When one of Germany’s most valuable companies acquired its American competitor, news of the purchase hardly made the headlines in any major papers. But for industry observers, the deal between major German healthcare company, Fresenius and Akorn, a maker of generic pharmaceuticals, was the latest sign of an unsettling trend in Germany.
“A driver of this development are low interest rates,” said Commerzbank equity strategist Markus Wallner. These make “relatively expensive acquisitions with high premiums seem affordable.”
This trend means many German companies’ consolidated balance sheets are inflated, consisting of fewer hard assets such as machinery or patents and instead reflecting the cost of their new acquisitions.