Deals of the year: Romanian M&A sector returns to growth

This year has seen notable M&A developments in energy, agribusiness, logistics and transport and retail, and deal-making has amounted to around EUR 1 billion. The market bounced back in 2012 and should continue this trend next year, sustained by the privatizations of state-owned firms and the existence of attractive investments in agriculture and renewable energy, say specialists.

The value of M&A registered in 2012 rose by 30 percent to around EUR 1 billion, almost evenly divided between domestic and foreign investors, according to Hein van Dam, partner in charge at Deloitte Financial Advisory Services. He added the second half proved to be the better for deal-making. The largest deals were concluded in e-commerce, IT, retail and agribusiness.

Specialist said M&A had increased against the background of a more stable macro-economic environment.

The market remained sensitive to the Euro zone crisis and the domestic political environment, but the appetite for acquisitions is still present, despite sluggish economic growth in the Euro zone, according to Radu Stoicoviciu, partner, leader of the transaction and management consultancy department at the professional services firm PwC Romania.

“Financial and strategic investors carefully and realistically plan their investment budgets and expansion/consolidation plans at a regional level, with potentially favorable consequences for Romania,” said Stoicoviciu. “The eventual macro-economic shortfalls may delay investment decision, but just temporarily.”

The difficult situation facing the Euro zone may actually represent an opportunity as long as investors perceive Romania as a country with good economic potential, which offers an attractive yield on investments, according to Mihai Zoescu, senior manager, advisory services, at the professional services firm KMPG. He reckons the political crisis has delayed some investments.

“We don’t think that investments have been cancelled due to the political environment, but it’s possible that certain investment decisions were delayed in the period prior to the elections,” said Zoescu.

The distressed Euro zone is Romania’s main trading partner, accounting for 70 percent of all exports, and Western Europe is the main source of foreign direct investments (FDI) in Romania, according to Hein van Dam of Deloitte.

“The deterioration in confidence across the Euro zone is clearly reflected in the dramatic decline in FDI which directly impacts the level of M&A activity,” said the Deloitte partner.

The M&A market is set to make additional gains in 2013, helped by Romania’s privatization program agreed with the IMF and the existence of opportunities in other sectors.

The privatization of state-owned companies such as post operator Posta Romana and petrochemical plant Oltchim, and the sale of minority stakes in other state-owned firms, could help the market move forward, according to Zoescu of KPMG. He sees additional growth potential in agriculture and renewable energy, where there is still a window of opportunity. Zoescu said deals could be struck between smaller players in the banking sector.

“The energy (including renewables) and resources sector continues to attract strategic investment while sectors such as IT and related businesses, niche manufacturing and services are among the sectors of interest to investment funds,” said Hein van Dam.

Stoicoviciu of PwC adds that transport and logistics are becoming an interesting sector for investors given that the economic recovery will boost trade and the demand for these services.

Romania still needs to work on creating an investment environment which can compete with other countries, regionally and globally, if it wants to increase its presence in the M&A market, according to the Deloitte partner.

“Romania’s share of regional M&A activity has declined in recent years as a clear divide has emerged between countries to the north such as Poland and the Czech Republic and those to the south such as Hungary, Romania and Bulgaria – largely reflecting investor concerns around macroeconomic stability and the perception of relative lower investment risk in Poland and Czech Republic,” said Hein van Dam.

Zoescu of KMPG said Romania ranks second in the region for M&A, behind the clear leader Poland.

Some of the largest deals signed this year have included the acquisition of Azomures by Ameropa Holdings and the purchase by Naspers of a controlling stake in eMag. Auchan bought 24 Real hypermarkets as part of a cross-border transaction, while Innova Capital acquired a controlling stake in EnergoBit.

FMCG

Kandia Dulce takes over Heidi Chocolat

Value of transaction: Not made public

Legal team buyer: Not made public

Legal team seller: Not made public

The owner of Romanian chocolate manufacturer Kandia Dulce, the Austrian Meinl family, acquired Heidi Chocolat from the Swiss Laderach family. Heidi and Kandia Dulce will become sister companies under the ownership of the newly created KEX Confectionery.

HEALTHCARE

Roni Talic Group buys two dialysis centers from Fresenius Group

Value of transaction: Not made public

Legal team buyer: Not made public

Legal team seller: Popovici Nitu & Asociatii

Businessman Roni Talic has acquired dialysis centers in Oradea and Botosani from the US Fresenius Group, a global healthcare group that provides products and services for dialysis, hospitals and home medical care.

INDUSTRY

Nokia sells Jucu plant to De’Longhi

Value of transaction: Not made public

Legal team buyer: NNDKP

Legal team seller: Musat & Asociatii

Finnish mobile phone maker Nokia divested its EUR 60 million investment at Jucu plant in Cluj county and sold the manufacturing facility to the Italian household appliances producer De’Longhi.

Trakya Cam Sanayii buys Glasscorp

Value of transaction: EUR 3.6 million

Legal team buyer: Reff & Asociatii

Legal team seller: Schoenherr

Turkish glassmaker Trakya Cam Sanayii, a company listed on the Istanbul Stock Exchange, acquired Romanian Glasscorp.

