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.

MEDIA

Montalivet DFH SAS acquires four companies in Romania

Value of transaction: Not made public

Legal team buyer: Wolf Theiss, Racine, Mayer Brown

Legal team seller: CMS Cameron McKenna LLP

Montalivet DFH SAS (currently Financiere Defi SAS), a company specialized in outdoor advertising and signage production and design, acquired a 90 percent stake in four Romanian companies, as part of a larger cross-border acquisition which included acquisitions in France and Italy. In Romania the firm bought Clear Channel Rooftop, Clear ChannelRomania, Overtop Services and Q Panel.

MINING

Assarel Medet AD bids for Cupru Min

Value of transaction: starting price of EUR 57.4 million

Legal team buyer: Popovici Nitu & Asociatii

Legal team seller: Bostina & Asociatii

Assarel Medet, a leading Bulgarian mining company, part of Austrian Voest Alpine Group, was bidder in the privatization of state-owned Cupru Min, the largest copper extraction company in Romania. Roman Copper Corp., a company controlled by Canadian BayFront Capital Partner, was the winner in the open-cry auction, bidding EUR 200.7 million. However, the privatization failed after the tender winner didn’t reach common ground with the Ministry of Economy on environmental guarantees, payment terms and transparency. Cupru Min owns the Rosia Poieni mine, which has a copper deposit of around EUR 1 billion tons.

Eldorado Gold Corporation acquires European Goldfields Limited

Value of transaction: over EUR 2 billion

Legal team buyer Musat & Asociatii

Legal team seller: Not made public

Low-cost gold producer Eldorado Gold Corporation, with operations in Turkey, China, Greece, Brazil and Romania, acquired the Canadian precious metal company European Goldfields Limited, which has gold and base metal deposits in Greece and Romania. The cross-border deal was carried out under the Yukon Business Corporations Act.

Transelectrica carries out SPO on the BSE

Value of transaction: EUR 37.7 million

Legal team buyer: Not applicable

Legal team seller: Musat & Asociatii

The Ministry of Economy (MECMA) and OPSPI (the Office for State Ownership and Privatization in Industry) sold a 15 percent stake in the grid operator Transelectrica, through the Bucharest Stock Exchange (BSE). The secondary public offering (SPO) was oversubscribed and generated EUR 37.7 million for the state coffers.

ONLINE

Ringier Romania buys 70 percent stake in E-Jobs Group

Value of transaction: EUR 12.2 million – market estimates

Legal team buyer: NNDKP

Legal team seller: Tuca Zbarcea & Asociatii

eJobs founder and minority shareholder Tiger Global Management sold a 70 percent stake inRomania’s largest online recruitment website (ejobs.ro) to Ringier Romania, the local subsidiary of Swiss media group Ringier.

Naspers buys 70 percent stake in eMag

Value of transaction: USD 83 million – market estimates

Legal team buyer: DLA Piper

Legal team seller: White & Case

South Africa-based multinational media company Naspers acquired a 70 percent stake in eMag, the largest online retailer in Romanian and Eastern Europe, operated by Dante International. The two founders of eMag, Iulian Stanciu and Radu Apostolescu, retained 21.6 percent and 8.4 percent stakes in the online retailer.

Asesoft Distributie buys minority stakes in Dante International

Value of transaction: Not made public

Legal team buyer: DLA Piper

Legal team seller: Not made public

Network One Distribution made two separate acquisitions of two share packages of 16 percent and 13 percent, in Dante International, the operator of the online retailer eMag, from minority shareholders.

PHARMA

Mid Europa Partners buys 50 percent stake in Walmark AS

Value of transaction: Not made public

Legal team buyer: Not applicable

Legal team seller: Musat & Asociatii

Private equity investment firm Mid Europa Partners, which has a focus in the CEE, purchased a 50 percent stake in Walmark and its subsidiaries, a leading company in the dietary supplement and traditional medicine segment in the CEE.

