronics and SportX. However, success failed to materialize and had a negative impact on the core business. With a new boss and a new strategy, Migros is now concentrating on the supermarket business again.
The retailer is by no means the only large Swiss company to return to its core competencies, as the "Handelszeitung " writes (paid content).
Lonza CEO Wolfgang Wienand has been looking for a buyer for the Capsugel business since December. The group plans to become a pure contract manufacturer for the pharmaceutical industry again. Meanwhile, Ypsomed wants to divest its diabetes business, and CEO Simon Michel wants to concentrate instead on injection pens for the highly sought-after weight loss syringes.
Nestlé is also going back to its roots, so to speak, with the core brands Nescafé, Kitkat and Maggi. The turnaround also came in the person of the new CEO Laurent Freixe, a Nestlé veteran, who is to get the company back on track by concentrating on its core business.
Companies are becoming more cautious
After years of acquisitions, the trend is now changing. "Companies are being more economical with their money," says management professor Stefan Michel in the Handelszeitung.
The reasons for the change in trend are manifold. Inflation, the turnaround in interest rates and the generally uncertain political situation have made companies more cautious. Added to this is the strong franc, which has made Swiss products more expensive abroad. Now companies have to consider where they can "really keep up", explains Michel.
Lonza, Migros and other companies are now doing what ABB has already done. The company bought companies for a total of 11 billion dollars - and was punished on the stock market. After numerous rejections, the share price is now moving towards an all-time high.
What will Trump bring?
The numerous acquisitions by Swiss companies were fueled by prolonged low interest rates. "Companies had more funds to invest in growth," says Michel. Now large investments are being held back. And finally, we don't know what the Trump era will bring.
Whether the trend of streamlining will continue remains to be seen: "Then, when the situation calms down and everyone has money again, there will be experiments again"
