According to the report the 2009 crisis has not done any major damage to the Polish M&A market. Experts predict that the value of M&A market will increase by 23-30% this year. Polish M&A market value reached 8.5 billion Euro in 2009 (transactions’ revealed value). It occurs only little less that the value from 2008. Last year in our country 556 transactions were announced i.e. 8 more than the year before. Polish market did well despite financial crisis on world markets which not only made it more difficult to gain necessary financing but it also increased uncertainty. There were over 1 600 transactions announced with the value of 24.9 billion Euro in the whole Central European region in 2009. KPMG and DealWatch experts estimate that the theoretical value of all transactions (both revealed and unrevealed) reached 43 billion Euro.
Poland’s share in the whole region in M&A corresponds the size of our economy. One in three transactions as well as one third of the value falls on our country. Influence of the crisis can be spotted when looking at the transaction indicators i.e. how much buyers were paying in relation to the book value of the company or the revenue. These indicators lowered which shows that the sellers have accepted lower prices than the year before. For example last year on average one paid 1.6 to double the company book value while in 2008 this indicator ranged between 2.2 and 2.6.
The effect of the crisis was also an increase in allocation of the corporate own funds and shares in M&A financing. It was related to limited bank credits availability. – We’re a very attractive region and Poland is a target of many investors – said Krzysztof Klamut, the head of M&A in KPMG Corporare Finance during a meeting with journalists.Yet, the vulnerability of our market is a low transaction value which discourages wealthy potential buyers. Last year only 16 Polish transactions were of the value over 100 million Euro. Furthermore, half of the total number – less than 10 million Euro.
IT and media leading
Similarly to 2008, most of transactions last year were made in ICT, media and entertainment. The total value of 97 deals equaled 1.3 million Euro (in 2008 there were 109 transactions with the value of 1.4 million Euro).The second position was taken by construction and real estate with 84 deals worth 868 million Euro altogether.Industry production stands as the third on the podium with 81 transactions worth 890 million Euro.
Kulczyk as a leader
The last year’s largest deal was a takeover of 28.1per cent of stake in Kompania Piwowarska by SAB Miller worth 800 million Euro. The seller of beer producer’s shares was Jan Kulczyk. Among large transactions there are two more that deserve attention i.e. transfer of 17.32 per cent of PKN Orlen stock from Nafta Polska to theTreasury and the acquisition of PCC Rail corporations by DB Schenker. Value of those transactions were respectively 470.7 million Euro and 400 million Euro. In case of PKN Orlen it didn’t eventually succeed in changing the owner and the transaction itself was a result from Nafta Polska restructuring.
Recovery on its way?
KPMG and DealWatch estimate that this year the number of M&A deals will rise by a few per cent. Their total value may increase by 25-30 per cent in relation to growing evaluations of listed companies. M&A transactions might be powered by Treasury activities. – Taking into consideration privatisations plans of the government (so far irreplaceable ‘provider’ of shares and stock to the market), we could expect about 30 billion PLN in 2010 only from privatisations deals. What is more because of the fact that 2009 privatisation plans have not been fully completed this value may theoretically even be greater – says Krzysztof Klamut, head of M&A in KPMG Corporate Finance.
Optimistic signs can also be observed when talking to PE/VC funds. – They posses ready-to-be -invested means and basing on these “solid” declarations 10 billion PLN (2.5 billion Euro) of the tola value of investments (new acquisitions and disinvestments) can be expected – estimates Michał Chromiński from KPMG Finance.- Privatisation in 2010 will be a driving force of our M&A market. First months of the year already show that the Treasury Minister has been making a lot of effort in completing the plan – Klamut declared. According to KPMG investment funds operating in our region indicate that they have substantial cash reserves.
In our region of Europe the second economy that should draw investors’ attention should be Romania. Similarly to Poland, Romania has a large market of individual consumers and the big price drop in real estate prices can encourage investors searching inexpensive assets.