Pöyry Romania SRL sold to company management

Value of transaction: Not made public

Legal team buyer: Not applicable

Legal team seller: Bulboaca & Asociatii SCA

Pöyry PLC sold its subsidiary Pöyry Romania, one of the leading design and engineering company in Romania. It also sold twelve affiliated companies.

Maintenance Partners Romania completes restructuring

Value of transaction: Not made public

Legal team advisor on restructuring: Bulboaca & Asociatii SCA

Maintenance Partners Romania, a subsidiary of Mitsubishi Heavy Industries Group, was restructured and the power-related business, also involving the employees, was transferred to Mitsubishi Systems Europe.

Menzies Aviation buys Kamino Cargo

Value of transaction: EUR 1.4 million

Legal team buyer: Zamfirescu Racoti Predoiu

Legal team seller: Biris Goran

UK-based Menzies Aviation took over the Romanian cargo ground handling company Kamino Cargo. Menzies Aviation has 17,000 employees, which covers over 500 airlines. Every year, it operates 800,000 fights and 1.7 million tons of cargo.

EBRD and Global Finance invest in Green Group

Value of transaction: EUR 23.5 million

Legal team buyer for Global Finance: CMS

Legal team buyer for EBRD: DLA Piper

Legal team seller for Romcarbon: Biris Goran

Romcarbon, the leading Romanian-based filters and protection materials manufacturer, sold a partial shareholding interest in the Green Group to the EBRD and Global Finance/South East Europe Fund.

Metair Investments buys Rombat

Value of transaction: EUR 42.8 million

Legal team buyer: D&B David and Baias, Taback

Legal team seller: Not made public

South Africa-based Metair Investments, through its wholly-owned subsidiary Metair International Holdings Cooperatief, acquired a 99 percent stake in Romanian automotive lead-acid batteries manufacturer Rombat. The deal is one of the highest ever recorded in the local automotive sector. Metair Investments, which manages a portfolio of companies that manufacture and distribute products mainly for the automotive sector, agreed to further purchase a 9.09 stake in Rombat from the remaining minority shareholders.

Ford completes privatization of Automobile Craiova

Value of transaction: Not made public

Legal team buyer: NNDKP

Legal team seller: Tuca Zbarcea & Asociatii

US car market Ford concluded negotiations with the Romanian Authority for the Recovery of State Assets (AVAS) over the completion of the privatization of Automobile Craiova Company. Around EUR 38 million was generated for state coffers as a result of the negotiations. Ford has invested over EUR 700 million in Craiova since the privatization in 2007.

INFRASTRUCTURE

Astra Rail Industries buys three Romanian train wagon makers

Value of transaction: over EUR 100 million

Legal team buyer: Musat & Asociatii

Legal team seller: Not made public

Astra Rail Industries, owned by German strategic investors Thomas Manns, acquired Astra Vagoane Arad, Meva SA and ROMVAG caracal, the largest railway wagon producers in Romania. The companies have a market share of 30 percent in the European wagon industry. As a result of the deal, Astra Rail Industries holds train wagon and rolling stock factories in Arad, Drobeta Turnu Severin and Caracal.

INSURANCE

Romstrade acquires ABC Asigurari-Reasigurari from Hidroconstructia

Value of transaction: EUR 6.7 million – media reports

Legal team buyer: Popovici Nitu & Asociatii

Legal team seller: Not made public

Romstrade, part of a group of firms controlled by Romanian businessman Nelu Iordache, bought 98.5 percent of the shares in insurer ABC Asigurari-Reasigurari. Hidrconstrcutia, a developer of hydropower projects, was the largest shareholder in the insurer, with a 55.2 percent stake. ABC held 0.21 percent of the insurance market, with RON 16.3 million (EUR 3.5 million) in gross written premiums in 2011, according to the insurance regulator CSA.

Gothaer Finanzholding takes over 67 percent stake in Platinum Asigurari Reasigurari

Value of transaction: EUR 6 million

Legal team buyer: Wolf Theiss

Legal team seller: Voicu Filipescu

Gothaer Finanzholding, part of the German Gothaer Insurance Group, acquired 67 percent of the share capital of the Romanian insurer Platinum Asigurari Reasigurari. The insurer registered a net profit of EUR 65,000 in 2011, while the gross written premiums were close to EUR 4 million.

BCR Asigurari and Omniasig complete merger

Value of transaction: Not made public

Legal team buyer (absorbing entity): Schoenherr

Legal team seller (absorbed entity): Schoenherr

Omnaiasig VIG, controlled by Austrian Vienna Insurance Group, is the newly formed insurer after the merger of BCR Asigurari and Omniasig. The Austrian insurer also controls Asirom and BCR Asigurari de Viata locally. The gross written premiums of VIG inRomaniafell by 17.4 percent year-on-year to EUR 340 million in the third quarter.

MetLife buys Aviva operations in Czech Republic, Hungary and Romania

Value of transaction: Not made public

Legal team buyer: CMS

Legal team seller: Clifford Chance LLP

The US-based insurer MetLife acquired Aviva zivotni pojistovna (a Czech life insurer), Aviva Eletbiztosito Zrt (a Hungarian life insurer), and Aviva Romania Life and Pensions. The deal was intended to support the distribution network of MetLife, also strengthening its market position geographically.

Ovidiu Posirca – ovidiu.posirca@business-review.ro

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