Deals of the Year 2013: Market transactions
Every year, the Budapest Business Journal attempts to present the most significant deals of the past 12 months. Since only a fraction of these are made public, and of the few that are only a minority disclose a transaction value, the task is a real challenge. Due to the lack of transparency and reliable data on the transactions market, the results are based not only on publicly available facts, but also on expert opinions gained during our numerous consultations with some of the industry’s most well-known and respected specialists (see list at bottom of this article), as well as on subjective judgments.
In compiling the list, BBJ separated market transactions involving private individuals and/or enterprises from deals in which the state was the buyer; significant deals of this sort are listed below. Lists of major state-related transactions and important moves in the pipeline for 2014 will be covered in future articles here at BBJ.hu.
Hochtief sells airport business
Germany’s largest construction company Hochtief completed the sale of its airport business, including its 49.6% stake in Budapest Airport, to a subsidiary of the Public Sector Pension Investment Board of Canada in September 2013 for approximately €1.1 billion. The transaction involves the deconsolidation of assets totaling around €1.5 billion, including minority interests of around €0.4 billion. Hochtief acquired a majority stake in Budapest Airport for €1.9 billion in 2007.
Citi acquires ING’s custody and securities services business in CEE
Citi Securities and Fund Services has acquired ING’s custody and securities services business in seven CEE markets, currently adding €110 billion to Citi’s $13.5 trillion assets under custody. The transaction, which includes ING’s local custody and securities services businesses in Bulgaria, Czech Republic, Hungary, Romania, Russia, Slovakia and Ukraine, extends Citi’s custody network coverage to more than 95 markets and its proprietary custody network to 62 markets. The price of the deal wasn't disclosed.
AMC Networks acquires Chellomedia
Liberty Global sold its international content division Chellomedia including Chello Central Europe to AMC Networks. Chellomedia is one of the largest international channel groups with distribution to more than 390 million households in 138 countries. The transaction is expected to close in the first quarter of 2014.
Liberty Global said that it “expects to realize cash proceeds for the assets that are approximately equal to the agreed upon enterprise value of €750 million.” The consolidated assets to be sold generated approximately €350 million in revenues during the 12-months ended in June 2013.
Deutsche Telekom acquires GTS Central Europe
Deutsche Telekom announced in November that it had acquired GTS Central Europe for a price of €546 million from a consortium of international private equity firms. With GTS, DT enhances its ability to offer pan-European telecommunication services as well as integrated products in countries where it currently maintains limited fixed-line access network infrastructure.
GTS Central Europe is the biggest alternative data, internet and telephone service provider of the CEE region, with subsidiaries in Hungary, Czech Republic, Poland, Romania and Slovakia. The company reported revenues of €347 million excluding the Slovak assets, which will be retained by the sellers as part of the transaction. The company has been present in the Hungarian market since 1993.
Transactions involving a Hungarian partner
Energy: ENI acquires RWE’s stake in Tigáz
Italian oil and gas company ENI purchased German electric utility company RWE’s 44.2% stake in Hungarian regional gas company Tigáz in February 2013, raising its stake in the company to around 97%. Tigáz is believed to be one of the energy utilities that are considering selling its retail division to the state, as it says it cannot accept any further reduction in energy prices.
IT: Accenture acquires evopro businesses
Management consulting firm Accenture agreed to acquire the industrial and embedded software development and services business of evopro group in November. The group, which has operations in Germany, Hungary, Romania and Turkey, provides services for embedded software used in industrial and medical equipment, automotive, building, logistics and transportation industries. Founded in 2001, evopro group is a privately held company with more than 1,000 employees.
Financial services: evopro acquires Hanwha Bank
Evopro Holding acquired a 98.33% stake in Hanwha Bank Magyarország in September, but reshuffled its stake in November, when evopro Finance purchased an 80.26% stake in the newly acquired bank. The bank’s new name is evoBank Co. Ltd and its subscribed capital is HUF 4.934 billion.
At the time of the transaction, Hanwha Bank had only one small branch in Budapest, an internet bank and approximately 400-500 clients. Korea’s Hanwha group acquired its Hungarian unit through buying the shares of Bank Indosuez Magyarország in 1996. The bank was founded in 1990 under the name of Kulturbank.
