Deals 2013 in Greece Turning the corner June 2014 www.pwc.gr PwC PwC is a leader in mid cap M&A transactions #1 in number of mid- market deals across Europe* and #2 in value of mid- market deals across Europe* *Statistics for the mid – market of deals (€10 mln - €250 mln) Deals 2013 in Greece June 2014 PwC 2 Table of Contents Chapter Page Introduction 4 Macro economic snapshot 6 Transactions in 2013 11 European highlights 18 Financial Advisors 21 Future M&A Dynamics 23 Deals 2013 in Greece June 2014 PwC 3 Introduction Deals 2013 in Greece June 2014 PwC 4 Introduction Greek corporates attracted about €6.2bn in 2013 A number of sizeable M&A deals amounting to €3.3bn M&A deals Greece 2013 was completed in 2013 in a recessionary environment (deal value) Telecommunic ations: Carriers Construction 3% The restructuring of the banking sector and 6% privatizations were the main drivers for M&A Consumer: Energy Retail 1% The stressed conditions of the domestic banking sector 10% Real Estate forced the biggest Greek companies to raise money 24% directly from the international financial markets Financial Services through bond issuance Mining 27% 4% Leisure 25% During 2013, about €2.85 bn were raised through international bonds with coupons ranging between 2.4%-9.8% and yields below Greek Government Bond yields Deals 2013 in Greece June 2014 PwC 5 Macro economic snapshot Deals 2013 in Greece June 2014 PwC 6 Macro economic snapshot Public sector finances on their way to recover… Greece - Fiscal Adjustment Figures Forecasts 8,0 4,5 Public finances have improved 4,0 0,0 -1,3 -0,7 significantly, achieving primary -4,0 surplus in 2013, while structural -8,0 -6,4 -12,0 reforms are underway (tax -16,0 -15,6 1991 2011 1997 1995 2017 1993 1992 1994 1996 1999 2015 2013 1989 1998 2012 2014 2016 1990 1988 2001 2010 2007 2005 2003 2002 2004 2006 2009 2008 administration, health and social 2000 security funds, etc.) or have already EU17-Cyclically adjusted primary balance(%GDP) Greece- Cyclically adjusted primary balance (%GDP) been implemented. Greece General gvnt Balance(%GDP) Greece General gvnt primary balance (%GDP) Source: National Statistical service; International Monetary Fund; Bank of Greece Trade Balance (as a % of GDP) Forecasts 2% 1.4% 0% -2% Adherence to the medium term stability program -2.0% -2.5% implementation has helped to reverse market -4% expectations, resulting in improved liquidity -6% -6.0% conditions with a positive impact on the Greek -6.8% -8% economy in general -7.8% -10% 2009 2010 2011 2012 2013 2014 Source: National Statistical service; International Monetary Fund; Bank of Greece Deals 2013 in Greece June 2014 PwC 7 Macro economic snapshot …with positive signs Nominal GDP GDP is predicted to bounce back in 2014. 240 Current consensus estimates are that the 230 annual real growth will be 0.6% in 2014 and 220 Forecasts bn 210 average 2.3% in the 2015 - 2018 period € in in 200 190 180 170 160 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Economist Intelligence Unit Real GDP Forecasts The cyclical recovery is projected to accelerate 6% 3,7% 3,5% 4% 2,9% with growth peaking at 3.7% in 2016 according to IMF due to stronger investment 2% 0% (reflecting both pent-up demand and new 0,6% -2% profit opportunities), net exports (reflecting -4% -3,1% -3,9% further improvement in competitiveness), Percentagechange -6% -4,9% -8% -7,1% -7,0% and ultimately private consumption (when 2009 2010 2011 2012 2013 2014 2015 2016 2017 real incomes recover). Source: European Commission Deals 2013 in Greece June 2014 PwC 8 Macro economic snapshot …leading to restoration of trust in the Greek economy 35% Government yields (10 – years) PSI 30% MARIO DRAGHI “WHATEVER IT TAKES” April 2013 April 2014 Change 25% Greece 11.25% 6.14% - 511 20% Trust gap Germany 1.26% 1.50% + 24 15% Spain 4.69% 3.18% - 151 10% Government yieldsGovernment Greece 6.1% Italy 4.32% 3.20% - 112 5% Portugal 3.9% Ireland, Spain, Italy 3.2% to 2.9% Portugal 6.28% 3.94% - 234 0% Source: Bloomberg Jul 13 Jul Jul 12 Jul Oct 13 Oct Oct 12 Oct Jan 13 Jan Jan 12 Jan Sep 12 Sep 14 Jan Feb 13 Feb Feb 12 Feb 13 Apr Feb 14 Feb Apr 12 Apr Apr 14 Apr Jun 13 Jun Dec 13 Dec Jun 12 Jun Dec 12 Dec Aug 12 Aug Nov 13 Nov Nov 12 Nov Mar 13 Mar Mar 12 Mar Mar 14 Mar May 13 May May 12 May Sept 13 Sept Aug 13 Aug Greek Government Bonds outperformed those of other Eurozone’s periphery countries Yields of internationally issued corporate bonds The Greek yields rose to unpreceded levels during the 9% period 2010-2012 and returned in April 2014 back to 8% 2010 levels 7% ELPE 6% OTE Corporate bond yields also dropped significantly over 5% CCHBC 4% FRIGOGLASS the period showing a restoration of investors’ Yields confidence 3% S&B 2% INTRALOT 1% 0% Deals 2013 in Greece Source: Bloomberg June 2014 PwC 9 Macro economic snapshot Indicative examples of