M&A market overview in Central and Eastern Europe - May 2015

M&A market overview in Central and Eastern Europe - May 2015

Zephyr report about M&A activity in Central and Eastern Europe in May 2015

M&A value holds month-on-month while volume halves

 There was slight growth in the value of mergers and acquisitions (M&A) targeting companies based in Central and Eastern Europe (CEE) in May, in spite of a significant decrease in transaction volume.

Deals worth a collective EUR 4,250 million were announced over the four weeks, compared to EUR 4,136 million in April, representing a 3 per cent increase month-on-month. However, the result was down almost two-thirds on the EUR 11,474
million recorded at the same time last year.

Volume halved between April and May from 762 to 380 transactions, the second consecutive decrease and the lowest figure recorded in the 12 months under review.

When taken in isolation, a similar trend emerged in Russia, with value advancing for the second month in a row to EUR 2,441 million (March: EUR 1,431 million; April: EUR 1,705 million) against a 60 per cent drop in volume from 156 transactions in April to 62, again marking a 12-month low.

CEE deals by volume and value

Announced date No of deals Total deal value (mil EUR)
May-15 380 4,250
Apr-15 762 4,136
Mar-15 771 4,958
Feb-15 677 11,620
Jan-15 636 2,935
Dec-14 1,115 27,121
Nov-14 761 7,216
Oct-14 993 15,982
Sep-14 1,027 27,855
Aug-14 797 6,329
Jul-14 993 9,970
Jun-14 1,036 10,481
May-14 911 11,474

Russian rail company targeted in May’s top deal by value

Russian targets dominated the month’s top 20 deals by value, featuring in 11 transactions.

The top deal was a capital increase in which Russian rail transportation company Rossiiskie Zheleznye Dorogi issued EUR 1,143 million-worth of shares to its sole stockholder, the Russian government. This transaction accounted for almost half of the month’s total deal value for Russia (EUR 2,441 million) and more than a quarter for the CEE region as a whole (EUR 4,250 million). Slovak Telekom was targeted in the second-largest transaction in May.

Deutsche Telekom offered to acquire the remaining 49 per cent it does not already hold in the telecommunications company from the Slovak government for EUR 900 million.

There was a significant degree of investment from outside the region, with acquirors based in the US, Singapore, the UK, Taiwan and Thailand featuring in the top 20 deals in May.

Regional structure of M&A deals

Target country

Top countries by volume

Target country

Top countries by value

May-14

Apr-15

May-15

May-14

Apr-15

May-15

Poland

108

159

81

Russia

5 603

1 705

2 441

Romania

64

43

81

Slovakia

222

0

900

Russia

221

156

62

Poland

627

621

593

Bulgaria

296

141

53

Romania

167

12

110

Ukraine

46

149

24

Latvia

6

36

106

Latvia

26

14

12

Czech Republic

40

21

33

Estonia

22

11

12

Ukraine

4 141

614

12

Belarus

21

11

11

Belarus

26

3

12

Bosnia and Herzegovina

15

5

9

Bosnia and Herzegovina

60

5

12

Slovenia

5

8

8

Bulgaria

134

254

11

Serbia

15

13

6

Slovenia

25

365

7

Moldova

20

8

5

Lithuania

294

104

6

Czech Republic

13

6

4

Estonia

17

1

4

Lithuania

9

10

4

Croatia

98

36

2

Croatia

8

17

3

Serbia

6

30

2

Hungary

13

8

2

Moldova

2

4

0

Montenegro

0

0

1

Macedonia

1

0

0

Slovakia

7

2

1

Montenegro

0

0

0

Albania

0

0

1

Albania

0

0

0

Macedonia

4

0

0

Hungary

7

556

0

Kosovo

0

0

0

Kosovo

0

0

0

M&A value in transport sector leaps

The Rossiiskie Zheleznye Dorogi capital increase transaction gave a major boost to deal value in the region’s transport sector, with a more than ten-fold increase from EUR 115 million in April to EUR 1,229 million, the highest result since November 2014.
M&A value also rose in chemicals, rubber and plastics and gas, water and electricity, while substantial decreases were recorded for the construction and food, beverages and tobacco industries.

