Saturday, 19 April 2014

Number of company mergers, sales up 30% in 2012

ČTK |
21 February 2013

Prague, Feb 20 (CTK) - The number of acquisitions and sales of companies in the Czech Republic grew by 30 percent year-on-year to 155 in 2012, and the estimated volume of the transactions rose by 39 percent to $8.32bn (Kc158bn), according to data from M&A Barometer made public by company Ernst & Young Wednesday.

However, the fast growth was also caused by the huge transaction involving the acquisition of company SPP, Ernst & Young said.

The Czech Republic ranked third in the region of Central and South East Europe by the number of completed transactions. It was overtaken only by Turkey and Poland.

The market for mergers and acquisitions in the region registered a moderate drop of activity in 2012 in terms of the number as well the total estimated value of transactions.

"The results of the activity of mergers and acquisitions in terms of the estimated value mean the third year of growth for the Czech Republic. A large part of transactions are the so-called secondary sales that reflect strategic changes in the distribution of powers of larger players in a specific segment and region," Petra Wendelova, mergers and acquisitions partner at Ernst & Young, said.

"It is pleasing that an important role was played by Czech companies abroad whose activity has been increasing systematically in the past 10 years," Wendelova said.

More than a half of transactions was made among entirely Czech entities. Besides, Czech companies announced 21 important acquisitions abroad in 2012, which is the highest number in history.

"The strength of the Czech Republic and its entrepreneurs is emerging gradually and inconspicuously. We are no longer a target for cheap acquisitions, but our companies are active players in the region where they invest in many interesting projects," said Petr Kriz, executive director of transaction advisory services at Ernst & Young.

Most Czech transactions were made in the region of Central, Eastern and Western Europe. A large part of them were concluded in Slovakia, Hungary, Germany and France.

Czechs even became the most active investors in Central and South East Europe in 2012, finishing 12 transactions there.

As regards investment from abroad, investors came to the Czech Republic mainly from the USA (eight transactions), Germany (five transactions), and Russia and Great Britain (three transactions each).

While US investors focused on one specific segment, Russian and German investment went mainly into the manufacturing sector. Companies from Great Britain invested mainly in the pharmaceutical sector in the Czech Republic.

The most attractive segments were in 2012 the segments of services and manufacturing. The share of each of them on the total number of transactions was 19 percent.

The third most attractive segment for investment was real estate with a 12 percent share. One in 10 transactions was made in the energy and mining industry. In contrast, the IT sector accounted for only 4 percent of total transactions.

The statistics of the Czech Republic's transaction activity were considerably influenced by the huge transaction involving gas and electricity supplier SPP as part of which Czech energy company Energeticky a prumyslovy holding spent almost $3.5bn (Kc66bn) on the acquisition of the Slovak company, Wendelova said.

The winner of the upcoming period should be the transaction involving the sale of gas company Net4Gas, according to Wendelova.

"Several transactions on the domestic market will be made in the media segment this year," Kriz said, but noted that transaction activity in Europe fell by 27 percent year-on-year in January.

M&A Barometer issued by Ernst & Young analyses publicly accessible information coming from various databases. Ernst & Young is among leading global companies offering audit, tax and transaction consulting.

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