M&A Barometer Hungary 2016

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1 M&A Barometer Hungary 2016

2 EY s M&A Barometer is a summary and analysis of publicly disclosed information accumulated from own research and reputable databases. M&A activity and data includes private to private transactions and excludes: Acquisitions of minority stakes below 1; Majority shareholder s further acquisition of 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 (value of these deals was ignored in each country, but the number was counted in); and Internal reorganizations. Key findings % Value of Hungarian M&A market 1.61 USDbn -1 Number of transactions 110 Sectors 22% IT and technology 13% Manufacturing Number of M&A transactions decreased to 110 in Hungary In 2016, 110 deals were disclosed and published in Hungary, reflecting a 1 drop compared to Following last year s peak, this has been the second most active period in terms of the number of publicly disclosed transactions since Greater estimated value of M&A market in Hungary in 2016 Manufacturing and Services are the most attractive sectors in terms of deal value Estimated value of the M&A market - USD 1.61bn Transaction values were disclosed and published in 26% of the deals (29) in 2016, decreasing the ratio significantly by 22 percentage points from Based on the publicly available information, the estimated value of the Hungarian M&A market was USD 1.61bn in 2016, which represents a 6% increase compared to This growth was mainly driven by the increase in average deal size of transactions with disclosed deal value below USD 100m increasing by 19% to USD 8.7m in 2016 from USD 7.3m in M&A Barometer - Hungary 2016

3 The Hungarian M&A market Number of transactions USDbn Number of transactions Estimated market size (USDbn) Local deals and strategic investors dominate the market In 2016, similarly to the previous years, the Hungarian transaction market was dominated by domestic transactions, in 54% of the deals both the target and buyer were Hungarian entities. The origin of inbound investments includes Austria (6 deals), the USA (5 deals), Germany and the Czech Republic (4-4 transactions), and Italy and Romania (each 3 deals). Ten publicly disclosed outbound transactions were noted in 2016, three of them were executed in Poland. The most active sector was Pharmaceutical and health care with three transactions. In line with previous years, financial investors were in the minority. A decline in the number of financial transactions was due to the lower activity of JEREMIE investors as the investment period came to the end. Share of strategic buyers increased to 68% of total deal number in 2016 from 62% in Inbound 37% Outbound 9% Inbound 34% Outbound Domestic 54% Domestic 61% Type of investors 140 Number of transactions Financial Strategic M&A Barometer - Hungary

4 Manufacturing became the most attractive sector, followed by Services Manufacturing In 2016, 15 deals were closed in the Manufacturing sector, compared to 12 deals in 2015, taking over IT and Technology which led the Hungarian M&A market last year. The average deal value was USD 5.4m and the largest transaction with published deal value was the acquisition of the automotive business of Ábrahám és Társa by Hungary-based MSSL Manufacturing Hungary for USD 10.5m. Other transactions with undisclosed deal values included amongst others the acquisition of IB Andresen Industry Magyarország Acélmegmunkáló Központ Kft. by Thyssenkrupp Ferroglobus Kereskedelmi Zrt. and the acquisition of Forest-Papír Kft. operating in the household hygiene paper industry by Italian Sofidel. The sector was dominated by inbound deals (60%) in terms of number of transactions. The most active foreign acquirers were Italian, German and Austrian companies with three, two and two transactions, respectively. Services 13 transactions were published in the Services sector in 2016 representing 63% growth compared to the previous year. In 11 transactions target companies were Hungarian entities and 10 of those transactions were closed by domestic investors. The most popular target companies are engaged in business and industrial services. Transactions in the sector included the acquisition of Bérkonténer Kft. - leases containers in construction sites - by Finatech and the acquisition of Webox Hungary Kft. - providing automated self-service parcel lockers 24/7 - by Foxpost Zrt. Average deal value reached USD 3.7m. IT and Technology There were 12 transactions closed in the IT and Technology sector in 2016 representing 57% decrease compared to Average deal value in the sector was USD 27.3m representing a significant increase from USD 9.4m in The sector was characterized equally by strategic and financial investors. The largest transactions in the sector included the acquisition of the cloud-based live video streaming service provider Ustream by IBM for ca. USD 130m according to public sources and the acquisition of the game software developer Bushido Games Kft. by Finatech Capital. Real Estate 12 transactions were published in the Real Estate sector in 2016 and inbound transactions by strategic investors amounted to more than 50% of the total deal volume. The average deal value based on four disclosed transaction values was USD 83m. The largest transactions included the acquisition of the Millenium Towers office complex in Budapest by CA IMMO for USD 197m and the acquisition of Nova Park shopping mall by Prime Kapital and MAS Real Estate for USD 99m. Telecom & Media In 2016, 12 deals were published in the Telecom & Media sector representing 20% growth compared to In case of 10 transactions, both the target companies and buyers were Hungarian entities. Two-thirds of the transactions were closed by strategic buyers investing mainly in digital media companies. No estimation is made on the total size of this sector as deal values were only disclosed in 8% of total deal volume. Transactions with disclosed deal value included the acquisition of Origo Zrt., one of the largest online news portals, by New Wave Media Kft. for USD 15m. Banking and Financial services There were 12 transactions published in the Banking and Financial services sector in 2016 representing 100% increase compared to In 58% of the transactions both the target and buyer companies were domestic players. Total size of the sector was not estimated as no deal values were disclosed. The most favorable target companies were engaged in leasing, factoring and insurance business. Disclosed transactions included the acquisition of Central-Faktor Zrt. by Pro-Cash Vagyonkezelő Zrt. and the acquisition of Lombard Pénzügyi és Lízing Zrt. by the Swiss DDM Holding AG. 4 M&A Barometer - Hungary 2016

5 Industry distribution by number of transactions Manufacturing 13% Banking and Financial services 11% Other Services 12% Energy and mining 7% Transportation and Logistics 2% IT and Technology 11% Pharmaceuticals and health care Retail & Wholesale 1% Real Estate 11% Food and beverages Chemicals 1% Telecom & Media 11% Publishing and printing Largest transactions in Hungary in 2016 (USDm) Target Country of target Buyer Country of buyer Value (USDm) Millennium Towers office complex in Budapest Hungary CA Immo Austria 197 Finox Holding Switzerland Gedeon Richter Plc. Hungary 194 Scitec Holding Hungary Ascendis Health South Africa 170 Ustream Hungary IBM USA 130 Nova Park shopping mall* Poland Prime Kapital and MAS Real Estate Romania 99 * Vendor was the Hungarian Futureal Group Some of the transactions with state involvement in 2016 that are not included in the analysis* Target Buyer Value (USDm) MKB Bank Blue Robin Investments SCA, Minerva Capital Fund Management, Pannonia Nyugdíjpénztár 133 Rác Nosztalgia Kft. Towercrest Real Estate Group Co Ltd. - * Transactions are not included in the overall analysis and statistics. M&A Barometer - Hungary

6 EY Transaction Advisory Services How organizations manage their capital today will define their competitive position tomorrow. Contacts Margaret Dezse We help create social and economic value for our clients by helping them make more informed decisions about strategic capital management and transaction execution. We advise on strategies to raise, invest, optimize and preserve capital. Our teams bring together transaction professionals across functional areas, sectors and geographies to evaluate your Capital Agenda. Our goal is to help you achieve your best capital performance, deliver value for your stakeholders and meet your strategic corporate objectives. Mergers and Acquisitions We assist owners of businesses sell their company to the right strategic buyer or raise financing from financial investors. Our Mergers & Acquisitions professionals combine our global network and relationships with local industry insights to help you diligently analyze all aspects of a potential transaction in the context of your business strategy and your personal strategy, as owner. Our team can assist you with: Exit readiness Sale to a strategic buyer / trade sale Merge into a strategic player Sale to financial investor Finance raising from a financial investor Disposal of assets, business line or subsidiary Planning, structuring and execution of acquisitions Management buy-outs Valuation, sale or acquisition of Real Estate Preparation for IPOs margaret.dezse@hu.ey.com Phone: Ferenc Geist ferenc.geist@hu.ey.com Phone: András Bányai andras.banyai@hu.ey.com Phone: Ferenc Nagy ferenc.nagy@hu.ey.com Phone: Virág Dezső virag.dezso@hu.ey.com Phone:

EY HUNGARY - Transaction Advisory Services - Credentials Rockaway Capital SE has acquired Naspers OCS Hungary Kft., the Hungarian online price comparison site Arukereso.

7 EY HUNGARY - Transaction Advisory Services - Credentials Rockaway Capital SE has acquired Naspers OCS Hungary Kft., the Hungarian online price comparison site Arukereso.hu EY provided buy-side M&A advisory services to Rockaway Capital SE. Forest Papír Kft. has been acquired by the Italian hygienic paper manufacturer Sofidel Group EY provided sell-side M&A advisory services to the owners of Forest Papír Kft. Central Faktor Zrt. has been acquired by Pro-Cash Vagyonkezelő Zrt. EY provided sell-side M&A advisory services to the owners of Central Faktor Zrt. Magyar Telekom Nyrt. has sold its online news portal Origo Zrt. EY provided sell-side M&A advisory services to Magyar Telekom Nyrt. Forestay Group has raised capital for its private student house development project. EY assisted Forestay Group in its finance raising efforts in respect of the transaction. Stratec Biomedical AG has acquired one of the top 5 global hematology analyzer manufacturers Diatron MI Zrt. EY provided sell-side financial assistance services to Diatron Group. Anheuser-Busch InBev NV has sold its Central and Eastern European beer business of Dreher Sörgyárak Zrt. EY provided vendor due diligence to AB InBev. MKB-Euroleasing Autopark Zrt. has been sold by MKB Bank Zrt. EY provided indicative valuation to MKB Bank. Lonestar has acquired Mammut shopping centre EY provided specific buy-side financial and tax due diligence services to Lonestar. Synlab has acquired a blood and urine analyzer laboratory Centrum-Lab Kft. EY provided buy-side financial and tax due diligence services to Synlab. KGAL Investment Management has acquired Eiffel Square Office Building EY provided buy-side financial and tax due diligence services to KGAL Investment Management. These announcements appears as a matter of record only.

8 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, please visit EYGM Limited. All Rights Reserved. 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.

+3% increase Number of transactions 66

+3% increase Number of transactions 66 M&A Barometer Hungary 2017 EY M&A Barometer is a summary and analysis of publicly disclosed information accumulated from own research and reputable databases. M&A activity and data includes private to