M&A deals and company listings failed due to crisis

Distributor Interbrands and construction materials and decorations retailer Ambient, energy companies Hidroelectrica and Transelectrica and telecom operator Romtelecom are among the major companies that were forced to put their sale or listing plans on hold.
“Most investors blocked several transactions as they are waiting the companies’ value to decline or because, although they had liquidities, they are facing problems in their home countries and they have to fill in the gaps there,” according to Raiffeisen Investment Romania Managing Director, Ioana Filipescu. So far, companies’ value dropped 30-50 percent due to the crisis, she added. “Before the crisis, the mergers & acquisitions market had great potential and a 15 multiple was easy to obtain. Now, however, a 7.5 percent multiple is great.”

A company with turnover exceeding €1 billion, such as Interbrands. the top consumer goods distributor locally, has no buyers because of the crisis, but also due to its own vulnerability. Sales negotiations, launched several months ago, are “at a dead end”, according to sources close to the business, who added the sale price for the company would have been around €80 million Two thirds of Interbrands contracts are made with consumer goods producer Procter&Gamble and cigarettes producer British American Tobacco. Sources say that Interbrands General Manager, Randy Sherif, is willing to take control of the company through a management buyout operation, with other investors. Company representatives did not comment on the issue before closing the print edition.
Another frozen deal is the sale of Banca Carpatica local lender.

Negotiations with other lenders, such as Banca Transilvania and Commerzbank or investment funds had no result. Meanwhile, the bank’s value dropped along with the stock market. Currently, Carpatica’s capitalization amounts to €106.2 million. Ambient also had negotiations with EQT private equity fund, but no deal was made.

Besisdes M&A, the initial public offering (IPO) operations were cancelled or delayed for several companies. “Several IPOs, both in Romania and in the region, were postponed until further notice. Even deals already signed needed restructuring due to lack of financing,” according to law firm Schoenherr Equity Parner, Markus Piuk. However, he is not completely pessimistic about the local market. “The important thing is that, at the international level at least, one can still find financing for Romania, although with difficulty,” Piuk said.
‘Most investors blocked several transactions as they are waiting the companies’ value to decline or because, although they had liquidities, they are facing problems in their home countries and they have to fill in the gaps there Ioana Filipescu Managing Director, Raiffeisen Investment Romania