M&A breakdown
2018 was another average year for mergers and acquisations. We break down the numbers
1 Transaction number decreased while transaction volume increased
In 2018, especially with the influence of private sector transactions, total transaction value increased while the number of transactions stood at 191, a significant decrease compared to 2017. In 2018, a total transaction volume of $9.3 billion was created with 83 transactions. Among the transactions whose value was announced, there were two exceeding one billion dollars while the number exceeding $100 million was 12. The transaction intensity in SMEs continued in 2018 as in previous years.
2 Foreign investors creaed more transaction volume than locals
In 2018, foreigners maintained their position against domestic investors with 69 percent of the total transaction value. As in previous years, the number of transactions carried out by local investors was more than foreigners at 124. The number of transactions by foreign investors fell to the lowest level in the last 9 years at 67.
3 Only 11 percent of the transactions are public
In 2018, while the number of private sector transactions was 173, the number of public sector transactions was 18 and the total value of private sector transactions was $8.3 billion compared to one billion dollars in public sector transactions. The share of public sector transactions in total transaction volume increased to 11 percent compared to 2017. Domestic investors had a significant weight in public transactions. The biggest public sector transaction was Dogus’s acquisition of Afyon Seker Fabrikasi for $177 million.
4 Decline in interest of private equity funds in Turkey
The interest of private equity funds in Turkey had increased significantly in 2017. In 2018, the number of transactions decreased to 41 from 82 and the share in the total number of transactions decreased to 21 percent from 33 percent. On the basis of transaction volume, the share of private equity funds in total transaction volume declined significantly. In 2017, financial investors signed transactions worth $1.2 billion. This year, it dropped significantly to $287 million.
5 ICT and finance sectors took the lead
In 2018, the financial services sector took first place both in terms of trans- action volume and in the number of transactions. The information sector topped the list, as in 2017. As a result of the biggest transaction of the year, Deniz Bank-Emirates NBD, the financial services sector ranked first in terms of transaction volume. On the other hand, the transaction volume of the energy sector, which ranked first in 2012, declined significantly due to smaller privatization and private sector transactions compared to previous years.
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$10 billion worth of transactions are expected in 2019
In 2019, it is expected that small and medium-sized transactions will continue to maintain their weight in mergers and acquisitions while some large-scale transactions are also expected. Sales operations of companies transferred to the Saving Deposit Insurance Fund is one of the issues that may affect the volume of mergers and acquisitions. Accordingly, similar to 2018, approximately $10 billion worth of transactions are expected in 2019.
7 Public sector transactions may increase in 2019
Major public sector transactions which are likely to occur in 2019 are the sales of companies transferred to the Saving Deposit Insurance Fund, SDIF, the ports of the Turkey Maritime Organization, various electricity generation assets of the EUAS and the privatization of Spor Toto. If these transactions are completed in 2019, the volume of public sector transactions may be expected to exceed 2018.
8 Export-oriented manufacturing sector will stand out
The energy sector is expected to be among the dynamic sectors in terms of mergers and acquisitions due to expected privatizations. In addition, merger and acquisition activity in food and beverage, export-oriented manufacturing and ICT will continue to be more intense compared to other sectors.
9 Political developments had biggest impact on M&As
According to a survey among businesspeople, 24 percent of participants stated that political stability affected M&A transactions. Another 22 percent said the domestic economic environment affected their M&A decision making, interest rates and developments on exchange rates were key factors for 19 percent and growth expectations for 15 percent. These factors are followed by regional political developments at 11 percent and developments in international markets at 6 percent.
10 Business world is negative about investment environment in 2019
Due to fluctuations in interest and exchange rates, increasing risk perception in emerging markets, political uncertainties in Turkey’s region and their potential impact on the Turkish economy, only 6 percent of participants were positive about the investment climate in 2019. 41 percent think that the investment environment in Turkey will be stable in 2019 while 35 percent say it will be negative. The percentage of those who think it will uncertain is 18 percent.