Transaction trends: CEE dealmaking strong and stable
The increase in European M&A deals in the energy sector is primarily driven by the growth of renewables across Europe. Renewable energy sources are already competitive and the cheapest source of electricity. They eliminate dependence of imported fuel and contribute to decarbonisation, which makes them a preferred source of electricity for businesses that are increasingly environmentally-conscious. We also see untypical players entering the market (investment funds, industrial consumers, landowners, EPC companies etc), alongside traditional utility companies. In 2025, we may see some non-traditional players divesting their PV businesses. We also expect ready-to-build wind energy targets to feature in the M&A scene. As elsewhere, energy M&A deals will be influenced by the evolving Ukraine conflict, which has already had a huge impact on the energy sector in CEE, as well as by the trajectory of the German economy.
Miglena Stoilova, Chief Executive Officer, PPC Bulgaria
Having demonstrated its resilience, by weathering uncertainties and escalating geopolitical tensions, dealmaking in the CEE region is increasingly buoyant. Compared to recent years, transaction volume in emerging Europe moved up last year. A mood of cautious optimism prevails among dealmakers about M&A activity in the region over the next 12 months as market conditions show potential for more deals to be done.
Gradually improving economic conditions and a greater sense of stability have raised market confidence across Europe as inflation continues to subside and central banks cautiously anticipate further interest rate cuts. Last year, transaction volumes in emerging Europe continued their positive post-pandemic trend: 1,281 deals were announced in 2024 compared to 1,186 deals in 2023 – an 8.0% year-on-year increase and the highest level since 2018.
Reflecting the region’s enduring appeal, the rising volume of deals reflects the region’s greater stability, notwithstanding the Ukrainian conflict. Even in hard times, it continues to be attractive to international investors.
Aggregate deal values, however, show a different trend, slipping by 30.9% year-on-year - from EUR 37.24bn in 2023 to EUR 25.72bn in 2024. Primarily, this resulted from a relative absence of megadeals valued at EUR1bn or more, compared with 2023 when there were several deals of that magnitude. Instead, there was a shift towards small and mid-market deals as the average deal value fell to EUR 20.1m in 2024 against EUR 31.4m in 2023.
Although the impact of potential tariffs that may affect Europe adds to uncertainty, overall investor sentiment remains upbeat, as M&A players recalibrate their plans in adapting to another new normal. Among countries in the region, some notably outshone others, as is evident from their relative performance.
Lower inflation, combined with the anticipation of still lower interest rates, provide a more benign backdrop for dealmaking as the expectation gap between sellers and buyers concerning M&A valuations continues to diminish. Long-term drivers of deal activity, such as digitalisation, consolidation, AI, renewable energy and green technology also continue to underpin potential future growth in M&A activity across the CEE region.
Countries
In its latest Regional Economic Outlook published in October 2024, the International Monetary Fund forecasts that European emerging market economies grew by 2.3% in 2024 and are anticipated to grow by 3.1% in 2025, compared with 1.0% and 1.4%, respectively, in Europe’s advanced economies, where growth remains sluggish. In Germany, for example, the forecast for 2025 is 0.8% (up from 0% in 2024).
The IMF forecasts a range of outcomes in different CEE countries for 2025 compared to 2024. According to its latest report, Poland's GDP is projected to grow by 3.5% in 2025, up from 3% in 2024. Meanwhile, Hungary’s GDP is expected to rise by 2.9% in 2025, up from 2.3% in 2024, and Romania is forecast to grow by 3.3% in 2025, up from 1.9% in 2024.
The report cautions that “high inflation persistence” is a challenge for much of the CEE region with expectations of “a bumpy last mile.” According to the IMF, this especially applies to CEE countries (Hungary, Poland, Romania, and Serbia) “where wage growth remains strong”, which could feed into higher services costs. The IMF report further points to increased CEE government spending in relation to defence, an aging population, and climate change-related expenditure - most notably in Poland, Romania, the Czech Republic, Slovakia, Albania, and the Baltics.
Although Poland maintains its position as a major M&A market, recording 269 deals in 2024, overall deal volume fell by 5.3% from the 284 deals recorded in 2023. Meanwhile, Polish deal values fell to a ten-year low of EUR 5.29bn. Without any megadeals, only five transactions surpassed the EUR 300m mark. The largest of these was the 64.8% strategic stake in Comarch by CVC Capital Partners and private investors for EUR 427m.
Deal volume in Hungary ticked up by 10.5% last year - from 57 deals in 2023 to 63 deals in 2024. By contrast, deal values fell by 75.9% over the same time period. This was largely because there was no comparable repeat of the EUR 4.3 bn acquisition of Budapest Airport which boosted the 2023 figure. The largest single transaction involved CVC Capital Partners, which acquired Partner in Pet Food (PPF) for EUR 2.0 bn.
Data for the Czech Republic presents a reverse picture. Although deal volume fell by 7.2% from 138 to 128, deal values continued a strong upward trend, jumping by 53.8% from EUR 3.67bn to EUR 5.65bn – more than double the figure of two years ago. The biggest deal by far was domestic: CEZ’s acquisition of a 55.2% stake in Gasnet for EUR 3.57 bn.
