CMS_LawTax_Negative_28-100.eps Emerging Europe M&A Report 2020/21 In cooperation with January 2021 Headline deals in emerging Europe Contents HIDROELECTRICA TIS GROUP ADVENT INTERNATIONAL Advised Hidroelectrica on the Advised TIS Group on the Advised Advent International acquisition of an operational joint venture transaction and its portfolio company 108 MW wind farm located in whereby DP World, one Zentiva on the acquisition of Constanta county, Romania, of the worlds’ largest port the CEE business of Alvogen, 4 Introduction from STEAG group. operators, enters Ukraine which markets over 200 generic 6 2020 dealmaking in emerging Europe directly for the first time. and over-the-counter products. at a glance 8 The global picture: An overview of international M&A investment streams VIVACOM KIWI.COM FREUDENBERG 10 Transaction trends: Covid-19 made for a Advised the sellers on the Advised the shareholders Advised Freudenberg cautious 2020, but there was no lockdown in sale of Vivacom to United in Kiwi.com on the sale Performance Materials M&A Group backed by its major of a stake in the company on the acquisition of Filc, a shareholder, BC Partners. to General Atlantic. Slovenia-based producer of 16 COVID-19 pushes emerging Europe on a needle punch nonwoven textiles journey towards digital transformation and laminated materials. through M&A 20 Zentiva and Alvogen CEE: the creation of a regional pharmaceutical powerhouse OTP LIBERTY GLOBAL NBG 24 Bonds across Europe survive the toughest Advised OTP on its Advised Liberty Global on Advised National Bank test and grow stronger strategic expansion in the CEE aspects of the EUR of Greece on the sale of a CEE by acquiring the local 18.4bn sale of its European portfolio of EUR 174m corporate 27 Digital infrastructure: Towers and fibre banking, financial leasing assets to Vodafone. non-performing and sub- underpin the broadband revolution and insurance subsidiaries performing loan portfolio to of Société Générale across Bain Capital Credit Group. 30 IPOs: Stock exchange listings make a comeback six CEE jurisdictions. as investors prepare to splash their cash 34 Renewable energy: Drive to go green boosts investment in clean energy PPF AFI EUROPE PORSCHE DIGITAL 38 Fortenova: Saved from disaster, this giant Advised PPF Group on its Advised AFI Europe on the Advised Porsche Digital on a conglomerate can be a catalyst for change acquisition, together with EUR 300m acquisition of a series of industry investments Sabanci, of Turkish vehicle Romanian real estate portfolio in Croatia, including the latest, 40 FDI screening: Striking the balance between producer Temsa Ulasim from NEPI Rockcastle. 2020 investment in Croatian open investment and protecting strategic Araclari Sanayi ve from True software developer Infinum. interests Value Capital Partners. 42 The data bank Country-by-country deal and sector information ENEL GREEN POWER PIB GROUP GREEN GENIUS 78 About CMS Advised Enel Green Power Advised PIB Group, a British Advised Green Genius 80 Footnotes index on the sale of a 42 MW insurance intermediary on the sale of a 40.4 MW wind park in Bulgaria to the group, controlled by Carlyle turnkey portfolio of ground 81 Methodology Switzerland-headquartered on the acquisition of WDB, mounted solar photovoltaic energy company MET Group. a leading independent farms in Poland to Aberdeen insurance broker in Poland. Standard Investments. Image: NASA Emerging Europe M&A Report | 3 Introduction In 2020 we counted 1,705 deals with a total value of EUR 60.80bn in emerging Europe, respective year-on-year decreases of 12.9% and 16%. It will not come as a surprise that this the lowest number of deals for the region in the ten editions of this report that we have published. Then again, after a year characterised by the COVID-19 pandemic, in which deals were protracted, postponed or simply abandoned, it is probably not as bad as many of us may have imagined. While deal numbers in Q4 remained subdued, we experienced the highest deal value for the final quarter of the year South-eastern Europe was quite stable overall with We also take a look at the region’s IPO activity. The fewer acquisitions in emerging Europe. We look at what markets such as Romania, Bulgaria and Croatia all seeing Warsaw-listing of Allegro is a testimony not only to the keeps attracting western European investors to the region. since 2016. only modest drops in deal volumes. From the usual top success of ecommerce in these new times, but also to the performers, Czech Republic was probably the hardest hit increased interest in an exit through the stock exchange. The restrictions on our freedom forced us to live with a 24.7% decrease in transactions; however, these are After seeing only 14 IPOs in 2019, this rebounded to 