Despite a slow start to 2024, the M&A market has near-term recovery prospects, according to PricewaterhouseCoopers (PwC).
Dinu Bumbăcea, Country Managing Partner, and George Ureche, Director, M&A leader in the consulting agency PwC Romania, claim that the mergers and acquisitions market in Romania had a slow start to the year, with 15 transactions, of €170 million, concluded in The first trimester. There are prospects for short-term recovery, with another 55 transactions being announced during the mentioned period, according to PwC Romania data.
The low number of deals closed at this time, despite the many deals announced (but not yet completed), signals that significantly more deals will close in the coming quarters. The 55 transactions announced, 13% less than in the first three months of last year, have a cumulative value of 1.7 billion euros.
Top of announced but not completed transactions
- The acquisition of OTP Bank by Banca Transilvania in a transaction estimated at over 340 million euros, which is awaiting the approval of the Competition Council
- A new transaction of the Bimbo group, after in 2023 it bought the local bakery market leader Vel Pitar. The Mexican group acquired 6 bread factories of Trei Brutari in a €100 million transaction
- Globalworth, the largest owner of office buildings in Romania, has sold part of its local logistics portfolio to CTP in a €70 million transaction
The Russians from Lukoil sold a wind farm
Among the operations completed in the first quarter, the transaction through which PPC Renewables, the local subsidiary of the Greek group PPC, the owner of Enel Romania, completed the acquisition of a wind farm with an installed capacity of 84 MW belonging to Land Power, part of the Lukoil group, stands out.
The consolidation of the market is also visible through a series of small transactions (mostly under €10 million), in which entrepreneurial companies are assimilated mainly to large conglomerates or local strategic players, and to a lesser extent by investment funds, which generates, as in the previous year, only 10% of the number and value of transactions made in the local market.
The most active: energy, industry and real estate
13 of the 15 transactions concluded in the first three months of the year had a strategic investor on the buyer’s side, the rest being carried out by investment funds. From a sector perspective, energy (18.18%), industrial products and services (16.38%) and real estate (14.55%) generated more than 50% of the volume and value of transactions announced in the first quarter of this year.
The financial and private healthcare sectors maintained their traditional presence at the top of the M&A sector, continuing to generate deals in the consolidation trend around the big players.
Sectors that experienced a slowdown in terms of transaction volume are consumer goods and technology, media and telecommunications, which saw a lower number of transactions compared to the same period last year, but are expected to bounce back quickly in the next period.
In the first quarter of 2023, the most deals were in industrial products and services (17.4%), consumer goods (17.4%) and IT&C (15.8%), followed by energy (12, 7%) and real estate (11.1%).
Excess money in the region
“Against the background of expectations of a decrease in inflation in the coming quarters, but also in 2025, as well as in the context of the stability of the monetary policy interest, it is anticipated that the level of confidence of investors in the economic recovery will increase, having a direct positive impact on the mergers and acquisitions market.
The positive feeling of investors is also supported by encouraging macroeconomic data, by the excess of liquidity in the financial markets in the region and respectively the ambitions to develop the business environment, including through the digitization and modernization of enterprises, in order to remain relevant in the future”, according to the specialists from PwC.
Last year, the M&A market in Romania recorded 189 completed transactions, worth €4.3 billion, down 20% compared to 2022, when it was €5.2 billion. The result was largely supported by the transaction through which the Greek group PPC bought Enel Romania, for 1.3 billion euros.
If both completed and signed but not completed transactions are taken into account, last year there were 241 transactions worth €7.7 billion. Many of the deals signed last year were announced in the last quarter, to be completed in 2024, such as the over €1 billion acquisition of the Profi network by Mega Image or Alpha Bank by Unicredit.