The data for Slovakia followed a similar trajectory. Deal volumes fell by 14.6% from 41 to 35, but deal value grew by 25.5% from EUR 3.33bn to EUR 4.19bn, the highest figure for more than a decade. One large deal accounted for the increased value figure: Czech company Energeticky a Prumyslovy Holding acquired 33% of Slovenske elektrarne for EUR 3.99bn.
Bulgaria had another strong year in deal volume which increased by 7.3% from 82 to 88 deals last year – the highest figure for more than a decade. But deal value fell by 77% from EUR 2.48bn to EUR 573m. For the first time since 2020, no deal exceeded EUR 100m.
Deal numbers in Romania, the region’s second most active jurisdiction, fell by 6% from 199 to 187 in 2024, while deal values also fell by 53.3% from EUR 5.54bn to EUR 2.59bn. The two largest deals were: Greece’s Public Power Corporation, which bought the 629 MW renewable energy asset portfolio of Evryo for EUR 700m and Romania’s Banca Transilvania 100% acquisition of OTP Bank Romania for EUR 347.5m.
Finance and insurance sectors are notable: we’ve seen a significant boom in terms of the number of deals, and we assisted OTP in exiting the Romanian market. There's still room for consolidation in some CEE markets, in both the financial and insurance sectors, where more deals may happen.
Horea Popescu
Horea Popescu
Croatian deal volume continued to advance from 83 to 92 last year – a 10.8% increase and the highest level for more than a decade. Meanwhile, deal value fell by 59.9% from EUR 1.91bn to EUR 767m. The standout deal was the 100% acquisition of the agricultural business of Fortenova by Croatian-based Podravka for EUR 333m.
Serbia’s deal numbers were static, falling by just one deal – from 63 in 2023 to 62 in 2024. Deal values fell by 68.2% from EUR 1.44bn to EUR456 . Only one deal surpassed the EUR 100 mark: Israel’s BIG Shopping Centers bought Promenada Novi Sad for EUR 177m.
The number of deals in Bosnia and Herzegovina fell back from 37 to 27 deals, although values increased from EUR 33m to EUR 42m.
Deal numbers in Slovenia slipped with transactions falling from 39 to 34. US-based Robinhood Markets’ EUR 184.1m acquisition of Bitstamp was the biggest deal as total deal values reduced by 9.2 % to EUR 425.
Montenegro deal numbers fell from 10 to four last year while Albania’s deals also reduced from 11 deals in 2023 to six deals last year, as values shrank by 99% from EUR 148.9m to just EUR 1.3m last year.
Partnering with local capital has in recent years proven to be an additional route to market in Central and Eastern Europe - giving rise to additional opportunities and competitive advantage for the larger PE houses.
Helen Rodwell
Helen Rodwell
Sectors
As the total number of deals rose last year, a significant realignment took place between sectors. Taking pole position, Energy & Utilities deal value rose by 162% from EUR 3.72bn to EUR 9.74bn. In second place, Real Estate and Construction staged a rebound: deal volume increased from 158 to 194 while value increased by 77.2% from EUR 3.19bn to EUR 5.65bn.
Conversely, several sectors experienced a notable decline in volume and value in 2024 compared to 2023. Telecoms and IT transactions fell from 279 in 2023 to 260 last year, while aggregate deal value fell from EUR 9.7bn to EUR 1.93bn. The value of manufacturing deals also fell from EUR 6.55bn to EUR 1.12bn, as volume remained flat at 180 deals last year.
There are big energy deals with ready to build projects, rather than projects which are already producing energy. In a very well-developed market for M&A across the region, we’re much more involved in transactions than last year. We’ve seen private equity funds interested in acquisitions and some American banks are active which we didn't have previously.
Radivoje Petrikić
Radivoje Petrikić
Private equity
Private equity witnessed a strong resurgence in western Europe during 2024 as PE firms sought to make the most of a glut of companies which represent good value. There were also Indications of a rebound in CEE: the factors driving PE investment remain strong as do the number of deals and their aggregate value. Given the significant levels of PE investment in western Europe, there is considerable room for growth in CEE, particularly in consolidation between operations across its fragmented markets.
Although PE deal volume rose by 12.6% to 278 deals last year compared to 247 deals recorded in 2023, deal value fell by 11.4% to EUR 13.88bn. Among the bigger PE deals, Blackstone acquired a portfolio of ten logistics assets in the Czech Republic and Slovakia for EUR 470m. Meanwhile, NEPI Rockcastle made two separate shopping centre acquisitions in Poland, each valued at approximately EUR 400m: the Silesia City Center in Katowice and Magnolia Park in Wroclaw.
There has been a stronger focus on joint venture transactions. We’re seeing parties not only consider taking over a competitor: they are looking to form a partnership with a competitor and/or a player in the value chain and develop something together. Going forward, joint ventures will remain busy.
