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The volume of M&A deals is growing

CzechInvest issues the M&A Report for the third quarter of 2021

The volume of M&A deals is growing Source: Adobe Stock

The third quarter brought forth an increase in the volume of mergers and acquisitions. Thanks to the slowdown in the spread of the coronavirus, when the market stabilised to a certain extent, investors gained greater certainty and thus gradually returned to the purchases that they had suspended during the lockdown. As in other areas of the economy, the phenomenon of deferred demand occurred also in the M&A segment. Experts believe that the final volume of transactions could exceed the pre-pandemic level of 2019. In the Czech Republic, there has also been a recent increase in interest in the sale of businesses established in the 1990s, whose owners often do not have anyone to hand their companies over to due to generational change.

The number of transactions carried out worldwide in technology companies is breaking records. Since the beginning of the year, a total of 9,222 agreements on the takeover of companies have been concluded in the estimated value of USD 264 billion. These deals are mainly strategic acquisitions of startups by technology giants that want to secure their position as market leaders in the future. These companies essentially follow the same pattern of first becoming dominant in their respective sectors, such as e-commerce for Amazon and search for Google, and then making acquisitions in new sectors in order to take over their competitors.
 
Czech Republic
In the third quarter, the strongest activity in the Czech M&A market was registered in the property and construction sectors, with forty announced deals. The second largest number of deals, thirty, was recorded in the retail and services sector, followed by the industrial manufacturing sector with sixteen deals.

A significant recent transaction is the merger of the Czech antivirus company Avast with the American firm NortonLifeLock, which specialises in identity-theft protection. Avast’s management hopes to achieve savings from the deal and for the company to be ranked among the twenty most influential software companies in the world. ETL Global is entering the Czech law firm Arrows. By acquiring a 50% stake, the German company intends to build up its position as a strong partner, while leaving room for current and new partners in the future. Following a successful transaction, when the holding company Solitea brought under its control a total of thirty companies from the Czech Republic and Slovakia, its management announced another acquisition plan involving the 100% purchase of Prytanis, a supplier of information systems for haulage companies and passenger transport operators, as well as shipping and logistics companies. The Cidem Hranice group is taking over Tomatex Otrokovice, which manufactures textile and leather parts for the automotive industry, supplying its products to prestigious brands such as Audi, Land Rover and Rolls-Royce. The Pelhřimov-based company Agrostroj, which is owned by entrepreneur Lubomír Stoklásek, has acquired Stoll Maschinenfabrik, a traditional German manufacturer of agricultural loading machines. Heluz Group is continuing to carry out acquisitions. With its purchase of Izos, the company intends to expand its line of products for the construction of energy-efficient buildings. Once the transaction is approved by the Office for the Protection of Competition, a new company operating under the name Heluz Izos will be established.

Details of selected mergers and acquisition are available in the attached report.

The M&A Report also contains news from the CzechLink capital-participation project, which has been in operation since August 2018. The project supports mergers, acquisitions and joint-venture partnerships between local and foreign investors and domestic parties interested in investing. The report also contains an overview of anonymised companies registered in the CzechLink project.

The M&A Report is published in electronic form on a quarterly basis. The next issue will be available in the first quarter of 2022. If you would like to receive the report directly, please contact czechlink@czechinvest.org.

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