central- south eastern europe - m&a barometer h1 2011 · strategic and financial the vast...
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Central- South Eastern Europe - M&A Barometer H1 2011
IntroductionIn our Mergers & Acquisitions (M&A) Barometer we analyze the prevailing trend in 10 Central and South- Eastern European countries (Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Slovakia, Slovenia and Turkey). Although the countries under review vary in size, background and economic growth, most of them have experienced an increased M&A activity in terms of volume in H1 2011 compared to H1 2010, while in 4 countries the M&A market had shown a decline. Total volume in CSE increased by 5%, moreover a 117% growth in estimated value in H1 2011 compared to H1 2010.
More specifically, we observed a majority of domestic transactions, 58% of all deals. Also noteworthy is the fact that transactions were dominated by strategic investors and the most active target industry was Manufacturing while in terms of value the largest transactions occurred in Telecom & Media, Chemicals and Banking & Financial Services.
Highlights – H1 2011Top 3 countries by number of transactions: Poland, Turkey, Hungary•
Number of closed transactions: 597•
Estimated market size: USD 28.6bn •
Top three most active industries in CSE (by volume):•
Manufacturing (86 deals)•
Services (64 deals)•
Energy & Mining (60 deals)•
Top three most active industries in CSE (by value):•
Telecom & Media•
Chemicals•
Banking & Financial Services•
Average deal size of deals over USD 100m: USD 450m•
Average deal size of deals below USD 100m: USD 14m•
Number of deals over USD 100m, as % of total deal volume: 5.5%•
Disclosure rate of transaction value or deal size: 44.2%•
Ernst & Young’s M&A Barometer is a summary and analysis of publicly disclosed information accumulated from various reputable databases, such as DealWatch and Zephyr.
M&A activity and data includes private to private transactions and excludes:
Acquisitions of minority stakes •below 15% (versus 20%, in the previous issues)
Majority shareholder further •acquisition of minority interest,
Real estate transactions (except •when the target and/or buyer was a real estate company or real estate fund),
Capital market transactions•
Acquisitions of licenses,•
Joint venture agreements,•
Greenfieldinvestments,•
IPOs,•
Privatizations.•
Multi country deals (value of these •deals was ignored in each country, but the number was counted in).
2
Number of M&A transactions in CSEPoland was the most active country in terms of deal volume in H1 2011 closing 163 transactions during the respective period. It was followed by Turkey and Hungary closing 130 and 69 deals respectively.
Total number of transactions increased in the region from 571 deals in H1 2010 to 597 in H1 2011 representing a 5% growth year on year.
Estimated transactions value of the marketTotal H1 2011 estimated transaction value in CSE market was USD 28.9bn, up 117% fromthepreviousyear.Polandrankedfirstwith an estimated value of USD 16.9 billion and followed by Turkey (USD 6.5bn) and Hungary (USD 1.4bn). The outstanding growth in terms of deal value in Poland is mainly attributable to two deals with significantvaluesexecutedinH12011.
Furthermore, the number of deals with a value over USD 100 million also increased from 31 in H1 2010 to 33 in H1 2011.
Investor population – Strategic and financialThe vast majority of deals were closed by strategic investors in all countries, resulting in overall proportion of 76% in the region.
Shareoffinancialinvestorswasthehighestin Hungary followed by Romania, Slovenia and Czech Republic.
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3
Direction of transactionsThe CSE transaction market was dominated by domestic transactions in H1 2011 (58% of total number of deals) which represents a 3% increase compared to H1 2010.
Domestic transactions were most popular in Romania, Poland, Hungary, Czech Republic, and in Croatia.
Poland had the most number of outbound transactions (18) which was followed by Czech Republic (7) and Turkey (5) and the proportional share of outbound transactions was the highest in Greece, Czech Republic and in Poland.
Proportional share of inbound transactions was the highest in Slovenia, followed by Bulgaria, Slovakia and Turkey.
Transacting within the region, the most active were Poland (7) and Czech Republic (4).
Sector analysisThe Manufacturing sector was the most active target industry (by number of transactions), accounting for 86 deals in H1 2011. This was followed by Services, and Energy & Mining.
