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M&A BarometerHungary 2014
Increasing number of M&A deals in Hungary in 2014 –IT and Technology remains the favourite sector102 deals were publicly disclosed in Hungary in 2014, which represents a 12% increase compared to 2013. The estimated M&Amarket size increased by 18% versus 2013. Similarly to the previous years, the IT and Technology sector was the most activeindustry in Hungary.
Number of M&A transactions increased to 102 in HungaryIn 2014, 102 deals were disclosed and published in Hungary, reflecting a 12% increase compared to 2013. Since 2009, this hasbeen the second most successful period after 2011 (111 deals), in terms of the number of publicly disclosed transactions.
Estimated value of the M&A market - USD 1.5bnTransaction values were disclosed and published in 47% of the deals (48), almost doubling this ratio from 2013, when it was only25%.Based on the publicly available information, the estimated size of the Hungarian M&A market wasUSD 1.5bn in 2014. This represents an 18% increase compared to 2013 and significantly exceeds the USD 0.5bn market size in2012.The average deal size of deals with a disclosed deal value below USD 100m was USD 6.9m in 2014, which represents a 30%decrease from USD 9.9m in 2013.
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111
8291
1022,50
1,77
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1,271,49
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1,0
1,5
2,0
2,5
3,0
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2010 2011 2012 2013 2014
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The Hungarian M&A market
Number of transactions Estimated market size (USD bn)
EY’s M&A Barometer is a summary and analysisof publicly disclosed information accumulatedfrom own research and reputable databases.M&A activity and data includes private toprivate transactions and excludes:• Acquisitions of minority stakes below 15%;
• Majority shareholder further acquisition ofminority interest;
• Real estate transactions (except when thetarget and/or buyer was a real estatecompany or real estate fund);
• Capital market transactions (except fortransactions that resulted in a change ofcontrol);
• Acquisitions of licenses;
• Joint venture agreements;
• Greenfield investments;
• IPOs;
• Privatizations;
• Multi country deals (value of these dealswas ignored in each country, but thenumber was counted in); and
• Internal reorganizations.
IT &Technology remains to be themost attractive, followed by Telecom& Media and Energy & Mining
IT & Technology
In terms of sectors targeted, the IT & Technologysector was again the most attractive. In 2014 34deals occurred in this sector, exceeding the 18 dealsin 2013. The average deal value was USD 6.15m andthe largest transactions in this sector included the UKbased Misys Digital Channels’ acquisition of theHungarian IND Group and Spectrum VC’s and AccelPartners investment in prezi.com. The most populartargets were companies developing cloud computing,data protection and financial IT software services aswell as companies involved in biotechnology. The IT &Technology sector was dominated by domestic deals(62%) in terms of number of transactions.
Telecom & Media
There were 12 transactions closed in the Telecom &Media sector in 2014. However, it is difficult toestimate the size of this sector as deal values wereonly disclosed in two cases. Transactions included,amongst others, the acquisition of Sanoma Media byCentral Fund, the sale of certain Ringier and AxelSpringer portfolio elements to VCP Capital Partners,the acquisition of the remaining 50% ofHasználtautó.hu by Schibsted Classified Media andthe sale of Profession.hu to Ringier-Axel Springer AG.
Local deals and the balance ofstrategic and financial investorscharacterize the marketIn 2014, similarly to the previous years, theHungarian transaction market was dominated bydomestic transactions, as in 61% of the deals boththe target and buyer were Hungarian entities.The origination of inbound investments bycountries included USA (8 deals), UK (4 deals),Germany (3 deals) and Austria, Czech Republic,France, Norway, Poland, Switzerland (each 2deals).Nine publicly disclosed outbound transactions wereannounced in 2014, 4 of them were in the CzechRepublic, 2 in the USA and 1 in Slovakia, Romaniaand the Netherlands each.Contrary to previous years, financial investorsaccounted for almost the half of the transactionsclosed in Hungary in 2014. Share of financialinvestors was 48% of total deal number and 52% ofthe total deal volume were related to strategic orindustry investors.38% of the deals were domestic transactionsperformed by financial investors. The reason fordomestic financial deals dominating the market isthe enhanced activity of those JEREMIE venturefunds that have to invest their funds until the endof 2015.The largest deals in 2014 were outboundtransactions of strategic investors like theacquisitions executed by MOL in the region.
