The number of M&A transactions in the Russian market dropped by 14.6% to 519 in 2012 from 608 in 2011, their total amount decreasing by 33.6% (or 30%, adjusted for the US dollar appreciation) to $49.69 billion from $74.83 billion in 2011, according to the recent issue of AK&M Information Agency's monthly bulletin MERGERS AND ACQUISITIONS MARKET.
Lagging far behind its 2011 result for most of the year 2012, the market apparently tried to stage a comeback in the fourth quarter, usually the most fertile period for M&A events. Passing its year 2012 low in September (the amount of transactions, applying AK&M Information Agency's proprietary estimation method, being a mere $1.2 billion) the market grew more than twice in October (to $2.6 billion), then doubled again in November ($5.2 billion) and was none the weaker in December (the amount of transactions slightly exceeding $5.4 billion).
While the market followed its usual Q4 behavior pattern in 2012, the gain was much less impressive this time than it had been in 2010 or 2011.
Anyway, the market failed to close the gap between 2011 and 2012 widening over the year. Just as predicted, the market stopped short of $50 billion, witnessing transactions for a total of $49.69 billion in 2012. Compared with a year earlier ($74.83 billion), the total market volume dropped by 33.6% (or 30%, if adjusted for the US dollar appreciation).
Furthermore, the M&A market was unable to match the result achieved in the post-crisis year 2010 ($62.12 billion). The total amount of transactions in 2012 was 20% below the 2010 level.
One of the reasons for this dismal result is the rising US dollar exchange rate. Some of the deals in the low-price segment which would have squeezed into statistics in 2011 failed to reach the lower threshold ($1 million). However, such transactions were not many (hardly more than 20), and their contribution would not have been much help.
Regardless of the amount, the total number of M&A transactions in the Russian M&A market also decreased. Only 519 transactions met AK&M Information Agency's requirements to qualify for statistics in 2012, compared with 608 in 2011, 522 in 2010. The number of transactions dropped by 14.6% year-on-year. The market apparently fell back to where it had been two years before.
"The poor M&A performance in 2012 is primarily attributable to the lack of economic stability in global markets, primarily in the Eurozone, throughout 2012, as well as the subdued growth rates in the Russian economy," Yaroslava Zabello, Head of the Analytical Center, AK&M Information Agency, points out. "The vibrant and flexible Russian M&A market reacts to such signals with a one or two month time lag. With the general feeling of instability in the air, investors are putting transactions on hold, being extremely careful when it comes to large outlays."
Even the top price segment lost weight in 2012. The merger of Uralkali and Silvinit in May 2011, the largest 2011 deal topping AK&M Information Agency's ranking of major 30 M&A events, was $8.8 billion worth. The largest asset acquired in 2012 (Denizbank, Turkey) cost the buyer, Sberbank of Russia, only $3.8 billion. The lowest transaction value on the Top 30 list also decreased from $500 million in 2011 to $360 million in 2012.
AK&M "M&A Market"
"AK&M", 12.02.2013 17:00