In 2018 in the 22 countries classified as European emerging markets, almost 2.1 thousand mergers and acquisitions (M&A) were announced, with total value reaching EUR80.5bn. This means a decrease of 0.9 per cent in the volume of deals and an increase of 12.5 per cent in the overall deal value as compared to 2017, indicate the authors of the report entitled „Emerging Europe M&A Report 2018/19”, prepared by the law firm CMS and the company EMIS, which specializes in collecting and analyzing data from the emerging markets.
If we take into account the estimates concerning the transactions whose value has not been officially announced, the value of the M&A in the region grows to EUR92.6bn, or by almost 11 per cent compared to 2017.
According to the authors of the report, there is no evidence that the political protests or instability discouraged investors from the markets of emerging Europe in 2018. They cite Poland and Serbia as the examples. In Poland, despite the government’s dispute with the European Commission, the past year was a very good one in terms of the number of transactions. The similar situation was in Serbia, where the number of transactions increased by 40 per cent, to the highest level in history, despite the fact that thousands of people protested on the streets against the government’s policy.
The report indicates that 323 transactions, with a total value of EUR6.49bn, were announced in Poland (if we include the estimated value of transactions in which the valuations were not made public, the total amount increases to EUR8.75bn). This puts Poland in opposition to the trend observed in the region. The value of M&A announced in 2018 was almost 39 per cent lower, while the number of transactions increased by more than 12 per cent y/y. Nonetheless, transactions with a higher total value were only announced in Russia and in Turkey, while a larger number of M&A transactions were only carried out in Russia.
The authors of the report point out that 2018 was another good year in terms of the number of M&A in Poland, and expect that the situation may be similar in 2019. They further emphasize that there has been a significant increase in the activity of private equity funds as buyers.
“In 2018, for the first time, we noted increased activity from the long-anticipated generational change in Polish family businesses established after 1989,” stated the authors of the report. In their opinion, this is the beginning of a trend likely to continue in subsequent years.
The biggest transaction carried out in this area last year, worth EUR300m, was the acquisition of the bus manufacturer Solaris Bus&Coach by Construcciones y Auxiliar de Ferrocarriles and the Polish Development Fund. Another significant transaction, worth nearly EUR117m, was the takeover of the Namysłów Brewery by Żywiec Brewery.
The largest transactions announced in 2018 in Poland were carried out in the financial sector. These were the takeover of Raiffeisen Bank Polska by BNP Paribas, worth EUR770m, and the takeover of EuroBank by Bank Millennium, worth almost EUR426m. Meanwhile, the list of the top 20 largest transactions was dominated by deals relating to the real estate market (there were 12 such transactions among the top 20). In total, the authors of the report identified 77 M&A transactions on the real estate market, which means that every fourth M&A announced in Poland took place on this market.
In the region, just like in Poland, most of the transactions concerned real estate deals (432). Meanwhile, the acquisitions with the highest value were announced in the telecommunications. The four largest transactions in this sector had a total value of nearly EUR15bn. Only in one case the purchase was carried out by a strategic buyer — the acquisition of the assets of Liberty Global in Hungary, the Czech Republic and Romania. The remaining buyers were all financial investors, including banks.
In the European emerging markets, cross-border purchase transactions mainly involved the participation of investors from the Unites States (89 transactions), Germany (71) and the United Kingdom, while the mergers and acquisitions with the highest value were carried out by investors from the United Kingdom (almost EUR9.8bn), Unites States (EUR5.1bn) and Qatar (EUR3.8bn).
Private equity funds showed considerable activity both in the region and in Poland. They carried out a total of 307 transactions (an increase of 15 per cent compared to 2017) with a total value estimated at EUR29bn. Almost every third transaction involving the participation of private equity funds related to real estate.