Domestic61%
Inbound30%
Outbound9%
2014
65 66 5668
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2545
2623 49
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2010 2011 2012 2013 2014
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Strategic Financial
Domestic59%
Inbound36%
Outbound5%
2013
Direction of transactions, by number of deals
Industry distribution by number of transactions
Type of investors
33%
11%
11%
9%
7%
6%
6%
5%
5%2%2% 2%1%
IT & Technology Telecom & MediaEnergy & Mining ManufacturingServices Banking & Financial servicesPharmaceuticals & Health care Real EstateOther Food & BeveragesRetail & Wholesale AgricultureChemicals
EY
Assurance | Tax | Transactions | Advisory
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This publication contains information in summaryfrom and is therefore intended for general guidanceonly. It is not intended to be a substitute for detailedresearch or the exercise of professional judgment.Neither EYGM Limited nor any other member of theglobal Ernst & Young organization can accept anyresponsibility for loss occasioned to any personacting or refraining from action as a result of anymaterial in this publication. On any specific matter,reference should be made to the appropriateadvisor.
Transactions with state involvement in 2014*
* Transactions are not included in the overall analysis and statistics.
Target company Buyer Value (USDm)
Antenna Hungária Zrt NISZ 251.2
Giro Elszámolásforgalmi Zrt Magyar Nemzeti Bank (MNB) 33.45
Remondis Magyarország HoldingKun Hulladék Kft MNV Zrt. 1.52
Apáczai Kiadó és KönyvterjesztőKft MNV Zrt. n.a
Nemzedékek TudásaTankönyvkiadó MNV Zrt. n.a
MMBF Földgáztároló ZrtMagyar Szénhidrogén KészletezőSzövetség n.a
Borbély Mansion Hotel Magyar Nemzeti Bank (MNB) 1.76
Eiffel Palace office building Magyar Nemzeti Bank (MNB) 51.12
Welt 2000 Kft. Government of Hungary n.a.
Old City Hall Magyar Nemzeti Bank (MNB) 7.48
Bombardier Transportation MÁVHungary Kft. Magyar Nemzeti Vagyonkezelő Zrt. n.a.
FHB Eletjáradék Ingatlanbefektető Nemzeti Eszközkezelő Zrt. n.a.
FHB Kereskedelmi Bank Zrt. Magyar Posta Zrt. 116.3
Fővárosi Gázművek Zrt. Hungarian Development Bank Plc,MVM Magyar Villamos Muvek Zrt. n.a.
MKB Bank Zrt. Hungarian Government 69.7
South Stream Hungary Zrt. MVM Magyar Villamos Művek Zrt. n.a.
Energy & Mining
11 transactions were published in the Energy & Mining sector in 2014. The sectorwas characterized by strategic transactions, as 8 out of 11 deals were closed bystrategic buyers. Transactions included MOL’s acquisition of gas stations in theCzech Republic, Slovakia, Romania from Eni and Lukoil. These transactions werethe largest deals of all in 2014. Other energy related deals included MET’sacquisition of Dunamenti Erőmű and the Hungarian power trading business of GDFSuez, Blox Inc’s acquisition of Kenderes Biogáz Termelő Kft., and AlteoEnergiaszolgáltató Nyrt.’s acquisition of Sinergy.
Manufacturing
9 transactions were published in the Manufacturing sector in 2014 but the dealvalue was disclosed only in one case. The transactions included Bonitás’sinvestment in Logtron Kft, Methusa SAS’s acquisition of MG Hungary Kft., HobréInstruments’ acquisition of Hobré Laser Technology Kft (previously Hilase Kft) andOTP Fordulat Capitals investment in Graboplast. Unlike the first 3 sectors theManufacturing sector was dominated by inbound investors (67%).
The State as an active playerAn interesting aspect of the Hungarian transaction market remained that, similarlyto the previous year, the Hungarian State both directly and through State ownedcompanies was an active player. The below table contains those transactions wherethe Hungarian State acted as buyer or investor. Please note that these transactionshave not been included in the analysis of the M&A market and the above dealnumbers.