When computing the market value, the decrease in the number of deals was offset by the increase in average deal size, which also doubled.
?As anticipated, the M&A activity decelerated in the second half of 2012, the number of deals decreasing by 30%. However, some significant deals were finalized during this period, mostly in the months of July and August 2012: the acquisition of eMag by Naspers, two real-estate deals (involving Liberty Center Mall and Tower Center International), the takeover of Astra Vagoane and the acquisition of a hypermarket from Pitesti by Auchan Romania.
?In 2012 we saw an increasing number of transactions involving strong targets - indicating a growing confidence of investors in the Romanian economy -, but insolvent and distressed companies continued to be in the focus.
?Last year meant also the completion of the largest transaction of the last two years: the acquisition of chemical fertilizer producer Azomures by Ameropa Holding.
Outlook 2013
?We expect a better 2013, based on the resumed push in privatizations and transactions in the renewable energy and the financial sector. We base this view also on the undertaken more positive attitude of the Romanian Government towards economy.
Type of investors
? The share of financial investors decreased from 35% in 2011 to 18% in 2012, signaling PEs difficulty in finding interesting Romanian targets to match their portfolios and their focus on selling companies held for a long time in the portfolio.
? If in 2011 the market was evenly shared between foreign and domestic investors, in 2012 foreign investors had 54% of the market - indicating that foreign investors keep an eye on the Romanian market in search for appealing targets.
? Origination of inb
ound investments included USA (8 deals), France (5 deals), Cyprus and UK (each with 4 deals), Germany and Canada (3 deals each). Germany, the traditional number one investor, was replaced by USA.
? During 2012 no outbound deals were completed, showing that companies are more focused on strengthening their local businesses. The value of cross-border deals was not accounted in the total size of the Romanian M&A market, a carve out of the Romanian assets not being possible.
M&A Barometer Romania 2012
Sector focus in 2012
?In terms of disclosed deal value, Real Estate sector was the sector with the largest deals, followed by Retail & Wholesale, Manufacturing, Food & Beverages and Energy & Mining. These five sectors cover 88% of the total aggregated disclosed value of USD 788 million.
?In terms of sectors targeted, Retail & Wholesale was the most attractive sector by number of deals, accounting for 16 deals in 2012. Other leading sectors included Manufacturing (13 deals), Energy & Mining (13) and Services (12).
2013 Outlook - Sector focus
?In 2013 we
anticipate an increase in the number of transactions in the Financial sector, mostly involving portfolio of assets and small banks.
?Renewable energy will continue to be an active sector in M&A during 2013, as well as Retail & Wholesale.
Ernst & Young involvement in 2012 M&A market
Ernst & Young was involved in 8 major transactions in 2013, offering support on the buy-side and the sell-side of the deals. Our services included, depending on the transaction: financial due-diligence, tax due-diligence, SPA and structuring advice and valuation services.
