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Turkish M&A value up 40% in 2018 despite economic woes

M&A targeting Turkey in 2018 saw subdued activity, but despite the low number of deals, the country saw an increase of 40.4% in deal value compared to 2017.

2018 saw M&A activity in Turkey drop to its lowest number of deals since the financial crisis reaching just 83 deals worth €10.3bn. Faced with a difficult macroeconomic situation and coupled with high interest rates to stem the decline of the lira; foreign players’ appetite for Turkish assets has been muted.

In spite of the low number of deals, the country’s deal value was spurred by two mega deals worth a combined €4.6bn – the €2.7bn acquisition of Deniz Yatirim by Emirates NBD and the €1.9bn acquisition of a 55% stake in Turk Telekomunikasyon by Levent Yapilandirma Yonetimi.

Private equity activity also stalled in 2018 with several firms deploying a “wait and see” approach as the Turkish market suffers from a slowdown. A further decline in the lira would impair the performance of funds’ investments, but favourable risk profiles could attract international “bargain-hunting” allocators to the country.

Overall, investors remain cautious towards Turkey’s growth pointing to uncertainty, the currency’s ongoing weakening and bureaucratic regulations stalling activity in the region. Nevertheless, restructurings are expected to spur M&A activity in 2019 as corporates saddled with foreign debt look to deal with their loan portfolios.

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