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Emerging Europe:M&A Report 2011

2012

CMS and DealWatch

3 Introduction

4 League Tables

5 Emerging Europe Overview 7 Deals by Sectors 8 Top 20 Deals 9 Bulgaria 13 Czech Republic

16 Hungary

20 Poland

25 Romania 28 Russia 33 Slovakia

36 Ukraine 39 CMS and DealWatch

2

Dear Readers,

We are delighted to launch “Emerging Europe: M&A Report 2011” which has been co-authored by CMS and DealWatch to highlight 2011 Mergers & Acquisitions (M&A) activity in the Central and Eastern Europe (CEE) region and our deal activity predictions for 2012.

Having completed more deals than any other CEE-based law firm, CMS is ideally placed to comment on the deal activity in the region, based on data compiled by DealWatch. We have used our network of offices and asked our partners to outline their views on the markets in which they operate as we believe the commentary on different markets from the eyes of local dealmakers are the most valuable.

The 2011 year produced a steady deal flow across the region, however deals continued to be protracted and the risk of deals not reaching either signing or financial close remained high. The banks played an even greater role in the outcome of due diligence exercises and the structure of deals, as financing remained heavily constrained and bank lending practices were more cautious than ever. The ability of buyers to deal with a basket of currencies, and hedge against currency fluctuations, in cross-border deals has become a strategic advantage over the last 12 months. The crisis has highlighted the importance of a diversity of risk profiles across the CEE region. Different jurisdictions are being priced, and contractual terms and conditions are agreed, depending on the assessment of a jurisdiction as an emerging or developed market.

What was particularly prevalent in 2011 was the arrival of the large global private equity funds. Players like KKR, BC Partners, and Apax Partners took a significant interest in the region, especially in Poland, where the volume and value of the transactions were significant this year.

The crisis in the Eurozone may well slow down the deal environment and the capital markets options. But we expect that the crisis will also trigger restructurings and the sale of assets, as well as privatisations.

We hope you will find the report useful. CMS remains dedicated to the CEE region with the leading corporate M&A legal practice and the most extensive and experienced office network offering experts on the ground who are able to advise you on your future transactions.

Helen RodwellCMS Head of CEE Corporate Practice

The 2011 year produced a steady deal flow across the region, however deals continued to be protracted…The crisis has highlighted the importance of a diversity of risk profiles across the CEE region.

3

League Tables

Top Emerging EuroLegal Advisors by Number of Deals (2011)

League Tables were generated using the LeagueBoard® tool available in DealWatch. The criteria used for crediting the advisors for the purpose of these league tables include:

— deal announcement date: January 1-December 31, 2011

— Emerging Europe geographic area, understood as the dominant country of operations of either of the deal sides, covers: Albania, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia and Ukraine

— only announced and/or completed deals were taken into account

— deal value: at least US $1 million (note: deals with unspecified value were taken into account in calculations as having the value equal to zero)

— all industries were included

— exclusions: rumoured or failed deals, convertibles issues, share buybacks, and employee offers

The ranking was created basing on deal advisory information available, according to our best knowledge, as of March 15, 2012. The data can be subject to updates.

Company Deal Value (€m) Number of deals

CMS 2,209.41 34

Sorainen 637.44 33

Raidla, Lejins & Norcous 903.13 29

Havel, Holásek & Partners 310.38 29

Weil, Gotshal & Manges 3,542.33 28

White & Case 4,255.29 25

LAWIN 512.43 22

Linklaters 3,069.60 19

Schoenherr 1,382.45 18

DLA Piper 4,699.31 17

Freshfields Bruckhaus Deringer 4,144.06 17

4

Emerging Europe Overview

Despite the rising number of transactions, the total value of deals recorded only a 0.8% annual growth with a total deal value of €150 billion. The average transaction size decreased by 10% and the number of mega deals with a deal size of over €1 billion dropped to 24 from the 34 recorded in 2010.

The most active sector by deal numbers in 2011 was manufacturing with 753 deals representing nearly 20% of all transactions.

Number of deals

3,723

2,967

3,375

3,792200

100

0

138

2008 2009 2010 2011

Total value of deals (€bn)

4,000

2,000

0

Mining (including oil & gas) was the leading sector in terms of deal value, with over €48 billion accounting for nearly a third of the overall market. The high deal value was mainly the result of several mega transactions - 13 out of the 20 largest deals in the region had a target from the sector.

The largest deal in Emerging Europe in 2011 was the reverse takeover of the largest Russian gold miner Polyus Gold by KazakhGold valued at €8.5 billion. The second largest deal was the acquisition of Polish mobile-phone company Polkomtel by Zygmunt Solorz-Żak for €4.8 billion.

M&A in Russia accounted for 38% of all deals and 65% of the total deal value in 2011. Poland came second with a 13% share in deal number and a 12% share in total deal value.

Despite the ongoing uncertainty triggered by the Eurozone crisis, we hold a positive outlook for M&A activity in the region in 2012.

Deals by Value and Volume in Emerging Europe (2008-2011)

The number of M&A deals in Emerging Europe countries registered a 12% increase in 2011 with a total of almost 3,800 transactions, slightly exceeding the record levels reached in 2008.

76

149 150

5

We expect investors to stay away from small-sized deals in countries like the Czech Republic, Romania and Hungary, but at the same time the largest countries (Russia and Poland) are likely to witness growth in deal activity.

The outlook for the Russian M&A market is positive mainly due to the upcoming privatisation of minority stakes in the largest state-controlled companies such as major oil company Rosneft and the state-owned banks Sberbank and VTB. The outlook for the Polish M&A market is stable. Some 208 state-owned companies are at still in the privatisation pipeline, so activity in this area is expected to continue.

Acquisitions may be expected in the food production and FMCG distribution sectors where the level of consolidation is still low.

In summary, we believe that the market in 2012 will be dominated by large transactions and do not expect a significant growth in the number of deals.

