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A Quick Look at the Competition Authority’s M&A Outlook Report for 2022

A Quick Look at the Competition Authority’s M&A Outlook Report for 2022

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The 2022 Mergers and Acquisitions (the "M&A") Outlook Report (the "Report") drafted by the Turkish Competition Authority's (the "Authority") Economic Analysis and Research Department regarding the transactions notified to the Authority in 2022 was published on the Authority's website on January 6, 2023.

In addition to the M&As reported in 2022, the Report also includes comparative analysis of the transactions examined in previous years, thus it not only outlines the framework of the commercial and economic mobility expected to take place in Turkey in the upcoming days but also sheds light on investors who want to invest in Turkey in the near future. Accordingly, in addition to taking a snapshot of the current situation of M&A and privatization transactions in Turkey on a sectoral basis, the Report also contains clues on how the next period will be shaped. Some of the highlights of the Report are summarized below.

21% Decrease in the Number of Transactions

In 2022, the Authority examined 245 M&As, 7 of which were privatization transactions. It is stated that 82 of these transactions, excluding privatizations, are related to companies with Turkish origin. In other words, target companies controlled within the scope of the said transactions are companies established in Turkey. The number of transactions examined by the Authority in 2021 has been decreased by 21%, from 309 to 245, in 2022. Although the number of transactions realized in 2022 decreased compared to the number of transactions in 2021, it is seen that the total number of transactions is above the average of the last 10 years (219).

Significant Increase in the Value of Transactions

In 2022, it was recorded that the total transaction value of the M&As examined concerning Turkey-based transactions was approximately TRY 86.2 billion, including privatizations. It is seen that the total transaction value of Turkey-based transactions is TRY 72 billion 210 million, excluding privatizations. In this respect, excluding privatizations in 2022, Turkey's transaction value is above the average of the last decade (TRY 32 billion) and has increased by approximately 70% compared to 2021.

Electricity Sector Ranks First Again

Just like in 2020 and 2021, the highest number of transactions in Turkey-based transactions in 2022 were realized in the field of "generation, transmission, and distribution of electrical energy," with 8 transactions, and the highest transaction value was realized in the same area with approximately TRY 8.35 billion. Transaction value in this sector corresponds to approximately 11% of the total value of the Turkish transactions reported in 2022 excluding privatizations. According to the classification made in terms of the field of activity / sectors of the 19 target companies subject to the transactions, the first area with the highest transaction volume in terms of transactions deemed to be of Turkish origin is "transportation and storage" with TRY 20.5 billion, following "electricity, gas, steam, and air conditioning production and distribution" with TRY 12.2 billion and "accommodation and food service activities" with TRY 4.7 billion.

Investors From the Netherlands and United Arab Emirates Share the Peak

In 2022, foreign investors invested in Turkish target companies in 36 separate transactions, among which the first place is shared by investors from the Netherlands and the United Arab Emirates, with five transactions each. The investment made by foreign investors in Turkish companies through M&A transactions in 2022 is stated as approximately TRY 43 billion in total.

Sectors Invested Worldwide

In the Report, a total of 181 transactions that foreign investors carried out globally in 2022, 36 of which are in Turkey and 145 abroad, are listed based on transaction value according to their economic fields of activity. Accordingly, among the sectors invested worldwide (i) Wholesale and retail trade and repair of motor vehicles and motorcycles (ii) Programming and broadcasting activities, (iii) Installation and repair of machinery and equipment, (iv) Manufacturing of basic pharmaceutical products, (v) Financial services and (vi) Manufacturing of chemical products sectors stood out the most.

15 Day Review Period

M&As notified to the Authority in 2022 were finalized after an average of 15 days from the date of the last notification without waiting for the statutory period of 30 days. Therefore, this may be taken into consideration in terms of determining the closing dates for M&A transactions planned to be carried out by the companies.

By Serra Haviyo, Partner, Nur Duygu Bozkurt Kadirhan, Senior Associat and Deniz Yontuk, Associate, Moral, Kinikoglu, Pamukkale, Kokenek