Corporate M&A 2022 Trends and Developments in Latvia

Source: Chambers Global Practice Guides, Corporate M&A 2022 *

Overview of 2021 M&A Activity

The COVID-19 pandemic and its dramatic impact on economies and societies around the world remained high on the global agenda throughout 2021. Although continuous lockdowns and other restrictive measures, in tandem with the widespread vaccination campaign, failed to eradicate the virus, private equity firms (PEs), special purpose acquisition companies (SPACs) and corporates worldwide had already been looking far beyond the COVID-19 outbreak. Optimistic sentiment echoing growing confidence amongst the investors resulted in the global M&A activity hitting record volumes and values in 2021. The European M&A market, largely driven by shareholder activism and high levels of dry powder, closely followed the global trend to produce one of the best years in its recent history. Latvian M&A activity likewise continued its recovery with an impressive upward trend, which originated in the second half of 2020.

M&A dynamics in the first half of 2021

A noticeable imbalance between supply and demand has been steadily growing across the Latvian M&A market towards the end of 2020. A strong interest from PEs and SPACs in acquiring corporate carve-outs with a potential for value creation as a standalone business continued into the first quarter of 2021. A prominent example of the divestment trend was the largest pan-Baltic 2021 disclosed M&A transaction, valued at EUR800 million on a debt-free and cash-free basis, for the sale of Fortum Oyj sustainable district heating business in the Baltics. Due to the rapidly accelerating valuations, divestiture is increasingly becoming a popular tactic used by the corporates to cash out, optimise asset portfolio and adjust strategy in the light of the COVID-19 impact.

 

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*Chambers Global Practice Guides provide clients with expert legal commentary on the main practice areas in key jurisdictions around the world. Written with clients in mind - both in-house lawyers and senior management - they enable the business client to identify and compare current legal issues across jurisdictions in a range of business-critical practice areas.

The new Corporate M&A 2021 guide covers 59 jurisdictions. The guide provides the latest legal information on acquiring a company, antitrust regulations, restrictions on foreign investments, stakebuilding, negotiation, mandatory offer thresholds, conditions for a takeover offer, squeeze-out mechanisms, disclosure, duties of directors, defensive measures and shareholder activism.