Boris MaleshkovDealWatch Editor-in-Chief

6

Deals by Sectors (2011)

Number of Deals by Sectors in Emerging Europe (2011)

Manufacturing,753

Finance &Insurance, 409

Services, 396

Wholesale & RetailTrade, 392

Mining, 303(incl. oil & gas)

Telecom& IT, 293

Food &Beverages, 276

Transportation &Warehousing, 219

Media &Entertainment, 210

Utilities, 185

Construction, 173Other, 183

Share of Sectors from Total Value of Deals in Emerging Europe (2011)

Manufacturing 11.4%

Finance &Insurance 12.3%

Wholesale & Retail Trade 6.5%

Mining 31.1%(incl. oil & gas)

Telecom& IT 9.2%

Food &Beverages 5.4%

Transportation &Warehousing 5.3%

Utilities 10.1%

Other 8.6%

7

Top 20 Deals (2011)

Target Company

Industry Deal Type Country of Target

Buyer Country of Buyer

Deal Value (€m)

Polyus Gold Mining (incl. oil & gas) Acquisition (89.14%) Russia KazakhGold Kazakhstan 8,545

Polkomtel Telecom & IT Acquisition (100%) Poland Private investor - Zygmunt Solorz-Żak

Poland 4,817

Norilsk Nickel Mining (incl. oil & gas) Minority stake purchase (7.71%)

Russia Norilsk Nickel Russia 3,358

Freight One Transportation & Warehousing

Privatisation (75%) Russia United Cargo Logistics Holding

Russia 3,167

Novatek Mining (incl. oil & gas) Minority stake purchase (12.09%)

Russia Total S.A. France 2,901

Bank of Moscow; Capital Insurance Group

Finance & Insurance Privatisation Russia VTB Bank Russia 2,555

LukOil Mining (incl. oil & gas) Minority stake purchase (6%)

Russia n.a. n.a. 2,525

VTB Bank Finance & Insurance Privatisation through stock exchange (10%)

Russia China Investment Corp.; Generali Group; TPG Capital

China; Italy; United States

2,440


Russia Norilsk Nickel Russia 2,317

Metalloinvest Mining (incl. oil & gas) Minority stake purchase (20%)

Russia VTB Bank Russia 1,938

MOL Mining (incl. oil & gas) Minority stake purchase (21.2%)

Hungary Government of Hungary Hungary 1,880

Beltransgaz Utilities Privatisation (50%) Belarus Gazprom Russia 1,852

Enisey Production Company

Mining (incl. oil & gas) Acquisition (100%) Russia Igor Altushkin; Ruslan Baisarov

Russia 1,748

Norilsk Nickel Mining (incl. oil & gas) Minority stake purchase (5%)

Russia Interros Russia 1,544


Russia Metalloinvest Russia 1,517

SABMiller’s Russian and Ukrainian beer businesses

Food & Beverages Acquisition Russia, Ukraine Anadolu Efes Biracilik ve Malt Sanayi

Turkey 1,462*

JSW Mining (incl. oil & gas) Privatisation through stock exchange (36.29%)

Poland n.a. n.a. 1,378

LukOil Mining (incl. oil & gas) Minority stake purchase (2.94%)


GZE Utilities Acquisition (99.98%) Poland Tauron Polska Energia Poland 1,213

X5 Retail Group Wholesale & Retail Trade

Minority stake purchase (11.14%)


* Deal value for Russian businesses only. Russia’s share is based on the annual brewing capacities and the respective market shares of SAB Miller

in the two countries (estimates for market shares and total market taken from ‘source’, brewing capacities taken from ‘source’)

8

Bulgaria

The deals on the Bulgarian M&A market this past year have pointed to several fundamental changes and, to a large extent, specific trends on the Bulgarian market:

— Global investors have started leaving the country and Bulgarian players have entered in their place. The change is most notable in key sectors such as energy, banking and finance, and media.

— Some privatisation deals have had a real impact and the state’s activity in this regard is expected to continue.

— Many of the transactions in the private sector have been initiated by debt restructuring (mostly in the real estate sector, industrial companies and trade, but also with big players in stable sectors like TMT, such as BTC).

— Companies that have been up for sale have mostly been small to medium-sized enterprises, which is largely because of the financial capabilities of local buyers in times of crisis, but also due to the unstable financial performance of local companies.

We can expect these trends to continue during the year ahead. Because of the unclear economic prospects in Europe and the depleted financial resources of local buyers, we can expect fewer deals in 2012, and maintaining the 2011 levels would be an optimistic scenario.

Energy & Utilities

Being a typical anti-cyclical sector with foreseeable and relatively stable cash inflow, the energy sector welcomed investors’ interest. In 2011, the Italian Enel sold 73% of Maritsa East 3 TTP to the American fund Contour Global for €230 million, the German E.ON sold 67% of its electricity supply company to Czech ENERGO-PRO for €133 million, while toward the end of the year the Bulgarian state started the privatisation of its 33% share of EVN on BSE, obtaining over €46 million for it. On the renewables front, over 5 PV or wind projects were successfully sold to foreign investors, with a clear focus on Asian investors, such as Toshiba (Japan), Sky Solar (China), SDN Company (Korea) and Samsung (Korea).

In 2012 we expect developers to keep selling renewables portfolios, with a tendency towards a decrease in volume and activity mostly among Asian investors, as well as US private equity houses.

9

Real Estate

This is one of few sectors that saw an increase of deal volume in 2011 and in which real estate companies actually made a profit. According to the Registry Office, M&A in real estate has increased by 22%. According to various sources, over 50% of those have been transactions with agricultural land.

Urban real estate and real estate investment2011 was a year of little interest in the Bulgarian real estate sector from big players (their focus was mostly on Western Europe, Poland and Russia). Opportunistic funds looking for big-risk-big-gain deals were behind most of the significant deals.

The biggest deal for 2011 was the sale of Mall of Sofia for a little over €100 million to Europa Capital, part of Rockefeller Group. Earlier in the year, the fund bought Retail Park Plovdiv for €20 million (CMS advised Europa Capital on both deals).

Office space transactions were much slower, with the biggest deal being the €24 million sale of “Kambanite Business Centre” by FNI Bulgaria to Zeus Capital Partners (Zeus’ first investment in Bulgaria).

Although the total value of similar deals brought over €200 million to the investment market, we expect 2012 to be a difficult year for the real estate sector. Opportunistic players will be the most active – those seeking to expand their portfolios, or those that have already invested in CEE and know the region.

Demand will be targeted mostly at high quality assets – buildings with a great location and high occupancy that have been let to first-class tenants with long-term contracts. However, such estates are rare, and this remains one of the biggest problems that investors in Bulgaria face. With this in mind, it is safe to say that we cannot expect any major investment deals in the sector. It would be an achievement if the market maintained 2011 levels.

Agricultural land2011 marked a significant rise in the revenues of funds specialising in agricultural land investments. Industry specialists forecast that agricultural land will continue to be a sought-after and profitable asset. Besides the traditional buyers like large real estate funds and agricultural producers, new players – investors who want to invest their assets acquired from other businesses - will be more active. For example, last year Peugeot importer “Sofia France Auto” acquired a portfolio of agricultural land in various parts of the country, which turned it into one of the biggest investors in the sector.

Food & Beverages: Retail

This sector was dominated by one large privatisation deal and one in the private sector. In 2011 the state sold 80% of Bulgartabac Holding for a little over €100 million, while Belgian Delhaize Group acquired Delta Maxi Group, the leading Serbian food retail company which owns Piccadilly stores in Bulgaria, and operates more than 450 stores in five South-eastern European countries, for a purchase price of €932.5 million (CMS advised Delhaize Group on this deal across all five jurisdictions).

