High levels of M&A activity in Croatia, originating from both domestic companies and foreign investors, are reshaping a number of sectors – primarily IT and media – according to Tarja Krehic, Managing Partner of Krehic & Partners in cooperation with Deloitte Legal.
“There is a lot of activity in the M&A market, and we see a markable increase in transaction numbers this year when compared to 2021 and 2020,” Krehic begins. “Also, we see a number of new investors moving in, including private equity funds and venture capital funds – which is a novelty for Croatian markets,” she says.
Zeroing in on the most active sectors, Krehic reports that IT takes first place. “There has been a lot of activity in the IT sector, primarily driven by M&A takeovers, such as, for example, those made by our unicorns,” she says. “Infobip took over a number of local, regional, and global start-ups, and Rimac entered into a joint venture with Bugatti, all of which engaged the IT sector and brought more investor attention to it,” Krehic explains.
“This is the first time in the history of our markets that we can see such a strong wave of novel kinds of companies taking charge, as opposed to traditionally strong players such as telecommunication companies.” Krehic characterizes this as a welcome trend in so far as it depicts not only the strength of the Croatian IT sector but also that “the manufacturing industry, as a whole, is doing great and that there is a lot of added value when doing business in our country.”
Krehic also highlights “one of the largest deals in the ICT sector: Nasdaq-listed outsourced digital services and next-generation customer experience provider TaskUs has acquired Heloo, a European and Croatian provider of outsourced specialized services.” She notes the acquisition “enhances TaskUs’ European language capabilities, diversifies its client mix with referenceable, EU-based clients, and helps to scale TaskUs’ global operations by expanding further into Eastern Europe,” with the buyer also benefitting from “strong cross-selling opportunities to Heloo’s clients across Germany, Austria, Switzerland, and Finland, among other countries.”
Additionally, Krehic also reports there is significant activity in the media sector. “Recently, we’ve seen RTL sold to CME for EUR 50 million, a regional media company owned by the Netherlands-based PPF Group. This made waves in the hitherto highly-condensed media market that saw little to no movement for almost two decades,” Krehic explains. “This transaction was also a ground-breaking one because it was the first one to have been completed following an overhaul of the electronic communications legal framework of 2021. The new set of regulations made the electronic media industry a very, very tightly and comprehensively regulated one, and this transaction paves the way for others,” she says.
Finally, Krehic shares that there is a noticeable trend of family-owned companies being sold. “After several decades of operating in an open market environment, there is a significant number of medium-sized companies that have been family-owned since inception, that are now changing hands,” she says. “Mostly, the investors that are coming in and scooping them up come from the US or Asia, in that way gaining a foothold in not only Croatian but also European markets,” Krehic explains. “IT companies, tourism companies, manufacturing businesses, and tourism entertainment sector players – these were but some of the targets for foreign investors coming in recently.”