Page 119 - IFR Opportunities in Russian capital markets

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ifrintelligence reports/Opportunities in: Russian Capital Markets
Figure 7.2: Russian M&A transactions, by sector, 2005, 2006 (US$m)
2005
Value, US$m
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000
Number Value (US$m) 80 Number 70 60
50 40 30 20 10
500 00
2006
Number Value (US$m) 80 12,000 Number 70 60
Value, US$m 14,000
10,000 8,000 6,000 4,000 2,000
0
50 40 30 20 10 0
Source: Citigroup
As elsewhere the numbers are slightly misleading, as the state entered the M&A market in a big way in 2006 with a couple of mega-deals as the Kremlin began retaking control of the ‘strategic sectors’.
More tellingly, two-thirds of all deals were conducted between two Russian parties. The largest numbers of M&A deals were made in trade and the services (17%, or four times more than in 2005), commodities (8%), telecoms (9%), mechanical engineering (10%), and food (14.5%), which testifies to the consolidation process going on in all industrial weight categories. Unsurprisingly, the most valuable deals were in the fuel and energy sector (20% of the total) and metallurgy (19%). These figures are according to Ernst & Young, whose categories are slightly different to Citigroup’s, on whose data Figure 7.2 is based.
Gazprom's acquisition of a 75% stake of oil major Sibneft for US$13.1bn was easily the biggest single deal in 2006, closely followed by RusAl's decision to merge with SUAL, worth $10.2bn and completed in March 2007.
Of the eight remaining top-10 deals, which accounted for just over half of Russian M&A deals in 2006 by value, the average deal size varied between US$0.5bn and US$3.5bn. The average value of the remaining M&A transactions was nearly US$200m in 2006, up from US$120m the previous year and US$75m the year before that.
Among the more important domestic deals were: the merger of the Perekryostok and Pyaterochka supermarket chains; Novolipetsk Steel’s acquisition of VIZ Steel, the second-largest Russian producer of electrical-grade steel, and coking coal producer Altai Koks; and LUKoil’s takeover of Primoryeneftegaz and the Khanty Mansiysk Oil Corporation.
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Catering trade Finance Food Mass media Mach. eng. Metals Mining Oil & gas Telecom. Trade Others
Catering trade Finance Food Mass media Mach. eng. Metals Mining Oil & gas Telecom. Trade Others