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

Newsroom 17/12/2012 | 11:27

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 eMagAuchan bought 24 Real hypermarkets as part of a cross-border transaction, while Innova Capital acquired a controlling stake in EnergoBit.


Erste Bank Group completes BCR share purchase program with two SIFs

Value of transaction: EUR 28 million – market estimates

Legal team buyer: Tuca Zbarcea & Asociatii

Legal team seller: Not made public

Austrian Erste Group announced in September 2011 it had reached an agreement in principle with four of the five SIF minority stakeholders in Banca Comerciala Romana (BCR) – SIF Banat Crisana, SIF Transilvania, SIF Muntenia and SIF Oltenia, whereby the Austrian lender would acquire a 24.12 percent stake, which is roughly 2.6 million shares in BCR. Since then, Erste has signed three final agreements with SIF Muntenia, SIF Banat-Crisana and SIF Transilvania. Erste gained control of 93.27 percent of BCR by this summer.


Erste Bank Group bids for 0.23 percent minority shares in BCR

Value of transaction: more than EUR 8.4 million

Legal team buyer: Tuca Zbarcea & Asociatii

Legal team seller: Not applicable

Erste acquired 34.5 million shares through a buyout bid for 0.23 percent of BCR shares from minority shareholders, raising its stakes in the Romanian lender to 93.27 percent.


Intesa merges Romanian entities

Value of transaction: Not made public

Legal team buyer (absorbing entity): Wolf Theiss

Legal team seller (absorbed entity): Wolf Theiss

Intesa San Paolo Romania and CR Firenze Romania, two local banks controlled by the Italian banking group Intesa, completed a merger whereby CR Firenze Romania was integrated by absorption into Intesa San Paolo Romania.


Novensys Coporation places winning bid in national healthcare card tender

Value of transaction: EUR 25 million – the contract value

Legal team buyer Novesnys Corporation: Bostina si Asociatii

Legal team buyer HP Romania: Not made public

Legal team seller: Not applicable

A consortium comprising HP Romania and Novensys Corporation was selected to supply the IT infrastructure for the introduction of the electronic healthcare insurance card. The Romanian authorities said this measure would streamline the verification of insured patients and provide clearer information from suppliers on medical services, drugs and equipment.


Crédit Agricole purchases subsidiary banks in Romania, Bulgaria and Albania from Emporiki Bank of Greece

Value of transaction: Not made public

Legal team buyer: CMS

Legal team seller: Clifford Chance LLP

Crédit Agricole, the second biggest lender in France by assets, acquired the shares owned by Emporiki Bank of Greece in Emporiki Bank Romania, Emporiki Bank Bulgaria and Emporiki Bank Albania, in a move to reinforce links between Crédit Agricole and Emporiki Group’s subsidiaries. As a result, the Emporiki Bank Romania became Crédit Agricole Bank Romania.

Ovidiu Posirca –

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