News release. Contact: Katarína Sekulová EY Tel.: Mobile:

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1 News release Contact: Katarína Sekulová EY Tel.: Mobile: EY M&A Barometer: The downward trend in the number of deals in CSE continued in H1 2017; however, this had no impact on the estimated value of closed deals Total deal volume in the region was almost US$20bn. The Slovak market experienced increased financial investor activity. Real estate deals dominated, in terms of number in the CSE region and deal volume in Slovakia. Bratislava, 30 September 2017 In H1 2017, the Slovak M&A market experienced a yearon-year decline in the number of deals by almost 35%. However, the situation in the Central and Southeast Europe (CSE) region was similar, with almost 28% fewer deals; albeit their volume increased considerably, by 42%, reaching nearly US$20bn. The CSE market was dominated by transactions in the areas of commercial real-estate, manufacturing and IT. The most active country was the neighboring Czech Republic, in the number of deals as well as their volume. M&A in CSE In the CSE region (Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and Turkey), there was a total of 473 deals closed in H (655 in H1 2016), with a total estimated value of US$19.9bn (US$14.1bn in H1 2016). This represented a decrease in the number of deals by 28%, year-on-year. This decline was mainly the result of decreased investor activity in the majority of the region s countries, with only four of them (Croatia, Greece, Hungary and Slovenia) experiencing slightly increased M&A activity by number of closed deals. The most active country in H was the Czech Republic, closing 113 transactions, followed by Poland and Hungary closing 107 and 66 deals, respectively.

2 Page 2 The largest deal in the region was the sale of the Turkish Petrol Ofisi division, which belonged to Austrian oil and gas group OMV, for US$1.4bn. Vitol Investment became the new owner of the leading Turkish company in the distribution and sale of fuels. Despite the overall decrease in the number of closed deals, the estimated transaction value increased by more than 42%. This increase may be attributed to the overall rise in the average value of closed deals, whether they were over or under US$100m, says Matej Bošňák, Country Managing Partner and Transaction Advisory Services (TAS) Partner of EY in the Slovak Republic. In terms of direction of transactions, the CSE market was again dominated by domestic investors, with buyer and seller originating from the same country in 48% of the total number of deals. Transactions by domestic investors were most popular in Poland (65% of all Polish transactions), Croatia (60%) and Hungary (59%). The Czech Republic had the most outbound transactions (22), followed by Poland (13) and Turkey (8). The vast majority of transactions in all CSE countries were closed by strategic investors, resulting in an overall proportion of 72% in the region. In Croatia, strategic investors closed up to 93% of deals. The only country with a dominance of financial investors was Slovenia, where they accounted for 54%, followed by Slovakia with 47%. The share of financial investors in Slovenia was high, due to the increase in the number of transactions executed by private equity firms, specializing in industrial technology and production companies. Real estate was the most active target industry by number of transactions, with 80 deals, followed by Manufacturing and IT with 55 and 51 deals, respectively. The largest transaction in the Real estate sector was the acquisition of a retail real estate portfolio, consisting of 11 shopping centers in the Czech Republic, Hungary, Poland and Romania, by CPI Property Group. However, in terms of the average volume of deals, the ranking differs. The first ranked was Chemicals (US$365m), with Energy and mining second (US$177m) and Retail and wholesale third (US$135m). Although there were fewer foreign inbound deals compared to domestic deals, in terms of the origin of foreign capital invested in the CSE region by M&A transactions, US-based and Western European investors continued to lead over CSE countries. The US was the most

3 Page 3 active in H1 2017, closing 25 deals in the region, followed by the UK and Germany with 17 and 16 deals, respectively. Slovak Republic The situation in the Slovak M&A market in H more or less reflected the situation in the region, comprising a decrease in the number of deals, an increase in the estimated value of deal volume as well as an increase in activity in the Real estate sector. During this six-month period, investors closed less deals in Slovakia year-on-year, reaching a total of 15. As a result, in terms of the number of transactions, Slovakia experienced a year-onyear decline by nearly 35% and together with Croatia ranked seventh in the CSE region. According to the released data, the largest transactions closed last year included the sale of Alpha medical and Aeskulab Holding groups, the leaders in providing laboratory diagnostics in Slovakia, Poland and the Czech Republic, to Unilabs. Considering the direction of transactions, the Slovak market was dominated by foreign investors, with their share accounting for more than 66%. High interest in Slovak companies was mainly demonstrated by Czech investors. Investments of domestic investors accounted for 27% of the total number of transactions; however, their activity experienced a visible decline of up to 60%. The majority of deals in all CSE countries were closed by strategic investors and this was also the case in Slovakia. Nevertheless, the activity of financial investors increased year-on-year when compared to the activity of strategic investors. Although the vast majority of deals in H were closed by strategic investors, the analysis points to unrelenting and increasing activity of financial investors. At the end of 2016, it was Slovakia and Hungary that experienced the highest share of financial investors within CSE, amounting to 32%. In H1 2017, their share increased even further and although Slovakia ranked second with 47%, this shows a visible increase of 15%, explains Peter Demský, Associate Partner of EY s Transaction Advisory Services in the Slovak Republic, responsible for mergers and acquisitions.

4 Page 4 The most active target sectors included Real estate and Manufacturing which dominated in the number of closed deals. In terms of value, Healthcare and Pharmaceuticals, together with Real estate, ranked first. Top 10 largest transactions in CSE in the first half of 2017 Target Country of target Buyer Country of buyer Value (US$m) 1 OMV Petrol Ofisi Turkey Vitol Investment Netherlands 1,441 2 Zabka Polska Poland CVC Capital Partners, EBRD UK 1,062 3 The Ethniki Hellenic General Insurance Company S.A. Greece Exin Partners Niger Helios Group Slovenia Kansai Paint Co., Ltd. Japan Retail real estate portfolio of 11 shopping centers Czech Republic, Hungary, Poland, Romania CPI Property Group Czech Republic United Bulgarian Bank & Interlease Bulgaria KBC Group Belgium E-Distributie Muntenia S.A., Enel Energie Muntenia S.A. Romania Enel Investment Holding B.V Netherlands Olympia Center Czech Republic Deutsche EuroShop AG Germany Langage and South Humber Bank power plants UK Energetický a průmyslový holding, a. s. Czech Republic Alpha medical, s. r. o. Source: EY M&A Barometer Slovakia, Czech Republic, Poland Unilabs SA UK 370 About the survey In our M&A Barometer, we analyze publicly disclosed information accumulated from various reputable databases, such as DealWatch, Mergermarket or Zephyr. We analyzed data of 11 Central and Southeast European (CSE) countries: Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and Turkey. M&A activity and data includes private to private transactions and excludes: acquisitions of minority stakes below 15%, majority shareholder s further acquisition of a minority interest, real estate transactions (except when the target or buyer was a real estate company or real estate fund), capital market transactions, acquisitions of licenses, joint venture agreements, greenfield investments, IPOs, privatizations, multi-country deals (the value of these deals was ignored in each country, but the number was included) and internal reorganizations.

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