China Summit on Mergers and Acquisitions 12 November 2013 Strategy panel

Nima Masroori, Honeywell () Jan-Geert Putten, DSM (Shanghai) Ji Zou, Allen & Overy (Shanghai)

1 Comparison of M&A statistics in Q1-Q3 for last seven years

Note: The diagrams above represent the breakdown of the total numbers of deals (≥ USD100m) in Q1-Q3 from 2007 to 2013 in Asia Pacific (excluding Greater ), Greater China including both inbound and outbound and China inbound deals Source: Mergermarket

2 Top 10 active industries in Q1-Q3 2013 and comparison with the same period in 2012 (Greater China)

220

200 192

180 159 160

140

120

100 81 79 82 80 70 63 60 50 63 47 44 51 40 35 32 25 36 25 33 20 22 24

0 Industrials and Consumer Technology Energy, mining Pharma, medical Real estate Business services Financial Construction Transport chemicals and utilities & biotech services

Q1-Q3 2013 Q1-Q3 2012

Source: Mergermarket

3 Top China inbound M&A deals (foreign acquirers)

Announced date Value USD (million) Target name Acquirer name

9 September 2013 $1,369m Vinda International Holdings Limited Svenska Cellulosa Aktiebolaget SCA Sweden-based

26 January 2013 $901m Dongfeng Commercial Vehicles Co., Ltd AB Volvo Sweden-based

1 February 2013 $873m BAIC Motor Co., Ltd. Daimler AG Germany-based

22 May 2013 $748m Hua Cheng Group Cedar Strategic Holdings Ltd. Singapore-based

15 August 2013 $696m Magic Holdings International Limited L'Oreal SA France-based

17 January 2013 $691m Trauson Holdings Company Limited Stryker Corporation US-based

24 April 2013 $631m Tianping Auto Insurance Co., Ltd. AXA SA France-based

4 March 2013 $600m Chongqing Brewery Co., Ltd. Carlsberg A/S Denmark-based

2 October 2013 $558m Vanguard Co. Ltd Plc US-based

30 September 2013 $553m Qingdao Haier Co Ltd Kohlberg Kravis Roberts & Co. L.P. US-based

Source: Mergermarket Deal value: above USD500m Period: Year-to-date 2013

4 Top 10 China local M&A deals

Announced date Value USD (million) Target name Acquirer name

14 June 2013 $9,786m PetroChina United Pipelines Company Limited 1. Taikang Asset Management Company 2. Guolian Energy Industry Investment Fund 5 February 2013 $4,941m LongTan Hydropower Development Co., Ltd. Guangxi Guiguan Electric Power Co Ltd

1 April 2013 $4,923m GD Midea Holding Co Ltd Midea Group Co Ltd

27 September 2013 $4,396m Beijing Xinwei Telecom Technology Inc. Beijing Zhongchuang Telecom Test Company Ltd

30 March 2013 $1,935m Shanxi International Electricity Group Limited Shanxi Top Energy Company Ltd Company (Coal Rail Trading and Mining business)

31 August 2013 $1,933m Heilan Home Inc Ganal Scientific and Technological Co Ltd

5 March 2013 $1,912m Wuhan Iron and Steel Group Mining Co Ltd Wuhan Iron and Steel Company Ltd.

15 July 2013 $1,850m 91 Wireless Websoft Limited Baidu

30 September 2013 $1,781m Shanxi International Electricity Group Limited Shanxi Top Energy Company Ltd Company (Coal Rail Trading and Mining business)

15 October 2013 $1,599m Guodian Anhui Power Co Ltd GD Power Development Company Limited

Source: Mergermarket Period: Year-to-date 2013

5 Trends effecting inbound M&A in China

6 Trends effecting inbound M&A in China

Due IPO Anti- SOEs diligence market trust

Intense & Food increasing Slower competition safety & Consolidation growth & over- pollution capacity

7 M & A in China • Why M&A Fails • Addressing Failure Modes • China M&A Process • Certain Key Issues • Alternative Structures

8 – Place holder for two extra slides

9 China M&A Steps – Target Screening – MOU – Due Diligence – Legal, Finance, Management, Environmental – Negotiation of Deal Documents – Execution of Definitive Agreements – Approvals – Pre-Closing Conditions – Closing – Post-Closing Conditions

10 Equity vs. Asset Asset Deals – Avoid contingent liabilities – Higher transaction/tax costs – Timing Issues – Seller Resistance Equity Deals – Risk of contingent liabilities – Lower transaction/tax costs – Speed to Close

11 Typical Legal Deal Issues

– Business Practices – Tax Liability – Labor Liability – Asset Ownership – IP Ownership – Transfer of Operating Licenses – Environmental – Valuation/Capitalization – Limitations on Holdbacks

12 Typical Approval Issues – Special SOE Requirements: 3rd Party Valuation; Transfer of Asset/Equity on Exchanges – Antitrust Law – Special M&A Approval by MOFCOM – Financing Issues; Round Trips

13 THANK YOU!

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