1. The Bulgarian M&A market in 2010 and prospects for 2011
2nd November, 2010

2. The Bulgarian M&A market peaked in 2008
The Bulgarian M&A market peaked in 2008
A 10-year view on the Bulgarian M&A market
5,000
Deal Value (EUR mln)
No of Deals
4,004
4,000
155
3,576
136
3,277
3,000
2,437
2,493
2,319 80
2,000 73 46
1,000 30 6
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
For the period 2000 – 2010, 731 deals were executed in Bulgaria. The total value of these transactions amounts to €19.79 bn
The peak of M&A activity in the country occurred in 2008 with 155 transactions, with total value amounting to over €4 bn
Source:

3. Most M&A activity has been concentrated in TMT, Real Estate, and Financial Services
Deal value by industry (EUR mln)
Deal volume by industry (Number of deals)
5,000
4,004
4,000
155
3,576
136
122
3,000
2,493 80
2,000
1,000
741
2007
2008
2009
2010
2007
2008
2009
2010
Pharma
General Manufacturing
Utility
Trade
Other
Food & Beverage
Financial Services
Real Estate & Construction
TMT
Since 2007 till today, the absolute industry champions are TMT (€2.8 bn), followed by Real Estate & Construction (€2.2 bn), Financial Services (€1.65 bn), and Food & Beverage (€1.59 bn)
The leading sectors by number of deals for the period are Real Estate & Construction (123) , TMT (74), Financial Services (57) and General manufacturing (57)
Source:

4. Top 10 Deals in Bulgaria in 2010
Q vs. Q3 2009
Quarterly development of the market
1.000
806 27
500
Q3, 2009
Q3, 2010
Q1, 2010
Q2, 2010
Q3, 2010
Deals Value (EUR mln)
No of deals
Deals Value (EUR mln)
No of deals
Source:

5. TMT and Real Estate dominated the M&A landscape in 2010
Deal value by industry (% of total)
Deals volume by industry (% of total) 1% 1% 1%
15% 0% 5% 0% 0% 5%
29%
58%
30%
15%
TMT
Other
Food & Beverage
Real Estate & Construction
General Manufacturing
Utility
Trade
Financial Services
Pharma
Deals in TMT, Real Estate & Construction and Trade sectors constitute 96% of the total deal value in 2010
In terms of volume, Real Estate & Construction sector dominates with 24 deals, followed by TMT and Trade sectors with 12 and 9 deals, respectively
Source: ISI

6. There is a notable absence of PE deals on the market in 2010%
There is a notable absence of PE deals on the market in 2010
Deals value by type of investor (% of total)
Deals volume by type of investor (% of total)
4,7%
0,3% 3% 3%
3,4% 1%
0,4% 5%
0,7%
0,4%
0,4%
40%
38%
89,5%
Bulgarian Strategic
Individuals
PE Fund
Government
Foreign Strategic
n/a
Bank
MBO
Foreign strategic investors dominate the landscape in terms of deal value, but are less in absolute number than local buyers
There is a notable absence of PE deals on the market
Bulgarian MBOs and bank repossessions are starting to appear on the market
Distressed sales and company reorganizations are driving a lot of the sales
Source: ISI

7. Investments by Bulgarian companies also decreased in 2010
Deal value and volume, Bulgarian companies investing in Bulgaria
Deal Value (EUR mln)
No of Deals 59 50 38 25 83 52 6
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Majority of Bulgarian companies investments in Bulgaria are up to €10 mln. Main investors are big holdings such as Eurohold, Chimimport, Alfa Finance Holding, Sopharma, and others
Majority of larger deals above €10 mln are privatizations
Source:

8. Deal value and volume, Bulgarian companies investing abroad
The level of investment of Bulgarian companies abroad has also decreased
Deal value and volume, Bulgarian companies investing abroad
150
Deal Value (EUR mln)
146
No of Deals 50 11 29 25 4 3 7
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
For the period 2000 – 2010, 49 cross-border transactions have been completed with a total value of €296.1 mln
Bulgarian investors are most active in the neighboring countries
Source:

9. Why deals don’t happen? Marketing Non-binding offers Due Diligence
Negotiations
Valuation gap
Lack of financing
Committment of buyers
Negative image of Bulgaria
Reduced attractiveness of CEE
Stricter due diligence requirements by buyers
Less than perfect accounting, corporate governance, legal practices of Bulgarian firms
The issue of theoretical risks
Time
Reps and warranties

10. %
Bulgaria’s overall international coverage is reasonable in absolute terms… but quality assessment of it is pending
Country share of voice in global print media
Int’l media coverage by region
Total number of articles: 12,387
100
100
100
100
100
1,618 articles 2% 2% 2% 1% 4% 1%
3,505 articles
12%
12%
10%
21%
28%
13% 6%
1,845 articles
15%
13%
22%
19%
25%
27%
2,580 articles
2,839 articles
59%
23%
49%
47%
37%
24%
Hungary
Bulgaria
Romania
Serbia
Slovakia
Hungary
Bulgaria
Romania
Serbia
Slovakia
Int’l vs. local media proportion of coverage by country
Middle East
Assia
Rest of the world
Russia
North America
Europe
Int’l media
Local media
Bulgaria’s overall FDI/M&A mention in the global media is on par with other countries in the region
Although, there is still room for improvement as far as quantity and quality is concerned
Hungary
Bulgaria
Romania
Serbia
Slovakia
Source: Commetric

11. Contacts Entrea Capital Address: 35/6 Nikola Vaptsarov Blvd
Sofia 1407, Bulgaria
Tel:
Tel/Fax:
Web: