A mergermarket report on global M&A activity Monthly M&A Insider NOVEMBER 2011 CONTENTS
Global overview 01 Americas: Latin America 06 North America 11 Asia-Pacific 16 Europe 21 middle east & africa 27 about merrill corporation 32
mergermarket Monthly M&A Insider
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Global overview glob a l overvie w This has been a disappointing month for deal makers; the US$134.4bn worth of announced deals is more than a quarter less than in October of last year and just 7% higher than for the same period in 2009. It seems that volatile markets and the economic mess in the Eurozone have taken their toll on M&A ambitions. To make matters worse, a number of high profile deals have collapsed which is likely to damage confidence going forward. Last year, the number of deals rose by more than a fifth between October and December, but with credit markets reeling and a drop-off in business confidence, few expect to see a repeat of this trend in the months to come.
The bar has been raised for M&A rationale in Britain after US and Canadian oil and gas assets. The Brigham deal gives G4S was forced to retreat from a US$8.2bn bid for ISS due to Norwegian Statoil access to US shale reserves, an answer disapproval from investors. What was momentarily a welcome to diminishing margins on its European assets. Sinopec’s sign of optimism for Europe now serves as a bitter lesson investment in Daylight Energy is a good example of continued concerning market sentiment. In defence of G4S, gauging expansion by Chinese oil firms overseas: the three largest the opinions of institutional investors poses dealmakers with Chinese producers have spent more than US$14bn on a double edged challenge: shareholders are unwilling to be acquisitions this year. made privy to inside information because this would cause Positive news also came from the TMT space where four them to have to relinquish their trading privileges under the large-cap deals were announced in October with a combined law, and in times of uncertainty their demand for flexibility value of US$10.4bn. EMI, the indebted music group goes up. repossessed by Citigroup from Guy Hands’ Terra Firma earlier Another major deal to grind to a halt was the US$7.1bn sale this year now looks like it could fetch a total of up to US$3.9bn. of BP’s majority stake in Argentine oil giant Pan American The tussle to gain control of EMI’s music recording division Energy to Bridas, which is jointly owned by Chinese CNOOC could have a transformational effect on the balance of power and the Bulgheroni family in Argentina. This deal, which in the music industry. Meanwhile, Sony’s US$1.5bn acquisition failed to gain regulatory approval in China and Argentina, of the half of Sony Ericsson that it does not already own is the serves as an unfortunate blight on what was otherwise a latest outbound Japanese deal. Under the terms of agreement knockout month for the Energy, Mining & Utilities sectors, Sony will gain access to patents crucial for the development of which posted a record US$63bn announced deals, constituting their Smartphone business. 40% of the global total. If successful, the US$38bn tie-up It is a small consolation for the overall gloomy outlook that between Kinder Morgan and El Paso will create America’s depressed European stock markets have weakened prey largest energy infrastructure owner, and the need to pay for private equity buyers. With some analysts suggesting down El Paso’s bulging debt by selling off its upstream arm valuations are as much as 30% below what they ought to be, adds another transaction to the pipeline. The US$4.5bn the last quarter of 2011 could be a period when some brave purchase of Brigham by Statoil, and the US$2.8bn acquisition investors build the foundations for profits in the medium term. of Daylight Energy demonstrate continued foreign interest in
Head of Research: Elias Latsis Global overview: Robert Imonikhe Editor: Felicity James Latin America: Jennifer Ruiz and Urna Chakraborty For advertising opportunities contact: North America: Jason Cozza Erik Wickman Asia-Pacific:R us Beasley Tel: + (1) 212 6863329 Europe: Samuel Tedjasukmana and Damien Julliard [email protected] Middle East & Africa: Yannis Papacostas and Marie-Laure Keyrouz
