DEAL DRIVERS AMERICAS the Comprehensive Review of Mergers and Acquisitions Throughout the Americas

DEAL DRIVERS AMERICAS The comprehensive review of mergers and acquisitions throughout the Americas. 2014 FULL-YEAR EDITION Published by: In association with: Merrill DataSite® The Premier Global Due Diligence Platform The Premier Due Diligence Platform for M&A Transactions Merrill DataSite® is the premier global due diligence platform, offering superior virtual data room and document management services for M&A and other financial transactions. We provide first class security on a fully searchable and indexed workspace that enables users to access information around the clock for fast, efficient project close. Our dedicated team of multi-lingual project managers can open your VDR from anywhere in the world in a matter of hours and have it loaded with thousands of pages of data for review. Our global platform, first class security and premier service will help you expertly close your M&A transaction. info@datasite.com Deal Drivers (US Letter).indd 1 21/01/2015 17:04 03 Merrill DataSite® CONTENTS The Premier Global Foreword 04 Technology, Media & Telecom 30 New England 58 Due Diligence Platform Americas Heat Chart 05 Life Sciences & Healthcare 34 Latin America 62 All Sectors 06 Canada 38 About Merrill Corporation 66 and Merrill Datasite® Financial Services 14 West 42 Industrials, Manufacturing & Engineering 18 Midwest 46 Merrill Corporation Contacts 68 Energy, Mining, Oil & Gas 22 South 50 Notes 70 Consumer 26 Mid-Atlantic 54 ABOUT MERGERMARKET Mergermarket is an independent Mergers and Acquisitions (M&A) intelligence service with an unrivalled network of dedicated M&A journalists based in 62 locations across the Americas, Europe, The Premier Due Diligence Platform for M&A Transactions Asia-Pacific, the Middle-East and Africa. Unlike any other service Merrill DataSite® is the premier global due diligence platform, offering superior of its kind, Mergermarket specializes in providing forward- virtual data room and document management services for M&A and other financial looking origination and deal flow opportunities integrated with a comprehensive deals database- resulting in real revenues for clients. transactions. We provide first class security on a fully searchable and indexed Visit www.mergermarket.com. workspace that enables users to access information around the clock for fast, efficient project close. Our dedicated team of multi-lingual project managers can open your VDR from anywhere in the world in a matter of hours and have it loaded with thousands of pages of data for review. Our global platform, first class security and premier service will help you expertly close your M&A transaction. info@datasite.com DEAL DRIVERS – AMERICAS Deal Drivers (US Letter).indd 1 21/01/2015 17:04 04 FOREWORD Welcome to the full-year 2014 edition of Deal Drivers Americas by re-domiciling to Ireland. However, these tax-saving deals lost published by Mergermarket in association with Merrill DataSite. their luster toward the end of the year when the US Treasury came This report offers an in-depth overall analysis of M&A activity in out with rules to make it harder to execute them. The aborted US North and Latin America, while also providing a comprehensive biopharmaceutical firm AbbVie’s and UK-based Shire’s inversion perspective of recent market activity and presenting some transaction, which would have been the fifth largest deal of the projections for 2015. year at US$54bn, showed that the US government’s efforts to put a damper on these deals were effective. North American M&A reached 5,751 deals worth about US$1.6tn in 2014, compared with 4,621 transactions worth roughly US$1tn PRIVATE EQUITY’S UPWARD MOMENTUM in 2013. This represents a 24% rise in volume and 57% in value. Private equity had a very active year in 2014, with full-year activity seeing the number of North American buyouts reach 1,007 deals Several factors came into play last year that pushed activity levels worth US$158bn, compared with 839 transactions worth about to new heights. Firstly, the significant amount of cash stockpiled US$147bn in 2013, a 20% rise in volume and a 7% increase in value. and committed capital gave both corporates and private equity The significant amount of committed capital at PE’s disposal has the confidence and the ability to execute transactions. Friendly given rise to this increase in buyouts. debt markets, low interest rates and high equity valuations also boosted deal activity. The year was also characterized by a healthy Exits had an even better year. There were 1,049 exits worth US$275bn IPO market that saw the pipeline for these transactions burgeon. in 2014, up from 787 deals worth US$160bn. This represented a 33% These transactions were driven by a buoyant stock market, the low increase in volume and a 72% in volume. The increased receptiveness interest rate environment and investors chasing after yield. According of IPO markets and trade sales drove the exit boom, while continued to Mergermarket data, last year was a record high in terms of both support in