Central and South Eastern Europe - M&A Barometer H1 2015

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1 Central and South Eastern Europe - M&A Barometer H EY s M&A Barometer is a summary and analysis of publicly disclosed information accumulated from reputable databases. 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 and/or buyer was a real estate company or real estate fund) Capital market transactions (except for transactions that resulted in a change of control) 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 counted-in) Internal reorganizations Introduction In our Mergers & Acquisitions (M&A) Barometer we analyze the prevailing trend in 11 Central and South Eastern European (CSE) countries (, Croatia, Czech Republic, Greece,, Poland, Romania,, Slovakia, Slovenia and ). Most of the countries have experienced an increased M&A activity in terms of total number of transactions that increased by 2.9% in H compared to H A 2.2% decrease in the average deal size of deals over USD 100m is observed, however the average deal size of more frequent deals below USD 100m increased by 1.. This resulted in a 10. decrease in the estimated M&A market size value. More specifically, we observed a majority of domestic and inbound transactions of all deals with 4 and 41% share, respectively. Also noteworthy is the fact that transactions were dominated by strategic investors, and the most active target industry was while in terms of value the largest transactions occurred in the Banking and financial services sector. Highlights H Top 3 countries by number of transactions:, Poland, Czech Republic Number of closed transactions: 647 Estimated market size: USD 16.5bn Top three most active industries in CSE (by volume): 1. (100 deals) 2. (78 deals) 3. Food & beverages (61 deals) Top three most active industries in CSE (by average deal value): 1. Banking and Financial services (USD 79.7m) 2. Food and beverages (USD 69.5m) 3. Pharmaceuticals and health care (USD 65.0m) Average deal size of deals over USD 100m: USD 351.4m Average deal size of deals below USD 100m: USD 11.4m Number of deals over USD 100m, as % of total deal volume: 5.1% Disclosure rate of transaction value or deal size: 39.1%* *Applying this disclosure rate we estimated the total transaction value of the M&A market for each country.

2 Number of M&A transactions in CSE Number of transactions H H was the most active country in terms of deal volume in H1 2015, closing 155 transactions during the respective period. It was followed by Poland and Czech Republic closing 117 and 98 deals, respectively. The total number of transactions increased in the region from 629 deals in H to 647 in H representing a 2.9% increase. Although, the overall transaction volume increased in H1 2015, four of the countries experienced a decreased M&A activity in terms of the number of transactions. The increased overall activity was driven by the significant increase in the volume of deals in Greece, Slovenia and where the growth rate compared to H was 122.2%, 90.9% and 45., respectively. Estimated transactions value of the market Estimated market size (USDbn) H H The total H estimated transaction value in CSE market was USD 16.5b, 10. lower than in the previous year. This drop is mainly due to the fewer number of mega deals over USD 1bn in this period. ranked first with an estimated value of USD 3.3b, followed by Czech Republic (USD 2.8b) and Romania (USD 2.1b). experienced the highest growth in H (2419%), where the market increased to USD 0.7b in H from USD 0.03b in H

3 Investor population Strategic and financial 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% H Strategic Financial The vast majority of deals were closed by strategic investors in all countries, resulting in an overall proportion of 75% in the region. The share of financial investors was the highest in and where financial investors were responsible for more than 3 of the market, followed by Slovenia and Poland. The share of financial investors in was high due to the increase in the number of transactions executed by n private equities and venture capitals in H1 2015, while in, the reason for the comparatively high share of financial deals in the market is the enhanced activity of the JEREMIE venture funds that have to commit their resources until the end of Direction of transactions Domestic 4 Outbound 11% Inbound 41% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Inbound Domestic Outbound The CSE transaction market was once again dominated by domestic transactions in H as in 4 of the total number of deals the buyer and the target originated from the same country. This represents a 3% percentage point decrease compared to H Outbound transactions are less popular than in the previous year as their share decreased from 13% to 11%. Domestic transactions were most the popular in (60%), in (54%) and in Poland (53%). had the most number of outbound transactions (20 deals) - followed by the Czech Republic (18). The proportional share of outbound transactions was the highest in Croatia (22%), Czech Republic (1) and Slovakia (1). The proportional share of inbound transactions was the highest in Slovakia (6), followed by Romania (60%) and Croatia (5).

