The M&A market in Central and Eastern Europe including Russia (CEE) recorded 726 deals in 2019, the same number as in 2018, according to a new report published by Mazars in association with Mergermarket.
Of the 726 M&A deals in CEE last year, 40% were inbound deals from outside the CEE region – a figure on par with the past four years. This highlights the continued attractiveness of the region to international investors, in spite of a global downturn.
In contrast, to deal volume, the total public deal value for CEE fell 12% in 2019 to €42.3 billion. This may indicate fewer big-ticket deals, but it is worth noting that the headline figure does not include transactions with publicly undisclosed values, including two investments in a liquified natural gas (LNG) project in the Russian arctic, which are likely to have been substantial.
Further key findings from the report
- As the most populous market and largest economy in the region, Russia once again leads the way for regional dealmaking, even with sanctions still in place. The deal value remained steady at €21.5 billion across 167 deals – up from 159 the previous year. Four of the top ten deals in the region and three of the top five took place in Russia, including the year’s largest transaction, which saw Japan Arctic LNG take a 10% stake in the Arctic LNG 2 project for €2.6 billion.
- In terms of inbound activity, Poland rose to the number one leading destination in 2019. The country saw 65 bids, up from 51 in 2018. This was accompanied by a rise in deal value which increased more than twofold, from €1.9 billion to €4.6 billion.
- CEE’s strong industrials sector continued to attract the most inbound deals at 56. However, these were mostly small and mid-sized transactions, totaling €1.1 billion, down from €5.5 billion the year before. Energy and utilities remained the top sector for value, with a total inbound deal value of just under €7.6 billion, up from €7.4 billion in 2018, reflective of the large ticket sizes of transactions in this sector.
- Both international and regional private equity firms are attracted to the region – at a time of slow growth and low yields in many developed countries, CEE offers much-sought-after value as businesses reach maturity or consolidate. Private equity activity continues to grow, with a total of 69 buyouts in the region in 2019, two more than 2018.
The M&A landscape in Romania
After a difficult transition to a free-market economy, in recent years the country has become one of the region’s success stories, with buoyant growth and diversifying economy. One of the biggest markets in ECE, natural resources including oil and offshore gas, and a strategic location are all competitive advantages.
Romania’s M&A volume rose 61% in 2019 to 50 deals, from 31 deals in 2018. Value also increased, by 45% to €815 million.