ECONOMY

M&A activity grows but stakes shrink

The number of mergers and acquisitions in Greece rose by 24 percent in 2004 from the year before to 209. About two-thirds of them involved domestic companies. Most of the rest were investments of Greek companies abroad, as in the previous two years, while foreign firms increased their presence in Greece by 11 percent compared to 2003, a PricewaterhouseCoopers (PwC) survey shows. However, the total amount involved dropped to 2 billion euros in 2004 from 3 billion euros in 2003, which is partly due to the rise in minority stake acquisitions compared to majority stake purchases, making packages cheaper per transaction. The average transaction value fell to 28 million euros from 56 million euros in 2003. Most investing companies, as in 2003, were major firms whose turnover exceeds 50 million euros, while the number of investments by holding companies was particularly low. The fact that most transactions last year were aimed at acquiring minority stakes, unlike in 2003, is evident by the smaller share of transactions exceeding 100 million euros, which was 6 percent in 2004 from 16 percent in 2003. The most active sectors in mergers and acquisitions last year were banks and other financial services, technology, telecoms and industry, which accounted for 44 percent of the total number. PwC estimates that Greek banks will maintain their investment interest in the Balkans and possibly Turkey. It sees a strong likelihood that investment by consortiums will intensify in the energy sector. Regarding banks, the report notes there is currently no significant pressure among major players for further concentration in the sector given their high profit levels, the continuing growth of the market and the difficulty in cutting expenses in case of a merger. In the medium term, though, the Greek market will be closer to maturing, increasing the pressure for concentration. Should a major foreign or local bank decide to acquire one of the big five banks of Greece, a series of significant defensive mergers is seen following.