The global merger and acquisition market fell by a third in 2008, after five years of constant growth, in the context of bearish capital markets and credit lockup. Wall Street lists the 10 biggest deals in the global and domestic M&A landscape.

Canceled deals in 2008

Global merger and acquisition volume hit a three-year low, totaling 2.89 trillion dollars, according to preliminary data from Thomson Reuters. The most dramatic sign of M&A market fall was the record number of canceled deals – more than1,100 – versus 870 a year earlier.

M&A volume slid 44% in fourth quarter, making it the weakest quarterly volume in the last four years.

The low number of mergers in 2008 has led to a sharp fall of fees charged by investment banks, down 32% in 2008, against previous year.

M&A market shrunk in most of the regions in 2008, except for China and Brasil who showed 25% and 93% gains in merger and acquisition volume, compared to prior year.

Merger volume dropped 38% in USA in 2008, in Europe by 29% and in Asia-Pacific by 12%.

Contraction of M&A market in Romania

In Romania, the volume of merger and acquisition underwent a contraction in 2008, compared to a year earlier. Experts in investment banking forecast a meltdown in real number of transactions.

Value of mergers and acquisitions completed in Romania in first nine months reached 1.426 billion dollars, after 126 million euros registered in third quarter, weaker than last year’s Q3, according to Wall-Street calculations.

“We expect a sharper contraction of merger volume in 2009, versus 2008, whereas the number of mergers and acquisitions will rise. Reasons are obvious, all being linked to global financial downturn and its negative impact in domestic economy,” Ciprian Paltineanu (photo), head of UniCredit CA IB Romania told Wall-Street.

More entrepreneurs and investors will be forced to sell the stakes they hold in Romanian companies, but the price assessment of the stakes will be lower compared to this year or to 2007. Therefore, the mergers’ value will surely shrink.

“In investment banking industry, he said, I expect it to be marked by corporate reorganizations and public-to-private deals next year”.

Both the number of deals and their size dropped this year compared to 2007. Investment bankers polled by Wall-Street say the financial crisis may take its toll on Romanian M&A market as well.

“Everything is connected to international markets’ status – all investors lag in a wait-and-see mode. In times of uncertainty, as we are experiencing today, few are those who actually take strategic actions, like an M&A deal. The waiting, though, preps a new flurry of deals after the sentiment calms down – we already see it coming”, said Doru Lionachescu, primary partner at one of the biggest advisory firms for mergers and acquisitions, Capital Partners.

Doru Lionachescu signals how the international crisis gripped the M&A market in Romania, forecasting an indecisive long-term tapping, both from vendors and buyers. “On the other hand, the theory says that these gloomy times create the premises of profit-making acquisition opportunities; we shall see how and when this will take effect in Romania,” Lionachescu added.

Top 10 deals worldwide

The following scorecard lists the top mergers and acquisitions worldwide, based on values, compiled by Thomson Reuters.

1. Takeover of cigarette producer Philip Morris International by stockholders, in a bid estimated at 113 billion dollars. Philip Morris International acquired rival Rothmans Inc., in 2008 for 2 billion Canadian dollars, Rothmans being the second largest cigarette producer in Canada.

2. InBev’s purchase of US-based beer producer Anheuser-Busch, which holds half of US beer market, in a 60.4 billion dollar bid. JP Morgan Chase and Lazard were appointed as lead advisors in the deal.

3. Bank of America paid 48.8 billion dollars for the acquisition of Merrill Lynch, namely 29 US dollars/share, although the stocks were sold at 50 dollars in May and at 90 dollars in early January 2007. Merrill Lynch registered major write-down that exceeded 40 billion dollars, due to financial crisis that was unfolding across the US economy.

4. Swiss drug manufacturer Roche Holding purchased all stakes in its American partner Genentech Inc for 43.7 billion dollars. Before the deal, Roche was already holding a majority 55.9% in Genentech.

