Money Buzz! Europa

Tag: M&A

  • M&A activity in 2020 in CEE at the lowest levels in the past 10 years

    M&A activity in 2020 in CEE at the lowest levels in the past 10 years

    M&A activity in emerging Europe took a hit in 2020 as a result of the coronavirus pandemic with the volume of deals reaching its lowest levels in the past 10 years.

    There were 1,705 deals with a combined value of EUR 60.80bn, down by 12.9% and 16% respectively from 2019.

    In spite of the ongoing restrictions, the market showed signs of recovery towards the end of the year, producing the highest fourth-quarter deal value (EUR 24.28bn) since 2016.

    Capital markets bounce back, PE holds steady

    In what mirrored a global trend, there was a revival of investor confidence in the capital markets with 26 companies from the emerging Europe region listing for the first time, reaching a total value of EUR 4.79bn.

    This was almost double the 14 IPOs in 2019 and represents the highest number of IPOs since 2015.

    Private equity deal flow seemed to have withstood the difficult market conditions of 2020, and while cautious at times, held steady with 319 transactions (318 in 2019) and a decrease in value by 11.1% from 2019.

    The financial services sector saw the biggest jump in the number of private equity deals, up from 15 in 2019 to 33 in 2020.

    Since CMS first published the report, private equity funds have consistently grown their share of M&A in the region: in 2011, it accounted for 6% of the total volume of deals, rising to nearly one-fifth (18.7%) in 2020.

    Foreign investors cautious but regional ones defy the odds

    Foreign investors were more cautious as reflected by cross-border M&A deal numbers decreasing by 34.3% to 764 and values falling by 31.5% to EUR 35bn.

    The US remained the largest foreign investor by volume, despite a 23% drop to 94 deals, while UK investors were the second most active with 72 deals, followed by Germany with 61 deals.

    The opposite was true of domestic deal activity within countries in emerging Europe. Domestic deal numbers jumped 18.4% to 941 and 21.2% by value to EUR 25.8bn. Companies from Russia, Poland, Turkey and Czech Republic were the busiest dealmakers from within the region both in their own markets and abroad.

    Romania registered 136 transactions (as in 2016 and more than in 2018, but 7 less than in 2019), with a volume totalling EUR 2.62bn (6.9% less than in 2019). However, almost half of this value was provided by a single transaction: the sale of CEZ assets worth EUR 1.2bn.

    Leading sectors

    Telecoms & IT was the most active sector by volume with 333 deals (up from 300 in 2019) and second by value at EUR 12.97bn, driven by the rapid acceleration of digitization and adoption of digital communications caused by the pandemic.

    The sector accounted for six of the 20 largest deals in region, including the third largest of all, the EUR 3.7bn purchase of Poland’s Play Communications by France’s Iliad.

    Mining (incl oil & gas) was the top sector by value at EUR 14.1bn despite falling deal volumes. While Real Estate & Construction dropped to second place by deal volume and third by deal value, the logistics and warehousing sub-sector saw a 38.5% increase in deals (from 39 to 54) in 2020, a trend demonstrating the need to support the growth in e-commerce.

    The financial sector enjoyed 12 additional deals and a 39% rise in values, lifted by some of the region’s largest transactions including the purchase of the regional businesses of AXA by Uniqa Insurance of Austria and those of Aegon by Vienna Insurance Group.

    Country hotspots

    Poland was the only country where both deal volume and value rose in 2020 – 9.3% to 282 deals and 6.6% to EUR 11.7bn, respectively.

    The country saw two landmark deals: the EUR 3.7bn purchase of Poland’s mobile operator Play Communications by France’s Iliad which was the largest Telecoms & IT deal, and Allegro’s IPO, the biggest company to list on the Warsaw Stock Exchange.

    These figures and other findings are part of the CMS Emerging Europe M&A 2020 report.

  • The pandemic has taken a heavy toll on European dealmaking activity

    The pandemic has taken a heavy toll on European dealmaking activity

    The COVID-19 pandemic has taken a heavy toll on European dealmaking activity. However, opportunities remain for those willing to take risks, according to the eighth edition of the European M&A Outlook, published by CMS in association with Mergermarket.

