2019 was not an easy year for new investments and M&A transactions in Ukraine. In ten regions of Ukraine, martial law has just ended and presidential and parliamentary elections followed. Such events, as a rule, do not contribute to the influx of new foreign investment into the country's economy. And domestic investors prefer to wait and look at the election results in such situations, and only then - to buy up assets.
And so it happened. If you evaluate the ten largest M&A transactions, then the amount that sellers made in the second half of the year doubled the results of the first half of 2019.
In the first half of the year, there were completed transactions, which were announced back in 2018.
In the second half of the year, a landmark transaction was the Azerbaijani Bakcell acquisition of Vodafone-Ukraine cellphone operator, German Stada - Biopharma, Dragon Capital bought Idea Bank.
It should be noted that the new owners of Vodafone-Ukraine and Biopharm did not have assets in Ukraine until 2019 (Stada conducted only trading operations). These two examples seem to establish a new trend for 2020 - the incoming of new foreign investors and the growth of M&A transactions.
According to InVenture estimates, despite the tense political situation associated primarily with the election year, in Ukraine in 2019 a significant number of M&A transactions were carried out on the amount of more than $ 1.6 billion. No less than this amount was invested in greenfield, which indicates a revival of the investment market and promises a forecasted increase in asset value already in 2020.
In 2019, investors were interested in completely different industries. For example, the Korean Posco Daewoo invested in the grain terminal, built by the Orexim group in the Mykolaiv port, the Blackstone global private equity fund invested in Murka - the developer of the gaming platform, the Canadian Fairfax Financial Holdings acquired the insurance business - Aksa Ukraine and Universalna.
VR Capital, a UK Investment Fund, has created a joint venture with ICU for the joint implementation of projects in the field of alternative energy, with a total capacity of about 200 MW.
It was essential to recall the local M&A transactions, which included the Kernel purchase of RTK-Ukraine railway operator and oil extraction plant of Kreativ group, the DTEK purchase of two energy distribution companies Kievoblenergo and Odessaoblenergo in VS Energy.
What will be with the M&A market in Ukraine in 2020? In all likelihood, the agricultural sector, pharmaceuticals, logistics, port and dock-side infrastructure, IT and alternative energy are the most attractive sectors where mergers and acquisitions will occur in 2020-2021.
We suggest you become familiar with TOP 10 M&A transactions that were completed in 2019.
Information on the value of transactions is based on official data, as well as the specialized web-sites InVenture, Capital IQ, Merger Market, Emis, etc.
A complete list of M&A transactions in Ukraine is available here.
- Bakcell> Vodafone Ukraine (MTS)
The transaction value is $ 734 million (including a deferred payment of about $ 84 million).
The largest Russian telecommunications operator MTS, controlled by AFK System of a businessman Vladimir Yevtushenkov, sold its Ukrainian business to Telco Solutions and Investments, controlled by Bakcell – an Azerbaijani telecommunications company.
In accordance with the agreement, MTS's wholly owned subsidiary Allegretto s.a.r.l. (Luxemburg) sells its 100% stake in its Preludium B.V. company, the sole shareholder of VF Ukraine PrJSC.
Read official release.
- Vasily Khmelnitsky> Ocean Plaza Project
The transaction value is $ 292 million (assessed value)
The Antimonopoly Committee of Ukraine allowed businessman Vasily Khmelnitsky to acquire a 35% stake in Ocean Plaza Project (Cyprus) Ltd.
The Ocean Plaza Project is the owner of two facilities: the Ocean Plaza shopping mall in Kyiv (the space is leased through the Lybid Investment Union) and the Radmir Expohall in Kharkiv (the space is leased through the Alakriti company).
In 2012, Vasily Khmelnitsky and Andrei Ivanov sold Ocean Plaza to the Russian company TPN Real Estate for $ 270 million. In March 2019, Khmelnitsky announced that he could buy the shopping mall back.
The developer Vagif Aliyev was also interested in buying Ocean Plaza, who claimed that he would close the deal before autumn. The businessman was ready to pay up to $ 150 million for the shopping mall. Later it was reported that the parties had already agreed on a price of $ 175 million.
On November 28, the Antimonopoly Committee of Ukraine was to consider the case of the acquisition by UPD Holdings Limited of businessman Vasily Khmelnitsky over 25% of the controlling stake in Ocean Plaza Project Ltd.
"I can’t say at what stage, so as not to disrupt the deal. We sold it, for example, for $ 350 million. If it is possible theoretically to buy it back for $ 250 million, then I’m ready for it", the businessman said.
In early December, it became known that Khmelnitsky is buying back shares from two English companies that own 20% and 15% of the capital of the Ocean Plaza shopping mall.
Read official release.
- DCH> Evraz DMP (Dniprovsky Metallurgical Plant named after Petrovsky)
The transaction value is $ 106 million.