the secondary buyout market also added weight to exits. value and volume for US-based companies with 232 IPOs worth Given the high multiples for targets, there was also a strong incentive close to US$48bn, driving up North American volumes. for these firms to cash in on their investments, many of which they have been holding onto since prior to the financial crisis. All of these factors pushed buyers to actively seek attractive targets, and companies that were holding back to put themselves up for sale. OUTLOOK Many firms were also adopting the strategy of going back to basics The outlook for 2015 remains positive. Many of the drivers that by strategically divesting their non-core assets and focusing on their existed last year remain strong going into the New Year, and offer strengths. The plunging oil prices were also a factor, as struggling increased hope for buyers and sellers. As a case in point, the IPO oil and gas firms had to contend with increased operational costs. market started off on a high note when Shake Shack’s IPO priced This shepherded some to either take the consolidation route or above expectations. merge with larger and more established players, adding fuel to the M&A market. Some things, however, still remain uncertain for dealmaking. One big question mark that the market is wrestling with is the possible Large-cap transactions were also a mainstay in 2014, not only adding impact of the possibility of a hike in interest rates by the Federal to the elevated deal pipeline, but also significantly contributed to Reserve, which is expected later in 2015. The jury is still out as to rising deal values. The top two sectors that saw these megadeals what the real implications of these future rate moves are, but even were TMT and life sciences & healthcare. with this uncertainty hanging over the market, the indications are that the M&A market is looking forward to a robust year of dealmaking. In TMT, Comcast Corp.’s US$68bn acquisition of Time Warner Cable and AT&T’s US$65bn acquisition of DIRECTV were notable examples of firms combining their specialties to provide broader packages for consumers. The Comcast/Time Warner merger will broaden significantly both companies’ ability to supply high-speed Internet to various parts of the US while the AT&T/DIRECTV combination allows both companies to expand their product and service offerings while gaining added revenue for their joint customer bases. For life sciences & healthcare large-cap corporate inversion transactions defined many of the megadeals in 2014. For instance, US specialty pharmaceutical company Actavis’ US$63bn purchase of Ireland-based multi-specialty healthcare firm Allergan – the third-largest deal of the year – allows Actavis to cut their tax bill DEAL DRIVERS – AMERICAS 05 AMERICAS HEAT CHART The Heat Chart represents ‘companies for sale’ stories written that TMT continues to dominate activity against all other sectors in H2 2014, based on Mergermarket proprietary intelligence. recording a total of 774 stories for H2 2014. The Heat Chart therefore serves as a barometer of potential deal flow in specific regions and sectors across the Americas. Other bright spots of activity were seen in Latin America’s Energy, Mining and Utilities space which had a total of 146 stories, just shy ‘Companies for sale’ stories written in the second half of 2014 of last year’s total of 150. Latin America is shaping up to be a feasible totaled 4,037, a significant 28% decrease from last year’s total growth destination as local currency devaluations and regulatory of 5,167 for the same period. With a close eye on the market, changes make it a good time to enter the market. Dealmakers will dealmakers will look to 2015 for a potential uptick in keep an eye on Chile, the region that saw the highest total deal value dealmaking activity. on record in 2014 valued at more than US$30bn. Continuing a trend from this time last year, the West and South remain hot regions for activity. The West saw a total of 924 stories while the South saw 867 stories. Particularly active sectors in these two regions include TMT, Energy, Mining and Utilities and Pharmaceuticals, Medical and BioTech. It comes as no surprise AMERICAS HEAT CHART - INTELLIGENCE Sector West South Midwest Mid-Atlantic LatAm New England Canada TOTAL TMT 304 126 54 118 76 41 55 774 Consumer 77 60 59 55 100 14 4 369 Energy/Mining/Utilities 133 204 65 57 146 15 145 765 Industrials and Chemicals 55 93 136 59 69 34 22 468 Pharma/Med/Biotech 150 131 132 119 17 91 18 658 Business Services 85 72 57 46 46 19 16 341 Financial Services 45 88 33 52 37 36 7 298 Leisure 37 29 13 20 19 1 8 127 Construction 5 4 2 3 28 0 4 46 Transportation 14 20 8 10 16 3 4 75 Defense 7 15 3 3 1 2 1 32 Real estate 8 22 17 6 4 0 1 58 Agriculture 4 3 4 1 8 0 2 22 Other 0 0 0 0 0 0 0 0 Government 0 0 0 1 0 0 3 4 TOTAL 924 867 583 550 567 256 290 4,037 Hot Warm Cold The intelligence Heat Chart is based on ‘Companies for Sale’ tracked by Mergermarket in (USA, Canada and Latin America) between 99 66 33 07/01/2014 and 12/31/2014.

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