Merger, acquisition deals bring in $12 billion in one year
An increase in mergers and acquisition deals was recorded in 2018, which totaled $12 billion, despite the volatility in markets exacerbated by currency attacks
SHAKEN by a tumultuous year with currency and market volatility, the Turkish economy still managed to have a productive year in mergers and acquisition deals, which recorded a 17 percent increase and hit $12 billion in total with 256 transactions. A report prepared by accounting giant Deloitte Turkey stressed the better performance in merger and acquisition deals in the Turkish market compared to the previous two years. According to the report, the 10 largest deals accounted for 63 percent of the total merger and acquisition value of $12 billion. The largest transactions include the Denizbank sale to the United Arab Emirates (UAE)-based Emirates NBD Bank for $3.2 billion.
ADDITIONALLY, Danish shipping company DFDS’ purchase of a 98.8 percent stake in the Turkish freight shipping operator U.N. Ro-Ro for $1.2 billion was also another big deal last year.
Forty percent of Oyak Çimento was acquired by Far Eastern cement producer Taiwan Cement Corporation (TCC) for an estimated $640 million. Moreover, Demirören Holding bought a leading Turkish media conglomerate, Doğan Medya, for $929 million - which was another major acquisition in the Turkish market last year.
Financial investors made 105 transactions with a value of nearly $1 billion, which was emphasized to be one of the lowest levels in the last decade. Small-scale venture capital firms and angel investor networks contributed to the aggregate financial transactions.
Seventy-four foreign investor transactions totaled $7.6 billion, while Turkish investors made 182 transactions with a value of $4.4 billion, accounting for 37 percent of total transaction value. In terms of the number of transactions, the deals of Turkish businesses made up 71 percent of the total 256 transactions.
The transaction volume of foreign investors recorded an increase for the second consecutive year and made the largest contribution to the merger and acquisition deals in the Turkish market last year.
The volume of deals by foreigners rose by 38 percent in 2018 thanks to the acquisition of Denizbank, U.N. Ro-Ro and Oyak Çimento. Turkish investors were observed to focus on their own portfolios.
Meanwhile, the merger and acquisition deals by European investors accounted for 49 percent of the total transactions although the number of deals by Europeans fell to 36 last year from 62 in 2015.
North American investors completed 16 merger and acquisition deals last year, while investors from the Asia-Pacific region and Gulf investors made respectively 13 and nine transactions. On the basis of transaction value, investors from the United Arab Emirates (UAE), Denmark and Taiwan made the largest investments. In terms of transaction numbers, investors from the U.S., Germany, Italy, the U.K., France and Sweden topped the list.
According to Deloitte’s report, financial investors carried out $1 billion in transaction volume and 105 transactions, which with respect to the annual transaction volume and number of transactions, showed a decline of 62 and 28 percent, respectively.
In the absence of private equity funds, the trading volume of financial investors and its contribution to the annual total trading volume was at its lowest level in the last decade.
Apart from some big outflows, it was a year in which private equity funds had difficulties in catching up new purchasing opportunities.
On the other hand, early stage investments by venture fund and angel investors increased the number of general financial investor transactions. These investors with 82 transactions accounted for 32 percent of the total number of transactions.
The largest transaction realized by financial investors was the acquisition of $200 million of shares of D.ream International by Temasek Holding and Metric Capital Partners. Deloitte Turkey Partner and Financial Consultancy Services lead Başak Vardar, said the variable macroeconomic conditions, which reduce the investor’s appetite and disrupt the purchasing process, quite forced the mergers and acquisition market in Turkey last year.
In addition, Vardar said, coming to the fore with their long-term perspective, foreign strategic investors made pinpoint investments.
“Even though the global economic slowdown forecast, the uncertainty in the trade investment, high debt levels of Turkish companies and current macroeconomic environment led to a prudent approach, we believe the investors will continue to make acquisitions in Turkey with their strategic perspective,” he noted.
“We expect some large-scale transactions in the technology, financial services, infrastructure, real estate and energy sectors. Production, energy, chemistry, food and beverage sectors will also be active,” Vardar added.