Watson Pharmaceuticals buys Actavis Group

Value of transaction: EUR 4.4 billion

Legal team buyer: Skadden Arps Slate Meagher & Flom LLP, Latham & Watkins LLP

Legal team seller: Clifford Chance LLP

US pharmaceutical company Watson Pharmaceuticals bought Actavis Group, which develops, manufactures and sells generic pharmaceuticals, creating the third largest generic pharmaceutical company worldwide. The deal will allow Watson to strengthen its global presence and expand in Europe and Australia. The Romanian division of Actavis employs around 340 people. It focuses on the development, production and marketing of oncology generics.

BC Partners buys Aenova Group

Value of transaction: Not made public

Legal team buyer: CMS

Legal team seller: Clifford Chance LLP

Funds advised by BC Partners acquired Aenova Group from Bridgepoint. Aenova Group is a leading service provider in the development, manufacture and marketing of pharmaceuticals and dietary supplements for a broad range of customers in the pharmaceuticals and healthcare sector. The Romanian division of Aenova has around 270 employees and specializes in the production of soft gelatin capsules.

Andreae-Noris Zahn buys 20 percent stake in Farmexpert DCI

Value of transaction: over EUR 30 million

Legal team buyer: Wolf Theiss

Legal team seller: Not made public

German pharma wholesaler Andreae-Noris Zahn, a member of the Alliance Boots group, purchased an additional 20 percent stake in Farmexpert, one of the largest distributors of pharmaceuticals in Romania. The group had acquired 60 percent of the Romanian distributor in 2006.

PROPERTY

E.ON Energie concludes agreement with Romanian developer for HQ building in Targu Mures

Value of transaction: Not made public

Legal team E.ON EnergieRomania: bpv Grigorescu Stefanica

Legal team RCB Development and Consulting: Tuca Zbarcea & Asociatii

E.ON Energie Romania, the local subsidiary of the German utility firm, entered into a build-to-suit agreement with RCB Development and Consulting, a Romanian construction company owned by the Benta family, for the development of a new HQ in Targu Mures. The 15,000-sqm office building will house some 750 employees, according to media reports. Construction works are expected to take place between 2013 and 2015.

Auchan Romania and Immochan Imobiliare buy former industrial platform in Bucharest

Value of transaction: over EUR 12 million

Legal team buyer: Popovici Nitu & Asociatii

Tax team buyer: Popovici Nitu & Asociatii Tax

Legal team seller: Not made public

French retailer Auchan Romania and Immochan Imobiliare, the property management arm of Auchan Group, acquired the former industrial platform in Bucharest, owned by Grantmetal, for the development of a retail park, in a ready-to-build status.

Immochan Imobiliare buys Tractorul Brasov industrial platform

Value of transaction: Not made public

Legal team buyer: Popovici Nitu & Asociatii

Tax team buyer: Popovici Nitu & Asociatii TAX

Legal team seller: Not made public

Immochan Imobiliare, the real estate arm of Auchan Group, acquired the former industrial platform Tractorul Brasov to develop a retail park, in a ready-to-build status.

Autoliv makes land acquisition in Transylvania

Value of transaction: Not made public

Legal team buyer: Salans

Legal team seller: Not made public

Global supplier of automotive safety systems Autoliv purchased over 35,000 sqm of land to develop a new production facility in the Transylvania region. The deal involved the acquisition of an existing operating plant, with a temporary lease-back to the current owner while it winds down its operations. Many of the employees of the existing factory were to be hired by Autoliv, which was planning to have around 600 employees at the new unit when fully operational.

Benevo Capital buys Vulcan Industrial Platform

Value of transaction: EUR 20 million

Legal team buyer: Not made public

Legal team seller: Biris Goran

Investment fund Benevo Capital and NEPI, each with a 50 percent stake, will invest EUR 20 million in developing theVulcanValueRetailCenter. Benevo bought a 77,000-sqm plot of land belonging to the former Vulcan factory to build a retail park.

