The results of Prudentia M&A Folio review shows that during the summer months of 2015, the Baltic M&A market is gradually becoming more active. 60 deals were announced in May-Aug period which is by 40% more than in the first 4 months of the year. Despite the so called “vacation season”, June and July were the most active months this year (17 and 19 deals respectively).
However, when comparing the year-to-date M&A activity to the same period last year, we can observe a decrease. This is affected by the current geopolitical crisis that still has an impact on foreign investors’ interest to invest in Baltics - in the first eight months of the year there was a slightly larger share of Baltics-internal transactions than in the previous year.
The largest deal by value in May-Aug period was conducted by Estonian Graanul Invest – the company for 104 million EUR acquired Latvian producer of wood pellets Latgran. This merger made Graanul Invest the largest European wood pellet company and one of the leading global players. So far, the company owned four factories in Estonia and one in Lithuania.
One of the biggest global surprises in 2014-2015 - the significant drop in oil price – also had its impact on M&A market activity. Oil influences performance of numerous industries and budgets of many countries. The greatest impact on the value of energy companies can be observed in the Asian and American markets, while in Europe the impact so far has been relatively lower.
The current situation in the energy sector differs from year 2008, when in spite of the sharp fall in oil prices the M&A market activity was not affected significantly. The current situation is characterized by the fact that the change in oil price has not been a temporary thing – it has been already a year, however, the oil price has not yet recovered. With some delay, it will inevitably affect the M&A activity.
In overall the economy of Baltics will gain from the reduced energy prices as this region is an oil importer. The most positive effect will be observed in companies that are large consumers of energy - oil price decrease means reduced costs, thereby making these companies more profitable.
A full version of the overview is accessible here: Prudentia M&A Folio (314.54 KB)
Prudentia M&A Folio is a review of the mergers and acquisitions in the Baltic States, issued quarterly. General market tendencies are discussed within the scope of the review. Furthermore, Prudentia gives its expertise regarding the most appealing M&A sectors in the Baltic States.