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M&A activity in CEE and Czech Republic – 4Q 2022

18. 1. 2023Jiří Hlaváč

The number of transactions on the M&A market in the Czech Republic fell to 11 from 21 in the fourth quarter year-on-year, and their volume also decreased. Thus, transactions worth EUR 135 million (approx. CZK 3.3 billion) took place in the Czech Republic or involving the Czech Republic in the fourth quarter, compared to EUR 1.74 billion (approx. CZK 41.9 billion)[1] in the fourth quarter of 2021. This is according to statistics from the consulting company TPA. Throughout the Central European region, the situation on the M&A market is affected by the impact of the war in Ukraine.

The most significant transaction with available data in the Czech Republic in the fourth quarter of last year was the conclusion of an agreement on the purchase of the loan portfolio of Sberbank CZ with Česká spořitelna. “The insolvency of Sberbank CZ is one of the largest insolvencies in the history of the Czech Republic in terms of the number of creditors and financial volume. According to the available information, the complete settlement of the transaction should take place in the first half of 2023,” said Jiří Hlaváč, partner at TPA Valuation & Advisory.

Across the Central European region (Albania, Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Poland, Romania, Slovakia, Slovenia and Serbia), the total number of transactions increased year-on-year to 159 from 126. The volume of these transactions, however, dropped significantly year-on-year, to EUR 2.95 million from EUR 11.5 million.

The largest announced transaction in the region in the fourth quarter of last year was the takeover of Polish electricity distributor PKP Energetyka by the Polish state-owned energy company PGE Polska Grupa Energetyczna. “The Polish government is thus continuing the trend set at the beginning of 2022 of strengthening its energy security through several transactions. The previous owner of PKP Energetyka Sp was the UK-based CVC Advisers Ltd., a company focused on private equity investments,” Hlaváč said.

Across the region, the number of transactions fell by 26 quarter-on-quarter and the volume of transactions fell by EUR 11.1 billion compared to the third quarter. In the Czech Republic, the number of deals fell by 19 quarter-on-quarter (from 30 to 11), with a EUR 31 million drop in volume (EUR 166 million in Q3 vs. EUR 135 million in Q4).

“In 2022, the region saw a decline of almost 25 per cent in realized transaction volume compared to 2021. The computer software, automation, renewables or telecoms sectors remain attractive to investors, as does the real estate sector in the long term, while we expect increased attractiveness in food security, arms manufacturing and material supply. The situation on the M&A market will be further affected by the conflict in Ukraine, which will be a constraint for potential investors in the form of uncertainty of future developments in various sectors across the region,” Hlaváč added.

2022 also saw the lowest median EBITDA multiple in the CEE region since 2008, at 7.0. This ratio was similarly low in 2009 and in 2017, when it reached 7.1. By comparison, in 2021 the median multiplier value was 10.0 (the highest multiplier was in 2008, when it reached 10.8).

[1] In the fourth quarter of 2021, MALL Group AS and WE|DO s.r.o. were sold, the buyer was the Polish group Allegro. The value of the transaction was almost EUR 1 billion. At the same time, there was a significant decrease in the number of transactions and transactions for which the price was known.

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