10

TMT

Undoubtedly significant in the sector was the sale of 50% of NURTS by BTC to Bluesat Partners for €57 million. It was the TMT sector that showed the first signs of foreign investors exiting from their Bulgarian investments, with WAZ, Bonnier and ProSiebenSat1 selling their assets in 2011. As part of a global restructuring, Nokia Siemens Networks took over Motorola Bulgaria’s business.

Against the backdrop of the few deals in the sector, another trend appeared – the loss of interest in the BSE and investors turning to other means of profit, a demonstration of which was internet company DIR.BG listing on the BSE. The first IPO on the BSE in two years did not cause much excitement despite the constantly proclaimed “hunger” for new companies on the stock exchange. DIR.BG hardly managed to get 13.5% of its maximum capital raise target.

Atanas BangachevPartner, Head of Corporate DepartmentCMS [email protected]

Veliko SavovSenior Associate, Corporate DepartmentCMS [email protected]

11

The Bulgarian M&A Market

Target Company Industry Deal Type Buyer Country of Buyer

Deal Value (€m)

Maritsa 3 Thermal Power Plant

Utilities Acquisition (73%) ContourGlobal United States 230

Sensor-NITE Manufacturing Acquisition (100%) Sensata Technologies Holding Netherlands 225

Kremikovtzi Manufacturing Acquisition (100%) Eltrade Company Bulgaria 162

E.ON Bulgaria Utilities Acquisition (100%) ENERGO-PRO Czech Republic

133

Bulgartabac Holding Food & Beverages Privatisation (79.8%) VTB Bank Russia 100

Mall of Sofia Real Estate* Acquisition Europa Capital United Kingdom

100

National Unit Radio and TV Systems

Media & Entertainment Acquisition (50%) Bluesat Partners United Arab Emirates

57

EPIQ Electronic Assembly

Manufacturing Acquisition (100%) Integrated Micro-Electronics Philippines 52

Markovo Tepe Mall Real Estate* Acquisition (100%) InvestKredit Bank AG Austria 45

EVN Bulgaria Elektrorazpredelenie

Utilities Privatisation (33%) EVN; PAC Doverie; Undisclosed investors

Austria; Bulgaria

43

Top 10 Deals in Bulgaria (2011)

150

100

0

Number of deals

136

9295

120

2,000

0

2,130

2008 2009 2010 2011

Total value of deals (€m)

720 742

1,20450

3,000

Deals by Value and Volume in Bulgaria (2008-2011)

1,000

*Real estate deals are listed in the Top Deals tables to illustrate the overall business activity. As they are not regarded as pure M&A deals, their number and values are

not included in other parts of the report.

12

Czech Republic

As opposed to the downward trend that we witnessed in 2010, in 2011 the M&A market in the Czech Republic was surprisingly active. But given the instability in the Eurozone, M&A activity was still prone to significant fluctuations.

In the absence of very large transactions, there were sectors that attracted more attention from private equity investors, strategic investors and small and midsize enterprises. Those sectors included energy (sale of Energy 21, RSP Energy, Ethanol Energy, Elektrizace zeleznic Praha, and Elektrarny Opatovice), telecommunications & IT (acquisitions of Skylink, POS Media Global Services, Mobilkom, Sitel, LMC, Spojka Group, LOSAN internet, Global Inspiration, and SLOANE PARK Property Trust) consumer products (sale of United Bakeries, SPV Pelhrimov, ETA, Venture Retail, Budejovicky Mestansky Pivovar, Pinelli, Asko – Nabytek, and Bontonland) and real estate (sale of D5 Logistics Park I, Monlid Development, Palac Andel and Olympia).

As the Czech Republic is a relatively small market, one strong investor or one large transaction can make big waves.

One of the largest deals in 2011 was the sale of the shopping centre Somerston Olympia by Somerston Group to Rockspring Property Investment Managers, a UK-based real estate fund management and investment company, and ECE European Prime Shopping Centre Fund, a Germany-based real estate developer and manager of shopping centres.

Other significant transactions were the acquisition of a 61% stake in OKZ Holding, a company engaged in the construction of large capacity steel storage tanks and steel structures, to a Russian strategic investor Summa Capital, and the €81.67 million sale of Direct to Home TV (DTH) Satellite operator company Skylink to M77 Group, a Luxembourg-based investment holding company.

The Czech market in 2011 was also driven by restructuring deals. One of the most notable examples was the €153 million sale of the insolvent SAZKA, a major player in betting games and lotteries, to investment groups PPF and KKCG.

13

The M&A market in the Czech Republic is not expected to grow significantly during 2012. One of the drawbacks for M&A deals is the limited willingness of banks to finance acquisitions, which affects the number and size of such transactions. However, a recent study showed that many Czech businesses are still planning acquisitions in 2012. Although it is surrounded by the turmoil of the Eurozone, many investors are beginning to see the Czech Republic as a safe haven by comparison. Additionally the government might create some opportunities through privatisations and the announced auction of a new telecommunication licence. There are also funder-owned IT and engineering companies that are willing to sell (part of) their business. We expect the market to grow in 2012, primarily in the energy sector (Austrian company OMV plans to close down its whole network of filling stations in the Czech Republic and RWE plans to sell its gas transmission company Net4Gas), the TMT sector (Mafra Group intends to sell the music TV station Ocko TV and Moravia Steel intends to sell Barrandov Movie Studios), e-commerce (potential acquisition of various Czech discount servers by Groupon or the potential sale of Alza.cz), and the engineering and consumer products sectors. The market may also be driven by restructuring deals (ČEPRO, a state-owned petrochemical company is considering restructuring). The year 2012 may bring also some privatisation deals as the Czech state continues to play a role in the M&A field. The sale of the Czech national airlines CSA is one privatisation expected soon.

Ian ParkerPartner, Corporate DepartmentCMS Czech [email protected]

Patrik PrzyhodaSenior Associate, Corporate DepartmentCMS Czech [email protected]

14

The Czech M&A Market


Deal Value (€m)

CEZ Utilities Minority stake purchase (3%)

n.a. n.a. 622

Nova Karolina & Ostrava Forum shopping centres

Real Estate* Acquisition (100%) Meyer Bergman; Healthcare of Ontario Pension Fund

United Kingdom; Canada

290

United Bakeries Food & Beverages Acquisition (100%) Agrofert Holding Czech Republic

249

19 office buildings Real Estate* Acquisition (100%) Czech Property Investments Czech Republic

219

Palac Flora shopping centre

Real Estate* Acquisition (100%) Atrium European Real Estate Czech Republic

191

Sazka Media & Entertainment Acquisition (100%) KKCG; PPF Group Czech Republic

154

6 logistics parks Real Estate* Acquisition (80%) Tristan Capital Partners United Kingdom

135

Olympia shopping centres

Real Estate* Acquisition (100%) Czech Property Investments Czech Republic

96

City Park Jihlava shopping centre


85

SG Equipment Finance Czech Republic

Finance & Insurance Acquisition (50.1%) Komercni Banka Czech Republic

74

Top 10 Deals in the Czech Republic (2011)

200

100

0

Number of deals

198

166

195

153

4,000

0

6,554

2008 2009 2010 2011


3,409

2,0991,556

8,000

Deals by Value and Volume in the Czech Republic (2008-2011)

6,000

2,000



15

Hungary

The Hungarian M&A market has been quite slow in the past few years, and 2011 did not see any major change. The first half of 2011 looked promising, but the unpredictability of the economic and legal environment, as well as a weak macroeconomic basis meant that the market failed to deliver.