Evraz company of Russian businessmen Roman Abramovich, Alexander Abramov and Alexander Frolov sold Evraz DMP (former Dniprovsky Metallurgical Plant named after Petrovsky) to the DCH group of Alexander Yaroslavsky. The deal was closed in April 2019.
Alexander Yaroslavsky became the owner of the plant with the annual revenue of $ 586 million, which produces cast iron, hot rolled, rolled and structural steel. Earlier, Yaroslavsky agreed to buy back the Sukha Balka mine from Evraz.
Read official release.
- DTEK bought Odessaoblenergo and Kyivoblenergo
The transaction value is $ 70 million.
DTEK Energy Holdingof Rinat Akhmetov completed the deal in May on the acquisition of Odessaoblenergo and Kyivoblenergo from the Russian group VS Energy.
The stake in DTEK Oil&Gas ownership increased from 16.8% to 68.3% of the authorized capital stock of Odessaoblenergo.
Also, DTEK now owns 93.9% of the shares of Kyivoblenergo.
The Antimonopoly Committee of Ukraine did not interfere with the agreement.
Read official release.
- Stada Group> Biopharma (pharmaceutical business)
The transaction value is $ 70 million.
The German company Stada Group, which is engaged in the production of medicines and consumer medical products, buys the pharmaceutical business of the Ukrainian company Biofarma. The group acquires production facilities in the city of Bila Tserkva, Kyiv region.
The company notes that the deal will be closed in December 2019. At the same time, Stada emphasized that this is one of the group’s largest investments in the Ukrainian pharmaceutical sector.
Read official release.
- Delta Wilmar> Chumak
The transaction value is $ 69.8 million.
Dragon Capital sold shares of Chumak company, one of Ukraine’s largest producer of sauces and branded food products, to Delta Wilmar.
The buyer was the Ukrainian subsidiary of Wilmar International, one of the largest agricultural companies in Asia, which shares are listed on the Singapore Stock Exchange.
Chumak produces ketchup, mayonnaise, tomato paste, sauces and paste goods. The company was founded in 1996 by Swedish businessmen in Kakhovka (Kherson region), processes up to 100,000 tons of tomatoes per year.
Read official release.
- Kernel> Rail Transit Cargo Ukraine (RTK Ukraine)
The transaction value is $ 64.8 million.
Kernel agricultural holding of Andriy Verevsky bought a 100% stake in the rail provider Rail Transit Kargo Ukraine (RTK Ukraine).
“The purchase should not only provide an EBITDA increase of $ 20 million per year and protect Kernel from constantly rising logistics costs, but also ensure an uninterrupted flow of grain from Ukrainian elevators to ports, as export volumes will increase after the commissioning of the TransGrainTerminal in the port of Chornomorsk ", stated in Kernel company.
RTK-Ukraine is one of the largest rolling stock operators for grain transportation. It was considered earlier a subsidiary of the Russian RTK group. The company owns 2,949 grain wagon loads, which account for about 15% of the market.
Read official release.
- Dragon Capital> IdeaBank
The transaction value is $ 58.5 million.
Group Dragon Capital along with unnamed private investor signed an agreement to purchase 100% shares Idea Bank Lviv in Polish Getin holding. The transaction will take place after approval by the Antimonopoly Committee and the National Bank and the parties fulfill a number of preconditions.
The purchase price will be equivalent to UAH 1,368 billion, or PLN 224,76 million, minus the amount of the dividend until the closing of the transaction and the price of a 100% stake in New Finance Service LLC about 5 million UAH.
For the first time since 2016 in Ukraine, a bank is being sold, not put out of the market or liquidated.
The biggest beneficiary of Getin Holding S. A. is a citizen of Poland and Malta Leszek Czarnecki.
Read official release.
- Dobrobut> Boris
The transaction value is $ 30 million.
The largest transaction in the Ukrainian private medicine market was closed in the summer of the year. On August 6, the Dobrobut clinic of businessman Oleg Kalashnikov completed an acquisition of the Boris clinic, owned by Mikhail Radutsky.
Negotiations on the merger took about three years.
Read official release.
- Metinvest> Unistil
The transaction value is $ 24 million.
Metinvest steel and mining group the acquisition of the Unisteel plant. It is located in Kryvyi Rih and produces cold-rolled galvanized flat steel products.
In 2018, the company was already integrated into Metinvest production chain. Unisteel covers with zinc a billet that is produced by Zaporizhstal and Mariupol Metallurgical Plant named after Illich. Thanks to the purchase, the company of Rinat Akhmetov intends to satisfy domestic demand and supply products for export.
In 2015, OTP Bank, one of Unisteel’s largest lenders, announced that the plant was part of the business group of ex-deputies David Zhvania and Mykola Martynenko.
Read official release.
The largest database of M&A transactions in Ukraine: the main mergers and acquisitions in Ukraine for 2017-2019
