Overview of M&A Transaction in Belarus in 2010
June 7, 2011 By Glimstedt Law Firm
Recently, M&A activity in the Republic of Belarus has been increasing. Despite the fact that in comparison with other member-states of the Commonwealth of Independent States (CIS), the scope of M&A transaction in the Republic of Belarus is much lower, rates of growth of M&A market in Belarus have almost doubled as compared with 2009.
According to the experts, the total scope of M&A transactions in Belarus has increased by 1,9 times in 2010 in comparison with 2009 and has reached 568 million U.S. dollars.
Telecommunication, banking and finance, retail and wholesale sectors are the most attractive sectors for investors.
The most significant M&A transactions in 2010 on Belarusian market are the following:
-Acquisition of 30% of shares of an Austrian company Telecom Austria AG by the sole owner of the first-rate mobile operator VELCOM. The cost of the shares is more than 450 million dollars.
-The first merger in banking sphere which has been carried out without foreign capital (a merger of Tehnobank and Belarusian Industrial Bank).
-Privatization of 52% of shares of the Minsk watch plant "Luch" by Swiss watch company "Franck Muller". The transaction is evaluated in 12 million dollars.
-Privatization of state-owned hotels in Bobruisk and Mogilev by Russian private company Amaks Hotel&Resorts. The value of the transaction is 2,5 million dollars.
-Acquisition of minority holding of shares of Belarusian breweries. 17 % of shares of JSC Olivaria were acquired by Danish company Calsberg, and 2,2 % of shares of JSC “Lidskoe pivo” were sold to Finnish company Olvi plc.
The acquisition of 80% of shares of the second-largest private company B&B Insurance by Franc company AXA Group has not been completed. Closing of the transaction is being planned in the first quarter of 2011.
Despite the fact that M&A process has intensified, transnational corporations do not tend to take active development of the Belarusian market. New investors in the market do not appear. Major mergers and acquisitions are generally carried out by companies that have entered to the Belarusian market and are just now increasing their assets.
Poor development of capital market and minor privatizations are the major constraints at the moment. The development of mergers and acquisitions in Belarus is also limited by the non-transparency of transactions and significant state support of the country's economy, ending up by overpricing of state-owned enterprises that can be interest to investors.
It is hoped that the repeal of the moratorium on the turnover of shares of companies established in the process of preferential privatization and improvement of the conditions of privatization shall have a positive impact on the investment attractiveness of the country and appearance of new strategic investors in Belarus.
ABOUT THE AUTHOR: Eugenia Urodnich
The Law Firm Glimstedt provides its services in Belarus from December, 2008. We represent one of the leading law firms in Sweden and the Baltic States. Glimstedt is famous for an outstanding quality service in many fields of the economic law, including the corporate, banking, regulation of the FEA field, regulation of the power-generating sector, privatization, and mergers and acquisitions.
Copyright Glimstedt Law Firm
More information about Glimstedt Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Telecommunication, banking and finance, retail and wholesale sectors are the most attractive sectors for investors.
The most significant M&A transactions in 2010 on Belarusian market are the following:
-Acquisition of 30% of shares of an Austrian company Telecom Austria AG by the sole owner of the first-rate mobile operator VELCOM. The cost of the shares is more than 450 million dollars.
-The first merger in banking sphere which has been carried out without foreign capital (a merger of Tehnobank and Belarusian Industrial Bank).
-Privatization of 52% of shares of the Minsk watch plant "Luch" by Swiss watch company "Franck Muller". The transaction is evaluated in 12 million dollars.
-Privatization of state-owned hotels in Bobruisk and Mogilev by Russian private company Amaks Hotel&Resorts. The value of the transaction is 2,5 million dollars.
-Acquisition of minority holding of shares of Belarusian breweries. 17 % of shares of JSC Olivaria were acquired by Danish company Calsberg, and 2,2 % of shares of JSC “Lidskoe pivo” were sold to Finnish company Olvi plc.
The acquisition of 80% of shares of the second-largest private company B&B Insurance by Franc company AXA Group has not been completed. Closing of the transaction is being planned in the first quarter of 2011.
Despite the fact that M&A process has intensified, transnational corporations do not tend to take active development of the Belarusian market. New investors in the market do not appear. Major mergers and acquisitions are generally carried out by companies that have entered to the Belarusian market and are just now increasing their assets.
Poor development of capital market and minor privatizations are the major constraints at the moment. The development of mergers and acquisitions in Belarus is also limited by the non-transparency of transactions and significant state support of the country's economy, ending up by overpricing of state-owned enterprises that can be interest to investors.
It is hoped that the repeal of the moratorium on the turnover of shares of companies established in the process of preferential privatization and improvement of the conditions of privatization shall have a positive impact on the investment attractiveness of the country and appearance of new strategic investors in Belarus.
ABOUT THE AUTHOR: Eugenia Urodnich
The Law Firm Glimstedt provides its services in Belarus from December, 2008. We represent one of the leading law firms in Sweden and the Baltic States. Glimstedt is famous for an outstanding quality service in many fields of the economic law, including the corporate, banking, regulation of the FEA field, regulation of the power-generating sector, privatization, and mergers and acquisitions.
Copyright Glimstedt Law Firm
More information about Glimstedt Law Firm
View all articles published by Glimstedt Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
