Deloitte Optimistic for Turkey M&A After 2011 Deals Set Record

Deloitte & Touche LLP is “optimistic” about mergers and acquisitions in Turkey in 2012, mostly in medium-sized companies, and expects government plans to sell assets to dominate activity.

Energy, retail, internet retail, food and banking will lead Turkey’s M&A transactions this year, Deloitte Turkey’s corporate-finance partner Basak Vardar said in an emailed statement. The country had 241 M&A transactions last year, the highest in Turkey’s history, valued at about $15 billion, and foreign investors accounted for 74 percent of the total value of those deals, Vardar said.

Turkey has been a popular target for deals in recent years as companies seek to tap its $735 billion economy, which grew 8.2 percent in the third quarter of 2011, the fastest increase among Group of 20 countries after China. Diageo Plc (DGE), the London- based distiller, bought the Turkish spirits maker Mey Icki Sanayi Ltd. for $2.1 billion in February, while Jersey-based Vallares Plc (VLRS), an oil investment company run by former BP Plc Chief Executive Officer Tony Hayward, combined with the Turkish oil field developer Genel Energy International Ltd. in a $2.1 billion all-share reverse takeover in September.

“We are optimistic for mergers and acquisitions in 2012 despite all the financial troubles in Europe, a slowdown in global investment appetite as well as risks at home about inflation and the current account deficit,” Vardar said.

Government Asset Sales

Turkey’s government asset sales agency will auction off toll roads and bridges over the Bosphorus, sugar plants, the national lottery Milli Piyango and the natural-gas grid of the capital city, Ankara, according to the agency’s website. The country will also see private equity investments in medium-sized Turkish companies, Vardar said.

IC Ictas Insaat Sanayi & Ticaret AS bought the Trakya power grid from the government for $575 million yesterday, and Limak Holding, a Turkish builder, took over the port of Iskenderun for $372 million last week.

The value of transactions involving Turkish targets fell to $11.4 billion in 2011 from $13.6 billion in 2010, according to data compiled by Bloomberg. That figure doesn’t include several deals that haven’t closed, including the purchase last month by Khazanah Nasional Bhd (KNBZ) and one of its units of a 75 percent stake in the parent of Turkey’s largest hospital chain, Acibadem Saglik Hizmetleri & Ticaret AS (ACIBD), which valued the company at $1.68 billion.

Middle-capitalization transactions constituted 201 of the total deals and made up 22 percent of the entire transaction value last year in Turkey, Vardar said. Forty-six of the overall transactions in 2011 were done by private equity firms, she said.

Today, Carlyle Group, a U.S. private-equity firm, said it bought 48 percent of Bahcesehir Kolejleri, a Turkish education group. Other deals announced this week include Gazprombank OJSC (GZPR) unit Prima Energy Trading LLC’s plans to acquire 26 percent of Avrasya Gaz AS, a Turkish wholesale gas trader. Eastgate Mena LP, a private equity fund controlled by Eastgate Capital Group, will also buy a 49.8 percent stake in Fabeks Dis Ticaret AS, a Turkish textile maker.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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