26 in differently: we work from home, shop online and meet After many years of decline, in recent years the annual still better numbers than the country posted in 2012 in the 2020. Through dual-track sales processes sellers want to friends virtually. Although a vaccine may soon allow us to dealflow in emerging Europe had started to steadily settle slipstream of the financial crisis and as reported in the CMS make the most of the competition between a trade sale return to “normal”, the last year is likely to have a lasting around the 2,000 mark. In last year’s report, we predicted Emerging Europe M&A Report at the time. and IPO, and with new records set on stock exchanges impact on our behaviour. As businesses that benefit from that the region would maintain its attractiveness to throughout the world towards the end of 2020, it will this new economy grow, so does interest from investors. investors and we had great confidence in the deal pipeline. A great deal has been written about winners and losers in likely remain an attractive prospect. On the flip side, those companies that have had to count We felt that uncertainties around China-US trade relations, terms of sectors, rather than focusing on some of these their losses may become interesting targets too. While Brexit and the US presidential elections would have little unforeseen developments, the articles in the report focus One development that we noted in 2019 did reverse last some companies will see the need for a capital injection to impact on the region’s dealflow. As the year showed, on some of the trends that had set in before the pandemic year. While cross-border investment into the region survive, others will be looking for investment to help it global political uncertainties are no competition for a hit. In fact, some of these developments were accelerated decreased by 34.3%, domestic deal activity picked up by capitalise on their success. pandemic when it comes to slowing down M&A activity. by it: the advance of Telecoms & IT in terms of deal 18.4%, reaching a total of 764 and 941 transactions volume—taking the top spot from Real Estate & respectively. Overall, investors based closer to the region However, deals did continue and compared to other global Construction—and continued investment in renewable remained more active than those further away, and in emerging markets, such as Emerging Asia and Latin energy, driven by climate goals, the demand of clean particular investors from the US, China and Japan made America, the region performed quite well. energy by technology giants, and the overall drive for sustainability. The Emerging Europe M&A Report takes a closer look at the trends and data on a country-by-country and on a sector Two articles provide a more detailed look into how specific basis. The impact of the economic slowdown was relatively companies are faring, a close-up on the Croatian evenly spread across the region, but there are always some conglomerate Fortenova and where it stands two years countries that buck the trend. Poland experienced a after its restructuring, and a fireside chat with Tereza Ber, year-on-year increase in deal volume while witnessing the general counsel at Zentiva, about the company’s takeover highest deal value since 2011. Bosnia and Herzegovina and of the CEE business of Alvogen. Horea Popescu Radivoje Petrikić Turkey saw deal values spike compared to 2019. Partner, CMS Romania/CEE Partner, CMS Austria/SEE [email protected] [email protected] Emerging Europe M&A Report | 5 2020 dealmaking in emerging US most active The Netherlands biggest Europe at a glance international dealmaker investor by value 94 deals EUR 5.83bn Telecoms & IT Value Volume EUR 100bn 2500 2,113 2,093 1,985 1,958 Busiest sector by deal number, 333 in total (value: EUR 2000 1,705 12.97bn). Followed by Real Estate & Construction (310 deals, 50bn EUR 9.46bn) and Manufacturing (236 deals, EUR 5.47bn). 1500 86.65 80.46 71.53 72.34 1000 60.80 25bn Private Equity 500 2016 2017 2018 2019 2020 Deal value (€m) No. of deals Continued increasing its share in overall dealmaking in the region, with involvement in 319 deals (18.7% of total volume). Capital Markets Activity in the region’s largest markets 526 282 184 136 119 Capital markets bounced back: 26 companies from the region listed for the first time in 2020, nearly double that of 2019 (14) and the highest number since EUR 30.02bn EUR 11.65bn EUR 7.86bn EUR 2.62 bn EUR 2.74bn 2015. The value of IPOs reached EUR 4.79bn. Russia Poland Turkey Romania Czech Republic Emerging Europe M&A Report | 7 The global picture: An overview of international M&A The Netherlands investment streams 37 deals EUR 5.83bn Value up 1870% United Kingdom 72 deals Austria EUR 749.3m 31 deals United States Value down