The acquisition champions

There has recently been a wave of major mergers and acquisitions in Turkey. Some of the movement has come from abroad, but some has been hand purely domestic. When one looks at the last three years in particular one can see that the preference has been for growth through acquisition. This trend has been led by groups such as Koç, Oyak, Doğan, Sabancı and TAV.

The privatization of Tekel was one of the most striking developments in the economy in 2003. The consortium of Nurol-Limak-Özaltın and Tütsab bought Tekel Alcoholic Drinks for $292 million, making it the largest acquisition of 2003. In the same year the Çalık Group bought Bursa Gaz for $120 million.

In 2004 the Enka Group bought the Intergen Natural Gas Power Station for $359 million. This was also the largest acquisition in that year. In 2005 the privatizations gathered pace. Koç Holding bought Tupraş through the privatization process, as did Oyak Holding with Erdemir. There were other acquisitions as well as those from the state, including an increase in purchases by domestic investors. Doğan Holding took a majority share in POAŞ by buying out the shares of İş Bankası for $616 million. This enabled the group to strengthen its position considerably in the energy field. In the same period, the Koç -Unicredito partnership merged with Yapı Kredi, one of the largest banks in Turkey. Turkey’s retailing giant Migros bought another major retailing chain Tansaş for $387 million. Carrefoursa, the joint venture between the Sabancı Group and Carrefour, bought the Gima and Endi retail stores, which were owned by Fiba Holding, for $132.5 million. In January 2005 Pegasus Airlines was bought by Esas Holding for €12 million.

The acquisitions speeded up after 2000. But the biggest movement has been in the last three years. When one studies the period, some groups and companies come to the fore and stand out as taking the lead in acquisition operations. An analysis of the ‘major purchasers’ shows that some groups have seen ‘acquisitions’ as an important vehicle for growth.

Look out for the first three groups
When we look at the last three years the group which heads the list of those who have made the most acquisitions is Koç Holding. After avoiding the ‘acquisition’ method for so many years, there has been an explosion in the number of purchases by the group over the last three years. In the last three years Koç Holding has made approximately $6.5 billion worth of acquisitions, including Yapı Kredi Bankası, Tansaş, Oypa, Netsel Marina, Birleşik Oksijen Sanayi, İztek Elektronik, Tariş Alkollü İçecekler and, most recently, Tupraş.

In 2005, in addition to its company acquisitions, Koç Holding also made investments of $1 billion. It has indicated that, as well as organic growth resulting from its acquisitions, in the future it will also expand its companies through acquisitions.

After Koç Holding, TAV ranks second among the acquisition champions in Turkey. Over the last three years the company had made acquisitions worth approximately $3 billion. Its two major acquisitions have been Atatürk Airport and Havaş.

Oyak Holding ranks third. Oyak Holding bought Erdemir, the largest iron and steel plant in Turkey, through the privatization programme and, in addition to this giant purchase, it has also bought İskenderun Sugözü Thermal Power Plant. The holding paid a total of over $3 billion for these acquisitions.

Doğan Holding went on the offensive
In recent years Doğan Holding had come to the fore through acquisitions in the media, but recently it has moved into other areas. The Holding, which had already acquired Milliyet and Hürriyet, most recently bought POAŞ for $616 million ad strengthened its position as the market leader in fuel distribution.

Like many other domestic groups, Doğan Holding has recently reviewed its activities and taken the decision to intensify its operations in some areas and leave others. For example, although it has expanded in the fuel sector through the acquisition of POAŞ, it has sold Dışbank to Fortis and indicated that it is withdrawing from the financial sector.

Doğan Holding’s largest purchase over the last three years was POAŞ. But, in addition to POAŞ, the holding also bought Star TV, the Istanbul Hilton Hotel, and approximately 70 percent of Ray Sigorta. The total cost of all of Doğan Holding’s acquisitions has reached $938.3 million. This total ranks it fifth amongst the companies in Turkey making the most acquisitions.

TURKEY’S COMPANY ACQUISITION CHAMPIONS (million dollars, transactions realised over the last three years)

Holding     Company Acquired             Total paid
1.  KOÇ HOLDING Tüpraş, Yapı Kredi Bankası, Tansaş, Oypa, Netsel     6,054.9
    Marina, Birleşik Oksijen Sanayi, İztek Electric, Tariş Alcoholic Beverages
2.  TAV          Istanbul Atatürk Airport, Havaş     3,110.0
3.  OYAK HOLDING  Erdemir, İskenderun Sugözü Thermal Power Plant       3,070.0 
4.  AKFEN       Mersin Port, Global Yatırım Holding, Vehicle Inspection Facilities 1,154.1
5.  DOĞAN HOLDING POAŞ, Istanbul Hilton Hotel, Star TV, Ray Sigorta      938.3
6.  SABANCI HOLDING  Marsa, I-BIMSA, BNP Ak Dresdner Bank, Standart Çimento, Gima, Endi 450.0
7.  ENKA HOLDING İzmir, Adapazarı, Gebze natural gas power plants          358.6 
8.  TEKFEN HOLDING    Akmerkez Gayrimenkul Yatırım Ortaklığı, Akdeniz Fertilizer,      310.0
Samsun Fertilizer, Sapeksa
9.  DOĞUŞ HOLDING Vehicle Inspection Facilities         306.8
10.CİNER GRUBU Aytemiz Petrol, Havaş          300.0    
11.ÖZALTIN GRUBU Tekel Alcoholic Beverages         292.0
12.KOZA GRUBU Bugün Newspaper, Mastra Mining, Normandy Mining,           280.0
Eldorado Gold, Madsan Coal
13. FİBA HOLDING Swissotel, M1 Retail Trade, Özel Air Transportation       200.0
14. TAHİNCİOĞLU         Büyük Efes Hotel, Dundas Ünlü Menkul Değerler, Günkent Sigorta            135.0
15. ÇALIK GRUBU      Bursagaz           120.0
16. ZORLU HOLDING    Tarişbank, Credit Registration Office, Anadolu Credit Cards,     115.0
Sanko Kimya Aydın Software, Amity Oil Turkey, Sanko Kimya,
Ege Portfolio Management,         
17. TURKON HOLDING Kartal Hotel Marmaris, Göcek Marina Resort, Robinson       103.7
Holiday Village
18. ACIBADEM GRUBU International Hospital, Bayındır Hayat Sigorta, Konur         51.1
Health Services
19. ESAS HOLDING Pegasus Airlines, Çoban Yoğurtçuluk, Sporting Mağazacılık                50.0
20. GLOBAL YATIRIM  Çorumgaz, Gaznet Urban Natural Gas Distribution, Toprak Hayat Sigorta    40.0

Important note: Some companies did not announce the sales price during the acquisition process. These figures are estimates by Capital based on evaluations by experts and sectoral analyses.

HANDE D. SÜZER
[email protected]