Synergy in energy

Internationally, the number of M&A transactions grew by 24 percent y/y in 2008, although the value of transactions decreased by a massive 41 percent compared to 2007. In Poland, meanwhile, the total value of transactions in 2008 amounted to $1.1 (zł.3.66) billion, a 175 percent y/y increase, and the number of transactions increased by 220 percent y/y, from five to 16.

"What contributed to this was the number and value of privatizations of state and city energy companies," explained Justyna Wardak, business advisor at PricewaterhouseCoopers' energy department. "Interestingly, most of these transactions took place in Q4 2008, when the economic crisis was already felt even in Poland. It shows how the Treasury Ministry was determined to obtain the forecast income from its privatization plans," Wardak said.

Obstacles that private investors had to face on the Polish energy market included the interventions of energy regulator URE, which capped energy prices. Uncertainty caused by Poland's stance on CO2 emissions cuts was also considered unfavorable by investors.

"To make a good business decision in this sector, an investor doesn't just have to look two or three years forward, but 20-30 years forward," said Piotr Łuba, a partner at PwC. "This is why the decisions made at the Copenhagen climate summit [in Q4 2009] will have a crucial influence on investors' decisions," he added.

PwC's energy experts agreed that fewer M&As should be expected this year, mainly due to the difficulty in obtaining financing. The forecast for economic slowdown in Poland is also important. However, the Polish energy sector still remains attractive, as many assets are still in the hands of state and local governments.

"For foreign investors, the planned privatization of the PGE, Tauron and Energa energy groups will be especially interesting this year," concluded Wardak.

Marcin Poznań