While the number of medium-sized deals did not increase significantly, some high-volume transactions took place in 2011. The state’s acquisition of a 21.2% stake in Hungarian oil and gas company MOL, and the acquisition of Hungarian chemicals company BorsodChem by China’s Wanhua Industrial Group, were among the biggest transactions in the region last year. CMS acted on several of the Top 10 deals on the Hungarian market in 2011, including the Pannunion acquisition and the acquisition of Provimi Pet Food.

The Hungarian State was the most active player in the Hungarian M&A market, completing three of the ten largest transactions of the year. Of course, these transactions were not driven by the market opportunities but by general economic political considerations, so these deals may not be perceived as signs of recovery in the M&A market. The Hungarian State is, nevertheless, expected to continue to be an active player in the Hungarian M&A market as there is a strong political intent to increase the state’s presence in certain sectors, such as energy and banking.

Another interesting feature of the market is that Jeremie venture capital funds remained active. Though the volume of these transactions is too small to attract global actors, the companies receiving investments are slowly progressing to the next stage where they might attract small to medium-size second round investments.

There was a fairly high number of restructurings, internal reorganisations and cross-border mergers of multinational companies in 2011 which affected Hungarian companies (e.g. Osram, Fairmont and Ecco). The main purpose of these was to increase efficiency, simplify organisational structures and provide benefit from synergies. It is expected that this trend will continue in 2012, especially in the banking and insurance sectors.

16

The Budapest Stock Exchange has failed to attract companies for listing in recent years, and it appears that this will remain the trend for the foreseeable future. Rather, it seems that listed companies are attractive acquisition targets. The acquisition and delisting of Pannunion was one of the high profile transactions in 2011, and we may see similar transactions in the next few years.

As in previous years, the largest transactions were completed by foreign investors (and the Hungarian State), while domestic buyers took part in smaller transactions. Large Hungarian companies will continue, however, to be active in acquiring (or selling) other businesses in the region (e.g. banks and real estate developers).

The M&A market cannot move independently from the general economic environment. The fact that Europe is on the brink of recession and Hungary is still fighting to achieve stability is enough in itself to hold back investments in Hungary. Nevertheless, in 2012 Hungary stands a good chance of restoring its financial stability, and business in Europe is predicted to slowly pick up in the second half of 2012, which may put Hungary back on the investors’ map. Hopes are high for certain sectors to remain active over the forthcoming year, including energy, TMT and financial services.

Dr. Aniko KircsiPartner, Head of Corporate DepartmentCMS [email protected]

Ferenz MatraiPartner, Corporate DepartmentCMS [email protected]

17

The Hungarian M&A Market

200

100

0

Number of deals

173

189171

137

5,000

0

5,478

2008 2009 2010 2011


3,536

1,532

3,933

10,000

Deals by Value and Volume in Hungary (2008-2011)

18


Deal Value (€m)

MOL Mining (incl. oil & gas) Minority stake purchase (21.2%)

Government of Hungary Hungary 1,880

BorsodChem Manufacturing Acquisition (58%) Yantai WanHua Polyurethane China 743

Euromedic International Dialysis Centers

Education & Healthcare Acquisition (100%) Fresenius Medical Care Germany 485

Provimi Pet Food Food & Beverages Acquisition (100%) Advent International United States 188

Millennium Portfolio Real Estate* Acquisition (74%) Heitman European Property Partners

United States 148

Budapest Airport Transportation & Warehousing

Privatisation (25%) Hochtief Germany 142

Magyar Televizio (MTV) headquarters

Real Estate* Acquisition (100%) Media Service Support and Asset Management Fund (MTVA)

Hungary 83

Intercontinental Budapest

Real Estate* Acquisition (100%) Tufik Abukhater - private investor

Lebanon 49

Egis Manufacturing Minority stake purchase (7.46%)

Tradewinds Global Investors United States 43

Napfény Park Retail Center

Real Estate* Acquisition (100%) ERSTE Property Fund Austria 30

Genesis Energy Manufacturing Acquisition (65.6%) Servertech United States 29

Rába Manufacturing Acquisition (57.69%) Magyar Nemzeti Vagyonkezelo (MNV)

Hungary 26

Pannunion Manufacturing Acquisition (98.8%) Sun Capital Partners United States 22

Magyar Turisztikai Holding

Services Acquisition (100%) Turisztika Hungária Hungary 19

Property of Ferencváros football club (FTC)

Real Estate* Acquisition (100%) Magyar Nemzeti Vagyonkezelo (MNV)

Hungary 16

Top 15 Deals in Hungary (2011)



19

Poland

Last year was exceptional for the M&A market in Poland. We have never witnessed so many transactions of such significant value in a single year.

The sale of Polkomtel, the Polish assets of Swedish company Vattenfall, TVN, Kamis, Polbank EFG, Emitel, Żabka – these were the just the biggest of the transactions that electrified the market and the media. The high value of assets sold and the attractiveness of the sectors meant that the largest global private equity funds finally took a significant interest in Poland. Previously, the volume of transactions in Poland had been too small to attract global actors; last year this changed, and the number of the leading funds that were involved (with varying degrees of success) in the largest transactions was impressive. Also regional private equity funds already present in Poland were very active.

There was strong competition between buyers for most of the assets sold. As a result, they could not usually expect favourable contract terms. The situation resembled the privatisations of the early years of the Polish economic transformation, when the negotiated terms strongly limited the liability of the seller and did not provide any (or provided minimum) protection to the buyer. The competitive pressure among the investors allowed the sellers to obtain unusual returns on their investment. We might say that it was a “sellers’ year.”

The majority of the last year’s transactions were a turning point in their respective industries. In many cases, the investors treated the companies they bought as a platform for consolidation. The TMT sector witnessed an end to the long association of state-owned companies with telecommunications (Polkomtel). Other transactions in the industry (Dialog, the expected sale of Exatel) seem to confirm this market trend.

It is almost certain that what happened last year will not be repeated in 2012. The M&A market in Poland will be negatively affected by the political uncertainty surrounding the Eurozone, which will likely result in the more conservative investors putting off certain investment decisions in Central Europe until safer times. The poor condition of the banking sector in Europe and, consequently, the increased caution of banks when it comes to financing M&A may seriously limit the availability of funds – as is already happening in Western Europe. Polish banks still show considerable passion for financing acquisitions, but they are being much more careful in their selection of projects.

