Deloitte analysis: The M&A activity slowed down in the third quarter of 2019, but remains solid

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Deloitte analysis: The M&A activity slowed down in the third quarter of 2019, but remains solid

22 October 2019

The mergers and acquisitions (M&A) market was solid in the third quarter of 2019, with 29 transactions announced, one more compared to the similar period of 2018. According to Deloitte estimations, the total volume, including transactions whose values were not disclosed, was EUR 650-850 million (EUR 1.4-1.6 billion in the third quarter of 2018), while the disclosed transactions amounted to EUR 343 million (EUR 814 million in the similar period of 2018).

“This year’s third quarter saw a solid M&A activity, after an atypical quarter, in which it had strongly accelerated. For the rest of the year, we anticipate the market will remain active, as a significant number of M&A projects are in progress in various industries,” said Ioana Filipescu Stamboli, Corporate Finance Partner, Deloitte Romania.

Only one transaction of over EUR 100 million was announced during this period, compared to the second quarter, during which four transactions with disclosed or estimated value over this threshold were announced, including a mega transaction (of over EUR 500 million). In the third quarter of 2018, there were six transactions of over EUR 100 million.

Out of the total analyzed transactions, only seven had their amount disclosed.

During the last quarter, the intense activity of private equity funds on the buy-side was notable. Thus, Innova was involved in two transactions (OptiBlu and Optiplaza), Abris took over Global Technical Group, Highlander purchased Ares, CEE Equity bought Pasteur Filiala Filipesti Farmavet and certain Agrozootehnica Pietroiu assets, and Morphosis purchased DocProcess. Also, Greenbridge entered the local market by taking over Casa Rusu.

“We notice an increased appetite for acquisitions from the private equity funds which are active on the local market, especially in fields such as specialized retail, medical services or manufacturing, as well as a significant decrease of the number of disclosed transactions. For instance, in the first nine months of this year, there were only 19 disclosed transactions, compared to 28 in the similar period of last year and 44 in the same period of 2017,” added Ioana Filipescu Stamboli.

The biggest transactions announced in the third quarter of 2019

  • the takeover by Ingka Group (which owns IKEA stores) of an 80% package in seven wind power plants, from Vestas (EUR 136 million);
  • the acquisition of America House office building in Victoriei Square by Morgan Stanley Real Estate Investing in partnership with David Hay. Within this transaction, Indotek Group also purchased Promenada Mall in Targu-Mures (undisclosed amount);
  • the acquisition by Holcim Romania of all the shares of Somaco Grup Prefabricate, from Oresa (undisclosed amount);
  • the takeover by Gardenica Limited (part of China CEE Group) of Pasteur Filiala Filipesti, Farmavet and, indirectly, of certain assets of Agrozootehnica Pietroiu (undisclosed amount);
  • the acquisition by Greenbridge of 75% of the shares of Rus Savitar group of companies – Casa Rusu (undisclosed amount).

The Romanian M&A market, in Q3 2019

-    market volume (disclosed transactions): EUR 343 million;

-    estimated market volume (including undisclosed transactions): EUR 650-850 million;

-    number of transactions (including undisclosed transactions): 29;

-    average value (calculated for disclosed transactions): EUR 49 million.

Evolutions of the number disclosed transactions
Quarterly evolution of the Romanian M&A market

*Note: Only transactions with a disclosed value of over EUR 5 million have been taken into consideration for the graph, while mega transactions (greater than EUR 500 million) have been excluded; for instance, in the second quarter of 2019, the UiPath transaction of EUR 500 million has not been included. Information is collected from public sources and updated with transaction values resulting from the latest available pieces of information.

Deloitte Romania coordinates an integrated multidisciplinary M&A practice, with a holistic approach that ranges across multiple service lines, including M&A Advisory, Transaction Services, Fiscal Advisory and Legal Advisory. Deloitte teams of skilled professionals can thus cover all relevant aspects of a transaction.

Deloitte provides worldwide audit, consulting, legal, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500 companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights, and high-quality service to address clients' most complex business challenges. Deloitte's goal is to make an impact that matters through its more than 312,000 professionals.

Deloitte Romania is one of the leading professional services organizations in the country providing, in cooperation with Reff & Associates, services in audit, tax, legal, consulting, financial advisory, risk advisory, business processes and technology services and other related services with more than 1,700 professionals.

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