20 April 2006 Press release
Tremendous year of activity
PricewaterhouseCoopers has completed an analysis on the key trends and driving forces related to the Mergers & Acquisitions and privatisation activity in the CEE region since 1997. The total estimated M&A deal value worth USD 91.2bn exceeds all expectations, almost double compared to 2004.
Growing number of Mergers and Acquisitions, 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.
In 2005, PricewaterhouseCoopers accounted for 1,848 publicly announced, private transactions in ten countries of the CEE/CIS region, including Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Russia, Slovakia, Slovenia and including Ukraine in PwC survey for the first time.
The estimated average disclosed deal value increased from USD 52.1m to USD 71m in 2005, with the average deal size of USD 473.4m among the transactions over USD 100m.
According to PricewaterhouseCoopers’ analysis, 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 m, up from 11% in 2004.
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 amongst 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, Romanian and Slovakian M&A markets were dominated by inward transactions, 72% and 63% respectively, compared to an average 40% for the entire region.
Diverse market
We reported an overall growth in activity, 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 the 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 largest growth in the M&A market, both in terms of number of transactions and in 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 - First time involved in the survey with a reasonable market value.
Privatisation – Continues
Although the number of privatisation reported in the region has decreased by 19%, the value realised on these privatisations was most significantly higher – estimated market size of USD 22.8bn, representing an 84% increase compared to 2004 (44% excluding Ukraine). Of total transactional activity in the CEE region, privatisations represent a 25% share. Privatisation spending was the highest in Ukraine and Romania, the Czech Republic and Hungary.
Key characteristics of the Ukrainian market
Changes in political climate have enlarged investment in Ukraine.
In 2005, the Ukrainian M&A market closed 85 deals worth USD 2.3bn representing 3% of the total CEE market volume.
Most active inward investors were from Russia (14 deals), US and Austria. Ukraine ranked the 3rd among the most favoured target countries within CEE/CIS markets, after Czech Republic and Slovakia. The majority of aquisition targets were in the manufacturing, financial services and telecom sectors.
In 2005, Ukraine had the highest privatisation spending – USD 4.9bn, representing 22% of the total estimated 2005 CEE/CIS privatisation market value, estimated at USD 22.8 bn.
”The Ukrainian market offers huge potential to investors”, commented Nilesh Lad, PwC Transaction Services Partner in Kiev, Ukraine.-„However political stability, a coherent and constructive government and effective tax and legal reform underpin the continued success of this market”.
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Notes to Editors:
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.
“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
For additional information please call Natalia Blotskaya at (044) 490 6 777 or e-mail to: natalia.blotskaya@ua.pwc.com.