confidence restoration Cosco Pacific Limited announced new investment in Piraeus port of about 11 €230 mn Trans Adriatic Pipeline (TAP) which will run across Northern Greece is estimated to bring 2 in more than €1 bln in foreign direct investment Announced investment of €30 mn from Dolphin Capital for the creation of a tourist 3 accommodation complex on the island of Kea Deals 2013 in Greece June 2014 PwC 10 Transactions in 2013 Deals 2013 in Greece June 2014 PwC 11 Transactions in 2013 There were 15 M&A transactions involving Greek companies in 2013 amounting to €3.3bn Country of origin Deal Advisors Announce A/A Transaction description Sector size Target / ment Bidder Target Bidder (€ m) Seller Invel Real Estate (Netherlands) II BV and BSG Real Estate Limited have agreed to acquire NBG The Real 1 November Greece 653 Morgan Stanley N/A Pangaea Real Estate Investment Company from Netherlands Estate National Bank of Greece SA Emma Delta Ltd has agreed to acquire 33% stake in 2 April Greek Organization of Football Prognostics S.A Cyprus Greece Services 652 N/A Lazard (OPAP) from Hellenic Republic Asset Development Fund. Piraeus Bank SA has agreed to acquire the Greek Barclays; Deutsche Bank banking operations of Bank of Cyprus Public 3 March Greece Cyprus Banking 524 AG; Lazard; UBS N/A Company Ltd, Hellenic Bank Public Company Ltd Investment Bank and Laiki Group Ltd. Banco Comercial Portugues SA has agreed to acquire a 4 June Portugal Greece Banking 400 Citigroup N/A minority stake in Piraeus Bank SA Homburger; Karatzas & Dufry Group has agreed to acquire the remaining 49% Partners; Slaughter and 5 December stake in Hellenic Duty Free Shops S.A. from Folli Follie Switzerland Greece Commerce 328 N/A May; W achtell, Lipton, SA. Rosen & Katz Hellenic Republic Asset Development Fund signed an agreement with Hellenic Lotteries consortium (Intralot Credit Suisse Securities Eurobank 6 July Greece/Italy Greece Leisure 190 Lotteries ltd, OPAP, Scientific Games Global Europe Ltd Equities SA Gaming S.a.r.l.) for Hellenic Lotteries Arabsat has agreed to acquire a 99.05% stake in Hellas Generation Alfa ; 7 February Sat from Hellenic Telecommunications Saudi Arabia Greece TMT 208 N/A Renaissance Capital Organisation SA (OTE). Deals 2013 in Greece June 2014 PwC 13 Transactions in 2013 There were 15 M&A transactions involving Greek companies in 2013 amounting to €3.3bn Country of origin Deal Advisors Announc A/A Transaction description Sector size Target / ement Bidder Target Bidder (€ m) Seller Fairfax Financial Holdings Limited agreed to acquire Eurobank’s rights in the share capital increase of Eurobank Bank of America Merrill Eurobank 8 October Canada Greece Real Estate 164 Properties REIC leading to a step up of its shareholding Lynch Equities SA from c. 19% to c. 42% Rhone Capital (Delhi Holdings) has agreed to acquire a Eurobank Equities; Norton BNP Paribas; 9 January Luxembourg Greece Mining 115 38.74% stake in S&B Industrial Minerals SA. Rose Fullbright Ermgassen York Capital has agreed to acquire a 9.99% stake in GEK 10 November US Greece Energy 100 Papapolitis & Papapolitis N/A TERNA Third Point Hellenic Recovery Fund has agreed to Axia 11 May acquire an undisclosed stake in Greek oil & gas producer and US Greece Energy 46 Papapolitis & Papapolitis Ventures explorer company Energean Oil & Gas S.A. Group Polisan Holding AS, the listed Turkey based chemicals Chemicals 12 September company, has acquired the chemicals business of Artenius Turkey Greece 9 N/A N/A & materials Hellas DONSKOY TABAK JSC acquired a 50.36% stake in N/A N/A 13 July Russia Greece Tobacco 3 SEKAP, the Greek tobacco producer Theocharakis Group acquired 100% of PGA Hellas, the 14 June Greece Greece Automotive N/A N/A N/A distributor of Renault and Dacia in Greece Ioannis Vezanis acquired a 73% stake in HSBC Α.Ε.Δ.Α.Κ. Financial PwC 15 January Greece Greece N/A N/A the Greek mutual fund manager, subsidiary of HSBC Holdings Services Total Value 3,392 Deals 2013 in Greece June 2014 PwC 14 Comparative Analysis M&A transactions number and values declined from 2008 to 2012 and appear to start recovering in 2013 € 211m M&A deals' value (in € bln) Number of M&A deals Average size of transaction € 133m 41 € 257m € 326m € 99m € 202m 8,7 20 15 3,6 11 10 3,4 2,7 8 1,6 1,0 2008 2009 2010 2011 2012 2013 The volume and number of deals have been adversely affected by the country’s economic conditions since 2009 The average deal size has recovered since its 2012 low and compares to the 2010 levels Deals 2013 in Greece June 2014 PwC 15 Transactions in 2013 The recapitalisation of the Greek banking sector was completed in 2013 with the Hellenic Financial Stability Fund acquiring significant stakes in all systemic banks Deal size A/A Announcement Month Transaction description HFSF holdings (%) (€ m) 1 June National Bank of Greece SA.