Investors buy Tower Center International

Value of transaction: Not made public

Legal team buyer: Popovici Nitu si Asociatii

Legal team seller: Not made public

Businesspeople Dragos Bilteanu and Ioannis Papalekas acquired the 22-storey Tower Center International, located inVictoriei Square. The building has a rental surface of 22.000 sqm and was insured by Chartis Europe London for EUR 55 million.

RETAIL

NEPI buys Mobexpert store in Brasov

Value of transaction: Not made public

Legal team buyer: Reff & Associatii

Legal team seller: Tuca Zbarcea & Asociatii

South African Investment fund NEPI acquired the building and land of the Mobexpert store inBrasov, under a buy-and-leaseback agreement. Mobexpert Group, which registered a turnover more than EUR 110 million in 2012, is one of the largest players on the local furniture market.

Carrefour and NEPI set up joint venture for shopping mall in Ploiesti

Value of transaction: EUR 65 million – total investment in Ploiesti Shopping City

EUR 26 million – loan facility agreement concluded with BRD – Groupe Societe Generale

Legal team Carrefour Property: Tuca Zbarcea & Asociatii

Legal team NEPI: Reff & Asociatii

Carrefour Property and NEPI teamed up to develop the Ploiesti Shopping City, which was opened in November, following an investment of EUR 65 million. The Ploiesti hypermarket is Carrefour’s leading hypermarket in Romania outside Bucharest. The mall is comprised of around 55,000 sqm in gross leasable area. Construction works started in December 2011 and leases have been agreed with major fashion retailers, a movie theater operator, a retailer of IT&C products and home appliances and a telecom operator. NEPI’s investment property grew by 26.8 percent year-on-year to EUR 407 million by June. Its property under development amounted to EUR 21.3 million.

Auchan buys Real hypermarkets in CEE

Value of transaction: EUR 1.1 million

Legal team buyer: Not made public

Legal team seller: Not made public

French retailer Groupe Auchan struck a deal with German retailer Metro Group to buy Real’s business in Central and Eastern Europe. Auchan will take over 91 Real hypermarkets in Poland, Russia, Ukraine and Romania. Metro sold the 24 Real hypermarkets in Romania for around EUR 100 million, according to market estimates.

OTHER

Rina Group buys two certification managers

Value of transaction: Not made public

Legal team buyer: Musat & Asociatii

Legal team seller: Not made public

Rina Group, an Italian firm active in system and product certification, acquired 70 percent of the share capital in Romanian SIMTEX Organismul de Certificare, a company active in the field of management and product certification. The group also purchased the state-owned ISCIR-CERT, which specializes in the certification management process.

SOFTWARE

Sustainalytics acquires Share Dimension software development business

Value of transaction: Not made public

Legal team buyer: Hategan Law Firm

Legal team seller: Birig Goran

Share Dimension, the Romanian branch of Dutch Share Dimension sold its software development business to Sustainalytics, the Romanian branch of a Canada-based holding company.

TRANSPORT

International Finance Corporation buys 10 percent stake in Transport Trade Services

Value of transaction: EUR 12 million

Legal team buyer: Not made public

Legal team seller: Zamfirescu Racoti Predoiu

International Finance Corporation (IFC) acquired a ten percent stake in Transport Trade Services (TTS), a Romanian group of companies active in river and railway freight,. The deal involved a share capital increase of 10 percent. The IFC investment will sustain the fleet development of TTS and other operations in the Danube region and in Constanta.

Interagro sells 92.5 percent stake in Giurgiu Nav

Value of transaction: EUR 3.8 million

Legal team buyer: Not made public

Legal team seller: Bostina si Asociatii

Interagro, a company controlled by Romanian businessman Ion Niculae, sold the share package it owned in the river navigation company Giurgiu Nav, representing 92.5 percent of the share capital. The 20.4 million shares were sold at a price of RON 0.85 per share.

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

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