Cross-Border M&A in Industrials

Introduction

The volume of cross-border deals from European companies into the US remains significantly higher than US companies acquiring into Europe, reflecting a structural valuation asymmetry: European industrials trade at persistent discounts to their US peers, making US assets relatively expensive for European buyers but making European acquirers relatively cheap acquirers for US sellers seeking the highest price. CRH, the Irish building materials giant, moved its primary listing from London to New York in 2023 specifically to access the higher valuations that US-listed industrials command. DSV's $14.3 billion acquisition of DB Schenker from Deutsche Bahn in 2025 created a European logistics champion of global scale. International Paper's $7.2 billion acquisition of DS Smith expanded the US containerboard leader's operations across Europe.

For industrials bankers, cross-border M&A is an increasingly important part of the deal landscape. Currency hedging appeared in 65% of cross-border deals in 2025 (up from 40% in 2024), reflecting the growing sophistication of FX risk management in transaction execution. Germany has tightened its foreign direct investment screening regime, expanding review powers over acquisitions in sensitive sectors. And CFIUS review adds a national security dimension to any cross-border industrial transaction involving US defense or critical technology assets.

Three structural forces are accelerating cross-border industrials M&A.

Valuation arbitrage. European industrials (Siemens, ABB, Schneider Electric, Sandvik, Atlas Copco) typically trade at 1-3 multiple turns below their US peers with comparable financial profiles. This discount reflects differences in investor base composition, capital markets liquidity, shareholder return policies, and perceived growth rates. CRH's listing migration from London to New York was explicitly motivated by this valuation gap: CRH's inclusion in the S&P 500 gave US institutional investors easy access to the stock, broadening the shareholder base and supporting multiple expansion. For European companies considering acquisitions, the valuation gap means US targets are expensive on a multiple basis; for US companies considering European acquisitions, the gap means European targets are relatively cheap.

Currency dynamics. EUR weakness in 2025 (approximately 1.05 USD/EUR versus 1.18 in 2023) reduced European buyers' purchasing power for US assets by roughly 12%. This currency headwind has slowed European acquisitions of US businesses, but the weaker EUR simultaneously makes European companies cheaper for US acquirers. The currency effect is a double-edged sword that creates different opportunities depending on which direction the deal flows. Currency hedging (locking in the exchange rate at signing to protect against further movement through closing) has become standard practice, appearing in nearly two-thirds of cross-border deals.

FDI Screening (Foreign Direct Investment Review)

Government review of foreign acquisitions for national security, public order, or strategic interest implications. In the US, CFIUS reviews transactions involving foreign acquirers of companies with national security significance. In Europe, the EU's FDI Screening Regulation (effective since 2020) establishes a framework for member states to review foreign investments in critical sectors. Germany's Investment Screening Act has been progressively tightened, expanding the sectors subject to mandatory review and lowering the ownership threshold that triggers review from 25% to 10% for sensitive sectors. For industrials bankers executing cross-border deals, FDI screening regimes in both the home and target countries must be mapped at the deal screening stage to avoid timeline surprises.

Supply chain reconfiguration. The post-pandemic emphasis on reshoring and friendshoring is driving cross-border M&A as companies acquire manufacturing capacity closer to end markets. European auto parts manufacturers are acquiring US production facilities to serve US OEMs without tariff exposure. US defense companies are acquiring European defense suppliers to participate in growing NATO defense budgets (with European allies committed to 5% of GDP by 2035). Japanese industrial automation companies (Fanuc, Keyence) are expanding US sales and service operations through acquisitions.

European defense spending acceleration. The surge in European defense spending creates a specific cross-border M&A channel. US defense technology companies are acquiring European defense firms to access NATO procurement budgets, while European primes (BAE Systems, Thales, Leonardo, Rheinmetall) are acquiring US defense suppliers to expand their US government market access. The AUKUS alliance (US, UK, Australia) has created a new framework that facilitates defense technology sharing and reduces ITAR friction for transactions among the three allied nations, accelerating cross-border defense M&A within this trusted partnership. European industrial companies are also acquiring US-based testing, inspection, and certification (TIC) businesses (SGS's **$1.3 billion** acquisition of Applied Technical Services) to build North American service footprints in fragmented markets with regulatory-driven demand.

CRH listing migration (2023). While not a traditional M&A transaction, CRH's move from the London Stock Exchange to the NYSE was the most strategically significant cross-border corporate action in industrials. The listing migration gave CRH access to the deeper US investor pool, resulted in S&P 500 inclusion, and drove a market capitalization increase that validated the thesis that US-listed industrials command premium valuations.

International Paper / DS Smith (2025). IP's $7.2 billion acquisition of DS Smith created a transatlantic containerboard leader. The European Commission required five divestitures as a condition of approval, illustrating the regulatory complexity of cross-border packaging consolidation.

DSV / DB Schenker (2025). Danish logistics company DSV's $14.3 billion acquisition of DB Schenker from Deutsche Bahn created one of the world's largest freight forwarding and logistics companies, reflecting the ongoing consolidation of European transportation and logistics.