Central and Eastern Europe mergers and acquisitions first quarter 2024 (2024)

M&A in the CEE region started 2024 on a cautious note as investors navigate a complex geopolitical and economic environment.

The Central and Eastern Europe (CEE) region started 2024 on a slow pace, recording 224 deals worth a combined US$5.4b, a 58% decline in terms of deal value and 27% decline in deal count compared with the same period in 2023. 1Q24 saw only one big-ticket (US$1b+) deal as against five such deals in 1Q23.

On the macroeconomic front, the region continues to struggle from headwinds, including subdued domestic demand and weak external demand limiting growth prospects for the industrial sector as well as other exports.

Aided by downside inflation surprises, both the Czech National Bank (CNB) and the Hungarian National Bank (MNB) continue to progress with monetary policy normalization. Given the lags in monetary policy transmission, this will likely give little impetus to growth before late 2024. But it should prove a welcome boost for credit flows and investment heading into 2025.

While the overall CEE M&A activity remained subdued in 1Q24, Poland led in terms of deal volume and Czechia in terms of deal value

Within CEE, Poland continued to be the most active nation in terms of deal volume, although deal volume was down 28% YoY and 39% QoQ. The nation recorded 59 announced deals totaling US$262m in 1Q24. A majority of deals were focused on the technology and consumer products and retail sectors.

The technology sector accounted for almost a fifth of the total deal volume in Poland in 1Q24. In one of the key deals in the sector, a Polish company acquired another domestic provider of an SFA suite of proprietary products for sales management, procurement and monitoring. The acquisition aims to strengthen the acquiror’s position as a leading provider of IT solutions and services for the public and private sectors in Poland and the region.

Czech Republic came up as the busiest country in terms of deal value in 1Q24. Deals in energy sector pushed the country’s deal value as one of the biggest deals in the CEE region so far in 2024 took place in the country. The biggest deal in the country in 1Q24 was a utility company’s acquisition of an operator of gas distribution networks in Czech Republic to enhance its position in the Czech energy market, particularly in the transition toward more sustainable energy sources.

Technology remained at the forefront in 1Q24 in terms of the number of deals

The technology sector maintained its top position in terms of number of deals, with the first quarter of 2024 recording 54 deals worth US$612m. However, it marks a 37% decline in deal value and 23% decline in deal volume compared with 1Q23.

Domestic deals dominated the technology sector M&A landscape, with Poland and Turkey leading in terms of the number of deals and Greece leading in terms of deal value. Geographic and market share expansion was the key driver for deals in the sector. Within the sector, software continues to attract investor interest due to its subscription-based business models and predictable recurring revenues.

The energy sector was another strong performer amid transition toward clean energy solution

In 1Q24, the energy sector recorded 41 deals worth US$1.2b. Although activity was down both in YoY and QoQ terms, the sector constituted the second-highest deal count in 1Q24.

A combination of factors, including the potential for economic growth in the renewable energy sector and international pressure to transition to cleaner energy sources, have been driving deals in the sector.

The CEE region is also witnessing a surge in efforts to strengthen its energy infrastructure, driven by the need for a reliable and efficient energy supply chain. This push is motivated by several factors, including the desire to reduce dependence on Russian energy imports, harness renewable energy sources more extensively and enhance energy security. The region is working to create a more sustainable and resilient energy system, which is critical for its economic growth and development.

Consumer sector led in terms of deal value, propelled by consolidation and market expansion plans

The consumer sector emerged as the top performer in terms of cumulative deal value in 1Q24, although deal activity registered a decline both in YoY and QoQ terms. The sector had 39 deals worth US$1.2b in 1Q24, down 16% in deal value and 17% in deal volume compared with 1Q23 and down 69% in deal value and 11% in deal count compared with the previous quarter.

Despite the decline in deal activity, the sector emerged as the leading performer in terms of deal value in 1Q24. Consolidation to expand market presence and create cost synergies drove deals in the sector. Companies in the consumer sector are using M&A as a strategic tool to drive growth, improve efficiency and stay competitive in a rapidly changing market.

Domestic deals dominated the deal activity in 1Q24, while outbound deals almost doubled in value in YoY terms

Domestic deals continued to dominate deal activity in terms of both deal value and volume in 1Q24, though activity dipped from previous quarters. The CEE region recorded 125 domestic deals worth US$2.3b in the first quarter of 2024, down both in YoY and QoQ terms.

Similarly, inbound deal activity also lost momentum in 1Q24 as it recorded 72 deals worth US$1.2b, down 46% in deal value and 35% in deal count compared with 1Q23. The US, the UK, Germany and Switzerland were the most active acquirers for CEE-based targets.

On the outbound front, deal value almost doubled in 1Q24 (reaching US$1.9b) compared with 1Q23 as companies look to expand outside their headquarter country for capability enhancement. Germany, Italy and Finland were the most attractive target countries for CESA-based acquiror companies.

M&A activity in the CEE region is poised for an uptick in 2024

Despite ongoing geopolitical uncertainties, the macroeconomic outlook for 2024 is expected to stabilize and provide a boost to M&A activity. The CEE region is poised to benefit from improving market conditions, including decreasing inflation and interest rates, which will make borrowing cheaper and stimulate economic growth. Fiscal policy will continue to play a crucial role in shaping the region's M&A outlook, with countries like the Czech Republic focusing on fiscal consolidation and Poland likely to receive a fiscal boost from EU funds.

In response to evolving megatrends like climate change and the integration of cutting-edge technologies like generative AI (Gen-AI), companies are compelled to swiftly transform their business models to stay competitive in the present landscape. This urgency drives corporations toward M&A as a potent strategy to facilitate rapid transformation, enabling them to align with the emerging trends.

Furthermore, there is a significant amount of pent-up demand for deals, particularly from private equity (PE) firms, which have accumulated a large amount of dry powder (US$2.6t globally in 2023 as per a report from CapitalIQ) that needs to be deployed. To address this, PE firms are likely to adopt strategies such as joint ventures with strategic partners, acquiring minority stakes, and using continuation funds to enter new sectors or make acquisitions.

Overall, the CEE region is expected to see an increase in M&A activity in 2024, driven by improving market conditions, pent-up demand, and strategic opportunities in various sectors. This aligns with the findings of the recent EY CEO Outlook Pulse Survey, which indicates that more CEOs and investors anticipate an M&A uplift in 2024, with increased acquisitions and divestitures.

How EY can help

Discover EY Buy and Integrate M&A Advisory services. We help enable strategic growth through integrated mergers and acquisitions, joint ventures and alliances.

Read more

Divestment strategy: sell and separate

Portfolio management via divesting can help improve value from carve-out, spin-off or JV.

Read more

Central and Eastern Europe mergers and acquisitions first quarter 2024 (2024)
Top Articles
Latest Posts
Article information

Author: Msgr. Benton Quitzon

Last Updated:

Views: 5551

Rating: 4.2 / 5 (43 voted)

Reviews: 82% of readers found this page helpful

Author information

Name: Msgr. Benton Quitzon

Birthday: 2001-08-13

Address: 96487 Kris Cliff, Teresiafurt, WI 95201

Phone: +9418513585781

Job: Senior Designer

Hobby: Calligraphy, Rowing, Vacation, Geocaching, Web surfing, Electronics, Electronics

Introduction: My name is Msgr. Benton Quitzon, I am a comfortable, charming, thankful, happy, adventurous, handsome, precious person who loves writing and wants to share my knowledge and understanding with you.