Bloomberg News

Turkish Buyouts Seen Increasing as Buyers Bid More

February 09, 2012

(Updates with buyout statistics in third paragraph, energy sales from fifth.)

Feb. 8 (Bloomberg) -- Turkey may see more of its companies acquired as buyers raise offers to match premiums demanded by sellers, according to Utku Ozay, an executive director at Goldman Sachs Group Inc.

“The gap between valuations and buyers is decreasing, and that’s basically because buyers are increasing their valuations,” Ozay said at a conference on acquisition finance in Istanbul yesterday. “For the right story, there is willingness to pay more for Turkish companies. Prices are increasing, the multiples are increasing, so we may see more deals.”

Turkey had 114 mergers and acquisitions worth $9.3 billion last year, according to data compiled by Bloomberg. The country may attract between $12 billion and $13 billion in 2012, Ilker Ayci, head of the Investment Support and Promotion Agency, told Hurriyet newspaper in December. The figure could reach as much as $26 billion, according to Istanbul-based brokerage BGC Partners.

Failure to close deals in Turkey in the past has been largely due to unwillingness to pay the premiums Turkish sellers demand, Ozay said.

“It’s not a lack of interest, it’s basically not being able to come to an agreement on valuation.”

Turkish deal flow may also be increased by conglomerates selling off assets to invest in energy and infrastructure, which are expected to be key growth areas in Turkey, according to Mustafa Tiftikcioglu, senior vice president in charge of project and acquisition finance at Turkiye Garanti Bankasi AS, who was also speaking at the seminar.

“Conglomerates who want to take significant positions in energy or infrastructure will dispose of non-core assets,” he said.

More than $10 billion of Turkish energy grid privatizations last year were canceled after the winning bidders at auction failed to make the down-payments necessary to complete the transactions, indicating difficulty funding the deals, Ozay said.

“In Turkey, buyers tend to look for financing after they win the asset,” Ozay said.

--Editors: Chris Peterson, Alan Purkiss

To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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