Deal activity rebounded strongly in H1 2021 in Romania, with a total of 69 transactions, reflecting a 19% increase on H1 2020. Despite the higher volume of deal making the estimated value of M&A only increased by 4% to USD1.1bn due mainly to a 12% decline in the average size of deals below USD100m, to USD13m. The acquisition NGY Properties Investment, the owner of Hermes Business Campus, by investment fund Adventum Quantum for USD146m was the largest transaction during the period. Hidroelectrica’s acquisition of the 108 MW Crucea Wind Farm, the first by a state-owned utility company in the private sector, reaffirms the accelerating pace of the green energy transition. Although the deal value was not formally disclosed, market commentators estimate the transaction at around USD120m-160m.
”While excluded from the value of M&A in our data , it is worth noting three other large deals during the period,” say EY officials.
In January, AmerisourceBergen Corporation agreed to acquire the Alliance Healthcare businesses of Walgreens Boots Alliance in nine countries, including Romania, for USD6.47bn. In April, a consortium of Aroundtown SA and CPI Property Group agreed to acquire the 49% of the Romania-based London-listed Globalworth Real Estate Investment it did not already own for USD0.9bn, and in May, Glovo, the food delivery app, acquired the operations of Delivery Hero in the Balkan region, including Romania, for USD208m.
Strategic investors continue to be the dominant players on the Romanian M&A market, accounting for 94% of transactions. Although Romania remained an attractive investment destination for foreigners, with inbound deals (31) accounting for 45% of all transactions, domestic deal-making (34 deals) increased by 31% compared to H1 2020, and accounted for just under half of all transactions. The most active inbound investors were the United States (6 deals), Germany (3 deals), followed by Hungary, France, Italy and Ireland with 2 deals each.
The most active sectors by deal volume were technology (14 deals), followed by real estate (10), diversified industrial products (10), power and utilities (6) and healthcare (6). In terms of disclosed deal value, power and utilities attracted the largest share of investment, followed by real estate, banking & capital markets, diversified industrial products, and technology.
The Romanian M&A market is expected to remain active for the remainder of 2021 given opportunities to further accelerate growth, including those arising from the economic volatility caused by the pandemic that has left some businesses financially distressed. M&A will also be driven by the need to adapt business models, particularly in ecommerce and direct to consumer, but also to address the digitalisation, green economy and ESG agendas. Liquidity of capital and favourable financing costs will support and accelerate these trends. The M&A winners have and will be those that have demonstrated resilience and innovation during the pandemic. Despite this overall positive sentiment, the unknown factor remains how the pandemic will evolve in the latter part of the year.