5. Takeover of Time Warner media giant by a group of shareholders, in a deal valued at 42.1 billion US dollars.

6. Verizon Wireless purchased Alltel for 28.1 billion dollars, thus becoming the biggest internet provider in United States, outcompeting AT&T. Verizon Wireless, who was 45% held by Vodafone, paid 5.9 billion dollars for Alltel and took over the company’s debts worth 22.2 billion dollars.

7. Drug company Novartis AG bought 77% stake in Alcon from Nestle in 2008, paying a roughly 27.7 billion dollars, in an effort to shore up the development of eye-care segment.

8. Royal Bank of Scotland Group was nationalized by the UK Government, in return of a 26.1 billion dollar financial aid.

9. UK-based Lloyds TSB took over HBOS, the largest mortgage lender in Great Britain, deal assisted by the British Government and evaluated at 25.4 billion dollars.

10. US-based Mars Inc purchased the world’s biggest chewing gum producer Wm Wrigley Jr Co for 23.2 billion dollars.

Top 10 deals in Romania

The 10 biggest corporate deals closed in 2008 are listed based on their headline value and their impact on the profile market

1. Asiban-Groupama

Groupama took over Asiban for 350 million euros, marking the biggest deal in the history of Romanian insurance market. The French insurer Groupama paid 350 million euros to BRD, CEC, Banca Transilvania and BCR shareholders for the third largest insurer in the local industry.

2. VIG-Unita

Vienna Insurance Group closes deal with Astra Uniqa Group, on full takeover of Romanian insurer by Uniqa. Austrian-based Uniqa paid a roughly 230 million euros for Unita.

3. Heineken – Bere Mures

The largest deal closed this year in FMCG industry was the purchase of Romanian producer Bere Mures by Dutch giant Heineken. The transaction was designed to consolidate Heineken’s leading position in Romanian beer market, by raising market share to 31%. Insiders say the deal was closed at 150 million euros.

4. Advent – LaborMed

American private equity firm Advent purchased via Eurogenerics company the Romanian drug manufacturer LaborMed in first quarter, for 123 million euros.

5. Lactalis – LaDorna

Lactalis acquired LaDorna dairy producer in April, the French manufacturer paying nearly 100 million euros.

6. PPF Investments – Ardaf and RAI

Generali PPF Holding acquired Ardaf and RAI, namely 72.7% and 99.9% respectively. PPF Investments fund cashed nearly 80 million euros from the sale of Ardaf and RAI to Generali PPF Holding.

7. DHL – Cargus

German-based DHL purchased internal express transportation company Cargus for 50 million euros, according to sources in the market and financial advisors.

8. New Europe Property Investments – IGD

Investment firm New Europe Property Investments bought two companies that hold 18 properties in different cities in Romania from a company controlled by Avrig 35, for 46.3 million euros.

9. Piraeus Bank – Capital Partners

The four partners of investment firm Capital Partners, namely Doru Lionachescu, Victor Capitanu, Andrei Diaconescu and Vlad Busila sold 51% stake of Capital Partners for 32 million euros to Greek-based investment division held by Piraeus.

10. Enterprise Investors -Simcor Oradea

Construction material producer and distributor Macon Deva bought 53.34% stake in Simcor Oradea and 40% in Simbeton, paying some 53 million euros.

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Despre autor este un cotidian de business fondat în 2005, parte a grupului InternetCorp, unul dintre cei mai mari jucători din industria românească de publishing online. Pe parcursul celor peste 15 ani de prezență pe piața media, ne-am propus să fim o sursă de inspirație pentru mediul de business, dar și un canal de educație pentru pentru celelalte categorii de public interesate de zona economico-financiară. În plus, are o experiență de 10 ani în organizarea de evenimente B2B, timp în care a susținut peste 100 de conferințe pe domenii precum Ecommerce, banking, retail, pharma&sănătate sau imobiliare. Astfel, am reușit să avem o acoperire completă - online și offline - pentru tot ce înseamnă business-ul de calitate.

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