Regional Mergers and Acquisitions Overview 2005 –
A Year of Tremendous Activity
The total estimated mergers and acquisitions deal value of USD 91.2 billion exceeds all expectations, almost double that of 2004. A growing number of M&A deals, an increasing value of privatisations and similarities among the most popular industry sectors – these common trends characterise the M&A activity in Central & Eastern Europe and in the CIS region.
10 April 2006 - PricewaterhouseCoopers (PwC) has analysed the key trends and driving forces related to the Mergers & Acquisitions and privatisation activity in the CEE region since 1997. In 2005, PwC accounted for 1,848 publicly announced, private transactions in ten countries of the CEE/CIS region, including Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Russia, Slovakia, Slovenia and including Ukraine in the survey for the first time.
The estimated average disclosed deal value increased from USD 52 million to USD 71 million in 2005, with an average deal size of USD 473 million among the transactions over USD 100 million.
“In 2005, half of the top ten transaction values were greater than the second largest transaction of 2004. Mega deals continue to be a significant factor: 15% of deals were greater than USD 100 million, compared with 11% in 2004,” highlighted Margaret Dezse, Corporate Finance Partner of PricewaterhouseCoopers Hungary.
Manufacturing remains the most attractive sector
The number of transactions within each industry sector has been consistent for the past years. The most active sectors were manufacturing with 384 transactions in 2005 representing 21% of the total, financial services (13%), energy & utilities (10%) and food & beverages (9%).
Elevating cross-border activity
The number of cross-border deals throughout the countries involved in the survey was three times higher than in 2004. However, 56% of all deals were domestic transactions, driven by the Russian domestic M&A market, where this rate was 72%. In contrast, the Romanian and Slovakian markets were dominated by inward transactions, 72% and 63% respectively, compared to an average of 40% for the entire region.
Diverse market
An overall growth in activity was reported; however, each country has its own specific characteristics:
Bulgaria |
Most dynamic growth in transaction number – 254%. |
Croatia |
One of the smallest markets in CEE, but with the largest growth in the estimated market value. |
Czech Republic |
After Russia, the largest market in CEE with stable growth in the last three years. |
Hungary |
Huge growth in transaction number, in line with development in the small- and medium-size domestic transactions market. |
Poland |
One of the largest markets, but only modest growth. |
Romania |
The second fastest growth in the M&A market, both in terms of number of transactions and estimated market size. |
Russia |
Represents half of the total CEE market value, mainly characterised by domestic deals. |
Slovakia |
Decreasing activity, increasing market value. |
Slovenia |
Consistent level of transactions, but continuously growing market value. |
Ukraine |
Included in the survey for the first time; reasonable market value. |
Privatisation continues
Although the number of privatisations reported in the region has decreased by 19%, the value realised on these privatisations was significantly higher – an estimated market size of USD 22.8 billion, representing an 84% increase compared to 2004 (44% excluding Ukraine). Privatisations represent 25% of the total transactional activity in the CEE region. Privatisation spending was highest in Ukraine, Romania, the Czech Republic and Hungary.
Outward transactions by Czech companies tripled
In 2005, the number of private-sector transactions grew to 242 (31% growth compared with 2004). The total disclosed value also increased – from USD 3.4 billion in 2004 to USD 5.9 billion in 2005. The disclosure rate of these deals remained at 30%.
The average value of all publicly disclosed private-sector deals increased from USD 62 million in 2004 to USD 96 million in 2005. The largest M&A private-sector deal was the purchase of an 18% stake in Cesky Telecom by Spanish Telefonica for USD 1.077 billion.
On the whole, the telecom industry also enjoyed the other biggest deals – privatisation of Cesky Telecom (again Telefonica), purchase of the remaining stake in Oskar Mobil by TIW and then its purchase by Vodafone. Furthermore, there was increased activity in pharmaceuticals and chemicals – 20 deals in 2005 compared with seven transactions in 2004. The most active industry sector was again manufacturing.
“The Czech Republic continues to be a country that is attractive to investors, and M&A activity remains high, not only due to EU accession but also thanks to an increase in the activity of, in particular, financial investors. The conditions within Czech companies are also improving, and this improvement is contributing to the growing number of acquisitions being made abroad by Czech companies”, stated Karel Kolář, Senior Manager in the Transactions department at PricewaterhouseCoopers Czech Republic.
Outward activities of Czech companies tripled in 2005 – there were 25 outward transactions compared to eight in 2004. Most deals (12) were completed in Slovakia . The proportion of transactions from foreign investors (127 deals) remained similar to 2004 at slightly over half of all M&As on the Czech market. Their disclosed value, however, increased from USD 2.543 billion in 2004 to USD 4.096 billion in 2005. The Czech Republic was the third most popular country for foreign investors. The top investor country for private-sector deals was Germany. Compared to 2004, the proportion of financial investors in the fifty biggest transactions of disclosed value also increased significantly: from 30% to 42%.
Complete findings for the Czech M&A market are available in the 2005 Czech Republic M&A report that is attached to this press release and can also be downloaded at www.pwc.com/mandace.
END
Notes to the editor:
- This publication includes information obtained or derived from a variety of publicly available sources. PricewaterhouseCoopers has not sought to establish the reliability of these sources or verified such information. PricewaterhouseCoopers does not give any representation or warranty of any kind (whether express or implied) as to the accuracy or completeness of this publication.
- The full survey can be downloaded from the following website: www.pwc.com/mandace
- PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 130,000 people in 148 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.
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