22 Jan 2021

Emerging Europe M&A eyes rebound after strong end to year

Overall activity slowed to a decade low, though Q4 was busiest since 2016, according to research by CMS

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M&A activity in emerging Europe during 2020 plunged to its lowest levels in a decade as the coronavirus pandemic dampened deal-making, according to a report from CMS.

Deal volume fell 13% to 1,705, with the value of those deals tumbling by 16% to just short of €61bn, the data showed. That was the lowest amount of transactions in the region at any point in the past 10 years, CMS said – though the slowdown reversed in the fourth quarter, with €24bn of deals getting over the line, the highest Q4 since 2016.

Horea Popescu, head of CMS’s CEE corporate M&A practice, said: “Overall, the region responded quickly and firmly, and the economic effects were not as severe as they might have been previously. Towards the end of 2020, we saw people rushing to sign deals that they had been unable to complete earlier in the year. We saw this trend pick up in the autumn and there is a decent pipeline of activity in most countries which is a good sign for 2021.”

Amid the disruption, some winners emerged. The Telecoms & IT sector saw the number of transactions increase by 11% to 333 deals – worth roughly €13bn – amid a growing need for faster digitisation as a result of the pandemic. That made it the most active of all M&A segments by deal volume and second highest by value.

Some countries were also more impacted than others. Poland, for instance, was the only country to see growth in both deal volume and value, edging up 9.3% to 282 deals and 6.6% to almost €12bn. That was driven in part by two landmark deals – French telecoms group Iliad’s acquisition of Polish mobile operator Play Communications, and Polish e-commerce business Allegro’s listing on the Warsaw Stock Exchange. 

Stefan Stoyanov, head of M&A Database at emerging market research provider EMIS, which collaborated on the report, said: “Despite Covid-19’s devastating impact on 2020, the emerging Europe region proved to be very resilient and outperformed other places similarly affected by the pandemic. There were key strategic deals featuring foreign investors in many of the region’s countries we reviewed, and private equity activity remained robust.”

Private equity deals ended the year in line with 2019, seeing 319 transactions compared to 318 a year earlier, albeit with the value of those deals declining by 11%. 

Graham Conlon, head of private equity for CEE and CIS at CMS, said: “We haven’t seen any change in the appetite of private equity funds and anecdotally they were busier than ever in the second half of 2020.”

Key strategic developments in the region last year included: