In the past two years the Romanian M&A market has continued to grow slowly and significant deals like the exit of Enel and the sale of Lafarge’s operations are now on the horizon. But due to their complexity, specialists expects they will be completed next year.


“In the beginning of 2014, most M&A professionals expressed cautious optimism about the market. As a firm, throughout the year we have witnessed the reactivation of major projects that had been stalling for various reasons. Looking back, I would say that the market is picking up speed. While we see some deals being closed, there are many more ongoing negotiations. And, much more importantly, several cross-border deals with a huge impact on both the regional and local markets,” says Nadia Badea, partner at Clifford Chance Badea.


She adds that deals are being discussed more thoroughly, as investors are extremely cautions and place major focus on due diligence. Interest and expectations remain high, since record amounts of cash available in the market push investors to constantly look for business opportunities.


Specialists say that the Romanian M&A market is showing signs of recovery, due to a combination of factors including Romania’s general economic growth – even though the growth rhythm is still rather low – the regional economic context, as well as the right timing for consolidation in several sectors and industries. Plus, two large transactions – the sale of some of the Lafarge-Holcim assets in Romania, as part of the merger between the two large cement producers, as well as the sale of the Enel assets in Romania to stimulate the local M&A market – are expected.


“These deals have attracted the interest of several major strategic and financial investors for Romania, which wanted large scale transactions that the Romanian market could not offer so far,” says Anda Rojanschi, partner at D&B David and Baias.


As for the types of transactions, currently the Romanian market is still dominated by small to medium deals, with slightly increasing values. “However, we expect some major ones to be announced sometime in the first half of 2015. Therefore, I would expect the overall volume of the 2014 M&A market to remain close to the previous year, around the EUR 1 billion mark,” adds Badea.


Energy, banking, retail, industry, logistics and agriculture were some of the most dynamic sectors in 2014 from the perspective of completed deals.“If we include the Electrica IPO we can say that the energy sector was the most active. Also we can see a realignment of the banking sector because of the acquisition of banks and of underperforming loan portfolios,” says Mihai Zoescu, director advisory at KPMG Romania.


There are also other sectors where significant transactions have been completed, like retail, industry, logistics and agriculture. But it is difficult to say if there was a polarization in a specific field of activity.


Alexandru Medelean, M&A director at PwC Romania, says that in 2014 the banking sector has been the star of the M&A market, with many large transactions being completed.


The most recent news in the banking system is that in mid-December Banca Transilvania announced that it had recently signed a binding agreement to acquire 100 percent of the shareholding of Volksbank Romania SA (VBRO) from Österreichische Volksbanken AG, Groupe BPCE, DZ Bank AG and WGZ Bank AG. This is in line with BT’s strategy to add value for its shareholders by making opportunistic acquisitions of Romanian banks or single loan portfolios.


BT and VBRO will operate as separate entities over the coming months, pending the successful closure of the transaction, which is still subject to a limited set of conditions including antitrust, merger clearance and NBR approval. Upon the successful completion of the transaction, BT is planning to fully integrate the business of VBRO into BT’s existing structure.


“The acquisition of Volksbank Romania is part of our bank’s growth and consolidation strategy, reaffirming our commitment as an active market player and supporter of the Romanian economy. After the integration, considering the market shares of the two banks, BT aims to become the second largest bank in Romania. Banca Transilvania is well capitalized, enjoys high liquidity, an increasing market share and positive financial results,” stated Horia Ciorcil, chairman of the board of directors of Banca Transilvania.


OTP Bank – Millennium Bank, for which PwC was lead advisor for the seller Banco Comercial Portugues; the sale of RBS Romania’s corporate banking franchise to Unicredit, in which PwC also advised the seller; Nexte Bank – Banca Carpatica; Banca Transilvania – Volksbank and Unicredit – RBS were the main transactions of the year in the financial sector.


“In addition to the transactions that involved banks, we have also witnessed deals with large portfolios of non-performing loans sold by Volksbank (EUR 500 million worth of NLP) and BCR (EUR 350 million). PwC was advisor for both these transactions,” says Medelean.


“For 2015 we expect to see further consolidation on the Romanian banking sector, as well as further opportunities for local banks to deleverage by selling non-core assets, including non-performing loans,” predicts Jonathan Wheatley, director, deals, PwC Romania.


