Dealmakers in Europe are closing 2025 with a paradox. On the numbers, activity is still subdued: S&P Global data for the third quarter show European deal volumes down sharply on the prior quarter, with just 3,275 transactions versus 3,900, even as aggregate value inched up by only 0.18% year on year.
Beneath that surface, however, the market is rediscovering its appetite for scale. Global M&A has been driven this year by a resurgence in megadeals, and Europe is no exception, with a growing share of value concentrated in transactions north of €1 billion. Private equity sponsors have also picked up the pace, with European sponsor-led deal value through the first three quarters already exceeding recent-cycle peaks, anchored by a tilt towards fewer, larger deals.
That renewed conviction is arriving against an uneven macro backdrop. November’s PMI readings show eurozone manufacturing slipping back into contraction at 49.6, while the UK’s factory sector finally crept back into expansion territory at 50.2. Dealmaking is therefore happening in spite of, rather than thanks to, the cycle.
What November delivered, more than anything, was a clear picture of what “selective risk-on” looks like in practice: large, complex, often cross-border transactions in industrials, energy, financial infrastructure, and financial services, executed in full view of muscular regulators and increasingly political scrutiny.
Market snapshot —
Across Europe, corporate and sponsor dealmakers are concentrating firepower. Q3 data show volumes down but deal sizes rising, with Europe overtaking Asia-Pacific as the second-biggest region globally by value despite low growth overall.
Private equity is central to that story. Ropes & Gray’s Q3 recap highlights that U.S. sponsor deal value into European assets jumped 952% quarter on quarter, and 207% year on year, driven by a handful of large transactions, while cross-border deal counts rose 36% versus the same period in 2024. That shift reflects both regulatory uncertainty in the U.S. and European governments’ determination to channel capital into defence, technology, and infrastructure.
Regulation itself is becoming a primary design consideration, not a closing condition. November’s tape was dominated by the EU’s Foreign Subsidies Regulation (FSR) in industrials, political scrutiny of Italian bank consolidation, and continuing reforms to EU and UK capital markets. The result is a market where deal success depends as much on anticipating supervisory reactions as it does on valuation or financing.
Five deals that defined November —
AkzoNobel–Axalta: a $25 billion coatings champion —
The headline industrial deal of the month was Dutch group AkzoNobel’s agreement to merge with U.S.-listed Axalta Coating Systems in an all-stock “merger of equals” that values the combined coatings business at $25 billion.
The new company expects revenues of about $17 billion, core profit margins of 20%, and $600 million of annual cost savings, with dual headquarters in Amsterdam and Philadelphia and an eventual sole listing on the NYSE. AkzoNobel shareholders will receive a $2.5 billion dividend and are expected to hold 55% of the combined group.
Strategically, this is classic scale-through-specialisation: a tighter focus on coatings rather than a broader paints portfolio, and a trans-Atlantic footprint designed to withstand both cyclical swings in construction and ongoing tariff uncertainty. The deal also underlines that European industrials remain willing to pursue true mega-mergers, even as regulatory timelines stretch towards the end of the decade.
ADNOC–Covestro: FSR moves centre stage —
In chemicals, November was defined less by signing and more by clearance. Abu Dhabi’s ADNOC won conditional EU approval on 14 November for its proposed €14.7 billion acquisition of German polymers producer Covestro, in what is only the second Phase II decision under the Foreign Subsidies Regulation.
The Commission found that foreign subsidies, including an unlimited UAE state guarantee and a committed €1.17 billion capital increase into Covestro, risked distorting both the acquisition process and competition in the internal market. To secure approval, ADNOC agreed to remove the unlimited guarantee and to grant EU companies access to Covestro’s sustainability-related patents for ten years, with Brussels explicitly describing the licensing remedy as a way to “balance out” negative effects of the deal.
This is one of the largest ever takeovers of an EU industrial champion by a Gulf state investor, and it firmly establishes FSR analysis as a gating item for state-backed buyers.
MPS–Mediobanca: Italy’s flagship bank deal under the microscope —
Italy provided the month’s most politically charged development. Monte dei Paschi di Siena’s government-backed takeover of Mediobanca, announced in January and completed in September at around €16–17 billion, has been a centrepiece of the country’s banking consolidation push.
On 27 November, Milan prosecutors confirmed an investigation into alleged market manipulation and obstruction of supervisory functions in connection with the deal. The probe covers MPS CEO Luigi Lovaglio and the bank’s two largest shareholders, Delfin and Francesco Gaetano Caltagirone, amid allegations that they acted in concert without proper disclosure to Consob, the ECB, or IVASS.
