Takeover Season on WSE to Enter Decisive Phase
September 28, 2006
Takeover Season on WSE to Enter Decisive Phase. Check it out:(Polish News Bulletin Via Thomson Dialog NewsEdge) In the opinion of analysts, the number of mergers and acquisitions in which the companies listed on the WSE are to play key roles will continue to grow. However, apart from Netia and Prokom, they will mainly be smaller firms partially controlled by foreign investors. For the last few months, mergers and acquisitions have been propelling business on Western stock markets. The most spectacular transactions were concluded in the financial, oil, extraction and telecom sectors. "Companies representing several market segments had accumulated considerable wealth which they then needed to invest. Paying out large dividends would have meant that their management boards had no vision of future enterprise development. Instead, they preferred to search for opportunities to strengthen their position by takeovers," says Deutsche Bank analyst Krzysztof Kaczmarczyk.
While in Poland these opportunities are much more limited, a similar development path was chosen by a number of listed companies operating on the domestic market, such as IT firms Emax and ComputerLand or ceramics manufacturers Cersanit and Opoczno. "In the near future, we will probably see the completion of more transactions of that type. However, they will be carried out more by second-rank businesses, not blue chips. The only likely major players to engage in such endeavours may be Prokom and Netia," says head of Analysis Department at DM BZ WBK brokerage house Marek Juras. Prokom remains one of the few Polish IT companies targeted by international corporations representing the sector. Meanwhile, the attention of its charismatic owner and CEO Ryszard Krauze has recently shifted to the oil industry. As for Netia, the former rival of TPSA has lately been experiencing a bad streak of luck. The failure of its current development strategy means its owner, Icelandic investment fund company Novator, may increase the pressure to realise profits from the investment.
As for the situation in the domestic pharmaceutical sector, CDM Pekao experts point out that the five leading drug distributors control around 60 percent of the market, whereas in Western European states it is usually three companies that hold an over 70-percent share of the local market. Moreover, so far no major foreign enterprise operating in this line of business has decided to enter the Polish market, despite its considerable size. In other words, it is only a matter of time before mergers and acquisitions take place in this sector as well. In the opinion of Andrzej Szymanski from DM BZ WBK, the only obstacle to carrying out such operations is the elevated price expectations of the owners of domestic drug distributors.
DI BRE Bank experts do not rule out that the takeover craze will start anew in the construction industry. In the past, sector investors have gained a presence in Budimex, Mostostal Warszawa and the no-longer-listed Exbud. Moreover, the last few months have seen the merger of Polimex and Mostostal Siedlce. In the opinion of Michal Marczak from DI BRE Bank, large construction companies will soon begin to acquire their subcontractors. A step in that direction has already been made by Polimex, which in return for its own shares intends to take over Energomontaz Polnoc. However, many analysts agree that it is Polimex that will soon fall prey to a major investor.
"If in the next few years annual GDP growth rate remains between 5-6 percent, foreign enterprises may presently have one last chance to purchase domestic companies at a moderate price," says Marczak. However, in the judgment of head of CDM Pekao Analysis Department Sobieslaw Pajak the current market prices of Polish firms are in most cases already too high for investors from abroad and are not sufficiently justified by expected profits. Nonetheless, it is widely believed that Goodyear will eventually acquire the remaining stake in domestic tyre manufacturer Debica. By the same token, Heineken and Accor, which are strategic investors in Zywiec brewery and Orbis travel agency, respectively, are expected to finally call for the stakes remaining in the hands of minority investors.
Copyright 2006 Polish News Bulletin of the British and American Embassies. Source : Financial Times Information Limited.
Related Tags: mergers acquisitions, companies, market, Polish, investors, domestic
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