In April 2014, the cross-border M&A activity continued to grow, according to the recent issue of AK&M Information Agency's monthly bulletin MERGERS AND ACQUISITIONS MARKET (no. 196).
For the first time in the last three years, the orientation of transactions towards the domestic market has weakened. For the 4-month period in 2014, the domestic market's contribution to the total amount of transactions decreased to 40% against 90% in 2013. This change, however, mainly results from more expensive cross-border deals. As for the number of transactions, the situation is different: 81% of all the M&A events involving Russian assets or parties still germinate inside Russia.
The number of Russian investors' transactions abroad for the first four months of 2014 decreased dramatically compared with the previous year (14 deals against 24 in January-April 2013). Russian players obviously think less of assets abroad these days. Instead, they choose spending much on assets they believe to be worth it: the total amount of in-out transactions increased 5.7-fold to $8.69 billion compared with $1.51 billion in January-April 2013.
Russian companies' M&A ambitions are mainly focused in the mechanical engineering, pharmaceutical, polymer processing and IT sectors.
The inbound M&A activity targeting assets in Russia is growing rapidly. The amount of such transactions for the first four months of 2014 grew 2.2 times to $6.48 billion from $2.95 billion in January-April 2013, even though their number edged down to 20 transactions against 22 the year before.
Out-in transactions are primarily motivated by sales of Russian companies' foreign assets in the metallurgical and oil / gas production sectors. In Russia, pharmaceutical assets have a special appeal to foreign investors. At the same time, foreign investors are reducing their footprint in other sectors of the Russian economy, as exemplified by the banking sector.
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