Monthly M&A Insider 01 Trend graphs
GLOBAL M&A quarterly trend GLOBAL M&A quarterly private equity trend glob a l overvie w
1,400 4,500 400 900
4,000 350 800 1,200
3,500 700 300 1,000 Number of deals Number of deals 3,000 600 250
800 2,500 500 200 alue (US$bn) alue (US$bn) 2,000 400 V V 600 150 1,500 300 400 100 1,000 200
200 500 50 100
0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11*
Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume
GLOBAL M&A ANNUAL TREND GLOBAL M&A Annual private equity trend
4,000 18,000 900 3,500
3,500 16,000 800 3,000
14,000 700 3,000 Number of deals 2,500 Number of deals 12,000 600 2,500
10,000 500 2,000 2,000 alue (US$bn) 8,000 alue (US$bn) 400 V V 1,500 1,500 6,000 300 1,000 1,000 4,000 200
500 500 2,000 100
0 0 0 0 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011*
Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume
Monthly M&A Insider 02 Trend graphs
GLOBAL GEOGRAPHIC BREAKDOWN YTD 2011 glob a l overvie w
value volume
1.6% 5.3% 4.8% 2.4% 17.0% Asia-Pacific 19.3% Asia-Pacific
Europe Europe
North America North America
Middle East & Africa Middle East & Africa 32.2% Latin America Latin America
44.4% 31.7%
41.3%
GLOBAL M&A Sector Breakdown YTD 2011
value volume
0.2% 0.3% 1.5% 1.1% 2.2% 0.3% 2.0% 3.5% 3.0% 16.8% 3.5% 1.2% Industrials & Chemicals 20.0% Industrials & Chemicals 3.5% 9.2% TMT TMT Consumer Consumer 3.5% Business Services Business Services
Energy, Mining & Utilities Energy, Mining & Utilities 12.4% 15.2% Financial Services 8.7% Financial Services 15.0% Pharma, Medical & Biotech Pharma, Medical & Biotech
Construction Construction
Leisure 9.2% Leisure 8.0% Transportation Transportation 4.1% 13.3% 24.8% Real Estate Real Estate 12.7% Agriculture Agriculture
Defence Defence
Monthly M&A Insider 03 Trend graphs
GLOBAL M&A deal size breakdown glob a l overvie w
value volume
0.7% 0.7% 0.7% 0.6% 0.5% 0.4% 0.6% 100 100 0.9% 1.0% 1.2% 1.0% 1.2% 1.3% 1.1% 90 98 27.2% 34.4% 3.9% 3.8% 38.8% 4.5% 4.8% 5.0% 80 42.3% 39.8% 42.0% 40.6% 96 5.0% 5.5%
70 94 3.9% 21.0% 4.6% 60 92 4.7% 18.2% 4.5% 5.1% entage entage 15.5% 4.7% 16.9% 16.5% rc rc 15.3% 5.1% 50 16.8% 90 Pe Pe
40 27.8% 88 22.1% 22.1% 19.3% 20.5% 24.9% 20.8% 30 86 90.9% 89.2% 90.1% 88.3% 89.1% 88.2% 20 8.5% 8.9% 7.9% 9.3% 84 87.4% 7.5% 7.9% 9.5%
10 15.1% 82 12.6% 12.5% 14.5% 14.5% 14.7% 13.1%
0 80 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011*
US$251m-US$500m US$251m-US$500m US$501m-US$2,000m US$501m-US$2,000m US$2,001m-US$5,000m US$2,001m-US$5,000m >US$5,001m >US$5,001m Monthly M&A Insider 04 We have one week to make “40,000 pages of information available for due diligence. Where do we start?” We thought of that. You can be ready for due diligence in a matter of hours with Merrill DataSite. In today’s dynamic market, you need to be poised and ready to take advantage of fast-moving opportunities. That’s why so many dealmakers rely on Merrill DataSite to give them an edge. We make it easy to transform a paper data room of thousands – or millions – of pages into a secure, virtual data room that is accessible around the clock to prospective buyers via the Internet worldwide. Best of all, you don’t have to be an expert to get started. Merrill DataSite’s expert project managers are available 24-7 to help you. We’ve helped clients launch thousands of projects for deals of all sizes – valuable experience that we’ll put to work for you. At Merrill DataSite, we believe in sharing ideas and best practices that assist companies in expanding and capturing new opportunities. To download our FREE industry survey reports please visit the Merrill DataSite Knowledge Center at www.datasite.com. MERRILL DATASITE datasite.com 06 Monthly M&A Insider Monthly or has dominated deals with 27 value ow op deals. ober’s t Exit deal made top 5 YTD in Latin America Exit deal made top the month equity activity in October, private less Despite Having made its Vision Capital. for exit saw a successful earlier, the firm sold Brazil-based one year investment and supplier of