Another active sector in 2014 was agriculture. The acquisition by Transavia of the business of Food 2000, an insolvent company for which PwC was advisor for the buyer, is one such example.


“Agriculture and the food industry are sectors that were generally active in terms of M&A activity in recent years and we expect that this trend will continue, as most of the markets in this sector are still widely fragmented,” says Rojanschi.


In addition to the consolidation trend in the financial sector, there was a boost of strategic investments in real estate. Other fields like technology, media and telecommunications remained a focus, in view of their huge potential in today’s economy.


“Our current pipeline also includes deals in the oil & gas industry, the financial sector, consumer business, pharmacy and healthcare,” says Badea of Clifford Chance Badea.


Rojanschi of D&B David and Baias emphasizes a trend on the real estate market where some major players such as the NEPI investment fund are currently consolidating their portfolios of properties, mostly in Bucharest, but also in some other large cities like Timisoara and Cluj, leading to an increase in real-estate deals. For example, the biggest event on the local real estate market this year came when Raiffeisen Evolution, the Austrian development company, sold the Promenada Mall (38,209 sqm of GLA) in Bucharest to NEPI for EUR 148 million.


“The sale of Promenada Mall just weeks after another record-setting transaction in which JLL was also involved – the industrial acquisition made by P3 in Bucharest – clearly shows that Romania is indeed ‘back in the spotlight’. This transaction is the largest one involving a single asset in Bucharest ever and the second largest in Romania,” says Gijs Klomp, MD and head of capital markets at JLL Romania.

Elsewhere, Rojanschi expects sectors like IT&Telecom, media, energy and healthcare to lead the way in terms of M&A activity in 2015. “There is talk in the market about a possible consolidation of the private healthcare sector. Also, the IT services market is going through re-arranging, which could lead to more transactions in this field,” says Rojanschi. “Although we don’t expect the value of the deals to increase in all sectors, we believe that the number of M&A deals will increase next year.”


Zoescu of KPMG says that there is room for moderate optimism about the evolution of the local M&A market.“A significant factor in boosting the M&A market is the increased trust of foreign investors in the evolution of the Romanian economy. The most and significant transactions are generated from abroad, although there are exceptions such as a possible, even partial takeover of Enel operations by Electrica,” says KPMG representative.


“We expect intensified activity over the following months, with some major deals and cross-border transactions reaching a successful end. Regained confidence in the strength and stability of the local economy could prove a major boost for the M&A activity in Romania. Taxation, in terms of predictability, could also be a driver,” says Badea of Clifford Chance Badea. But the global context also matters, as the entire business community is facing major question marks: the European economy and its perspectives, the uncertainty and implications of sanctions imposed on Russia, the related geopolitical context, shifting trade and capital flows in the global economy, the technological revolution, and intensified scrutiny and intervention from national regulators.


Specialists say that Romania is on the radar of international investors, both strategic and portfolio investors, and is considered one of the most stable countries in the region.“If Romania manages to continue its well-balanced mix of macroeconomic stability and steady structural reforms, while accelerating the absorption rate of EU funds and speeding up its infrastructure projects, we might witness a picking up of FDI flows in the next few years, which will result in higher M&A activity as well,” says Medelean of PwC Romania.


Rojanschi expects the M&A market to increase in Romania in 2015 and 2016, taking into consideration the country’s favorable position in the regional context, as opposed to the political and economic situation in countries like Ukraine, Hungary and Bulgaria.


“This growing M&A activity in Romania was already seen in 2014, when the overall M&A value in Romania was the third largest in Central and Eastern Europe, after those of Poland and the Czech Republic, countries that have traditionally larger M&A markets, with more large scale investors,” she says.


The Romanian M&A market is recovering after the economic downturn, agree pundits.

“The increase is not spectacular. We think that the levels registered prior to the crisis can be reached and exceeded on the medium term but it is difficult to estimate a period of time,” adds Zoescu.


Without doubt, the market was more dynamic in the years prior to the global financial crisis. Investors’ interest was high and some deals reached impressive values. In a seller’s market, the negotiations process mostly focused on price.



“Today it’s a buyer’s market: we’re seeing fewer and smaller deals, often closed after a lengthy negotiation process. Investors are no longer willing to pay the EBITDA multiples they use to pay in the boom period. They are much more cautious, more demanding and inquisitive, and make strategic decisions when deciding on a deal,” concludes Badea. (Source: