Coping with the Credit

Roundtable Discussion

Crunch: M&A and private

equity in the CEE region

2009
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Sponsors

02 M&A and private
Roundtable Discussion

equity in the
cee region

Contents

Speakers around the table 03

Regional M&A trends 04
Sector activity 04
The financing environment 06
Corporate restructurings 08
State intervention and privatisation 09
Penta: Zabka case study 10
Wolftheiss: Cross-border merger case study 12
Historical data 16

 03

Roundtable Discussion
Speakers around the table

Dr Zoltán Faludi György Herczku,

Managing Partner Managing Director
Wolf Theiss Budapest KBC Securities

Olivér Martin, Pavel Petrik,

Director Member of the Board
Invescom Corporate Finance Carnibona (Penta Investments)

Béla Seres
Partner
Deloitte

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Roundtable Discussion

In light of current market conditions, this roundtable event held in late June in Hungary examined M&A and
corporate finance related activity involving regional and international businesses in Central and Eastern Europe.
The discussion looked at domestic M&A, cross-border M&A and private equity activities. The following is an
edited transcript of the discussion.

Regional M&A trends
Olivér Martin (OM)
OM: I’m cautiously optimistic about where the market is heading. The
best indicator for transaction activity in the region is always the number
of buy-side enquiries that we receive. This was practically zero over the
first quarter of the year and this was not particularly surprising bearing
in mind the difficult macroeconomic situation in Hungary and indeed
beyond. However, over the course of April and May, we have started to
receive buy-side enquiries again and this is a very good indicator for us
that activity is beginning to return to the market
Pavel Petrik (PP)
PP: I think that the main driver for the recent drop in Hungarian M&A
activity was the almost unprecedented level of market uncertainty –
nobody knew how far the economy would fall. Once investors start to
feel more comfortable about the situation, they will be more willing to
invest again. Once there is stabilisation in the economy, or at least the
perception of stabilisation, I think the market will recover.
Béla Seres (BS)
BS: My belief is that if you really look at why there have not been any
M&A transactions since September 2008 until very recently it was
because no one was able to do any proper forecasting, or arrive at
valuations, due to market volatility.
Hungary, for a number of structural reasons, is one of the weakest spots
at the moment in terms of the fundamental drivers of M&A activity.
It’s not especially related to the macroeconomic situation, but more to
do with the internal structure of the economy and the small number
of independent mid-market companies owned by either local private
owners or local institutional owners. This is a very different situation
compared to Poland, the Czech Republic or Slovakia.
Nonetheless, I believe the worst is over for the local market. The collapse
of Lehman Brothers was 10 months ago now and I think that confidence
is returning, although there will still be some tough months ahead for
the majority of corporates. Consequently, I think that over the next 12
months we will see more deals than we have seen over the past year.
Some corporates are now realising that they have to do something and
either sell or merge with a competitor, meaning this step will be a hard
but necessary decision for many owners to take.
György Herczku (GH)
GH: I fully agree that the market will recover soon. The market has
definitely shifted down in terms of valuations and in Hungary there
are three types of deals: deals over €100m, deals between €10m and
€100m and a lot of deals below €10m. The big problem for advisers at
the moment is that the deals valued at o ver €100m have disappeared
because of the financing environment. As far as I can recall, there
has been only one deal in Hungary so far this year that is worth more
than €100 million, namely the 21.2% stake that was acquired by OJSC
Surgutneftegaz in MOL.
On the flipside nonetheless, there is a lot of deal appetite in the sub-
€10m tranche and I would expect this to continue going forward. There
are a few deals valued between €10m and €100m, yet while financing is
probably still available in this region, the deal terms are totally different to
what they were before.
Sector activity
BS: Healthcare Services in general is obviously a very sexy industry for
private equity because its fundamentals are extremely strong, especially
as populations age across Europe. Again, Hungary does not compare
well to some other countries in the region for the very simple reason that
much of the system is managed well by the public sector. This is not the
case in other CEE countries.

Clearly, what we have seen is that the market froze over much later in
these geographies than compared to Western markets. Deal-making
in Warsaw continued right up until Christmas last year. Since then,
however, it has slowed but is still far healthier, primarily because of these
economies’ relative strengths. The same cannot be said of Hungary.

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Roundtable Discussion
“THE main driver PP: We are quite active in the Healthcare sector, especially in health
insurance, polyclinics, outpatient care and laboratories. I would agree

for the recent that Hungary is not particularly attractive for these deals because of the
lack of differentiation between private and state-owned health providers.

drop in Hungarian But on the other hand, Hungary can be very interesting as you can still
find a relatively wide portfolio of customers who are not satisfied with the

M&A activity state system and require additional services. Of course, this will not be a
mass product, but will specifically target certain customers.

was the almost OM: I agree that hospitals are relatively good in Hungary, but, at the

unprecedented same time, they have very limited funds to acquire modern equipment
and devices. There are businesses that specialise in providing these

level of market devices within the hospitals, and the Social Security Fund is financing
the use of these devices. Equity is needed for these purchases and this

uncertainty – creates a demand for funding.

nobody knew how The renewable sector is another area where I see opportunities and
recently, more and more financial, rather than strategic, investors are

far the economy showing interest. In addition, activity in the sector will be supported by
EU subsidies. Such subsidies work through a pricing system in which

would fall.” member states are free to opt for one of two models. The feed-in
system works where a generally higher price is offered for the uptake
of renewable electricity. The other is the green certificate system. Either
Pavel Petrik way, private equity investors stand to benefit from such hand-outs.

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Roundtable Discussion

GH: I agree – the Energy sector will also see a lot of interest, especially
in the renewable energy sub-space. In addition, the TMT industry is likely “Bidders must have
to see a number of M&A deals looking forward, a case in point being
the recent €10m acquisition by Magyar Telekom of International System an extremely
House.
interesting story to
I also see an appetite for agro-businesses. We have already closed one
deal in this segment in 2009, advising a Dutch player who acquired a get financing up to
competitor in Western Hungary, so there is definitely interest in this area.
Furthermore, there are certainly a lot of distressed stakes for sale in the five years and this
market, especially in the Automotive sector.
would undoubtedly
Dr Zoltán Faludi (ZF) be an amortising
ZF: Based on the number of deals we are working on across different
sectors, there are certainly sectors which are relatively weak. For
loan starting in
example, Real Estate M&A certainly slowed down, primarily because
of a lack of financing. At the same time however, Energy sector deal
the first year,
flow is still robust, although there are a lot of energy projects going on
that are still under development – they haven’t reached the stage where
rather than bullet
financing is required. financing.”
The main distinction between the two industries is that of leverage – Real
Estate developers, who used to receive debt financings in the region of
György Herczku
90% to 95% of their investments, are not going to receive that anymore. As
a result, Real Estate developers and investors are putting a considerable
amount of equity not only into the development phase but also into the
financing of their own projects and this has impacted deal flow.

The financing environment

BS: Given what has happened in recent months, I think that it is natural
for banks to be more cautious. But unlike the more mature markets, it
was not the prime issue constraining deal flow as acquisition finance
in CEE was available for much longer, and still is, to some extent. Even
last November and December, there were deals being done in Poland
with a debt element.

OM: I agree on the issue of deal financing – banks have actually proven
to be quite strong in providing acquisition financing for the types of deals
that are occurring in Hungary. However, the 80% debt to equity ratios,
which were witnessed in the past, have clearly disappeared. This ratio is
now much lower and the conditions attached to it are also much stricter
and, as a result, whoever now has cash reserves has an advantage. Any
competitive bidding processes where debt financing is required by a
bidder now takes much longer than in the past. Cash is definitely king at
the moment.

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Roundtable Discussion
PP: Our view is that deal financing is not really an issue. However, in this
particular area, the one advantage that private equity has over corporate
competitors is their approach to risk. I think that private equity is capable
of bearing higher risks than strategic investors, with corporates tending
to shy away from distressed driven M&A. Indeed, private equity is looking
to conduct deals in areas that strategic players don’t want to touch,
even if the industry is relatively fragmented. And this is exactly the type
of space that private equity players will move into and look to undertake
buy-and-build strategies, ultimately looking to provide a silver plate to
strategic players in the future.

ZF: What we are also seeing is that deal-making is taking longer

due to documentation. Banks are updating their existing standard
documentation to so-called LMA standards that we use for financing
transactions, and now they are much more cautious looking at the
provisions. This process certainly takes time and law firms and banks are
now working together to find a best practice approach to this.

GH: Bidders must have an extremely interesting story to get financing up

to five years and this would undoubtedly be an amortising loan starting in
the first year, rather than bullet financing. Furthermore, the margins are
at least double what they were a year or two ago.

From a sector perspective, there are certainly industries where banks

are more willing to provide finance. Indeed niches such as Food &
Beverages, Energy and Healthcare have not been greatly impacted by
the downturn. In these types of industries, the banks are still willing
to provide financing on relatively attractive terms. However, banks are
still demanding more equity and this becomes even more severe when
other sectors are taken into consideration. For example, if a company is
operating in the Automotive or Real Estate industries, then it would find it
very difficult to secure any kind of M&A financing at the moment.

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Roundtable Discussion
Corporate restructurings
and distressed driven M&A
situations
BS: I expect that in the months and years to come, distressed sales
will increasingly come to market despite there being little activity so far.
Notably, there is no Chapter 11-style legislation across the region and
it’s important to recognise that regional commercial bankers simply
have no experience handling large loan book issues. They have little
experience simply because there has not been a recession in this region.
In comparison, the Anglo-Saxon markets have witnessed a marked
increase in distressed M&A since the onset of the downturn.
ZF: I believe that in the medium term, the volume of restructurings will
rise, especially cross-border restructurings of multinational businesses.
The process will be driven by a number of factors, firstly, the cross-
border merger directive has been recently implemented in the CEE and
this is a very good legal tool.
The legislative package for the liberalisation of the Energy sector also
provides an outlet for cross-border restructurings. Its implementation
will facilitate the splitting up of all European Energy distribution assets
from their existing companies. When this comes about, all of these
companies will be looking for a new owner.
However, corporate restructurings are complex from a legal viewpoint,
especially since regional authorities are increasingly regulating the M&A
markets. At the same time, governments are using the downturn to
reshape national champions, particularly in the Agriculture and Energy
sectors, although this could fall foul of EU antitrust laws. While I expect
a wave of corporate restructurings to hit the region in the future, there
have to date been very few cases where a banker has been willing to
accept an unsolicited offer from a third party buyer for a debt package
and force the equity owner out of the business.
OM: After the collapse of Lehman Brothers, market values fell heavily
which, in many cases, meant that there was barely any equity left in
small businesses. Owners of many struggling businesses are relatively
inexperienced and as a result, I would expect that distressed sales
will pick up in a couple of months as owners begin to realise that they
have to act to save their business. At the moment, many are in survival
mode and hoping to renew short-term financing facilities to overcome
the liquidity problems - they are generally reluctant to initiate any sale.
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Activity will also be kick-started by pressure from the banks. The
problem is the banks are still waiting because their covenants are
based on audited reports which only came to light a month ago and
they still don’t know what they have on their balance sheets. Big
institutions need time to evaluate situations and only after that can they
start to think about taking steps with regards to these companies. The
problem is that the banks haven’t faced these conditions before, their
price expectations are quite high at the moment and they mostly think
these credits are fully recoverable.
Nevertheless, I believe that once the process starts, any potential
restructurings will come very quickly. The problem with such
restructuring negotiations is that a banker needs to see some
business prospects on the horizon. If the company’s not performing
as initially expected then the banks are more inclined to search for a
new owner with some experience in restructuring, rather than keep
on the existing owner, who, in recent years, was perhaps just riding
the wave of market optimism.
On the other hand, business owners are still hoping that the situation
will either improve or the state will intervene, which I think is a problem
as the state, in most instances, is not capable of evaluating which
companies are capable of survival. In my mind, any state subsidisation,
or state aid just distorts market conditions. It’s also bad for the private
equity community because it’s prolonging the negative impact of the
downturn.
Peering into the crystal ball a little bit further, I think that the bulk of
restructurings will fall into two categories. On the one hand, there are
large corporates that have too much debt on their balance sheets and
are forced to sell some of their assets. Yet in many cases, these assets
may still perform relatively well and represent an excellent opportunity
for equity players in the region. Another type is where the underlying
asset itself doesn’t perform and then you really have to undertake a
total restructuring of the business. I think there are also opportunities
there, but they are more difficult to make money from and carry much
more risk.
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Roundtable Discussion
“In Hungary there State intervention and
is not a great deal privatisation
left for sale. PP: Privatisations are off the radar for the moment although
Hungarian companies are still heavily reliant on state bail-outs.
However, I see a lot Looking forward there are some possibilities for privatisation

of opportunities
in Hungary, for example, within the Utilities or Public Services
sectors. I would doubt that any of this will come through in the

and an increasing
short term as I don’t believe that any political party or government
will be willing to deregulate the market to such an extent.

number of tenders BS: I think you can clearly not expect many privatisations to
take place anytime soon. There is nothing in state ownership
in neighbouring that would be ready for privatisation and at the same time,

countries.”
there is little political will to sell. However, I do expect that
in certain public services, the role of private investment will
increase. These might be in areas such as municipal services,
Dr Zoltán Faludi municipal public transport, water and wastewater treatment,
or just simply waste management. In essence, I believe that
more and more public services are going to be organised by
private businesses.

ZF: In Hungary there is not a great deal left for sale. However, I
see a lot of opportunities and an increasing number of tenders
in neighbouring countries. In terms of privatisation, what really
concerns me is the amount of political influence in any process.
This causes issues for investors and infringes on the reliability,
transparency and security of the country’s legal framework.

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Roundtable Discussion

PENTA INVESTMENTS CASE STUDY

ZABKA
• Industry: Food Retail - Convenience
• Seat: Poznan, Poland
• Total stake of: 100%
• Penta involved in the investment: since 2007

Zabka is the largest chain of convenience stores in Poland, established in 2000, offering
food and other goods in downtowns and busy residential areas. Zabka stores are managed
by independent business entities according to a business relationship agreement. In 2007
Penta won an international tender, organized by the Warsaw advisory company CAG.
Penta succeeded from among several Polish and foreign interested parties thanks to a
combination of the highest price and the best purchase conditions. The transaction volume
exceeded €150m. Penta’s ambition has been to keep and support the strategy of Zabka
aimed at extending the number of stores. Besides that, Penta has brought a new focus on
territorial expansion. Since April 2008, Zabka has started to provide its services in Prague, in
the Czech Republic. Currently it operates approximately 50 stores.

Currently Zabka investment represents three lines:

• Zabka - convenience concept Poland, where more than 2,000 shops are being operated
and 200 shops being opened annually;
• Zabka – the new format shops Freshmarket, established in 2009 in Poland;
• Zabka Czech Republic - convenience and supermarket concept.

Key figures (2008):

• Annual revenues of €440m
• EBIDTA of €18m

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 11

We see
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Real hands-on
We focus on businesses in which
we can use our expertise. We take
a very active part in managing the
companies in our portfolio.

Penta is an investment group founded in 1994. It is active in the area of private equity
and real estate, controls almost 30 companies and provides more than 20,000 jobs.
In 2007, its portfolio companies reported consolidated revenues of EUR 1.3 billion.
Penta’s private equity investments have recorded an average IRR of 50% since 2000.
www.pentainvestments.com

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 12
Roundtable Discussion
Cross-Border Merger Case Study
There is an ever-increasing demand in the business sector to find the easiest way for companies to cooperate and restructure themselves
across borders. This demand was supported by the European Directive 2005/56/EC of the European Parliament and the Council on cross-border
mergers of limited liability companies (Directive) by proposing a simplified legislative framework. The legal basis of the Directive is article 44 of
the EC Treaty with regard to the freedom of establishment. The Directive has been implemented into the Hungarian legal system by the Act CXL
of 2007.
Furthermore, Hungary has implemented the Council Directive 90/434/
EEC of 23 July 1990 on the common system of taxation applicable to
mergers, divisions, partial divisions, transfers of assets and exchanges
of shares concerning companies of different Member States and to
the transfer of the registered office, of an SE or SCE, between Member
States (‘Merger Directive’) and Council Directive 2006/112/EC of 28
November 2006 on the common system of value added tax (‘VAT
Directive’) so that the tax treatment of cross-border mergers is also
harmonised.
In the following case study, we are introducing a scenario where a cross-
border merger is conducted between two companies which have their
registered seats in different member states of the EU, a pre-condition for
the application of cross-border merger law (cross-border element).
1. Background
1.1 Company A is a limited liability company duly registered under
Austrian law. 100% of its quotas are held by a holding company
registered in Austria. Company B is a limited liability company and duly
registered under Hungarian law. 100% of its quotas are held by a holding
company registered in Slovenia.
1.2 Company B would merge into Company A by way of an absorption
and, following the merger, Company A would keep its legal entity.
2. Universal succession
2.1 It is a general characteristic of cross-border merger law that the
company being acquired ceases to exist and all of its assets and liabilities
are transferred to the new entity (universal succession). However,
additional procedures need to be conducted and rules remain applicable,
for example, for the registration of the change of ownership in the case
of real estates and registered movables. In the case of permits and
licenses, the notification of the issuing authorities is mandatory and,
in particular cases, the approval of the issuing authority needs to be
obtained as well.
2.2 If the company being acquired has more members, then they too
become members of the new entity; however, any shareholder of the
predecessor company may decide not to participate (i.e. remain a
shareholder) in the successor company (an ‘exiting shareholder’). In
such a case, the exiting shareholder is entitled to the relevant portion of
the net assets of the predecessor company.
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3. Competition law aspect
It should be added that apart from industry-specific regulatory
notification or licensing requirements, a merger may be subject to
Hungarian or EU merger control depending on whether certain turnover
thresholds of the participating groups of companies are exceeded.
Unless EU merger control thresholds are met (which we do not set
out in detail) the Hungarian competition act (Act LVII 1996 on the
prohibition of unfair trading practices and unfair competition) requires
the prior authorisation of the merger as well as the agreement from the
Hungarian Competition Authority.
4. Steps of the merger
As a first step, a decision of the general meeting of both Company A and
Company B is needed to start the merger process. Further decisions
are then required to begin carrying out the merger process, such as
instructing the management to prepare the common draft terms of
cross-border merger, to draft a statement of assets and liabilities for
both companies and to select an auditor.
The applicable law contains a list of compulsory particulars that
constitute the minimum content of the common draft terms, which must
be published as prescribed by law at least one month before the date of
the general meeting which is to decide on them.
At least thirty days before the date of the general meeting, the common
draft terms must be published by the company in the Official Journal in
the countries of registration of Company A and Company B.
The management of the merging companies must prepare a report on
the proposed cross-border merger for the members and employees that
explains the legal and economic aspects of the cross-border merger and
its implications on creditors and employees. The management report
must include all implications of the cross-border merger to employees.
If there is a workers’ council, the report must be made available to the
workers’ council (or the employees) at least 30 days before the common
draft terms of the cross-border merger is approved by the supreme body
of the merging company. The workers’ council has the right to provide an
opinion which is to be attached to the management report.

An independent auditor’s report on the merger must be drawn up. It will
not be required if all the members of each of the companies involved in
the merger have so agreed. The auditor’s report and the proposed cross-
border merger report must be made available at least one month before
the date of the general meeting to the shareholders, notwithstanding
that the statements of assets and liabilities and inventories need to be
approved by an accountant.
If there is a supervisory board at either of the two companies, the
supervisory board must offer an opinion on the proposal for the cross-
border merger issued by the management of the company for the first
general meeting. The approval of the supervisory board may be required
for the cross-border merger if so provided in the Articles of Association.
However, if the supervisory board refuses to grant its approval of the
respective decision, the management of the company may convoke the
general meeting to replace or substitute – as the case may be – the
resolution of the supervisory board.
On the basis of the documents referred to above, the general meeting
of both Company A and Company B must decide on the approval of the
common draft terms of the cross-border merger and about the draft
statement of assets and liabilities and draft inventories for the merging
companies and for the successor.
Following the execution of the common draft terms, Company A and
Company B must publish two consecutive notices in the Official Journal
within eight days after the approval of the common draft terms by all
companies.
5. Worker participation
The general principle as regards the employees’ rights of participation
is that national laws governing the company resulting from the cross-
border merger will apply, which is Austrian law in our case. We note
that under Hungarian law, if the resulting company has more than 200
employees, the establishment of a supervisory board is mandatory and
the participation of the employees needs to be one third of the members
of the supervisory board.
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Roundtable Discussion
6. Operation of Company A in Hungary following the merger
Following the merger, Company A can operate in Hungary either
cross-border from Austria or through establishing a branch office or a
subsidiary in Hungary. We note here that according to the relevant ECJ
case law and Hungarian laws, if the operation in Hungary can qualify
a permanent establishment because the services rendered through
permanent representatives do not have a cross-border characteristic
anymore, Company A will be obliged to establish a branch office. We
note that in case of a financial service provider in the EEA, there are more
beneficial rules applicable to obtain operation permits for branch offices
than for subsidiaries.
7. Approval by the Company Court
Management of Company B must file an application for the issuance
of the pre-merger certificate to the Hungarian Court of Registry. The
Hungarian Company Court must issue a pre-merger certificate attesting
to the proper completion of the pre-merger acts and formalities.
The management of Company A must file an application for registration
with the Austrian Court of Registry. The merger is legally effective upon
registration of the merger in the Austrian Commercial Register in
compliance with the relevant Austrian laws.
After registration of the merger in the Austrian Commercial Register,
the Hungarian Court of Registry deletes Company B from the registry of
companies upon notice of the registration of the merger received from
the Court of Registry of the absorbing (successor) company.
8. Tax aspects
Based on the Act CXL of 2007, legal succession resulting from cross-
border transformation of companies is recognised by Hungarian tax
law. Thus, in general, rights and obligations pertaining to the legal
predecessor (i.e. Company B) will transfer to the successor company
(i.e. Company A). The economic presence of Company A in Hungary
following the merger should qualify as a permanent establishment
for tax purposes, unless it terminates its business activity in Hungary.
Consequently, Company A should register a branch office with the
Hungarian court of registration.
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 14
Roundtable Discussion

8.1 Corporation tax

Hungary implemented the EU Merger Directive into the Hungarian

tax law introducing the concept of qualified transformation (referred
to as ‘merger’ by the Merger Directive). Hungarian taxpayers meeting
the requirements set forth for qualified transformations may opt for a
beneficial corporate tax treatment.

In the course of the merger, the transfer of assets and liabilities of

Company B could either be performed at book value or at fair market
value for book purposes. In case the transformation is performed
at book value, there should be no Hungarian corporate tax effect
either at Company B or Company A. However, in case Company B
decides to revalue its assets and liabilities for book purposes, i.e. if
the transformation is performed at fair market value, the revaluation
difference between the book value and the fair market value of the
assets and liabilities shall adjust the corporate tax base and thus, in
case of a potential gain, it could result in Hungarian corporation tax
liability at Company B. Applying the referred beneficial rules of qualified
transformation, the corporate tax liability arising from the revaluation
gain can be deferred; Company A and Company B shall determine the
corporate tax liabilities as if the transformation had not taken place.

8.2 Value added tax

In line with the relevant EU regulation, transfer of assets and liabilities

during the transformation is not subject to Hungarian value added tax,
provided that certain requirements are met. The most important of the
referred requirements is that the transformation would be subject to
Hungarian value added tax if Company A does not qualify as a Hungarian
taxpayer following the transformation.

8.3 Transfer tax

Transfer of real property held by Company B during the transformation is

not subject to transfer tax in Hungary; however, as of 1 January 2010, this
exemption will apply to qualified transformations only.

8.4 Local taxes

No local tax liability would arise in relation to the transformation.

by János Tóth, György Kovács and Mihály Harcos

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 16
Roundtable Discussion

Historical data

Top deals Q3 2008-Q1 2009

Cee
Announced Status Target company Target dominant Target dominant Bidder company Bidder dominant Seller company Seller Deal value
date sector country country dominant (€m)
country
07-Apr-09 C JSC Gazprom Neft Energy, Mining & Russia OAO Gazprom Russia ENI SpA Italy 3,089
(20% stake) Utilities

30-Mar-09 C Bashkir Oil and Energy Energy, Mining & Russia AFK Sistema Russia Agidel-Invest LLC; Inzer-Invest LLC; Ural- Russia 1,894
Group Utilities Invest LLC; Yuryuzan-Invest LLC