4 Sector analysis 3% 2%2% 2% 2%0% 3% 15% Target Country Industry Croatia 12% Czech Republic / Services Greece 9% Poland Romania Real Estate Food & beverages Services Retail & Wholesale Pharmaceuticals and health care Transportation & Logistics Publishing & printing Other Chemicals Telecom & media Banking and Financial services Real Estate Construction Agricultural Entertainment Slovakia Slovenia Construction Telecom & media and Technology The sector was the most active target industry (by number of transactions), with 100 deals, and accounting for 15% of all transactions in H The largest transaction in this sector was the Germany based Delivery Hero s acquisition of the Turkish yemeksepeti.com, where the company was valued at ca. USD 589m according to market sources. Another large transaction from the sector was the acquisition of the U.K.- based desktop and mobile privacy services provider, Privax by the Czech AVG Technologies for USD 40m. The average value of deals with a disclosed deal value in this sector was USD 17.1m in H The sector was followed by with 78 closed deals in H The largest deals in this sector included KAI Group s acquisition by Mohawk Industries Inc for USD 193m, Pehart Tec s acquisition by Abris Capital Partners for USD 112m and SASA Polyester s acquisition by Erdemoğlu Holding for USD 102m. The average deal value in this sector was USD 22.3m. Food & beverages There were 61 transactions in the Food & beverages sector in H Some of the largest transactions in this sector included, Danube Foods Group s acquisition by Mid Europa Partners LLP for USD 657m being the second largest transaction in the region, Partner in Pet Food s acquisition by the UK based Pamplona Capital Management for USD 343m, Radenska DD s acquisition by Kofola AS for USD 63m. The average deal value of disclosed deals in this sector was USD 69.5m. 54 deals were closed in the Energy and mining sector in H The largest transactions in this sector included the S&B Industrial Minerals SA s acquisition of Imerys SA for USD 634m, E.ON Italia SPA s Coal and Gas Business s acquisition of Energeticky A Prumyslovy Holding SA for USD 592m and Silopi Elektrik s acquisition of GSD Holding for USD 125m. Services There were 53 closed transactions in the Services sector in H The largest transactions in this sector included the Hungarian Accor-Pannonia Hotels acquisition by Orbis SA for USD 169m, Nusco Tower SRL s acquisition of Kifeni Investments Ltd s for USD 50m and Hoteli Metropol Doo s acquisition of Hoteli Cavtat DD for USD 34m. In terms of value, the largest transactions occurred in the Banking and Financial services and Food & beverages sectors. Each country had its own favored industry, however ranked first in most countries, while was an active sector too.

5 Foreign interest Although there were fewer foreign inbound deals compared to domestic deals, in terms of the origin of foreign capital invested in CSE by M&A transactions, US based and Western European investors continued to lead against CSE countries in H The United States was the most active in H1 2015, closing 36 deals in the region followed by the UK (29), Germany (26) and Austria (11). USA (9), Germany (7), UK (5), Italy (4), Switzerland (3) USA (6), Germany (5), Italy (2), Spain (2), UK (2), France (2), Spain (2) Czech Republic (2), Israel (2) Germany (1), France (1), Japan (1), UK (1), USA (1) UK (2), Austria (2) Ten largest transactions in CSE in H (USDm) HU RO UK (3 ), Austria (2) GR USA (10), Japan (6), Germany (5), France (4) Target company CZ Country of target SI CR PL SK RS Buyer Germany (6), Czech Republic (5), US (4) BG USA (4), UK (5), Austria (3), Switzerland (3) US (6), Netherland (6), Cyprus (4), UK (4), Italy (3), Czech Republic (3) UK (3) TR Country of buyer Value UniCredit Tiriac Bank Romania UniCreditSpA Italy Danube Foods Group Mid Europa Partners LLP United Kingdom Pharmathen S.A. Greece BC Partners Limited United Kingdom S&B Industrial Minerals S.A. E.ON Italia SpA s Coal and Gas Business yemeksepeti.com Partner in Pet Food (PPF) Kft Greece Imerys S.A. France Italy Energeticky A Prumyslovy Holding A.S. Delivery Hero Holding GmbH Pamplona Capital Management Czech Republic Germany United Kingdom EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Contacts Diana Nikolaeva diana.nikolaeva@bg.ey.com Croatia Lena Habus lena.habus@hr.ey.com Margaret Dezse margaret.dezse@hu.ey.com Czech Republic Petr Kriz petr.kriz@cz.ey.com Greece Tassos Iossiphides tassos.iossiphides@gr.ey.com Romania Florin Vasilica florin.vasilica@ro.ey.com Poland Bartlomiej Smolarek bartlomiej.smolarek@pl.ey.com Urs Indermühle urs.indermuhle@rs.ey.com Slovakia Jozef Mathia jozef.mathia@sk.ey.com Slovenia Luka Vesnaver luka.vesnaver@si.ey.com Musfik Cantekinler musfik.cantekinler@tr.ey.com Boyner Perakende Mayhoola for Investments Qatar EYGM Limited. All Rights Reserved. Corn wet milling assets of Eaststarch KAI Group,, Slovakia, Archer Daniels Midland Co (ADM) Mohawk Industries Inc. USA USA This publication contains information in summary from and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. ey.com