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Use The new era following the completion of images from our library. the Greek banks’ divestment plans PwC Greece February 2019 M&A activity in 2018 Greek companies attracted in total Privatisation proceeds in 2018 were The top 20 M&As completed in Europe in €5.5bn in 2018, of which € 3.8bn driven by the sale of the Hellenic Gas 2018 reached € 261bn in value, of which account for plain vanilla M&As, € Transmission System Operator (DESFA) 26% in Pharmaceuticals, 18% in Leisure 0.6bn were raised through traded to the Senfluga Energy Infrastructure and 12% in Construction corporate bonds and € 1bn through Holdings consortium, as well as the sale privatisations of the final stake (5%) in OTE to PwC is the first M&A financial advisor in Deutsche Telekom Europe in terms of number of deals and In 2018, 51 M&A deals were completed. second in terms of value (in mid cap The five largest deals amounted to In 2018, there was a shift from micro transactions between $ 10mn - $ 250mn) €1.8bn. Shipping accounted for 22% of deals (<€10mn) towards higher value the total deal value followed by energy transactions, mainly medium-sized In 2019, M&A deals along with and the financial services sectors (€50mn-€100mn) privatisations is possible to exceed €5bn On average, inbound and outbound GDP growth is roughly expected to transactions represent 59% of the total reach 2% in 2018. The Μ&Α transaction value, 3 pps higher than in environment is growth-unfriendly with 2017 impaired bank and private sector balance sheets, limited liquidity and very low investment level 2018 marked a year of increased M&A activity as the number of total deals increased by nearly 31% compared to 2017 Deals in Greece 2018 February 2019 PwC 2 Contents Economic M&A Transactions 1 Outlook 2 51 M&A transactions, Growth in the Greek amounted to € 3.8bn economy has been in 2018 versus €1.9bn The level of anaemic in 2017 M&A Bond Issues European M&A activity in 3 4 Highlights During 2018, four tradeable corporate bonds The top 20 announced Greece is were issued, amounting deals in Europe to just € 0.6bn reached € 261bn still low M&A Dynamics for Conclusions compared 5 2019 6 M&As in Greece have The M&A market will shifted from being remain on a growth track dominated by the to in 2019 disposal from the Greek systemic banks the rest of to moves in other sectors Europe 7 Appendices Deals in Greece 2018 February 2019 PwC 3 1 Economic outlook The total capital attracted by the Greek companies in 2018 amounted to € 5.5bn Value of € 3.8bn corporate bonds issued € 635mn 51 M&A by Greek companies M&A TRANSACTIONS of above Privatisation 38 33% acquisition amounted to € 3.5bn total value* € 1bn proceeds MINORITY DEALS of deal value* 10 € 257mn DISPOSAL OF NON CORE ASSETS Average deal 8 by systemic banks € 820mn € 75mn size *total value of deals including non reported deals 6 Distressed deals were recorded in 2018, mainly in industry Deals in Greece 2018 February 2019 PwC 5 Anaemic growth with few short-term risks but a wall of transformation ahead • The key economic drivers, although very gradually improving, remain weak and the investment level far below the levels that are consistent with high growth • Consumption and disposable income remain under high tax pressure. Investment is the single strongest deficiency in fueling growth • The fiscal and operational weaknesses of the State persist despite fiscal surpluses, with a distorted tax system and an unreformed public administration • Greek banks are suffering in the process of removing NPEs from their balance sheets and in conjunction with their structural and operating weaknesses have difficulties in funding growth • Greece exited the 3rd Economic Adjustment Programme with a sizeable cash buffer of ca. € 24bn, which in combination with debt relief, return of profits from Greek bonds and privatisations cover the state’s financial needs to the end of 2022 • As the fundamental economic drivers remain subdued, economic growth will remain anaemic • The country will benefit from major structural adjustments as its economic model appears inconsistent with sustainable growth • There are limited risks over the medium term and growth will only marginally be affected by the outcome of the forthcoming elections: . difficulties in accessing the capital markets . further competitive degrading as other countries improve . inability to cope with the inherent operational and fiscal tensions . political instability reinforced by the new electoral law • The Greek political economy needs to be completely reconfigured by 2022 in order to build long-term growth momentum and thus make the outstanding debt serviceable Deals in Greece 2018 Date PwC 6 The “trust gap” between 10y Government Bond Yields Greece and the rest of Europe PIIGS 40% PSI MARIO DRAGHI has been shrinking “WHATEVER IT 35% TAKES” 30% Referendum Closure of 25% first Greece issues €3bln. of agreement 5y bonds, first issue in The “trust gap” has 20% 4 years 15% -15.0pps Trust gap been stabilised 10% Greece 4.4% since December 5% Portugal, Spain, Italy 1.6% - 3.5% 2.7pps 0% 2017 at 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 Greece Portugal Spain Italy Ireland 2.7 pps Source: Reuters 10 Year Bond Spread vs German bond 4,000 Greek Government Bond Greek 10 year bond yields yields kept outperforming fell to lowest levels since 3,500 those of other Eurozone’s 2006, marking a spread of 3,000 periphery countries in 2018 365 bps with the German Basis points (bps) Basis points 2,500 bund. This reflects the exit 2,000 Since July 2015, when the from the support 1,500 “trust gap” of the Greek programme as well as the economy rocketed to 18pps, prospects of growth for 1,000 the difference of yields has not Greece 500 fallen below 2.5pps 0 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 Source: Reuters Deals in Greece 2018 February 2019 PwC 7 2 Privatisations and Mergers & Acquisitions Privatisations in 2018 and forecasts for 2019 * 2018 2018 2018 2019e 2019e 2019e Year The final stake The sale of the 67% The largest The extension of the On March 2019, offers The sale of 100% (5%) holdings in stake of OLΤΗ to the privatisation of 2018 Athens International for the sale of 50.1% stake in EESSTY S.A. OTE were sold in DIEP GmbH - Belterra was the sale of a 66% Airport concession stake in HELPE will be to Trainose for a 2018 to Deutsche Investments Ltd - stake in DESFA to the could be completed submitted. Revenues of consideration of Telekom for a Terminal Link SAS Senfluga Energy in 2019, with € 300mn are expected €22mn is expected to consideration of consortium for a Infrastructure expected proceeds of to be paid as part of the be completed within €284mn consideration of Holdings consortium €1.1bn, and it will Hellinikon project deal 2019 €232mn was completed for a total clear the road for the consideration of sale of a 30% stake in Privatisation €535mn, of which AIA €251mn are attributed to HRADF Sector *privatisation completion year Privatisation Proceeds 2,647 € mn • In 2018 the privatisation proceeds reached € 1bn, against a € 2.7bn 1,115 estimate according t0 the State AIA extension 1,368 Budget of 2018 1,166 300 Hellinikon 1,040 1,016 Other • Total privatisation proceeds from 394 498 1,232 2011 to 2018 amounted to € 5.8bn, of 261 which € 4.6bn were collected in four 5 years (2011, 2013, 2017 and 2018) 2011 2012 2013 2014 2015 2016 2017 2018 2019f Source: State Budget 2019 Deals in Greece 2018 February 2019Date PwC 9 M&A transactions in 2018 M&A deals* Greece 2018 Deal value M&A transactions increased Minority holdings deals significantly in number in amounted to € 257mn, of TMT 2018 reaching 51, while the which 58% account for 11.5% total deal value rose by Infrastructure deals Financial Services 11.9% €1.9bn compared to 2017, Services 11.2% mainly because of large deals Συναλλαγές μειοψηφικών πακέτων in Shipping, Energy and 5.2% Energy 2018 13.5% Financial Services sectors Αξία συναλλαγών Entertainment 3.1% Infrastructure Food & Beverage 7.7% € 3.8bn Transactions in Shipping 2.1% Industry Shipping drove deals in Greece in 2018 2.3% 21.9% Health accounting for 22% of the total Retail 7.6% TMT 1.4% deal value 5.8% Services Shipping Industry 5.1% 21.7% € 257mn 4.7% 0.2% Food & Beverage Pharmaceuticals 2.2% 0.5% 2.2% Leisure Entertainment Retail * Including minority holdings Infrastructure *ΤΜΤ: Telecommunications, Media and Technology 58.1% Deals in Greece 2018 February 2019 PwC 10 The number of Total value of M&A transactions at € 3.8bn M&A was € 1.9bn higher than in 2017 transactions € 75m Transaction activity increased by The number of M&A deals in 2018 significantly € 211 m M&A deals' value (in € bn) € 114 m increased and their total Number of M&A deals € 48m value almost doubled € 65 m Average size of transaction 31% € 45 m There have been six transactions € 133 m 51 € 201 m in 2018, with the which exceeded 41 € 202 m 39 39 35 average deal size € 150mn in 2018 € 326 m € 99 m 32 8,7 20 rising by 17 3,6 3,4 4,5 3,8 2,7 11 10 2,3 In 2018 there was a shift 1,6 8 1,0 1,4 1,9 from micro deals (<€10mn) towards higher value 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 € 27mn transactions, mainly medium-sized (€50mn- Transaction size distribution €100mn) Number of transactions 28 23 Number of transactions 2017 compared to The number of transactions 24 Number of transactions 2018 at € 100mn and above more 20 2017, 17 than doubled in 2018, 16 13 representing a admittedly from a miniscule 12 12 9 shift towards base 8 6 3 3 3 bigger tickets 4 1 0 €0mn - €10mn €10mn - €50mn €50mn - €100mn €100mn - €150mn > €150mn Transaction size Deals in Greece 2018 February 2019 PwC 11 Top 5 M&A deals in 2018 amount to € 1.8bn, driven mainly by Shipping Bidder Seller Company Target Deal Amount The top 5 M&A (€ mn) deals account 1 Global Ship Lease, Inc.