02-Jun-09 P OAO Rostelecom (40% TMT Russia Deposit Insurance Russia KIT Finance Russia 1,513
stake) Agency;
Vnesheconombank
30-Mar-09 P MOL Hungarian Oil Energy, Mining & Hungary OJSC Surgutneftegaz Russia OMV AG Austria 1,415
and Gas Public Ltd Utilities
Company
(21.2% stake)
18-Nov-08 C Masshtab Real Estate Russia Avgur Estate Russia Investbuilding Group Russia 1,189
(49.91% stake)
27-May-09 P OAO Novatek Energy, Mining & Russia Volga Resources Luxembourg Cartagena Development Inc Russia 1,125
(13.3% stake) Utilities SICAV SIF SA

02-Sep-08 C INA Industrija Nafte dd Energy, Mining & Croatia MOL Hungarian Oil Hungary 870
(22.15% stake) Utilities and Gas Public Ltd
Company
14-May-09 C Kompania Piwowarska Consumer Poland SABMiller plc United Kingdom Kulczyk Holding SA Poland 818
SA (28.1% stake)

31-Jul-08 C Nova Television Bulgaria TMT Bulgaria Modern Times Group Sweden Antenna Group (Greece) Greece 620
MTG AB

03-Mar-09 C OJSC Polyus Gold (20% Energy, Mining & Russia Suleiman Kerimov Russia Vladimir Potanin (private investor) Russia 541
stake) Utilities (private investor)

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 17

Roundtable Discussion
Hungary
Announced Status Target company Target dominant Target dominant Bidder company Bidder dominant Seller company Seller Deal value
date sector country country dominant (€m)
country
30-Mar-09 P MOL Hungarian Oil Energy, Mining & Hungary OJSC Surgutneftegaz Russia OMV AG Austria 1,415
and Gas Public Ltd Utilities
Company
(21.2% stake)
30-Sep-08 C Hungarian Power Energy, Mining & Hungary Matra Power Plant Hungary Hungarian Power Companies Ltd; Matra Hungary 208
Companies Ltd (assets); Utilities Generation Co Power Plant Zrt
Matra Power Plant Zrt
(assets)
04-Aug-08 C ASA Epitoipari Kft Construction Hungary Consolis Oy Ab Finland 100

12-Dec-08 C Papai Hus Zrt Consumer Hungary Papa 1913 Hungary Vectigalis Hungary 17

29-May-09 P International System TMT Hungary Magyar Telekom plc Hungary 10

House Ltd

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 18
Roundtable Discussion

Overall M&A trends in CEE Geographic split of CEE

M&A activity H1 2009: VOLUME

300 40,000 9%
Russia
2%
35,000 2% Poland
250
3%
Czech Republic
30,000 4% 38%
Value of deals (€m) Romania
Volume of deals

200

5% Ukraine
25,000
150 Hungary

20,000 Slovakia
9%
100 Bulgaria
15,000
Serbia & Montenegro
50 Other
10,000
12%

0 5,000 16%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009

Volume of deals
Value of deals (€m)

Overall M&A trends in Hungary Geographic split of CEE

M&A activity H1 2009: VALUE
20 2,500 5%
1%
1%1% Russia
2%
Hungary
7%
2,000
Poland
15
Value of deals (€m)

Romania
Volume of deals

1,500 9% Macedonia

10 Serbia & Montenegro

1,000 Lithuania

Other
5
500
74%

0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009

Volume of deals
Value of deals (€m)

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 19

Roundtable Discussion
Geographic split of Hungarian Geographic split of Hungarian M&A
M&A activity H1 2009: VOLUME activity H1 2009: VOLUME

6% 2%
Transportation 6%
18% Energy, Mining & Utilities
6%
Consumer Construction
6% Energy, Mining & Utilities Other

Industrials & Chemicals

6%
TMT

Business Services
17%
Construction

12% Financial Services

Defence

12%
17%
92%

Deal size split of Hungarian M&A

activity Q3 2008-Q2 2009: VOLUME
5%
1%
1%1% Russia
2%
Hungary
7%
Poland

Romania

9% Macedonia

Serbia & Montenegro

Lithuania

Other

74%

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