Week Ahead (5 August)

W/C Monday, 5 August – European Commission likely to announce decision on ICG’s acquisition of Italian cybersecurity firm 

This week, the European Commission is likely to announce its decision on whether to allow ICG’s acquisition of DGS, a leading Italian firm in cybersecurity services and digital transformation, from H.I.G Capital, a Miami-based global alternative investment firm.  

DGS specialises in providing solutions for the digital transformation of business processes, cybersecurity services, and IT management consultancy, serving large customers across various industries. The company has a staff of over 1,900 employees and expected revenues of €340 million. 

According to the deal’s announcement in June, under H.I.G.’s ownership, DGS has tripled in size, consolidating its position as a leading firm in its sector. ICG, is also a global alternative asset manager and will support DGS in the next phase of its development. The sale marks a significant milestone for DGS, which has been active for over 25 years in the ICT services market for public and private companies. Giulio Piccinini, Managing Director and Head of Italy at ICG, expressed excitement about partnering with DGS for its future development, noting the company's strong position to benefit from the growing digitalisation in Italy. 

The parties filed a notice of the proposed deal to the European Commission on 9 July. Although the Commission’s deadline for Phase 1 of the deal is on 13 August, a decision could take place as early as this week.   

W/C Monday, 5 August – European Commission likely to rule on $2.1 billion acquisition of Synopsys’ Software Integrity Group by Clearlake Capital and Francisco Partners 

In May, Synopsys, the US-based electronic design automation company, announced it would sell its Software Integrity Group (SIG) unit to a private equity consortium led by Clearlake Capital and Francisco Partners in a deal valued at $2.1 billion. The transaction will see the private equity firms prevail over rivals to acquire the SIG unit, which provides application security testing for software developers. The transaction will also result in the SIG operating as a privately held company upon completion. 

The deal includes up to $475 million in cash, payable upon achieving a specific rate of return from liquidity transactions, which allow company stockholders, including employees, to sell their shares. Synopsys had announced plans to divest its SIG unit in late 2023, and in January, it agreed to acquire rival design software firm Ansy for $35 billion, marking its largest-ever deal. 

Expected to close in the second half of 2024 pending regulatory approval, the SIG deal will establish a new standalone entity providing application security testing software. Although DG Comp has a decision deadline of 14 August, a decision may come by Friday. 

Τhursday, 8 August – CSO to publish consumer prices for the month of July 

The Consumer Price Index data will be released by the Irish Central Statistics Office (CSO) on Thursday, covering the situation through July.   

The CPI for the month of June was 2.2% down from an annual increase of 2.6% in the 12 months to May 2024. This marked the eighth consecutive month with an inflation rate under 5%. When excluding energy and unprocessed food, the CPI increased by 3.1% over the same period. The sectors with the highest annual increases were Transport (+4.9%) and Restaurants & Hotels (+4.4%). Conversely, Clothing & Footwear (-6.7%) and Furnishings, Household Equipment & Routine Household Maintenance (-1.1%) were the only sectors to see a decline compared to June 2023. 

The upcoming release of the CPI for July is expected to confirm the downward trend in consumer prices, as indicated by the EU's Harmonised Index of Consumer Prices (HICP) flash estimate, which showed a 1.5% price increase in Ireland in the 12 months to the end of July. This means that inflation is poised to drop below ECB’s inflation target rate of 2%, a remarkable decline from Ireland’s peak inflation of 9.2% in October 2022. 

Friday, 9 August – Eurostat to release 2023 data on EU’s international trade policy in goods 

On Friday, Eurostat is scheduled to release the data on international trade in goods by type of goods for 2023.  

In 2022, machinery and transport equipment made up 37% of all goods exported from the EU, equating to €952 billion, and 27% of all goods imported into the EU. The next highest export values were for other manufactured goods (€571 billion, 22.2%) and chemicals and related products (€553 billion, 21.5%), while food, drinks, and tobacco (€204 billion, 7.9%), mineral fuels (€180 billion, 7.0%), and raw materials (€76 billion, 3.0%) had much lower shares. 

Between 2002 and 2022, the global financial crisis in 2009 and the COVID-19 pandemic in 2020 significantly impacted EU exports. In 2009, exports declined sharply across all product groups. However, in 2020, exports of chemicals, food, drinks, tobacco, and raw materials were less affected compared to machinery, transport equipment, other manufactured goods, and mineral fuels. From 2002 to 2022, machinery and transport equipment exports saw the highest absolute increase (+€495 billion), doubling their 2002 value. Other manufactured goods saw similar growth, while mineral fuels increased 7.5 times from their 2002 value. 

Last year’s figures confirmed that the EU remained the world’s largest car exporter, with a trade surplus of €96 billion in 2022, despite a total goods trade deficit of €430 billion. This surplus reflects increasing motor car exports to both established and emerging markets as European carmakers address declining domestic demand. In 2022, the main destinations for EU motor car exports were the US, followed by the UK and China. In terms of imports, China was the main source of EU imports of motor cars, followed by the UK. Notably, there was a rapid decline in imports from Japan (-19.5 pp) and the UK (-19.9 pp), reflecting Japanese manufacturing bases within the EU and increased shares of imports from China, Mexico, and Turkey. 

Eurostat has already confirmed that in 2023, China was the EU's third largest partner for exports of goods, accounting for 8.8% of total exports, and the largest partner for imports, accounting for 20.5% of total imports. However, this week's figures on "international trade in goods by type of goods" will shed more light on the exact changing nature of EU's trade with China amid increased de-risking in critical sectors such as raw materials, chips, solar panels and batteries.