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International Internet Magazine. Baltic States news & analytics Thursday, 28.03.2024, 13:37

Baltic merger and acquisition market grows in 2016

BC, Riga, 01.06.2016.Print version
The Baltic merger and acquisition (M&A) market had been active at the beginning of 2016, contrary to the global market, Prudentia consultancy said in its latest M&A Folio, reports LETA.

In the first four months of this year, 64 transactions were announced in the Baltics, which is by 28% more compared to the same period in 2015. On the global scale, on the number of transactions in first quarter of 2016 compared to the same period in 2015 decreased on average by 21%.

 

”During the analyzed period industrial or commercial services have been the most demanded target industry in the Baltics, whereas in 2014 and 2015 manufacturing was the leading sector. This year has started very actively for frequently discussed IT&T industry. In first four months of 2016 IT&T sector accounted for 20% of the total deal count, while in the same period one year earlier it was only 9%. Such a growth indicates that the market sees a potential in this industry, therefore sector players are motivated to strengthen their market positions,” Prudentia said in its report.

 

Increase in lending and the adaptation to recent geopolitical shock makes the Baltics more attractive both for local and cross-border investors. Also the increase of household purchasing power should boost the consumption of goods and services. The average real wage in Latvia, Lithuania and Estonia rose by 7.4%, 6% and 6.9%, respectively. Therefore there is a foundation to believe, that in the next eight months the Baltic M&A market will continue to be active, Prudentia said.

 

In addition, recent invitation for Latvia to join the Organization for Economic Co-operation and Development (OECD) should improve investor confidence about the commercial environment in this country, which in the medium term will most likely positively reflect in the Latvian M&A market.

 

Prudentia produces M&A Folio or an overview of the Baltic M&A market every four months, reviewing the overall trends and specific industries. The latest report deals with the situation in the Baltic retail sector.

 

”The Baltic retail sector is very concentrated, especially in Lithuania and Latvia. In Lithuania Maxima and IKI control 40% and 16% of the market, respectively, but in Latvia Rimi and Maxima each owns 30-40% of the market. Whereas in Estonia the largest retail chains have ensured a fierce competition between themselves, where Coop (previously ETK), Maxima, Rimi and Selver control 20%, 18%, 17% and 16% of the market, respectively," Prudentia said.

 

”In such a competitive environment it is possible to notice the construction of new stores and logistic centers, presence of innovative shopping alternatives (food delivery to home, self-service registers) and market consolidation. For example, last year Vita Markets purchased 15 new Elvi chain stores, in 2014 Mego acquired Palink (IKI chain with 51 stores), in 2012 Lithuanian Maxima entered Spanish market via DinoSol acquisition and in 2011 Maxima purchased Polish Aldik Nova (24 stores).

 

„Due to the global and Baltic M&A trends, market share concentration and unequal distribution within individual states it is inferable, that consolidation can be anticipated also in the future. Smaller retailers will most likely continue to merge within individual states, whereas on a global scale we might be able to see such mega-deals as the merger of Ahold and Delhaize,” the report concludes.

 






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