    According to Mergermarket data, in H1 2020, European deal volume fell 31% to 2,800 transactions and aggregate value dropped by 29% to EUR 262.9bn compared to the same period in 2019.

    Volume and value figures for Q2 are the lowest for any quarter since 2013.

    This period of volatility looks set to continue. 74% of respondents to this year’s survey say the pandemic has lessened their dealmaking appetite, with 65% not considering M&A at all, compared to just 45% last year.

    Correspondingly, only 2% of respondents expect their deal activity to increase this year, in comparison to 27% in 2019. More than half of those surveyed (53%) expect activity levels to decrease significantly during the next 12 months.

    Further key findings from the report

    Struggling companies are unlikely to find the help they need from the corporate sector. Only 14% of corporates said they would consider acquiring distressed targets at this time. Instead, 83% of such respondents identify the acquisition of new technologies as one of their two principal deal drivers.

    Non-distressed deals will be mostly found in the sectors which have proven most resilient through lockdown periods, including technology, media & telecoms (TMT), financial services, pharma, medical & biotech (PMB) and industrials.

    Respondents pointed to TMT (68%) and PMB (38%) as the two sectors where they expect to see the most European M&A activity over the next year. Meanwhile, the industries hit hardest by COVID-19 – including aviation, retail, leisure and restaurants – will find it difficult to find potential buyers without accepting much lower valuations.

    North America is considered the most attractive overseas market, with almost two-thirds (63%) of respondents predicting that it will be the top non-European target region for European acquirers in the coming year. Asia-Pacific placed a distant second at 35%.

  • The global transactions landscape has come to an abrupt standstill due to the pandemic

    The global transactions landscape has come to an abrupt standstill due to the pandemic

    The global transactions landscape has come to an abrupt standstill due to the COVID-19 pandemic, as companies preserve cash and grapple with the immediate impact of the crisis.

    EY research, however, reveals that companies that make bold decisions on their transaction and strategic investment plans early on after a crisis are the ones that benefit the most in the long-term.    

    Reviewing transactions in the immediate period (2008-2010) after the Global Financial Crisis (GFC), EY research found that companies that were early movers and made bold choices on portfolio-transforming transactions saw a 25% increase in total shareholder return (TSR) over the following decade, compared to those that didn’t.

    Businesses that made acquisitions saw 26% higher returns for shareholders. Those companies that proactively reshaped their portfolios by taking the harder, but more decisive, step to divest assets also reaped rewards achieving 24% higher returns over the same period.

    In further evidence that companies that invested their capital following the GFC gained in competitive advantage, the research found that they saw two- or three-times higher returns over those that took a cautious approach.

    Industry drivers behind pick up in M&A

    With M&A activity across all sectors affected by the COVID-19 pandemic, the drivers that are likely to lead to a shift up in gear for deals vary considerably by industry, according to EY analysis.

    In the healthcare sector, M&A activity is likely to be boosted by large companies buying innovative players in the cell and gene therapy space, as scientific advances continue to showcase the promise of these personalized therapies. A surge in joint ventures and alliances is also on the cards for the sector, as companies look to build the large-scale manufacturing and supply chain expertise required to scale-up delivery.

    The media and telecoms sectors look set to overcome challenges caused by the shutdown and capitalize on the continued shift in consumer preferences for digital entertainment media.

    Whereas, in the technology sector, established players who are looking to augment their capabilities, especially in cloud and customer engagement, will expand their market share and increase their top line by capitalizing on the attractive pricing of innovative start-ups.

    In retail and industrials, combinations aimed at shoring up balance sheets and companies’ ability to generate higher levels of cash flow and boost cash reserves will help spur up activity. At the same time, transactions in the automotive sector will be driven by existing market trends, such as the shift to fully electric vehicles.

  • CzechInvest: 143 transactions reported in the second quarter of 2020

    CzechInvest: 143 transactions reported in the second quarter of 2020

    In the Czech Republic, 143 transactions were reported in the second quarter of 2020, CzechInvest M&A Report shows.

