The Romanian M&A market should experience a significant recovery in 2012 in terms of value and deals following post-crisis market repositioning and market consolidation says A.T. Kearney. “Romanian business leaders need to re-think their opportunities within M&A activities, to broaden their regional presence and gain scale. Especially in the fragmented market of IT in order to participate in international outsourcing/offshoring trends,” said A.T. Kearney representatives.
The local M&A market has experienced an inverse V shaped curve since 2002, dropping by 66 percent in total deal value between 2008 and 2010 after surging by 39 percent between 2002 and 2008.
Between 2004 and 2008, Romania saw a dynamic growth of M&A activities both in terms of total deals value, number of transactions or average deal value – the latter decreasing severely when the economic crisis began. In terms of value, the peak was achieved in 2005 which accounts for approximately EUR 9.3 billion. About 30 percent of the total value was given by BCR’s privatization that year.
Although Romania saw an intense M&A activity in the past 8 years, the level of acquisitions made by local companies abroad remains low, compared to the global evolution of transactions made by firms from developing countries, shows A.T. Kearney’s study on the local M&A market. From the total number of transactions between local and foreign companies, less than 4 percent represented acquisitions made by Romanian firms abroad, or about 25, whereas on a global scale around 7 percent of transactions come from developing countries.
Romanian companies mostly expanded horizontally, reveals the study. Almost half of the transactions were aimed at expanding distribution chains and access to new markets and only about a quarter on the vertical axe of the value chain, aiming mostly on production or product technology and less on lower cost capabilities.
The industries where local companies mostly expanded abroad were the IT&C, energy and process industries, with several players like Neogen or Rompetrol Group being more active.