polyester Holdings, a manufacturer Terphane and company that produces the US-based Tredegar, to films a consideration for materials, and elastic supplies aperture in exit largest is the fourth of US$188m. This transaction of the year exit The largest in 2011 so far. Latin America acquisition of Cetip Exchange’s Intercontinental remains US$512m. for and l olume where 81 deals & Chemicals by Industrials osely ow v ow Consumer sect ar this year, the w l art of Oct ober of 2011 sa deals, trailed cl with 86 olume , three of which were a p were recorded US$2.1bn. So f only at valued collectively in terms of v ctober this year decreased in value by in value decreased this year M&A in October Overall, (US$11.4bn year last M&A performance to 81.6% compared last by 20.6% from also decreased in 2010). Deal volume year-to-date lower to (34 deals in 2010). This has led year of 26% from in 2011 (US$97.6bn), a decrease value aggregate US$132bn. year’s last Deal value down, deal count up deal count down, Deal value The Telecommunications sector has led in terms of value of value in terms has led sector The Telecommunications 11 deals of deals in 2011YTD, tallying with US$26.1bn worth 26.8% of Latin American comprises The sector in October. absent but is surprisingly and 2.4% by volume M&A by value deals. of top list October’s from US$1bn Scotia’s deal, Bank of Nova top This month’s Banco in Colombia-based acquisition of a majority stake the Canada- SA expands Colpatria Colpatria Red Multibanca date, to In the year South America. in based banks presence with by value countries leading the two are and Chile Brazil and US$ 7.9bn or share market US$67.4bn or 69.1% of total 8.1% respectively. M&A in Oct American Latin on po rt re M&A ket ermar g A mer LATIN AMERICA LATIN LATIN AMERICA Top deals Top 10 LATIN AMERICAN announced deals of the month (OCT-11) LATIN AMERICA Announced Bidder company Target company Target Seller company Exit multiples (x) Bid premia Deal dominant Revenue EBITDA P/E 1-day value sector before (US$m) 20-Oct-11 The Bank of Nova Scotia Banco Colpatria Red Financial n/a n/a - 1,011 Multibanca Colpatria SA Services (51.00% stake) 20-Oct-11 Grupo Financiero Banorte Afore XXI SA de CV Financial Prudential Financial Inc n/a n/a - 200 SA de CV (50.00% stake) Services 19-Oct-11 Iochpe-Maxion SA Grupo Galaz SA de CV Industrials & - 195 Chemicals 17-Oct-11 Tredegar Film Products Terphane Holdings LLC Industrials & Vision Capital Partners 1.2 - 188 Corporation Chemicals VII LP 3-Oct-11 BRF Brasil Foods SA Avex SA (Undisclosed stake), Consumer Avex SA and GB Dan SA - 150 Flora Danica SA (undisclosed stake), and Flora San Luis SA (undisclosed stake) 24-Oct-11 Flora Produtos De Higiene Hypermarcas SA (Domicile Consumer Hypermarcas SA - 79 E Limpeza SA products line) 5-Oct-11 Arca Continental SAB Petstar SA De CV Industrials & Promotora Ambiental - 60 de CV Chemicals SAB de CV 7-Oct-11 Galeno Argentina SA Consolidar Aseguradora de Financial Banco Bilbao Vizcaya n/a n/a - 59 Riesgos del Trabajo SA Services Argentaria SA 24-Oct-11 Camera Agroalimentos SA Vanguarda Agro SA Agriculture Vanguarda Agro SA - 33 (two plants) 31-Oct-11 Sao Martinho SA Santa Cruz SA - Acucar e Agriculture - 32 Alcool (32.18% stake) Based on announced deals, including lapsed and withdrawn bids Source: mergermarket Based on dominant geography of target company being Latin America Data correct as of 07-Nov-11 Monthly M&A Insider 07 08 Number of deals Number of deals 18 16 14 12 10 8 6 4 2 0 45 40 35 30 25 20 15 10 5 0 50 Q4 11* 11 Q3 11 Q2 Exit volume Exit volume YTD 2011* 11 Q1 10 Q4 ate 10 Q3 2010 10 Q2 ate 10 Monthly M&A Insider Monthly Q1 09 Q4 Buyout volume 09 Buyout volume Q3 2009 09 Q2 09 Q1 08 Q4 08 Q3 2008 Exit value 08 Exit value Q2 08 Q1 07 Q4 07 Q3 2007 07 Q2 07 Q1 Buyout value Buyout value 06 Q4 06 Q3 2006 06 Q2 06 Q1 05 Q4 05 Q3 2005 05 Q2 05 Q1 0 0 500 8000 7000 6000 5000 4000 3000 2000 1000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 alue (US$m) alue V alue (US$m) alue V equity trend priv M&A quarterly American LATIN equity trend M&A Annual priv American LATIN Number of deals Number of deals 180 160 140 