    The largest number of mergers and acquisitions (41) occurred in the industrial products and services sector, followed by the real-estate sector with 39 transactions and the retail, consumer goods and entertainment sector with 19 deals concluded.

    The most important M&A activities in in the second quarter of 2020

    Significant activities on the Czech market include MVM Group’s acquisition of the Czech energy group Innogy from the German company E.ON.SE.

    The Brno-based holding company Solitea announced the largest merger on the Czech market so far this year, involving the consolidation of twenty-three companies in the Czech Republic and seven in Slovakia.

    C-Energy Planá acquired a majority stake in Teplárna Tábor. ČEZ Group is selling its share in the Israeli company CyberX. Czech Aircraft Group took control of the light sport aircraft manufacturer Czech Sport Aircraft.

    Agrofert is selling some of its bakeries that fall under PEK Group. Detailed information on selected mergers and acquisitions is available in the attached report.

  • Deloitte: 2020, a difficult year for the M&A market

    Deloitte: 2020, a difficult year for the M&A market

    The mergers and acquisitions market (M&A) recorded 19 transactions in Romania in the first quarter of the year, four more compared to the same period in 2019.

    According to Deloitte’s estimates, the total value of the market, including transactions whose values were not disclosed, was between EUR 600 and 750 million in Q1 2020 (EUR 200-300 million in Q1 2019), while the disclosed transactions accounted for EUR 337 million (EUR 120 million in Q1 2019).

    Out of the total 19 transactions, only four were announced in March, the month during which a state of emergency was declared in Romania in the context of the COVID-19 outbreak.

    “Unfortunately, these are unprecedented times, governed by uncertainty on all levels. In this context, our expectations for the M&A market can’t be optimistic. Everything will depend on when and how this will end” said Ioana Filipescu Stamboli, Partner Corporate Finance, Deloitte Romania.

    Only four transactions with disclosed value were announced during the quarter and the tendency of non-reporting transactions values has remained strong.

    The largest transactions announced in the first quarter of 2020

    • the acquisition by the Czech developer CPI Property Group SA of a minority stake in Globalworth, the largest owner of office buildings in Romania and Poland, in a series of successive transactions, the largest amounting to approximately EUR 280 million;
    • the transfer by OMW Petrom, the largest energy company in South-Eastern Europe, of 40 onshore oil and gas deposits from Romania to Dacian Petroleum (undisclosed value);
    • The Brink’s Company’s takeover of cash operations of the UK-based G4S in 14 markets, including Romania (undisclosed value for Romania).

    The Romanian M&A market, in 2019

    • market value (disclosed value transactions): EUR 337 million;
    • estimated market value (including undisclosed transactions): EUR 600-750 million;
    • number of transactions (including undisclosed transactions): 19;
    • number of disclosed transactions: 4;
    • average value (calculated for disclosed transactions): EUR 84 million;
  • The M&A market in CEE recorded 726 deals in 2019

    The M&A market in CEE recorded 726 deals in 2019

    The M&A market in Central and Eastern Europe including Russia (CEE) recorded 726 deals in 2019, the same number as in 2018, according to a new report published by Mazars in association with Mergermarket.

    Of the 726 M&A deals in CEE last year, 40% were inbound deals from outside the CEE region – a figure on par with the past four years. This highlights the continued attractiveness of the region to international investors, in spite of a global downturn.

    In contrast, to deal volume, the total public deal value for CEE fell 12% in 2019 to €42.3 billion. This may indicate fewer big-ticket deals, but it is worth noting that the headline figure does not include transactions with publicly undisclosed values, including two investments in a liquified natural gas (LNG) project in the Russian arctic, which are likely to have been substantial.

