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24% more transactions have brought a 186% increase in the value of transactions which took place in Romania in 2014

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  • Romania records the highest M&A market increase in Central and South-eastern Europe (CSE) in 2014
  • Romania scored the biggest IT transaction in CSE, through the acquisition of LiveRail Inc by Facebook with $500 million
  • German and Austrian investors were the most important foreign investors on the Romanian market

The 2014 estimated transaction value in Romania had a spectacular increase to USD 3.14bn, up with 186% from the previous year, while the number of transactions grew only by 24% during the same period, according to EY’s M&A Barometer Romania 2014. Transaction value was disclosed for 66 deals of the total 182, resulting in a disclosure rate of 36%.

The Romanian transaction market was dominated by financial investors and domestic transactions, with 55% in 2014 of total number of deals. The Services sector was the most active target industry, while the largest transactions occurred in IT, services and real estate. Romania scored the biggest IT transaction in CSE, through the acquisition of LiveRail Inc by Facebook with $500 million.

In 2014, the largest number of deals came from Austria, and Germany –with 9 and 6 transactions representing 8% followed by Netherlands, while in 2013 the most active inbound investors came from Poland.

Of the total 182 transactions finalized, 47% were closed by strategic investors – 16% lower compared to previous year, while the rest were closed by financial investors. The financial investors represent 53% out of the total transactions versus 37% in 2013, which indicate a growing easiness for PEs to match their portfolio in Romania.

The Services sector was the most active target industry (by number of transactions), accounting for 25 deals in 2014. It was followed by Retail & Wholesale (20 deals) and IT (16 deals). In terms of average value, the largest transactions occurred in the IT sector (USD 174.4m), followed by the Services industry (USD 126.1m).

Florin Vasilica, Leader of Transaction Advisory Services, EY Romania, states:

 „We have seen an enhancement of investment funds’ activity, both on the sell-side – exits of some companies from their portfolios – as well as on the buy-side. Whether we refer to take-overs of companies belonging to portfolios of other funds, to consolidations or even to entering new markets, the investment appetite private-equity funds has grown, both regionally and in Romania. Also, the interest of larger funds in Romanian companies represents an encouraging fact, since the latter have succeeded in growing to a value at par with the minimum acquisition ticket of financial investors. An additional enhanced interest comes from funds specializing in restructuring, infrastructure, energy and financial services.

Top 10 largest transactions in Romania in 2014

No.

Target company

Buyer company

Country of target

Country of buyer

Value

USDm      

1

LiveRail Inc

Facebook

RO, US

US

500.0

2

Floreasca City Center SRL

NE Property Cooperatief UA

RO

NL

185.4

3

Non-performing loans of Volksbank Romania

Deutsche Bank AG, AnaCap Financial Partners, HIG Capital LLC

RO

DE, UK, US

134.3

4

Societatea Companiilor Hoteliere Grand SRL

STRABAG SE

RO

AT

126.0

5

United Shipping Agency SRL

COFCO Corp

RO

CN

66.8

6

Millennium Bank Romania SA

OTP Bank Nyrt

RO

HU

52.3

7

Detergenti SA

Dalli-Werke

RO

DE

37.0

8

Hivatalos SRL

Magyar Villamos Muvek Zrt.

RO

HU

37.0

9

Non-performing loans of BCR

Deutsche Bank AG

RO

DE

33.6

10

VB Leasing Romanian IFN SA

Idea Investment SA

RO

RO

32.5


Florenta Birhala, Manager M&A, EY Romania explains:

„The M&A market is seeing a growth period due to the strategic repositioning of large global and regional players, as well as to consolidations in certain sectors, through the acquisitions of competitors that are in difficulty. This adds to exits of financial investors that have reached the term of their investment period. We expect the financial sector to continue its consolidation and restructuring in 2015. Also, medical services will represent a start-sector this year, through the transactions initiated by investment funds and due to big players which will continue their expansion through small acquisitions enabling certain strategic repositioning. At the same time, we expect to see transactions on the telecom and energy markets and a slight recovery in real estate.”

 

About the EY M&A Barometer Romania 2014

EY’s M&A Barometer is a summary and analysis of publicly disclosed information accumulated from reputable databases, such as DealWatch and Zephyr. M&A activity and data includes private to private transactions and excludes: Acquisitions of minority stakes below 15%, majority shareholder further acquisition of minority interest, real estate transactions (except when the target and/or buyer was a real estate company or real estate fund), capital market transactions (except for transactions that resulted in a change of control), acquisitions of licenses, joint venture agreements, greenfield investments, IPOs, privatizations, multi country deals (value of these deals was ignored in each country, but the number was counted in) and internal reorganizations.

Press release in Romanian (pdf, 70.0kb), in English (pdf, 42.9kb)