The days of no offers

For several months, Turkey has been experiencing the most extraordinary times in its history. Amidst all the confusion, one of the most striking issues related to the economy is that mergers and acquisitions have come to a halt. Whatever the sector, all companies that had until recently been the focus of mergers and acquisitions say that there has been a striking decline in the number of offers.

They say that, in addition to developments in the global economy, the reason for this is the change in the political and economic conjuncture in Turkey. When asked “Will the mergers and acquisitions market pick up again in the near future?” they do not have a clear answer.

Over the last few years, there is virtually no company in Turkey which hasn’t had someone knocking on its door. During this period many companies in every sector have realized important partnerships with investment funds or institutions looking to make strategic investments.

But the political and economic developments of recent months have significantly changed this picture. Today, everybody is saying that merger and acquisition offers have abruptly ceased.

Mark Mobius, who heads the Emerging Markets Group at Franklin Templeton, knows the money markets very well and closely follows every movement, confirms the slowdown in Turkish mergers and acquisitions. “The ignoring of legal regulations, the inclusion of foreign investors in some judicial investigations and government pressure have been cause for concern. This is the reason for the recent slowdown in Turkey,” he says.~

EVERYONE HAS WITHDRAWN INTO THEIR SHELL
Many owners and executives can confirm the change in the situation regarding mergers and acquisitions.mAkman Holding Board Chair Ali Akman says that over the last three months both local and foreign investors have virtually disappeared from the Turkish market.

Civil Board Chair Mustafa Yıldıran says that compared with last year there has been a significant decline in the offers of partnerships and acquisitions. “We knew that there would be a slowdown in investments in emerging economics as a result of the FED tapering and the turbulence in the global economy.

The fact that this is an election year in Turkey made things a little more difficult,” he notes. Sinpaş Yapı General Manager Ahmet Çelik says that there has been a decline in the frequency of visits from foreign investors in particular. “They are waiting to see what will happen in Turkey. Foreign capital won’t come to a country where there is pessimism and turbulence.”

WHY HAS THE APPETITE DECLINED?
Investment funds, which are at the heart of merger and acquisition activity, admit that they are now knocking on the doors of a smaller number of companies. Turkven General Manager Seymur Tarı notes that there has been a slowdown in the opportunities coming from investment banks.

He says that this is because the company owners believe that, under the current market conditions, it is better to put things on hold. Tarı says that there has been a slowdown in the interest of foreign funds in Turkey. “Strategic investors are trying to conclude their ongoing negotiations. In the months to come, their appetite may also wane,” he says.~

Nord Holding Türkiye President Servet Topaloğlu reports that their business partners abroad have begun to adopt an attitude of ‘let’s wait and see what happens’. “As a result, the two sides don’t come together with the same high motivation.

The main reasons for this are that countries which have been in difficulties for the last five years, but which are relatively better at applying corporate management principles, have started to become more attractive and the uncertainty that has recently emerged in our country.”

WILL THE SLOWDOWN CONTINUE?
Coming to the general situation in mergers and acquisitions over the months ahead. There are different views about what will happen. Some think that the political tensions in Turkey will subside and that attractive companies will once again be targets for takeover bids, while others predict that the uncertainty will continue for some time yet.

For example, KPMG Türkiye Company Partner Tayfun Pişirir says that, after the local elections, the market will offer good opportunities, particularly for companies which have cash. “The rise in the exchange rate will make Turkish assets more attractive for foreigners and companies with high financial debts will be more open to partnerships in order to lighten their burdens,” he says.

THE POLITICAL IMPACT IS IMPORTANT
Companies do not look at developments from the same perspective as executives managing funds and corporate financial institutions. Hakan Cem Akbulut, the deputy board chair of Akbulut Holding, which has recently been the focus for mergers and acquisitions, is one of those who thinks that, in terms of offers, the picture will become more negative. ~

Although he notes that it is difficult to make a forecast, Akbulut says: “But it looks as if we shall experience a negative fallout from the political problems in our country.” Abalıoğlu Holding Board Member Cafer Sadık Abalıoğlu says that the recent political developments may result in a decline in investors’ interest in mergers and acquisitions in the future.

LEVENT BOSUT / INHERA CAPITAL FOUNDING PARTNER
“INVESTMENT DECISIONS ON HOLD"
AN OPPORTUNITY CREATED
The negative developments have not resulted in a decline in the appetite for investments of those financial investors who know the conditions in Turkey and are focused on the country. In fact, it is just the opposite as companies have become cheaper in foreign currency terms and this has created an opportunity.

INVESTORS ARE CAUTIOUS
We are observing that, in several projects where we are engaged in negotiations with both buyers and sellers, investors have become a little more cautious. Most of them are slowly digesting what the developments mean and beginning to put their investment decisions on hold. Some foreign investors may be able to achieve positive results from what is happening.

PROFITABLE INVESTMENTS
There won't be any decline in the activities of financial funds which are focused on Turkey. They will see what is happening as an opportunity and make profitable investments. The activities of foreign financial funds will continue but they will slow down. At a time when we have become accustomed to shock developments, all of these things depend on future political and economic developments.