The deal of the year in Romanian online media

Capital Partners, the country’s leading boutique investment firm has provided assistance in the sale of a minority interest in InternetCorp. The representatives of the company say the first talks began in November 2008. “In December 3TS has expressed a clear interest in buying a minority stake in the company, and that is when we estimated the deal would be closed at some point in April-May 2009”.

“It’s clear that the worsening of the local and global economic environment has only put off the completion of the deal. Therefore, although the first term-sheet was drafted in January 2009, it was signed in April 2009. The completion date was postponed, in order to allow an assessment of the company in this struggling year, and it was concluded in November 2009,” said Victor Capitanu (photo), partner at investment firm Capital Partners.

Due to the current economic climate, the negotiation process wasn’t intensely competitive . According to Capitanu, 4-5 companies have expressed their interest in the media company, both investment funds and strategic firms, and 3TS variant was deemed as the most suited by InternetCorp owners.

“Unlike previous deals we assisted, the competition hasn’t been very stiff. As we all know, the mergers and acquisition market has shifted over the past 12 months from a seller’s market to a buyer’s market”, the representative of the investment firm commented.

Capital Partner was the lead adviser in the eJobs – Tiger deal in 2007, a deal that faced an intense competition, Victor Capitanu continued.

He confirmed that the valuation of the online companies dropped by roughly 50% compared to the same period of last year. “However, the online sector is still seen as a field with high growth potential and valuation multiples remain high compared to other sectors”, said Capitanu. He stressed that the price of the deal represented a mix between owners’ and management’s capacity to generate cash flow and the online sector’s growth sector in Romania, who lags far behind Europe.

Capitan said he expected a consolidation of strong players, while smaller players might be absorbed or even disappear from the market.