20

On the other hand, banks operating in Poland which are owned by major Western European banks that are finding it hard to raise funds in their respective countries have already reduced their lending in Poland and Central Europe.

The buyer will have to show more ingenuity in seeking financing and prove able to make difficult investment decisions in times of trouble.

Consequently, the buyers’ caution and the difficulties in obtaining finance may cause difficulties for the potential sellers to find investors. In such circumstances, more activity can be expected from entities that have their own investment resources and do not necessarily have to rely on acquisition debt. Many Polish firms are in pretty good financial shape and have provisions allowing them to carry out acquisitions. Also private equity funds are carrying out more and more transactions using alternative sources of financing, avoiding bank debt. But will it compensate for the increasingly common problem of obtaining attractive financing? Probably not.

Another factor that can stimulate M&A activity is consolidation. Investors – funds or industry investors – which have committed substantial resources in specific sectors with a view to consolidating them are determined to implement their strategy. This is frequently a matter of survival for them.

The M&A market may also be positively influenced by the lack of competition from the stock exchange. It seems that over the next twelve months or so the stock exchange will not be an attractive alternative to exiting an investment by way of an IPO, and only a sale will be a reasonable option for industry investors or funds. Also the low capitalisation of listed companies can make them attractive acquisition targets. After all, it is not without reason that legal counsels have observed increased interest among their clients in acquisitions of listed companies and delisting.

So, will 2012 be the “year of the buyer” who will dictate the terms of transactions? Time will tell. One way or another, we may be sure that a potential buyer will have to show more ingenuity in seeking financing and prove able to make difficult investment decisions in times of trouble. But of course, when the going gets tough, the tough get going...

Dariusz GresztaPartner, Head of Corporate DepartmentCMS [email protected]

21

The Polish M&A Market

600

300

0

Number of deals

463

525581

51625

10

-5

6.1

2008 2009 2010 2011


Deals by Value and Volume in Poland (2008-2011)

9.5

20.917.5

22

Deals by Sectors in Poland (2011)

Number of Deals by Sectors in Poland (2011)

Manufacturing, 112


Services, 71

Wholesale & RetailTrade, 67

Education &Healthcare, 23

Telecom& IT, 54

Food &Beverages, 34



Utilities, 29

Construction, 28

Other, 17

Share of Sectors from Total Value of Deals in Poland (2011)

Manufacturing 10.4%

Finance &Insurance 12.6%


Mining 8.4%(incl. oil & gas) Telecom

& IT 35.3%

Utilities 18.2%

Other 9%

23

Top 20 Deals in Poland (2011)

Target Company

Industry Deal Type Buyer Country of Buyer

Deal Value (€ m)

Polkomtel Telecom & IT Acquisition (100%) Zygmunt Solorz-Żak Poland 4,817

Jastrzębska Spółka Węglowa

Mining (incl. oil & gas) Privatisation through stock exchange (36.29%)

n.a. n.a. 1,378

GZE Utilities Acquisition (99.98%) Tauron Polska Energia Poland 1,213

PZU Finance & Insurance Privatisation through stock exchange (10%)

n.a. n.a. 804

Vattenfall Heat Poland

Utilities Acquisition (99.98%) PGNiG Poland 717

Polbank EFG Finance & Insurance Acquisition (70%) Raiffeisen Group Austria 490

TP Emitel Telecom & IT Acquisition (100%) Montagu Private Equity United Kingdom

422

Żabka Polska Wholesale & Retail Trade

Acquisition (100%) Mid Europa Partners LLP United States 383

SPEC Utilities Acquisition (85%) Dalkia Polska Poland 380

Cyfrowy Polsat Telecom & IT Minority stake purchase (24.72%)

Heronim Ruta; Zygmunt Solorz-Żak

Poland 338

Tauron Polska Energia

Utilities Privatisation through stock exchange (11.9%)

KGHM; Institutional investors Poland 316

Kogeneracja; Elektrownia Rybnik; EDF Polska CUW

Utilities Minority stake purchase

Electricite de France France 301

Emperia’s distribution division

Wholesale & Retail Trade

Acquisition Eurocash Poland 235

N-Vision Media & Entertainment Minority stake purchase (40%)

Canal+ France 231

Polfa Warszawa Manufacturing Acquisition (85%) Polpharma Poland 229

Telefonia Dialog Telecom & IT Acquisition (100%) Netia Poland 214

Kamis Przyprawy Food & Beverages Acquisition (100%) McCormick & Company United States 208

TU Europa Finance & Insurance Acquisition (50%) Meiji Yasuda Life; Talanx Group Germany; Japan

202

Metelem Holding Finance & Insurance Minority stake purchase (16.2%)

European Bank for Reconstruction and Development

International 200

Globe Trade Centre

Construction Minority stake purchase (16%)

n.a. n.a. 191

24

Romania

Acquisition appetite remained low throughout 2011, but growth in the M&A market is envisaged for 2012

A stable year, although appetite remained lowGenerally speaking, the M&A market in Romania stabilised in 2011. Many had envisaged the appetite for takeovers would be stronger. The fact that the M&A market in Romania did not “make a comeback” during the year perhaps reflects a gap between the value expectations of sellers and buyers, as well as the general economic climate brought on by the financial tensions in the Eurozone, limited economic growth and low consumer spending.

The energy sector was particularly interesting for our M&A team in 2011. We acted for the Romanian state, as a minority shareholder, in the secondary sale of shares in the largest Romanian company, OMV Petrom SA, a multinational oil and gas company listed on the Bucharest Stock Exchange. This was the largest secondary public offering to date on the BSE and the most significant capital markets transaction Romania has seen to date. Another noteworthy deal in this sector was First Reserve’s acquisition of the third largest gas producer in Romania – we acted for an US-based energy-focused investment fund on this deal.

Generally, the most targeted sectors for deals in 2011 were the manufacturing, energy, agriculture, TMT and real estate. The M&A market also saw a more active presence from financial investors, and this growth trend should continue in 2012.

A large deal of 2011 was the acquisition of Cadbury’s Kandia-Excelent, the second largest player on the Romanian chocolate market, by Oryxa Capital, an international investment fund, from Kraft Foods. CMS acted for Oryxa Capital in the sale. Kraft Foods agreed to sell Cadbury Plc’s chocolate confectionery business in Romania to Oryxa Capital for an undisclosed amount to meet the European regulatory requirement of its Cadbury acquisition.

25

Growth envisagedAs regards 2012, a general upward trend is expected. Any increase in M&A activity will, however, rely heavily on Romania experiencing continued economic recovery. Investment decisions are always highly dependent on the overall economic situation as well as strong prospects for market growth in the relevant industry sector. Unfortunately we are facing uncertain times, as the Eurozone debt crisis continues and economic turmoil threatens, especially given that national elections will take place at the end of 2012, which historically slow the economy for at least one quarter. It will be a waiting game to see how much these factors impact the market.

Growth in the M&A market in Romania is, nevertheless, expected in 2012. While privatisations across the region are waning, there are still several significant privatisations planned in Romania following IMF recommendations, for example the privatisation of Cupru Min Abrud (state-owned copper mine) is expected to conclude in spring 2012 via open auction. The large thermo-electrical power plants of Turceni and Rovinari, the state-owned chemical producer Oltchim, the Romanian postal service, the state railway company and the national airline (Tarom) could all go into private hands this year. Should these privatisations go ahead, the local M&A market would grow significantly. Several state-owned energy companies may also be subject to IPOs or SPOs in 2012.

The most attractive sectors for acquisitions will be manufacturing, agriculture, energy & mining, telecoms & media and (potentially) real estate.

It seems very likely that we will see transactions in Romania step up in 2012, with the most sought after companies being those with limited exposure to risk.

Horea PopescuPartner, Co-head of Corporate DepartmentCMS [email protected]

Rodica ManeaSenior Associate, Corporate DepartmentCMS [email protected]

26

The Romanian M&A Market

Target Company


Deal Value (€m)

Banca Comerciala Romana (BCR)

Finance & Insurance Minority stake purchase (30.12%)

Erste Group Bank Austria 514

BRD - Groupe Societe Generale

Finance & Insurance Block trade (5%) Artio Global Management; Institutional Investors

United States; n.a.

108

A&D Pharma Wholesale & Retail Trade

Minority stake purchase (30.5)

A&D Pharma Romania 44

Adama Group Construction Acquisition (69.22%) Immofinanz Group Austria 42

SkyTower office building

Real Estate* Acquisition (100%) Raiffeisen Group Austria 35

Proprietatea Fund


Proprietatea Fund Romania 30

Astra (Astra-Uniqa)

Finance & Insurance Block trade (27%) Nova Trade Romania 25

Generali Asigurari


Generali Holding Vienna Austria 24

Green Group Romania Holdings Limited

Services Acquisition EBRD; Global Finance International; Greece

24

Auto Italia Showroom; Auto Italia Impex

Wholesale & Retail Trade

Acquisition (100%) Mediterranean Car Agency Israel 20

Top 10 Deals in Romania (2011)

300

200

0

Number of deals

238

189

223

162

1,700

0

3,620

2008 2009 2010 2011


2,363

1,6881,264

100

3,400

Deals by Value and Volume in Romania (2008-2011)



27

Russia

The DealWatch results show a very strong upward trajectory for Russian deal making both in volume and value terms suggesting that in Russia we may be on our way back to the way things were – which is good news.

What we do see is that a large number of the deals done here are in country transactions and many of the largest deals are transfers of minority stakes rather than transfers of the ownership or at least control of Russian companies. In this respect, the Unilever acquisition of Koncern Kalina and Walt Disney acquisition of Seven TV are perhaps better indicators for the health of the cross border market which seems to have held up strongly in 2011 although we wait to see whether the more interesting political landscape that emerged in Russia in the final weeks of the year, will have any sobering effect.

Most commentators believe that government policy will be a major driver in what happens to Russian M&A in 2012. The announced privatisation programme is a significant part of this. Privatisation has been much delayed as a result of the volatile situation on European stock markets and clearly the government intends to hold out for better valuations – which must be sensible – and this makes it difficult to predict the level of activity in deal making in 2012. There is a knock on effect of this delay also as the pipeline of major infrastructure projects and the M&A activity that these would spawn, will be held up too. Nevertheless, the programme did start in 2011 with the sale of 10% of the large state bank VTB and the sale of Freight One as the kick-off for the privatisation of Russian Railways and the government is clearly intending to pursue and even expand the privatisation project.

Finance & Insurance sector had a strong year achieving 10.6% of the Russian deal market in value terms and equal second place with energy and mining in volume terms. Some of the value performance was on the back of transactions concerning the Bank of Moscow that was a big story in Russia last year and was in due course transferred to VTB after receiving a massive government bail-out. But Sberbank was active – acquiring Troika Dialog and reaching out to new markets in Switzerland and Austria and we may see more of this as European banks continue to struggle with stricter capital requirements and the pressure exerted by the receipt of substantial government bail-out finds. We also saw VTB’s first phase of privatisation. The large number of deals recorded by DealWatch in this sector may herald the start of the much anticipated consolidation in the Russian banking sector – something that has been on hold since the crisis began but which is widely expected given the enormous fragmentation in this sector.

28

Energy and mining is conventionally the strongest sector in Russia, always in value terms and generally in volume terms too. What is interesting is the emerging strength of the consumer-facing space including services, telecoms, retail and the associated activities such as transportation and warehousing. There is a widespread expectation that the consumer driven sectors will attract a high level of interest in 2012 as investors look at the favourable fundamentals of the Russian consumer economy.

There seemed to be a tail off in deal activity in the second half of 2011 – not measured by the DealWatch statistics – that may coincide with the performance on European stock markets and showing the effect of Eurozone problems and European sentiment generally on the Russian M&A market and inward investment. It is difficult to say but there is a strengthening belief that Russia is far from insulated from what goes on in Europe that was not always thought to be the case before. DealWatch notes that the US and France were leading investors in deal number terms in 2011 and certainly Europe features much more strongly than Asia in terms of volume of transactions with Russian targets. While most investment activity we observe is strategic and the market seems to remain healthy enough for that, financial investment remains very subdued in comparison to pre-crisis levels.

It is difficult to predict whether Russia will dominate the Emerging Europe deal list in 2012 as it did in 2011. At the time of writing there is something of a waiting game to see what happens after the presidential elections in March: surveys indicate that ‘political risk’ (quite apart from the recurring concerns about ‘corruption and bureaucracy’) is a – or even ‘the’ – major concern of investors in Russia and any change of administration exacerbates this issue, the more so a change that occurs against the background of quite intensive public pressure to reform.