Agriculture: a battle of billionaires
As Hungary’s second richest billionaire, the owner of péti Nitrogénművek Zrt László Bige was just about to acquire a majority share in agricultural firm KITE, one of the company’s employees, Sándor Guba, made a last minute offer of more than HUF 23 billion for the 81% stake. This was almost twice as much as Bige’s original offer. OTP Bank chairman and CEO Sándor Csányi, who is Hungary’s richest mogul, is believed to be behind Guba. Tellingly, KITE recently concluded its first strategic agreement with OTP.
KITE, which reported HUF 200 billion revenues in 2012, was established in 1972. Its main activities are trade in agricultural materials and tools, and trade of agricultural products and agricultural machinery and parts. The company is the Hungarian distributor of John Deere agricultural equipment.
Logistics: Merger of Waberer’s Logistics and Szemerey Transport
The merger of Waberer’s Logistics Ltd and Szemerey Transport was carried out through an exchange of shares and stocks at the beginning of 2013. Waberer’s acquired 60% of Szemerey’s stocks, while Szemerey gained control over 40% of Waberer’s Logistics. The merger of Hungary’s leading logistics enterprise and the market leader of domestic refrigerated freight and distribution has created Hungary’s largest, domestic freight power.
The two firms, which have a total headcount of 1,200 and a fleet of 700 vehicles, plan to increase their sales revenues by an annual 10% from HUF 22 billion in 2012 in five years.
Healthcare: UPS acquires CEMELOG
Atlanta-based logistics company United Parcel Service (UPS) purchased pharmaceutical logistics company CEMELOG Zrt in July 2013. The acquisition added three additional facilities of approximately 24,000 square meters of healthcare distribution space to UPS’s current European network.
UPS is a global leader in logistics serving more than 220 countries and territories worldwide. Its healthcare network offers services such as temperature-sensitive handling, geographic-specific regulatory compliance, monitoring and security and kitting and labeling. CEMELOG has offered customers across the CEE region tailor-made healthcare logistics solutions since a Hungarian businessman set it up in 1996.
Private equity: Enterprise Investors acquires Scitec
PEF VII, a private equity fund managed by Enterprise Investors, together with its minority co–investor, Morgan Stanley Alternative Investment Partners, has acquired a majority stake in international sports nutrition company Scitec Holding BV. The value of the transaction reportedly reached €100 million. Scitec’s founder Zsolt Bengyel remains a minority shareholder following the transaction. Originally founded in the United States, Scitec has a significant market presence in Europe and extensive international sales reach, with its products available in more than 70 countries.
Private equity top-up: Docler acquires NetLock
Docler Investments Kft, the private equity arm of the Docler group established in 2011, has taken over Hungary’s market leading authentication provider, NetLock Kft. Docler acquired a 51.05% share in NetLock in February 2012 and a purchase call option for the remaining quota, which was exercised in July 2013. NetLock Kft is the first qualified authentication, timestamp and archiving provider in Hungary.
Budapest bourse: three exits and a new listing
In 2013, the Budapest Stock exchange (BSE) saw one new listing and three exits through acquiring the free float. Asset manager Altera sold 204,000 ordinary shares raising HUF 429 million in fresh capital in an IPO in March 2013. The company’ shares were listed in the ‘Standard’ category of the BSE in June.
French pharmaceutical company Servierincreased its stake in Egis from 50.91% to 96.43% after offering to buy all outstanding shares at HUF 107 billion, or HUF 28,000 per share. Following the transaction Arts et Techniques du Progrès, a wholly owned unit of Servier, exercised its right to squeeze out the remaining Egis shareholders.
In 2013, the shares of Prague-based used car seller AAA Autoand Questor Securities were also delisted from the BSE.
BBJ would like to thank the following for their contributions to this article: Allen&Overy managing partner Zoltán Lengyel; Deloitte managing partner Béla Seres; Equilor Corporate Finance manager Ágnes Svoóc; Falkenburg Corporate Finance partner Gábor Kurutz; Invescom Corporate Finance managing director Zoltán Siklósi; Jalsovszky Law Firm senior associate Ágnes Bejó; KPMG director Tamás Simonyi; and PwC director Ervin Apáthy.
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