|
|
FOR
IMMEDIATE RELEASE
Report On Emerging Markets Deal Activity Spotlights Latest Sector Performance and Ranks, Cites Hefty Decline in Total Deal Value
Warsaw, December 8, 2008 - According to the DealWatch database, there were 2,041 M&A deals registered in the Emerging Markets in Q3/2008, as of November 15, 2008. Compared to the respective period of 2007, the M&A activity stood flat - the number of transactions fell by 1%. However, the total deal value declined by 12.3% y/y to below USD 159.7bn. In the Q1-Q3/2008 period, the number of transactions surged by almost 20% y/y to over 6,100, but still their aggregate value tumbled by 31% y/y to USD 528.6bn, Dealwatch reported in its latest report.
"The financial crisis had a clear negative impact on M&A market. Although valuations fell and the Emerging Markets are full of acquisition opportunities, investors applied a "wait-and-see" approach, which should remain in place until the credibility of the financial market is completely restored. In this situation, alternative sources of funding like PE or VC might flourish," said Jakub Siekierzyński, head of DW M&A research.
The most active target countries were the BRIC countries: Russia (331 deals in Q3), China (281), India (182) and Brazil (160). However, smaller markets like Poland (137), Ukraine (112), Chile (90) or Turkey (71) have also shown good performance. Compared to Q3/2007, India became number three, and Ukraine dropped to sixth position, as Brazil also overtook the eastern European country in Q3/2008. Poland advanced from sixth place to fifth, also ahead of Ukraine.
BRIC countries were also top buyers. Russian companies carried out the largest number of transactions (321), and were followed by Chinese investors (236). Indian and Brazilian firms took third and fourth place with 191 and 139 deals respectively. Poland came in fifth with 117 deals and was closely followed by the sole 'outsider' - the USA (114 transactions). Compared to Q3/2007, the largest drop was seen in activity by the USA and Ukraine, as the former fell from third position in Q3/2007 to sixth in Q3/2008, while the latter from fifth to seventh, accordingly. BRIC countries in general were also among the top buyers in Q3/2007.
Over 53% of deals (1,083) carried out in the Emerging Markets were acquisitions of majority stakes. Compared to the respective period of 2007, the percentage dropped from 61%, but acquisitions were still the most frequent transaction type. Privatizations witnessed a significant drop, as there were only 75 such deals carried out in Q3/2008, against a solid 103 in the respective period of 2007. Lowered valuation of companies coupled with poor market conditions prevented state treasuries worldwide from selling national companies to investors at attractive prices or delayed this process.
Analyzing the sector breakdown, the largest number of deals - 577 - was carried out in manufacturing, compared to 607 in Q3/2007. Information and IT came second in Q3/2008, with 237 deals, versus 260 in the comparative period of 2007. Finance and insurance came in third with 234 transactions, compared with 260 such deals in Q3/2007. Given that the structure of the industry breakdown has not changed significantly, and analyzing preliminary data for Q4/2008, we predict manufacturing to remain the most popular sector for M&A deals also in the coming quarter.
The latest DealWatch report is available to subscribers of the DealWatch service at http://www.securities.com/dw/.