David CranfieldPartner, Head of Corporate DepartmentCMS [email protected]

29

The Russian M&A Market

1,500

1,000

0

Number of deals

1,176

696

1,026

1,493 150

100

0

72

2008 2009 2010 2011


Deals by Value and Volume in Russia (2008-2011)

33

9097

500 50

30

Deals by Sectors in Russia (2011)

Number of Deals by Sectors in Russia (2011)

Manufacturing, 279

Mining, 184(incl. oil & gas)

Services, 144

Wholesale & Retail Trade, 105

Telecom& IT, 119

Food &Beverages, 89



Utilities, 76

Construction, 79

Other, 44


Share of Sectors from Total Value of Deals in Russia (2011)

Manufacturing 10.6% Finance &Insurance 10.6%


Mining 40.6%(incl. oil & gas)

Telecom& IT 6.3%

Utilities 8.3%

Other 4.2%

Transportation &Warehousing 6.9%

Food &Beverages 3.7%

Construction 3.2%

31

Top 20 Deals in Russia (2011)

Target Company


Deal Value (€m)

Polyus Gold Mining (incl. oil & gas) Acquisition (89.14%) KazakhGold Kazakhstan 8,545


Norilsk Nickel Russia 3,358

Freight One Transportation & Warehousing

Privatisation (75%) United Cargo Logistics Holding Russia 3,167

Novatek Mining (incl. oil & gas) Minority stake purchase (12.09%)

Total S.A. France 2,901

Bank of Moscow; Capital Insurance Group

Finance & Insurance Privatisation VTB Bank Russia 2,555

LukOil Mining (incl. oil & gas) Minority stake purchase (6%)

n.a. n.a. 2,525

VTB Bank Finance & Insurance Privatisation through stock exchange (10%)

China Investment Corporation; Generali Group; TPG Capital

China; Italy; United States

2,440


Norilsk Nickel Russia 2,317

Metalloinvest Mining (incl. oil & gas) Minority stake purchase (20%)

VTB Bank Russia 1,938

Enisey Production Company

Mining (incl. oil & gas) Acquisition (100%) Igor Altushkin; Ruslan Baisarov Russia 1,748


Interros Russia 1,544


Metalloinvest Russia 1,517

LukOil Mining (incl. oil & gas) Minority stake purchase (2.94%)

n.a. n.a. 1,259

SABMiller's Russian and Ukrainian beer businesses

Food & Beverages Acquisition Anadolu Efes Biracilik ve Malt Sanayi

Turkey 1,101*

X5 Retail Group Wholesale & Retail Trade

Minority stake purchase (11.14%)

n.a. n.a. 1,067

Yandex Telecom & IT IPO (17.87%) Morgan Stanley United States 1,018

Russian Trading System Stock Exchange (RTS)

Finance & Insurance Merger Moscow Interbank Currency Exchange (MICEX)

Russia 940

Lenta Food & Beverages Acquisition (44%) EBRD; TPG Capital; VTB Capital International;United States;Russia

844

Polyus Gold Mining (incl. oil & gas) Minority stake purchase (10%)

Suleiman Kerimov Russia 829

Wimm-Bill Dann Foods

Manufacturing Minority stake purchase (18.83%)

PepsiCo Inc. United States 770



32

Slovakia

Prior to the global economic crisis most M&A transactions in Slovakia were initiated by private equity companies which funded the transactions primarily from borrowing.

As the conversion rate was favourable, it was not unusual to borrow up to 80 percent of the value of the transaction. With the onset of the economic downturn banks lost their appetite to finance more than 50% of the value of a deal. Their confidence to lend more is gradually returning, however, but at a slow pace. There has been a number of mergers and acquisitions within groups, including cross-border ones, but mainly with the aim of lowering operation costs and increasing efficiency.

Up until the middle of 2010 sellers tended to overvalue their businesses in the light of pre-crisis economic results. Buyers, however, looked at realistic numbers, also in the context of economic forecasts. The number of deals has not changed over the last three years (46 in 2011), but their value has been steadily decreasing. The total value of transactions in 2008 was approximately €1.185 billion, in 2010 €290 million, and in 2011 €235 million, one fifth of the 2008 figure.

Some recent transactions include PosAm becoming a part of Slovak Telekom, which in turn merged with T-Mobile in the summer of 2010, and the Czech company Skanska acquiring construction company Skybau.

The energy sector dominated in 2011 when the privatisation of several heating companies started. However, the privatisations have been stopped due to the collapse of the Slovak coalition government. The acquisition of Grafobal Group Energy (GGE) by Czech company Tenergo Brno went ahead, as did the acquisition of the West-Slovakian heating company Comeron SPS by heating company Cofely, a member of the major international energy group GdF Suez.

The top ten deals by value in 2011 were mainly in the services and media & entertainment sectors. Kempinsky Hotel River Park and Grand Hotel Kempinski High Tatras were bought by Best Hotel Properties; the deals were valued at €66 and 31 million respectively. The Luxembourg M7 Group bought all the shares in Skylink in Slovakia (€31 million), Cinema City International acquired 100 percent of the shares in Palace Cinemas Slovak Republic (€4 million), and Time Warner Inc. purchased a minority stake in Central European Media Enterprises in Slovakia (€6 million).

33

Other significant deals included the 100 percent acquisition of Československá obchodná banka dôchodková a správcovská spoločnosť by Poštová banka in Slovakia (€15 million) and the purchase of a minority stake in construction company Prigan Holding by the European Bank for Reconstruction and development (€9 million). Slovak Penta Investments bought a minority stake in Dexia banka Slovensko (€5 million).

In comparison to Poland and the Czech Republic, Slovakia does not possess great potential for future acquisitions. The optimal deal size in Slovakia is considered to be approximately €10 million, and although many aspire to higher value deals (over €30 million), these are exceptional and usually linked to the privatisation of government-owned property. The future of privatisations in Slovakia is in the hands of the politicians who will take over the government after the recent parliamentary elections in March this year.

Analysts expect the market to pick up in 2012 thanks to an increased volume of manufacturing sales. This should improve opportunities for mergers and acquisitions, as should the fact that many investors have been holding back and waiting for conditions to improve. Some investors are counting on a second wave of restructuring where they believe they will be able to take advantage of “good deals”.

Some analysts are forecasting that the majority of deals will take place in the information technology and innovative sectors. New innovative products, services and know-how are likely to be more tempting for investors than traditional ones.

Petra Starková Partner, Head of Corporate DepartmentCMS [email protected]

Ian ParkerPartner, Corporate DepartmentCMS [email protected]

34

The Slovakian M&A Market


Deal Value (€m)

Aupark Bratislava Real Estate* Acquisition (50%) Unibail-Rodamco Netherlands 151

Logistics park in Lozorno


72

Kempinski Hotel River Park

Services Acquisition (100%) Best Hotels Properties Slovakia 66

14 retail parks Real Estate* Acquisition (100%) Czech Property Investments Czech Republic

66

Sekyra Group’s Slovak projects

Real Estate* Acquisition (100%) JF Hamilton Group France 60

Grand Hotel Kempinski High Tatras

Services Acquisition (100%) Best Hotels Properties Slovakia 31

Skylink in Slovakia Media & Entertainment Acquisition (100%) M7 Group Luxembourg 31

CSOB d.s.s. Finance & Insurance Acquisition (100%) Postova Banka Slovakia 15

Prigan Holding Construction Minority stake purchase

European Bank for Reconstruction and Development

International 9

Central European Media Enterprises in Slovakia

Media & Entertainment Minority stake purchase (4.9%)

Time Warner Inc United States 6

Top 10 Deals in Slovakia (2011)

75

50

0

Number of deals

53

4448 46

1,000

0

1,185

2008 2009 2010 2011


286 290

235

25

1,500

Deals by Value and Volume in Slovakia (2008-2011)

500



35

Ukraine

As the statistics illustrate, 2011 was not a banner year for M&A transactions in Ukraine. The volume of reported deals was at its lowest since 2008, and the total value of those deals – although higher than the lowest point in 2009 (when the economic crisis was at its worst) – was significantly lower than in 2010.

