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.
