M&A Barometer

Hungary H1 2015

51

39

69

4238

44 4249 48

55

701,079

1,4211,483

0,287 0,3670,183

0,243

1,027

0,849

0,646

0,803

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

0

10

20

30

40

50

60

70

80

H12010

H22010

H12011

H22011

H12012

H22012

H12013

H22013

H12014

H22014

H12015

The Hungarian M&A market

Number of transactions Estimated market size (USD bn)

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 15%;

Majority shareholder 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.

Increasing number of M&A deals in Hungary in H1 2015 – IT and technology remains the favorite sector70 deals were publicly disclosed in Hungary in the first half of 2015, which represents

a 46% increase compared to H1 2014 and a 27% increase from H2 2014. The

estimated M&A market size decreased by 5% versus H1 2014 but it increased by 24%

versus H2 2014. Similarly to the previous years, the IT and Technology sector was the

most active industry in Hungary.

Number of M&A transactions increased to 70 in Hungary

In H1 2015, 70 deals were disclosed and published in Hungary, reflecting a 46%

increase compared to H1 2014. Since H1 2011 (69 deals), this has been the most

successful period, in terms of the number of publically disclosed transactions.

Estimated value of the M&A market - USD 0.80bn

Transaction values were disclosed and published in 40% of the deals (28), lower than

H1 2014 of 56%.

Based on the publicly available information, the estimated size of the Hungarian M&A

market was

USD 0.80bn. This represents a 5% decrease from H1 2014, but a 24% increase from

H2 2014.

The average deal size of deals with a disclosed deal value below USD 100m was USD

4.3m in H1 2015, which represents a 5% decrease from USD 4.5m in H1 2014.

3641

2530

19

43

15

27

1312

29

27

0

10

20

30

40

50

60

70

80

H1 2010 H1 2011 H1 2012 H1 2013 H1 2014 H1 2015

Strategic Financial

Domestic58%

Inbound38%

Outbound4%

H1 2014

Outbound6%

H1 2015Local deals and strategic investors dominate the

market

In H1 2015, similarly to the previous years, the Hungarian

transaction market was dominated by domestic transactions,

where in 60% of the deals both the target and buyer were

Hungarian entities.

The origin of inbound investments includes UK

(5 deals), USA (4 deals) Austria and Switzerland (3 deals).

Only 4 publicly disclosed outbound transactions were noted in

H1 2015, 3 of them were executed by MOL Nyrt. and the fourth

by OTP Bank.

In contrast to the previous year, strategic investors were in

majority in Hungary in H1 2015. Approximately 61% of the

deals were performed by strategic investors. Moreover, 49% of

the strategic investors’ deals were inbound transactions

including one of the largest deals in H1 2015, the acquisition of

Accor-Pannonia Hotels by the polish hotel chain operator Orbis

SA. The deal value was USD 168.9m – according to public

sources.

89% of the deals performed by financial investors were domestic

deals.

IT and technology remains to be the most

attractive, followed by Energy and mining and

Telecom and media

IT and technology

The IT and technology continued to be the most attractive

sector. In the first half of 2015, 16 deals occurred in this sector

compared to 20 deals in the same period in 2014. The average

deal value was USD 2.1m. The most popular targets were

companies developing cloud computing, data protection and

financial IT software services as well as companies involved in

biotechnology. The IT and Technology sector was dominated by

domestic deals (69%) in terms of volume of transactions.

Energy and mining

There were 8 transactions closed in the Energy and mining

sector H1 2015. 6 out of 8 deals were closed by strategic

investors. Transactions included MOL’s acquisition of ENI

Romania, Ithaca Petroleum Norge AS and the DG Khan oil

exploration block. Furthermore Pannon Drill Kft.’s acquisition by

Forte Venture Capital and Renewable Energy Investments Zrt’s

acquisition by Hemisphere.

Domestic60%

Inbound34%

IT and technology Energy and mining

Telecom and media Manufacturing

Banking and financial services Transportation and logistics

Food and beverages Publishing and printing

Services Pharmaceuticals and health care

Other Construction

Retail and wholesale Agricultural

Number of deals by industry in H1 2015

23%

12%

10%

7%7%

7%

7%

6%

6%

4%

4%3%

3% 1%

Ernst & Young

Assurance Tax Transactions Advisory

© 2015 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.

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Contacts

Margaret Dezsemargaret.dezse@hu.ey.com

Ferenc Geistferenc.geist@hu.ey.com

András Bányaiandras.banyai@hu.ey.com

Ferenc Nagyferenc.nagy@hu.ey.com

Telecom and media

In the Telecom and media sector, 7 transactions were closed in H1 2015. The average

deal value was USD 2.3m. Transactions included, amongst others, the acquisition of

OLX.hu by jofogas.hu, the sale of Viasat3, Viasat6 channels and Viasat Play catch-up

service to Sony Pictures Entertainment Inc. and the acquisition of Rádió Juventus by

Tematic Group Kft.

Banking and financial services

In the Banking and financial services sector 5 transaction were closed but only one

deal value was disclosed. Transactions included e.g. the acquisition of Bank

Findomestic Banka by OTP, the sale of MKB Bank insurance arms’ and CE Faktor Zrt.’s

acquisition by MagnetBank Zrt.

Food and beverages

There were 5 transactions closed in the Food and beverages sector in H1 2015. The

average deal value in the sector was the highest, at USD 174.0m. Transactions

included Partner in Pet Food’s acquisition by Pamplona Capital Management with the

highest deal value disclosed in H1 2015.

Manufacturing

5 transactions were closed in the Manufacturing sector in H1 2015. The average deal

value in the sector was USD 1.7m. The transactions included KGF Hungary Kft.’s

acquisition by Garangold, Alurad Heating Innovation Kft.’s acquisition by Prosperitas

Profit and Kalocsai Porcelánfestő Kft.’s acquisition by Agrotechfood Zrt.

Transportation

5 transactions were closed in the Transportation sector in H1 2015. 4 out of 5 were

domestic including TrustAir Aviation Kft.’s acquisition by Garangold for a market

estimate of USD 2.1m.

The State as an active player

An interesting aspect of the Hungarian transaction market remained that, similarly to

the previous years, the Hungarian State both directly and through State owned

companies was an active player. The table contains those transactions where the

Hungarian State acted as buyer or investor. Please note that these transactions have

not been included in the analysis of the M&A market and the above deal numbers.

Transactions with state involvement in H1 2015*

* Transactions are not included in the overall analysis and statistics.

Target company Buyer Value (USDm)

Budapest Hitel- és Fejlesztési Bank Zrt.

Corvinus Nemzetközi Befektetési Zrt.

685.11

Styl Ruhagyár Zrt.Municipality of Szombathely;Hungarian private investor(s)

3.59

Panrusgaz Gázkereskedelmi Zrt. MVM Magyar Villamos Művek Zrt. 3.50

E.ON Energiaszolgáltató Kft.; GDF Suez Energia Magyarország

Zrt.Főgáz Zrt. n/a