Whatever the eventual legal outcome, the message to European financial institutions is blunt: transformational domestic consolidation, especially when state-supported, will attract forensic scrutiny of how boards and anchor shareholders coordinate.
TotalEnergies–EPH: flexible power for an AI-hungry grid —
Energy transition-linked infrastructure remained a hotbed of activity. On 17 November, TotalEnergies agreed to acquire 50% of Czech investor EPH’s flexible power generation platform in Western Europe, in an all-share deal valuing the business at €10.6 billion and transferring €5.1 billion of newly issued TotalEnergies equity to EPH.
The joint venture will manage more than 14GW of gas-fired, biomass, and battery assets across Italy, the UK, Ireland, the Netherlands, and France, more than doubling TotalEnergies’ net gas-fired power capacity and supporting its target of 100–120 TWh of annual power production by 2030. The structure also makes EPH a long-term shareholder in TotalEnergies, aligning incentives as Europe races to build the flexible capacity needed to backstop intermittent renewables and energy-hungry data centres.
Deutsche Börse–Allfunds: consolidation in fund distribution —
In financial infrastructure, German exchange operator Deutsche Börse entered exclusive talks in late November to acquire London-listed fund platform Allfunds. A non-binding proposal implies total consideration of €8.80 per share, comprising €4.30 in cash, €4.30 in new Deutsche Börse shares, and a permitted 2025 dividend of €0.20, valuing Allfunds at around €4.7 billion.
Allfunds operates as a European “fund supermarket” connecting asset managers and distributors. Folding it into Deutsche Börse would deepen the German group’s footprint in post-trade and distribution infrastructure, and continue the trend towards scale in the picks-and-shovels of European savings — data, connectivity, and fund servicing.
Sentiment check —
November’s European deals suggest three broad themes.
First, sovereign and state-backed capital is now woven into the fabric of European M&A. ADNOC’s bid for Covestro and the Italian state’s continuing role in MPS–Mediobanca both demonstrate that large transactions in strategic sectors — from advanced materials to banking — are rarely purely private-sector affairs. The FSR tools deployed in ADNOC–Covestro, and the prosecutorial lens on alleged “concert parties” in the Italian bank deal, will have a chilling effect on any assumption that capital origin or shareholder coordination is a secondary issue.
Second, energy transition and infrastructure resilience have become anchor investment theses. The TotalEnergies–EPH joint venture is explicitly framed as a way to integrate LNG, flexible gas, biomass, and batteries to serve rising electricity demand, including from data centres. Similar logic underpins sponsor activity in grid, fibre, and data infrastructure across the continent.
Third, complexity is the new normal. S&P data show Europe generating fewer deals but at larger ticket sizes, while cross-border U.S.–Europe sponsor flows have surged in both count and value. Exec teams and boards are navigating multi-track regulatory processes that can include merger control, FSR, national security screening, and sector-specific supervision, often in several jurisdictions at once.
Lessons for the board —
Build regulatory strategy into the deal thesis
The ADNOC–Covestro case shows the FSR can be decisive in shaping deal economics, not simply timing. Remedies went as far as removing an unlimited state guarantee and imposing a long-term licensing commitment on key sustainability patents. Boards contemplating state-backed bidders or heavily subsidised rivals need to ask, at the outset, what remedies they could live with — and at what point concessions would erode the strategic rationale.
Assume scrutiny of shareholder alignment in contested situations
The MPS–Mediobanca probe is a reminder that supervisors and prosecutors will interrogate how large shareholders coordinate around transformative transactions. Listed companies should ensure that any informal “club” dynamics among anchor investors are matched by robust disclosure, clear documentation, and a credible regulatory engagement strategy.
Use scale deliberately, not reflexively
AkzoNobel’s merger with Axalta illustrates how boards can make the case for scale when it is tied to sharper strategic focus, tangible cost synergies, and disciplined capital returns. Investors appear willing to back large industrial combinations when management can articulate a coherent story that is not dependent on a cyclical upswing.
Consider creative structures over straight control deals
TotalEnergies’ equity-financed joint venture with EPH demonstrates how share swaps, joint ventures, and partial stake sales can re-shape portfolios while aligning the interests of corporates and financial investors over the long term. For many European businesses, especially in energy and infrastructure, November’s deals argue for a broader structuring toolkit than the classic all-cash acquisition.
If November’s tape is a guide, 2026 is likely to bring more of the same: fewer transactions, but larger, more politically exposed, and more structurally inventive deals — with European boardrooms increasingly judged on how well they manage not just price and synergy, but sovereignty and scrutiny.
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