M&A market stays low

The Romanian mergers and acquisitions (M&A) market amounted to $154.2 million last year, up 56% from 2001, but down to half the value posted in 1998, a survey by KPMG consulting firm and Dealogic shows.
This kind of transactions has witnessed a serious decline throughout the entire world in 2002, with the Eastern European market reaching some $9.1bn.
The authors of the survey found 38 transactions in Romania, if excluding privatisation contracts, and considering acquisitions through foreign direct investment.
KPMG declined comment on the distribution of 2002’s mergers and acquisitions by sectors and did not provide estimates for 2003 either.
The analysts, however, agree the market was very weak last year, so that consultants in the field and law firms did not have much of a business in this regard. On the other hand, the M&A market is hard to assess due to the low transparency of this kind of transactions.
“The Romanian companies are usually poorly capitalised, so that there is no way they could generate high-value acquisitions and mergers, while exceptions such as Banca Comerciala Romana (Romanian Commercial Bank – BCR) or Petrom are merely verifying the rule,” Radu Craciun, ABN Amro Bank Romania senior analyst says. Craciun added most of the privatised companies were already consolidated, while the possible mergers in the banking sector were likely to involve small banks. “I don’t see what major mergers could occur this year,” Craciun says.
At the same time, takeovers of enterprises not privatised yet by foreign companies would not entail major transactions in terms of money, with the further investments included under the direct foreign investment chapter.
The most important transaction in the productive sector in 2002 was the acquisition of 78% in Romcim Fieni by Germany-based HeidelbergCement Group in October. The deal was estimated at nearly $70 million. The acquisition of 25% in Rompetrol by Austria-based OMV Group can be deemed as the second-biggest deal of the year in the Romanian industry in terms of value (some $50 million).