EY: M&A market, moderate decrease in H1 2014
The Romanian market saw decreasing activity in the M&A field in the first half of 2014, contradicting the trend noticed within the CSE region, where most of the countries recorded higher volume in terms of mergers and acquisitions as compared with the same period last year, indicates EY’s M&A Barometer Romania H1 2014.
Again, of all deals, domestic transactions account for the majority (66 percent), above the average level registered in the region, as there, only 51 percent of the deals were concluded between parties originating from the same country.
As regards inbound transactions, which amounted to 19, most active investors came equally from Canada, Luxembourg and Germany, whereas in H1 2013, the largest number of such transactions came from Polish investors. On the other hand, the EY specialists observe that the USA remains the sole inbound investor country continuously present in Romania in the last two years and which in the first six months of 2014 accounted for 5 percent of M&A deals, down from 12 percent last year.
According to the mentioned study, the transactions were dominated by strategic investors: “Deals closed by strategic investors in H1 2014 represent 49 percent of total deals, which is 10 percent lower compared to previous year. The financial investors represent 51 percent out of the total transactions, which indicates a growing easiness for PEs to match their portfolio in Romania, in H1 2013 the percentage being of only 41 percent”, states a related press release.
Although not among the industries listed in top 5 largest transactions, the IT sector was the most active target industry considering the number of transactions, 9, followed by Telecom & Media (7) and Services (also 7 deals).
In terms of value, the largest transactions happened in Energy & Mining, Transportation and Banking & Financial sectors, shows the report:
TOP 5 largest transactions by value
1. Sunowe Photovoltaic (China) acquired 25 MW PV Park in Sibiu (Romania) – USD 55.1 million
2. Strauss Group Ltd (Israel) acquired Companhia Cacique De Café Soluvel Sa'S Romanian Amigo Brand (Romania) –USD 20 million
3. Secure Property Development & Investment Plc (Cyprus) acquired Innovations Logistics Park (Romania) – USD 17.3 million
4. Getin Holding SA (Poland) acquired Vb Leasing Romania SA (Romania) – USD 16.7 million
5. Anholt Investment (USA) acquired Agraria Nord (Romania) – USD 15.2 million
In fact, the EY specialists note that the most important trend in the M&A market is the consolidation of the Energy industry, especially the green energy field, as half of the deals closed in the analyzed period included PV and small hydropower plants. A similar evolution has been observed in the Banking and financial services, the financial sector seeing a consolidation, with important deals in the banking field and insurance, as well as in other areas such as leasing.
“The M&A market for the first half of 2014 has been dominated by transactions below the EUR 20 million mark. While certain large transactions have appeared in the financial services, energy and construction materials, those are due to complete in 2015.
On the other hand, the local medium size market has seen strong positive signals, with numerous transactions in the TMT (technology, media & telecom) sector. Other sectors where we noticed sustained M&A activity were energy, transportation and financial services. An additional positive sign we noticed on the buy-side is the increase in the number of transactions pursued by Private Equity funds, through fresh investments or add-ons, coupled with some secondary transactions.
On the sell-side, we have seen local entrepreneurs, for whom EY is particularly supportive, becoming more attuned to market realities. As a result, valuation expectations have seen a downward shift, a development expected to support continued M&A activity in the coming period”, explained Florin Vasilica, Partner, TAS Leader, EY Romania, according to the mentioned release.
