The value of mergers and acquisitions last year on the Romanian market added up to 5.8 billion dollars last year, four times greater than in 2004. Romania placed fourth in the M&A top of Eastern European countries, behind Russia, the Czech Republic and Poland, according to a PricewaterhouseCoopers study.
The number of transactions in the private sector increased last year to 117, compared to 42 in 2004 and 33 in 2003. The top refers to deals made public and does not include privatizations.
Moreover the average value of transactions increased by 58 percent last year, up to 65 million dollars. Foreign investment accounted for 72 percent of the total number of deals, pointing out the preference of Romanian companies for foreign strategic partners.
Great Britain is the top investor when looking at the amounts, with 2.6 billion dollars, mainly due to the Vodafone International Holdings 2.5 billion dollar acquisition of Mobifon. France ranks second with 625.6 million dollars, also due to a telecom transaction, as FranceTelecom bought an additional 20 percent stake in Orange Romania. The US is third in the M&A top with 457.8 million dollars after LibertyGlobal had invested 407 million dollars for the takeover of Astral by UPC.
Looking at the economic sectors, the processing industry and financial services industry were the arena for M&A last year, registering the largest number of deals. The processing industry has been the leading sector for three consecutive years, while the sector of financial services outranked telecom.
Outstanding transactions in the financial services industry include the acquisition of Banca Tiriac by HVB and the takeover of 70.7 percent of Omniasig by Wiener Staedtische Allgemeine Versicherung AG.
The telecom sector leads the transactions top with 62 percent of the estimated M&A market. The Vodafone (Great Britain)-Mobifon deal was the second largest transaction in the region.
The PwC study also made an inventory of privatizations in 2005, which reached 4.9 billion dollars.
The main contribution to this figure was brought by Erste Bank, which bought a 61.88 percent stake in the Romanian Commercial Bank for 3.75 billion euros (4.815 billion dollars).
Other important privatizations include the 326 million dollar investment in the acquisition of majority stakes in two of the main Romanian electricity distributors, Electrica Oltenia and Electrica Moldova, which have been sold to Ceske Energeticke Zavody (CEZ) and E.ON AG respectively. In the case of mergers and acquisitions, the average value of privatization increased significantly reaching 442 million dollars in 2005, compared to just 62 million in 2004. As for the number of privatizations, the sector of utilities replaced the processing industry at the top last year, but the financial sector brought in the most money.