Given the drop in overall transaction volume for the region it is perhaps unsurprising that volume was down across all industries, with the exception of wood, cork and paper and post and telecommunications, for which increases were recorded, while public administration and defence remained unchanged month-on-month at zero.

Top 20 deals by value

#

Deal value

(mil EUR)

Deal type

Target

Target country

Acquiror

Acquiror country

Deal status

1

1 143

Acquisition increased from to 100%

Rossiiskie Zheleznye Dorogi 0A0

RU

Pravitelstvo Rossii

RU

Announced

2

900

Acquisition increased from bl% to 100%

Slovak lelekom AS

SK

Deutsche Telekom AG

DE

Announced

3

241

Minority stake 11%

Inter RAO EES OAO

RU

   

Announced

4

184

Acquisition increased from 61% to 88%

Farmstandart OAO

RU

Augment Investments Ltd

CY

Announced

5

178

Acquisition increased to 100%

VEB-Lizing OAO

RU

Gosudarstvennaya Korporatsiya Bank Razvitiya i Vneshneekonomicheskoi Deyatelnosti (Vneshekonombank)

RU

Announced

6

170

Acquisition increased from 64% to 100%

Mostotrest PAO

RU

TFK-Finans OAO

RU

Announced

7

147

Acquisition 100%

SiaieichrusOOO

RU

Qiwi pic

CY

Pending

8

115

Minority stake

EasyPack Sp zoo

PL

Templeton Asset Management Ltd; lnteger.pl SA

SG; PL; PL

Announced

9

104

Acquisition 100%

Latgran SI A

LV

Graanul Invest AS

EE

Announced

10

101

Acquisition increased to 100%

Dzhei end Ti Bank AO

RU

J&T Finance Group SE

CZ

Completed

11

92

Minority stake 29%

Bank Sankt-Peterburg PAO

RU

Upravlyayushchaya Kompaniya Vernye Druzya OOO

RU

Completed

12

85

Acquisition increased from 22% to 100%

North Star Shipping SRL

RO

Archer Daniels Midland Company

US

Announced

13

63

Minority stake 49%

Colian Holding SA

PL

Allumainvest Sp zoo

PL

Completed

14

60

Acquisition

Walki Group Oy's Pietarsaari plant in Finland; Walki Group Oy's Wroclaw plant in Poland

Fl; PL

Mondi pic

GB

Announced

15

47

Acquisition increased from 54% to 61%

Farmstandart OAO

RU

Augment Investments Ltd

CY

Announced

16

46

Minority stake 15%

Polenergia SA

PL

   

Completed

17

43

Minority stake 0%

Bank Zachodni WBK SA

PL

Institutional Investors

 

Completed

18

33

Acquisition 100%

Wistron InfoComm (Czech) SRO

CZ

Wistron Corporation

TW

Completed

19

32

Minority stake increased from 1% to 33%

AIbion-2002 OOO

RU

Diksi Yug ZAO

RU

Completed

20

30

Capital increase acquired 66% to hold 100%

Charoen Pokphand Foods (Overseas) LLC

RU

Charoen Pokphand Foods PCL

TH

Completed

Sharp drop in PE activity

While M&A value for the CEE region rose in May, there was a significant decrease in private equity and venture capital (PE and VC) investment over the four weeks.

A total of EUR 156 million was invested across 16 transactions in the month under review, compared to 25 deals worth a collective EUR 678 million in April, which in monetary terms represented a 77 per cent decline and of 36 per cent by volume.
This was replicated in Russia, where PE and VC activity weakened over the four weeks from 9 deals worth an aggregate EUR 281 million in April to 8 worth a combined EUR 10 million.

Modest transaction values accounted for the overall decline in May, with the region’s highest PE and VC deal a EUR 115 million funding round by Polish parcel locker rental firm EasyPack.

M&A deals strtucture

 

 

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