    Further key findings from the report

    • As the most populous market and largest economy in the region, Russia once again leads the way for regional dealmaking, even with sanctions still in place. The deal value remained steady at €21.5 billion across 167 deals – up from 159 the previous year. Four of the top ten deals in the region and three of the top five took place in Russia, including the year’s largest transaction, which saw Japan Arctic LNG take a 10% stake in the Arctic LNG 2 project for €2.6 billion.
    • In terms of inbound activity, Poland rose to the number one leading destination in 2019. The country saw 65 bids, up from 51 in 2018. This was accompanied by a rise in deal value which increased more than twofold, from €1.9 billion to €4.6 billion.
    • CEE’s strong industrials sector continued to attract the most inbound deals at 56. However, these were mostly small and mid-sized transactions, totaling €1.1 billion, down from €5.5 billion the year before. Energy and utilities remained the top sector for value, with a total inbound deal value of just under €7.6 billion, up from €7.4 billion in 2018, reflective of the large ticket sizes of transactions in this sector.
    • Both international and regional private equity firms are attracted to the region – at a time of slow growth and low yields in many developed countries, CEE offers much-sought-after value as businesses reach maturity or consolidate. Private equity activity continues to grow, with a total of 69 buyouts in the region in 2019, two more than 2018.

    The M&A landscape in Romania

    After a difficult transition to a free-market economy, in recent years the country has become one of the region’s success stories, with buoyant growth and diversifying economy. One of the biggest markets in ECE, natural resources including oil and offshore gas, and a strategic location are all competitive advantages.

    Romania’s M&A volume rose 61% in 2019 to 50 deals, from 31 deals in 2018. Value also increased, by 45% to €815 million.

  • Romanian M&A market increased by 4% year-on-year in 2019

    Romanian M&A market increased by 4% year-on-year in 2019

    Following a decline in 2018, the mergers and acquisitions market in Romania grew by 4% to a total value of EUR 5.2 billion in 2019, according to a study by the PwC Romania and D&B David and Baias integrated transactions team.

    Transactions decreased by 9.6% to EUR 5 billion in 2018

    In 2019, 215 transactions were completed, 26% more than in 2018, with an average value of EUR 24 million. Of those transactions, 14 were valued at over EUR 100 million each, with 16 valued at between EUR 40 and 100 million.

    “The M&A market remains interesting and at a high level, both in value and in terms of number of transactions. Although it still has to recover to reach the record of EUR 5.8 billion in 2007, we are optimistic about the development prospects, because several sectors are evolving towards consolidation, such as the medical, banking and IT&C sectors”, said Dinu Bumbăcea, Partner and Advisory Leader PwC Romania.

    According to the report, the most dynamic sectors in 2019 were IT&C, real estate and pharmaceutical / medical services. By 2020, energy is expected to be one of the most dynamic sectors, with two major transactions expected: the sale of Czech group CEZ assets and those of the Italian company Enel. The Healthcare & Pharma segment will also continue to consolidate, with large players searching for smaller and niche players.

  • Romania’s M&A market shows strong growth, KPMG survey reveals

    Romania’s M&A market shows strong growth, KPMG survey reveals

    Stakeholders expect a further increase in Mergers & Acquisitions (M&A) activity in Romania in 2020 after one of the most successful years in the last decade. The first edition of a new KPMG publication The M&A Landscape in Romania shows investor confidence is continuing to build up, supported by the GDP growth trend and favorable geopolitical position in the region.

    Romania has become a significant investment destination, over the last 15 years, for both strategic and financial investors. Buyers find M&As to be a useful strategy to seize the moment in a rapidly growing environment, while sellers try to realize the value that has been built up in local companies.

    We expect to see another busy year as positive sentiment is fostered by sustainable economic growth and increased attractiveness of Romanian targets, which are strengthening their market position and are opening new development opportunities through regional expansion. Furthermore, Romanian entrepreneurs, in their quest for growth, continue to be faced with a buy versus build strategy and have begun to consider M&As as an integral part of their strategy.

    In the context of a booming global M&A market, our survey found a strong sense of optimism at the national level, with 67% of respondents expecting high levels of M&A activity in Romania to continue over the coming months. Sectors such as technology, healthcare and energy are expected to be particularly attractive.

    The study shows that buyers are worried about substantial differences in price expectations and global macroeconomic uncertainties. At the same time, investors consider that target readiness has a material impact on deal making.