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Central and Eastern European M&A markets diverging

19/01/2016

CMS, in co-operation with EMIS, has published the fifth edition of “Emerging Europe M&A Report 2015/2016”. The report presents the M&A trends for 2016 and an analysis of M&A deals valued over US$ 1mln announced in 2015 across 22 jurisdictions in Central and Eastern Europe, focusing on 15 of them in detail (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine, while data on Emerging Europe include also Belarus, Estonia, Kosovo, Latvia, Lithuania, Macedonia, and Moldova).

Key conclusions

  • Some markets see increase in deal value and volume, but CEE M&A activity down overall
  • Private equity fund investment up 16%
  • Investment by US based companies and funds increases by 61%

Fragmented investment landscape

Investors no longer regard Central and Eastern Europe as a coherent investment area as countries in the region present increasingly different risk profiles. While the CEE M&A market overall was down on 2014, a number of markets saw increases in 2015 in both deal value and volume, as reported in Emerging Europe M&A Report 2015/2016, published by CMS in cooperation with EMIS.

Helen Rodwell, Partner, CMS Prague : “Political changes can be seen to have a direct, and often immediate, impact on the levels of new investment and the sustainability of investments. The net result for the region may be neutral, however, as investment is simply diverted to other CEE countries, rather than withdrawn”.

Stefan Stoyanov, Global head of M&A database, EMIS: “Looking ahead to 2016, we expect a year of respite for emerging Europe M&A. Political risks remain, but many external shocks have been curbed or at least taken into account. On the private equity front, ripe portfolios and a flight to higher returns are likely to spur more deals in the region.”

While the 2015 global M&A market saw more deals with more value than any year since 2007, CEE was relatively flat with a 3% decline in announced deals (2,138 transactions), but a sharper 15% decline in total value (from EUR 63bn to EUR 53,5bn). Poland, Hungary, Serbia and Bosnia and Herzegovina saw an increase in deals – both value and volume – from 2014.

Increased private equity interest

A total of 288 deals were announced (a 16% increase), more than half of which constituted new PE entries. The largest transactions predominantly attracted US and UK investors.

Radivoje Petrikić, Partner, CMS Vienna: “Private equity funds are traditionally characterised by a greater risk appetite than corporate players. It should be expected that funds will to a large extent shape the situation on the M&A market in the region in the coming months”.

US investors increasingly active

In 2015 US based investors increased their M&A activity in the region by 61% in value and 9% in volume with 127 deals valued at almost EUR 4bn.

Helen Rodwell, Partner, CMS Prague: “The most active foreign investors in CEE in 2015 were from the US. This is not surprising, given the strength of the dollar against the Euro, and is a consistent trend across the European M&A market. A new wave of investment from China and a developing interest from South Korea was also apparent.”

CEE also saw more interest from German (a 22% increase in volume to 88 transactions) and UK investors (a 23% increase in value of transactions closed by UK–based buyers to EUR 2.5bn).

The most active sectors in M&A

Manufacturing was the most targeted sector with 343 deals for a total of EUR 8.9bn (14% increase), followed by Telecoms & IT and Real Estate with 298 and 263 deals for EUR 5.7bn and EUR 8.3bn, respectively.

You can find the full report here.

Related people

Helen Rodwell
Helen Rodwell
Managing Partner
Picture of Radivoje Petrikic
Radivoje Petrikić
Partner