In terms of value, the largest transactions occurred in the Telecom & Media, in Chemicals and Banking & Financial Services sectors.
Each country had its own favoured industry. However manufacturing, services and telecomandmediarankedfirstinmostcountries.
Target country IndustryBulgaria Energy & MiningCroatia ManufacturingCzech Republic ManufacturingGreece Entertainment / PharmaceuticalsHungary ServicesPoland ManufacturingRomania Real EstateSlovakia Telecom & MediaSlovenia ManufacturingTurkey Energy & Mining
ManufServicEnergITTelecoBankiPharmFoodRetailReal EConstEntertTransOtherChemPublisAgricuTourisR+D
14%
11%5%
4%3%
2%2%2%2%2% 1%
1%acturing
cesgy & mining
om & mediang & Financial Services
11%
10%
9%7%
6%
6%
5%maceuticals and health care& Beverages & WholesaleEstatetructiontainmentportation
icals 9%
9%7%shing & printinglturalm
Inbound35%
Outbound7%
Domestic58%
Inbound Domestic Outbound
45% 51%
62%50% 67%
69%
43%31%
48%
100%
10%20%30%40%50%60%70%80%90%
0%10%
8% 6% 13% 14%3%
11% 10% 6% 4%
48% 43%25%
36% 30%20%
48%63%
48%
0%
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62%
International Tax Review
Tax Firm of the Yearin Hungary 2010
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Foreign interestAlthough there were fewer foreign inbound deals compared to domestic deals, in terms of origin of foreign capital invested in CSE by M&A transactions, Western European and non European investors continued to lead versus CSE countries in H1 2011.
USA was the most active non European investor in H1 2011, closing 27 deals in the region followed by Germany (21) and UK (18).
Ten largest transactions in CSE in H1 2011 (USDm)
Target companyCountry of target
BuyerCountry of buyer
Value
Polkomtel* Poland Private investor Poland 6,552
Bank Zachodni SA Poland Banco Santander SA Spain 3,781
Mey Icki Turkey Diageo Plc. UK 2,100
Telewizja Polsat SA Poland Cyfrowy Polsat SA Poland 1,349
BorsodChem Zrt. Hungary Wanhua Industrial Group China 930
Polbank EFG Poland Raiffeisen Group Austria 700
TP Emitel Poland Montagu Private Equity UK 629
Specifar SA GreeceWatson Pharmaceuticals Inc.
USA 628
Zabka Polska SA Poland Mid Europa Partners LLP UK 558
Italicementi-Set Group Turkey Limak Holding Turkey 414
*Signed and announced, in process of closing
IPOs in the CSE regionIPOs are not counted in our M&A barometer statistics. They are not prevalent in most of the countries, however, it is noteworthy that IPOs and the Warsaw stock Exchange plays an important role in the Polish transactions and capital market.
In H1 2011 25 companies have conducted IPO on the primary market and 80 on the alternative, compared to 11 and 32 IPOs respectively in H1 2010.
IPOs are also becoming more and more popular in Turkey, as 16 companies have been listed with a total value of USD 705m in H1 2011.
In Romania the “Proprietatea” Fund was listed on the Bucharest Stock Exchange in January 2011. The fund’s market capitalization reached USD 2.5 billion (RON 7.4 billion) as at 7 July 2011.
Contacts
Bulgaria Diana Nikolaeva [email protected]
Croatia, Slovenia, Hungary Margaret Dezse [email protected]
Czech Republic, Slovakia Petra Wendelova [email protected]
Greece George Momferratos [email protected]
Romania Cornelia Bumbacea [email protected]
Poland Brendan O’Mahony brendan.o’[email protected]
Turkey Musfik Cantekinler [email protected]
Sweden (5), Canada (3), Germany (3), USA (3)
HURO
CR
SK
SI
CZ
PLPoland (4), Finland (2), USA (2)
USA (3), Czech Repu
Germany (4), Luxembourg (3), Poland (2)
Czech Republic (3)
Germany (2)
BU
GR
USA (5), UK (3), Netherlands (2)
UK (2), USA (2), France (1)
USA (9), UK (8), Germany (6), Italy (6)
blic (2), Poland (2)
TR
Germany (4), USA (2), Austria (2)