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Analysis: M&A market in Romania has prospects for recovery, despite slow start in 2024
The M&A market in Romania had a slow start to the year, with 15 transactions worth 170 million EUR concluded in the first quarter, but there are prospects for recovery in the short term, with another 55 deals being announced in the mentioned period, according to data analysed by PwC Romania.
"The low number of transactions concluded at this time, despite the many announced (but not yet closed) transactions, signals that significantly more transactions will be closed in the coming quarters. The 55 announced transactions, 13% less than in the first three months of last year, have a cumulative value of 1.7 billion EUR," reads an article signed by Dinu Bumbacea, Country Managing Partner PwC Romania, and George Ureche, Director, M&A Leader, PwC Romania.
According to the cited source, among the largest transactions announced but not yet finalized is the acquisition of OTP Bank by Banca Transilvania, in a transaction estimated at over 340 million EUR, currently awaiting the approval of the Competition Council. A new transaction by Bimbo Group on the Romanian market is also expected, after its purchase of local bakery market leader Vel Pitar in 2023. Now, the Mexican group has acquired 6 bread factories belonging to Trei Brutari SA in a transaction estimated at 100 million EUR. At the same time, Globalworth, the largest owner of office buildings in Romania, has sold part of its local logistics portfolio to CTP in a deal valued at 70 million EUR.
Among the transactions closed in the first quarter, PPC Renewables, the local subsidiary of the Greek group PPC, owner of Enel Romania, completed the acquisition of a wind farm with a total installed capacity of 84 MW belonging to Land Power SRL, part of the Lukoil group.
"The consolidation of the market is also visible through a series of small transactions (mostly under 10 million euros), where entrepreneurial companies are mainly assimilated by large conglomerates or local strategic players, and in a smaller proportion by investment funds, which generate, as in the previous year, only 10% of the number and value of transactions in the local market. Thus, 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," the document points out.
From a sectoral perspective, energy (18.18%), industrial products and services (16.38%) and real estate (14.55%) accounted for more than 50% of the volume and value of deals announced in the first quarter of this year. The financial and private health services sectors also maintained their traditional presence at the top of the sectoral M&A market, continuing to generate deals in the consolidation trend around the big players.
Sectors that experienced a slowdown in terms of deal volume were consumer goods and technology, media and telecoms, where there were fewer deals compared to the same period last year, but are expected to recover rapidly in the coming period.
Comparatively, in Q1 2023, most transactions were in the industrial products and services (17.4%), consumer goods (17.4%) and IT&C (15.8%) sectors, followed by energy (12.7%) and real estate (11.1%).
Against the backdrop of expectations of lower inflation in the coming quarters, but also in 2025, as well as in the context of the setting of the monetary policy interest rate, the level of investor confidence in the economic recovery is expected to increase, with a direct positive impact on the M&A market, consider the representatives of the consulting company. The positive investor sentiment is also supported by encouraging macroeconomic data, excess liquidity in the region's financial markets and the ambitions to develop the business environment, including through the digitisation and modernisation of enterprises aimed at remaining relevant in the future, they say.
Last year, the M&A market in Romania saw 189 transactions concluded worth 4.3 billion EUR, down about 20% from 5.2 billion EUR in 2022. Last year's result was largely underpinned by the 1.3 billion EUR deal in which Greek group PPC bought Enel Romania.
If both the deals that were concluded and those that were signed but finalised are taken into account, there were 241 deals last year with a total value of 7.7 billion EUR. Many of the deals signed last year were announced in the last quarter and are expected to be completed this year, such as Mega Image's acquisition of the Profi network for over 1 billion EUR and Unicredit's acquisition of Alpha Bank.