Alexander Rakosi
Alexander Rakosi
Foreign vs regional
US investors remain the most active in terms of deal volume: the number of US-originated deals rose from 96 in 2023 to 102 deals last year, although deal value declined from EUR 3.49bn in 2022 and EUR 2.06bn in 2023 to EUR 1.26bn in 2024. In the top slot by value, Luxembourg rose from EUR 184m in 2023 to EUR 2.01bn last year. The number of Luxembourg deals increased from 14 to 21. In third place by overall value, the Netherlands fell from EUR 1.8bn in 2023 to EUR 790.3bn last year, just ahead of Italy which rose dramatically from EUR 6m to EUR 744.5m.
The UK is still the second most active foreign investor and the number one European investor in CEE, with 68 deals, slightly down from 73 in 2023. The UK was in sixth place by value, down from EUR 824m to EUR 598m. The third largest by transaction volume, with 55 deals down from 69, Germany was ranked 11th by value. The fifth largest investor by value at EUR 710m, down from EUR 2.05bn in 2023, Greece was 18th largest overall by volume at six deals, down from nine a year earlier. By value, the other top ten investor countries were Austria, Sweden, Switzerland, and Italy.
Cross-border deal activity rose from 745 to 776 deals, while aggregate value fell back from EUR 35.5bn to EUR 23.3bn. As domestic deal volumes grew from 441 to 505, values rose from EUR 1.7bn to EUR 2.4bn. Within emerging Europe, the largest investor countries were the Czech Republic which increased from EUR 2.09bn to EUR 8.88bn, Poland which rose from EUR1.14bn to EUR 1.28bn, Estonia (up from EUR 187m to EUR 590m) and Romania (up from EUR 191m to EUR 577m).
Real estate is active, driven by consolidation of assets, where certain groups are exiting from the region or country, and other groups are using this as an opportunity to enlarge their portfolio. This is a strong trend, particularly in office space. We see regrouping with sizeable assets and Luxembourg fund structures being acquired by real estate players. We also see the relaunching of transactions for the sale of large shopping centres.
Juraj Fuska
Juraj Fuska
Deal drivers
M&A activity may have been impacted by economic and geopolitical events, but these are invariably cyclical and indicators now point to a reinvigorated market for dealmakers in 2025. Indeed, current difficulties may ultimately prove to be a catalyst for increased deal activity as opportunistic companies focus on expanding their core activities.
Emerging Europe is forecast to benefit from sustained growth, a robust financial ecosystem, an increasingly digitalised economy, and a skilled, well-educated workforce. Historically, these factors have made the region attractive for M&A activity with cross-border deals consistently outnumbering domestic deals.
Looking forward, digital and technological competencies, renewable and green technology, and the increasing use of AI are integral to the region’s plans for growth. Inevitably, these factors will serve to drive the volume and value of deals in the years ahead.
Ultimately, many deals will also be driven by consolidation of SMEs across the region and the increasing success of large family businesses. As new investment opportunities arise, M&A momentum will endure as the CEE economies continue to grow at a robust level.
The UK remains a significant investor in the region, which recognises that CEE countries offer significant opportunity for science, innovation, and technology partnerships. This is driven by each country’s efforts to combine their science and technology expertise and skilled workforces (Bulgaria, Hungary, Poland and Romania comprise four of the six EU countries in the Top 25 countries of STEM (science, technology, engineering, and mathematics) excellence), alongside traditional strengths in manufacturing, IT and science.
Eva Talmacsi
Eva Talmacsi
Outlook
Despite the short-term challenges, dealmaking in the CEE region remains attractive for international investors, as evidenced by higher deal volumes in a range of countries and sectors last year.
Cross-border M&A transactions continue to feature across many sectors with no sector or acquiring country dominating the deal landscape. Instead, buyers based in multiple different countries are active across diverse sectors. As optimism, albeit cautious, looks set to become the hallmark of 2025, buyers will continue to capitalise on the region’s diverse investment opportunities.
In terms of private equity, there has been an increase in the number of deals. In part, this can be attributed to local private equity firms investing in the region. Although we have had less private equity investment from abroad, local private equity has established itself in the region, building platforms and consolidating in certain sectors, often focused on mid-market investments.
Velizar Velikov, Head of M&A Database at EMIS
OTP Group aims to achieve an optimal scale of economics within its existing footprint by strengthening its presence and reach top3 market share in OTP countries’ such as the Central and Eastern European (CEE) region and selected high-growth markets in Central Asia. According to our recent acquisition in Uzbekistan, we believe that Central Asia is a business opportunity for further expansion and diversification of our presence in this region. In respect of the future M&A trends we believe that the implementation of AI in M&A transaction will materially improve the efficiency of the processes and simplify the entire M&A transaction, reducing the time and resources required from all parties. Currently, generative AI is rarely used in M&A processes, however our expectation is that the use of AI will increase, transforming the M&A transaction in the future.
Anna Réka Nagy, M&A Senior Manager, OTP Bank
