Vienna, Austria, 19th April 2018: Mergermarket, the leading provider of M&A data and intelligence, has reported that M&A in Central & Eastern Europe has made a solid start to the year reaching €6.4bn across 112 deals. This figure has slightly dipped from the €8.8bn recorded across 163 during the same period in 2017. The figures were released at Mergermarket’s CEE M&A and Corporate Financing Forum held on 19th April 2018 at the Palais Ferstel in Vienna.
Private equity buyouts have been the key driver in 2018 with over €1bn already invested into the region this year. The €1.1bn spent year-to-date 2018 represents a 17.9% share of total M&A up from 12.4% seen throughout 2017. The third and fourth largest deals targeting the region so far this year have been private equity buyouts. These include Starwood Capital Group’s acquisition of a 26% stake in CA Immobilien Anlagen for €706m and Novalpina Capital’s €239m takeover of Olympic Entertainment Group. “A steady flow of private equity deals should see the region remain active throughout 2018” commented Jonathan Klonowski, Research Editor (EMEA) at Mergermarket.
Cheap financing, healthy PE fundraising and a need to digitalise are likely to support dealflow across the region for the rest of 2018. The focus is expected to be on consumer-related, financial and insurance, energy and industrial sectors. Austria has recorded a strong start to the year with €1.1bn invested across 22 deals in the first quarter. On the other hand, following a slowdown in activity in Poland last year, Czech and Slovak M&A is expected to take off given the volume of ongoing deals and a strong pipeline of transactions. There is also optimism amongst M&A professionals in the Baltics given the pipeline of IPOs on the radar and forecasts of increasing GDP. In Serbia, the TMT sector is among those expected to see the most activity for the rest of the year.
CEE TMT activity received its second highest number of deals on record in 2017 with 87 deals worth a combined €4.2bn. 2018 has started strongly with 19 deals targeting the sector worth €3.4bn. Earlier in the month, Mergermarket reported that Czech billionaire Petr Kellner’s investment firm PPF Group is studying an option to acquire control of Serbian digital bank Telenor Banka from the Norwegian telecoms firm Telenor. In March, Telenor agreed to sell its mobile operations in Serbia, Hungary, Bulgaria and Montenegro to PPF Group for €2.8bn – the largest deal targeting the region so far this year.
Another high-profile TMT deal on the horizon is Vodafone’s approach for Liberty Global’s Central and Eastern European assets. As it stands, Vodafone is looking to purchase Liberty’s Unitymedia in Germany, UPC Hungary and UPC Czech Republic. The three CEE assets could cost Vodafone $20bn, one sector banker estimated.
However, the sector has faced deal execution issues. In February, Serbia’s National Bank refused to give permission to Bulgarian fund River Styxx Capital to buy Telenor Banka without citing reasons. This was one of the nine deals announced in 2017 which have since lapsed. This compares to the 11 deals announced in 2016 which have now lapsed with UPC Polska’s €695m acquisition of Multimedia Polksa finally lapsing in late March 2018.
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