Mergers, acquisitions cooling down in crisis .hurriyet2008-detailbox-newslink { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:none; color:#000000;} .hurriyet2008-detailbox-newslink:hover { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:underline; color:#990000;} ISTANBUL - The global crisis keeps razing expectations for local and international business circles, forcing them to revise investment plans. A report by Ernst & Young Turkey, which provides consultancy to international firms, shows there is a considerable decline in interest in mergers and acquisitions in Turkey

Despite the deepening effects of the global financial crisis in the last quarter of 2008, mergers and acquisitions, or M&As, in Turkey reached a total volume of $16.3 billion last year, according to an Ernst&Young report released yesterday.

The report estimated the overall volume of last year’s M&As, including those with no disclosed prices, to total $18.5 billion. Deloitte Turkey had revealed a similar report Jan.7, saying that the overall M&A volume for last year has reached $18.4 billion.

Rise in foreign share
A total of 172 M&A transactions whose prices were disclosed were realized last year. The global financial crisis loomed large in the last quarter and the overall M&A figure reached $16.3 billion in 2008, down from $25.5 billion in 2007.

Foreign investors' share in M&As, which was 66 percent with a $16.9 billion-worth transaction volume in 2007, increased to 73 percent with a $12 billion-worth transaction volume last year, according to the report. Since Turkish investors were less active in leading M&As last year, their share in M&As declined more than 50 percent compared to the previous year.

With a $5.7 billion transaction volume, the leading sector of 2008 in M&As was energy. In 2007, airport administration led transactions, with two large acquisitions. The privatization of Başkent Natural Gas for $1.6 billion was the top-priced transaction of 2008.

In terms of the number of transactions, industry sector ranked first last year, with 22 M&A transactions, while financial services was the leading one in this category in the previous year.

Considering Turkey's growing energy demand, domestic and international investors set their strategies to grab a share in this market, said the report.

The total volume of the top 10 M&As whose prices were undisclosed was $10.1 billion, as the privatizations and the other public sector-based transactions loomed large, said the report. The total volume of privatizations last year was $6.5 billion.

According to Ernst & Young, private equity funds performed better in M&As last year. They accounted for a total of $2.3 billion in transactions and their share raised 19 percent, whereas the figure stood at $1.9 billion in 2007.

Ernst & Young expects a slowdown for private equity fund activity in M&As in 2009 due to the global credit crunch. Private equity funds were mainly active in retail, food, media and entertainment sectors last year.

Gloomy picture for 2009
According to the report's forecast, depending on the overall global economic conjuncture, there would be considerable decline in M&As this year, but a likely positive atmosphere in the market would increase the M&A vibration to some extent at the second half.

The total volume of M&As would not be more than $10 billion this year, the report estimated, expecting investors to reconsider their investment plans due to the global economic turmoil.

The total transaction volume was expected to reach $20 billion, while volume of privatizations were expected to reach $10 to $12 billion in 2008, according to the forecasts in last year’s Ernst&Young M&A report.hurriyet