Mergers and acquisitions in defence: A paradigm shift for Europe
Defence M&A
Fecha: mayo 2025
Pablo Guijarro Segado and Pilar Gómez Estefanía
SEFO, Spanish and International Economic & Financial Outlook, V. 14 N.º3 (May 2025)
Europe’s long-standing investment gap relative to the U.S. has been especially pronounced in the defence sector, where fragmented demand, limited interoperability, and dependence on foreign technology have constrained competitiveness. Recent geopolitical developments and the ReArm Europe initiative have shifted the focus toward scaling and consolidating defence capabilities, supported by policy incentives and multilateral coordination. Past consolidation trends in the U.S. and Europe reveal a growing role for cross-border transactions, alliances, and dual-use technologies in today’s defence M&A environment. Despite global M&A activity weakening in 2025, the defence sector has remained resilient, with transaction volumes rising in Europe and supported by investor interest, margin expansion, and limited sensitivity to interest rates. While structural and regulatory barriers persist, the sector’s strong fundamentals and strategic relevance are expected to sustain momentum in consolidation and investment going forward.