The year witnessed some very interesting cross-border transactions, not the least of which was nearly €1 billion privatisation of Ukrtelecom, the state-owned fixed line telephone monopoly, by EPIC. Although a fair amount of the other transactions that occurred could technically be classified as cross-border, by far the majority of all transactions in 2011 were in fact among Ukrainian and/or Russian buyers and sellers, whether acting through their foreign holding companies or locally. In fact, the Ukrainian market has not really seen the level of interest by foreign strategic investors that it witnessed in the years leading up to the crisis, with only a handful of transactions involving foreign strategics in the last few years. Investors in certain industries, particularly in the banking sector, have been hard hit, and the overall negative economic outlook, coupled with what many view as a declining level of democracy and a failure by the government to institute real reforms and stamp out corruption, have held back significant foreign investment. Despite this, in 2011 the market witnessed a number of transactions involving foreign private equity firms. These included a transaction by a seasoned veteran to the Ukrainian market, Horizon Capital, which together with Hartwall Capital, purchased a 60% stake in the Inkermann Wine Factory. In addition, Advent International, a US-based private equity firm, acquired a controlling stake in Isida-IVF, the Ukrainian based provider of medical treatment and healthcare services. Also, ADM Capital recently announced a US $35 million investment into a joint venture with Concern Galnaftogaz to help develop its chain of petrol filling stations.

So what does 2012 hold for the Ukrainian M&A market? Ukraine has the underlying fundamentals to make it an interesting country for investment – not only by Ukrainian and Russian investors, but particularly by strategic investors – in the medium to long-term. It has a large population with plenty of room for growth amongst the middle class, and offers agricultural resources that are in short demand in the wider world. Opportunities also exist in such areas as conventional/alternative/renewable energy, infrastructure, telecommunications, the IT sector and consumer products, to name but a few. In many of these sectors, in order for the leading companies to begin realising their potential, significant investments as well as leading expertise are required, and in the near term this can often come from foreign strategic investors.

36

Although we do not expect a significant increase in the volume or the value of deals in 2012, we can already see that the types of players in the market, as well as the sectors involved, are likely to be similar to 2011. For example, we expect to see more market consolidation amongst domestic businesses, particularly in sectors such as agriculture/livestock, mining/metallurgical, financial services and in the telecommunications and IT sectors, with Russian investors likely to continue to play a leading role. A few privatisations, particularly in the power sector, are expected and will provide existing players in the market an opportunity to increase and consolidate their holdings. We also expect to see existing private equity players play an increasing role, particularly with respect to companies that have difficulty in raising financing or accessing the capital markets through IPOs in Warsaw and other platforms. And we may even see some exits by private equity players to foreign strategics, which will only help underscore to others the potential for growth that Ukraine has to offer. In short, whilst 2012 will again not be a banner year, we are likely to see more foreign investors exploring – if not entering – the market than in the previous few years.

Adam MycykPartner, Corporate DepartmentCMS [email protected]

37

The Ukrainian M&A Market


Deal Value (€m)

Ukrtelecom Telecom & IT Privatisation (92.79%)

EPIC Austria 950

Azot Manufacturing Acquisition (95.63%) Group DF Ukraine 580

Donetsk ElectroMetallurgical Works

Manufacturing Acquisition (100%) Mechel Steel Group Russia 410

Severodonetsky Azot

Manufacturing Acquisition (100%) Group DF Ukraine 370

Nadra Bank Finance & Insurance Acquisition (89.97%) Dmitry Firtash; Ivan Fursin Ukraine 304

PrivatBank Finance & Insurance Minority stake purchase (24.99%)

Triantal Investments Cyprus 299

SABMiller’s Russian and Ukrainian beer businesses

Food & Beverages Acquisition (100%) Anadolu Efes Biracilik ve Malt Sanayi

Turkey 275*

XXI Century Investments Public

Services Minority stake purchase (30.85%)

n.a. n.a. 129

Marine Specialized Port of Nika-Tera

Transportation & Warehousing

Acquisition (100%) Group DF Ukraine 110

Black Sea Industries Food & Beverages Acquisition (100%) Kernel Holding Ukraine 109

Top 10 Deals in Ukraine (2011)

500

250

0

Number of deals

442

403422

323

5,000

0

4,542

2008 2009 2010 2011


3,440

6,232

4,747

10,000

Deals by Value and Volume in Ukraine (2008-2011)



38

CMS and DealWatch

CMS

CMS aims to be recognised as the best European provider of legal and tax services. Clients say that what makes CMS special is a combination of three things:– strong, trusted client relationships– high quality advice– industry specialisation We combine deep local expertise and the most extensive presence in Europe with cross-border consistency and coordination. CMS has a common culture and a shared heritage which make us distinctively European. CMS operates in 30 jurisdictions, with 55 offices in Western and Central Europe and beyond. CMS was established in 1999 and today comprises 600 Partners and over 2,800 lawyers. CMS is headquartered in Frankfurt, Germany.

www.cmslegal.com

DealWatch

DealWatch was designed to the exact requirements of top M&A (mergers and acquisitions) dealmakers. It is a useful tool for extracting deal information, preparing comparisons and company valuations, making rankings and analyses. It gives M&A professionals tools to get to deals first, and to make better valuation decisions once they get there. DealWatch helps to get mandates and build the business.

DealWatch offers: — The News section, prepared by the team of financial journalists, includes articles unraveling the

dealmakers’ plans and intents. — The Database section encompasses detailed transaction information, background and company

valuations and presents it in a tabular, database form. — The LeagueBoard is a tool for generation of rankings of financial and legal advisors taking part in

the transactions. — The Analysis section stores analytical reports and research documents. — Finally, the DealMonitor monitors the deals that are about to happen and helps identifying the

hottest M&A markets.

DealWatch currently covers the Central and Eastern Europe, Southeastern Europe, the Commonwealth of Independent States, Central Asia, India, China and Latin America.

The database is designed to help investors and business owners quickly identify future M&A deal and Equity Capital Market (ECM) activities, trends and opportunities in the emerging markets. DealMonitor is a component of the DealWatch product, offered as a part of the company’s flagship Emerging Markets Information Service (EMIS) product line.

DealMonitor, a component of the DealWatch is an exclusive database and forecasting tool designed to help investors and business owners quickly identify future M&A deal activities, trends and opportunities in the emerging markets. Equipped with solid database and powerful graphical visualizations, DealMonitor presents global heat maps of the most active M&A markets, worldwide, in a clear, comprehensible manner.

www.securities.com/dw

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