Findings from the CMS Emerging Europe M&A 2021 report, released today in cooperation with EMIS, show that 2021 has been a year of rebound and recovery for traders in Emerging Europe. Not only has the region recovered from its slump in 2020, with deal levels in 2021 reaching 2,015 deals (up 18.2%), but Emerging Europe has seen overall deal value reach its highest high level since 2013, rising to 94.27 billion euros (up 55.1%). .
Horea Popescu, Head of CEE Corporate M&A practice, CMS, comments: “Merger and acquisition activity in emerging Europe has seen a resurgence in 2021, with buyers and sellers appearing to regain confidence at the prospect of bringing the pandemic under control. The year got off to a good start with a strong recovery in the number of transactions in the first three months of the year, reaching levels similar to 2019 – a trend which then continued until the fall.
Stefan Stoyanov, Head of M&A Database at EMIS, said: “In 2021, we saw dealmakers adapt to the new normal of the pandemic and pursue mergers and acquisitions. The findings of this year’s report demonstrate the return of trader confidence, as quarterly deal values exceeded €20 billion for five consecutive quarters and mega-deals firmly returned to the agenda – each of the ten main transactions of the year amounting to more than 1 billion euros. .”
Private equity activity continued to grow and IPOs took off
Private equity is now firmly rooted in the transaction culture of emerging Europe. Building on the dynamic figures for 2020, private equity activity increased further with the number of deals at an all-time high (399) and values up 18% (€23.75 billion).
IPOs also had an exceptional year, with the number of listings jumping to 116 (vs. 26 previously) and values rising to EUR 13.47 billion (vs. EUR 4.79 billion previously). These figures reflect the success of regional stock exchanges, such as Warsaw, Bucharest and Istanbul, in attracting new listings, while those in London, Amsterdam and New York continued to attract companies seeking international investors.
Telecoms and IT again topped the deal rankings and accounted for five of the ten largest deals of the year. The number of transactions increased to 450 (from 333 previously) and the sector recorded the highest overall value at 23.4 billion euros. Important transactions in the telecommunications sector include the sales of Polkomtel Infrastruktura and UPC Polska in Poland, as well as the sales of České Radiokomunikace and a 30% stake in CETIN in the Czech Republic. Meanwhile, notable software deals included the €7.3 billion sales of Avast Software in the Czech Republic and the €1.6 billion purchase of game developer Nexters Global by Kismet, both having roots in Russia.
Real estate and construction was the second most active sector, with 340 transactions (against 310) and a 3.8% increase in the value of transactions (9.83 billion euros). Despite a 19% drop in the number of transactions, offices remained the leading real estate sub-sector. Similarly, warehousing and logistics also maintained its sub-sector ranking, reflecting the ongoing transition to e-commerce. The manufacturing industry was the third most active sector with 253 transactions (against 236) and the second in value with 18.26 billion euros. Meanwhile, mining, oil and gas was the third sector by value with 10.59 billion euros, although it was one of the few sectors where the number of transactions fell (from 124 to 105).
Growing investor interest in climate action helped push the total number of energy and utilities deals to 122 (from 73 previously), and the sector accounted for 6% of all deals (from 4 .3%). The renewable energy subsector saw particularly impressive growth in deal activity and value, with 81 deals (vs. 44) and a four-fold increase in value.
In Romania, the telecommunications and IT sector remained the most active sector, with 38 deals accounting for 19.5% of total M&A deals recorded in 2021. Real estate and construction took the second place with 31 transactions, representing 15.9% of the total. Production and distribution ranked 3rd and 4th, with 27 and 18 deals recorded last year.
Rodica Manea, Corporate M&A Partner at CMS Romania, says: “The 2021 statistics show the rapid recovery of the local M&A market after the pandemic and the return to pre-COVID volumes. The Romanian market remains competitive and attractive for investors, and we are optimistic that it will continue to grow in the coming years, particularly in the telecommunications and IT sector driven by the digital transformation, as well as than in renewable energy, manufacturing, among other things.”
Three notable M&A hotspots included Croatia, Romania and Ukraine, whose number of deals each exceeded those made before the pandemic. Croatia saw the number and value of deals reach record highs of 69 (up 60.5%) and €1.8 billion respectively (387.4%). Meanwhile, deal activity in Romania also hit record highs (195 deals, up 43.4%), but deal value fell by 9.6% (€2.37 billion) . The number of deals in Ukraine recovered strongly (up 57.1% to 143) and the country’s overall deal value doubled to €1.72 billion.
Foreign and regional investment reaches new heights
The United States was the most active foreign investing country. The number of transactions in the United States rose to 154, a decade high (from 94 previously) and values more than doubled to a record 9.17 billion euros.
European investors also showed a strong appetite for deals in emerging Europe and, by deal activity, the top three European investors were the UK (106 deals), Germany (81 deals) and France (54 deals). ). These same three countries are also at the top of the rankings for the value of transactions of European investors; Germany leads the pack (€3.13 billion), followed by the UK (€2.08 billion) and France (€1.91 billion) in second and third respectively position. The United Arab Emirates has moved up the ranking of foreign investors to secure the tenth position for the number of its transactions, the highest outside the United States and Europe.
Cross-border mergers and acquisitions remained dynamic, with the number of transactions increasing by 28.9% (985 transactions) and values increasing by 59.8% (56 billion euros). Meanwhile, the value of domestic deals reached €38.3 billion (up 48.1%), with the number of deals up 9.5% (1,030). Russia was the largest investing country overall, with 564 deals worth €37.3 billion – almost all (96%) of which were domestic deals.
Outlook for 2022
Radivoje Petrikić, CEE Corporate Practice, CMS, comments: “M&A professionals have shown that they are capable of adapting to any challenges that 2022 may throw at them. Although uncertainty about the impact of new variants and the prospect of economic fallout from higher inflation led to a more cautious end to the year, our findings show that traders’ confidence has been largely restored. In 2021, the key drivers for deals were long-term underlying trends, such as digitalization, and with the pace of change and the digital shift continuing to accelerate, the fundamentals of an active deal market stay firmly in place.
Emerging Europe includes Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, North Macedonia, Moldova , Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine.