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INTERVIEW – FMCG deals seen boosting M&A activity in Bulgaria in H2

SOFIA (Bulgaria), May 30 (SeeNews) – Mergers and acquisitions (M&A) activity in Bulgaria seems set for an upswing in the second half of 2014 on the back of expected deals in the fast-moving consumer goods (FMCG) sector and the food industry, Raiffeisen Investment Bulgaria‘s managing director said on Wednesday.

"I expect a considerably stronger second half of the year due to deals resulting from a consolidation in the FMCG sector and the food industry, where at least two deals involving major sector players are in progress," Julian Gikov told SeeNews in an emailed interview.

Another sector that is likely to see a change in ownership is transport, where both cargo and passenger transport have attracted strategic investor interest, he said. The consolidation process in the telecom sector too has been reactivated despite the failure of some big deals in the beginning of the year, Gikov noted.

“We are bound to see more acquisitions of smaller banks by the end of the year,” Gikov also said.

In October 2013, Bulgaria’s First Investment Bank acquired MKB Unionbank, the local unit of Hungary's MKB.

Less than 20 M&A deals have been struck since the beginning of the year, more or less on par with last year. In terms of value, however, the market has shrunken compared to the first half of 2013, Gikov said.

Regulatory unpredictability and depressed investment climate in the country's renewable energy sector have triggered sale procedures for some large assets but striking a deal remains difficult for the time being, he commented.

“In general, I expect some major deals to take place, considering the approaching end of some equity funds' investment horizon and their exit from the respective investments, especially in the manufacturing sector,” Gikov said.

Interest on the part of foreign strategic and financial investors remains focused on companies selling their output abroad, he said, pointing as an example to the acquisition of a stake in Bulgarian fertiliser producer Neochim by a joint venture of Vienna-based chemicals company Borealis and First Energy Bank of Bahrain several months ago. On the other hand, foreign investors in companies operating only on the local market tend to withdraw, he noted.

The restructuring of international companies operating in Bulgaria will remain a driving force for exiting the Bulgarian market, according to Gikov.

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