120 100 80 60 40 20 0 600 500 400 300 200 100 0 Q4 11* 11 Q3 et volume et volume 11 Q2 YTD 2011* 11 Q1 10 Q4 Mid-mark Mid-mark 10 Q3 2010 10 Q2 10 Q1 09 Q4 09 Q3 2009 09 tal volume tal volume Q2 To To 09 Q1 08 Q4 08 Q3 e e 2008 08 Q2 08 Q1 et valu et valu 07 Q4 07 Q3 2007 Mid-mark Mid-mark 07 Q2 07 Q1 06 Q4 e e 06 Q3 2006 06 Q2 tal valu tal valu To To 06 Q1 05 Q4 05 Q3 2005 05 Q2 05 Q1 0 0 80 60 40 20 10 20 30 40 50 60 70 160 140 120 100 180 alue (US$bn) alue V alue (US$bn) alue V M&A ANNUAL TREND American LATIN trend M&A quarterly American LATIN ra phs g Trend LATIN AMERICA 09 als es es al & Biotech atons e ca an Republic s Servic ogy o vador e e y, Mining & Utilities e ommunic ombia xic c gentina enc enezuela le ansportation Brazil Chil Col Costa Ri Dominic Ecuador El Sal Guatemala Honduras Me Panama Peru Uruguay V Ar Bolivia echnol Media Leisur Real Estate Def Pharma, Medic Financial Servic Agricultur T Energ Busines Tr Construction Te Consumer Industrials & Chemic Monthly M&A Insider Monthly 53.9% 17.5% 18.6% 13.8% 0.6% 0.2% 1.9% 1.9% 9.7% 2.2% 11.4% 7.4% 2.4% 3.0% 0.4% 0.9% 3.9% 6.3% 8.4% 3.9% 8.2% 1.1% 5.0% 8.7% olume olume 5.6% 0.4% v v 0.6% 0.6% 0.2% 0.4% 0.6% als es es al & Biotech atons e an Republic s Servic ogy e e o vador ommunic gy, Mining & Utilities c e enc ombia xic gentina le ansportation echnol Brazil Chil Col Dominic Ecuador El Sal Guatemala Honduras Me Panama Peru Uruguay Ar Media Leisur Real Estate Def Ener Busines Financial Servic Pharma, Medic Agricultur T Tr Construction Te Consumer Industrials & Chemic 23.3% 69.1% 5.6% n YTD 2011 or Breakdow 13.5% 3.5% 0.04% 4.6% 2.0% 11.0% 1.5% 0.2% 0.1% 1.4% 2.4% 0.2% 0.6% 0.7% 7.2% 0.02% 11.0% 26.8% 0.4% 5.8% 0.5% 8.1% 0.1% 0.2% M&A Sect American LATIN value value n YTD 2011 raphic Breakdow M&A geog American LATIN phs gra Trend 0.2% LATIN AMERICA Trend graphs LATIN American M&A deal size breakdown LATIN AMERICA value volume 0.3% 1.0% 0.2% 0.6% 0.3% 1.2% 0.6% 0.3% 1.0% 0.7% 1.2% 1.8% 2.0% 1.1% 100 100 9.2% 4.4% 5.3% 4.7% 5.4% 6.9% 6.9% 17.6% 16.2% 8.2% 90 7.1% 6.4% 5.3% 26.6% 90 7.4% 5.4% 30.5% 6.5% 6.3% 80 7.1% 10.8% 39.5% 46.9% 29.3% 80 70 16.8% 26.9% 70 20.3% 60 31.4% entage entage 19.2% rc rc 50 8.3% 60 Pe Pe 87.8% 88.2% 84.9% 36.7% 85.1% 87.4% 85.6% 31.2% 82.2% 40 21.0% 24.5% 50 21.8% 16.2% 30 24.9% 40 10.0% 11.5% 20 10.3% 10.1% 27.3% 25.4% 6.9% 30 10 12.7% 14.7% 14.8% 13.9% 9.5% 20 0 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* Monthly M&A Insider 10 11 ted ted to Monthly M&A Insider Monthly soor El Pa and this year tor tion. tor domina tor tion is expec ertob an’s bid f ld be resolved uld be resolved C concerns co Morg Kinder tober, orth America sector breakdown breakdown sector YTD North America Mining & Utilities are in 2011, Energy, date to In the year with 31% of breakdown sector dominating the deal value the second represented & Chemicals Industrial the market. by followed share, with 15% of the market sector largest with 13% of the market. & Biotech Pharma, Medical active the most is & Chemicals Industrials By volume, deals. TMT came 17% of North America representing sector, Pharma, and Services by Business with 15%, followed next 13% and 12%, respectively. representing & Biotech Medical c Mining & Utilities se ted Energy, a miliar with the transac y sources fa he largest deal in the sec ue of US$37bn - t al ssets, sa ain assets, al deal v ls for the month of Oc ls for dea N top ICA te NORTH AMER id the consol tober, tion had a tot The transac ally. and glob in North America all the second largest over ion. FT rade Commiss iew by the Federal T receive an extended rev through disposal of cert Corpora . Announced on 16 Oc in North America deals the top &A activity by aggregate deal value has already has already deal value M&A activity by aggregate Overall In year. last from deal value year-end overall surpassed US$797.9bn with 4,069 reached deal value 2010, aggregate with an this value surpassed deals. 2011 has announced a US$823.4bn – representing 3,094 deals worth aggregate verall M&A transaction values for 2011 indicate 2011 indicate for values M&A transaction Overall health may be improving economic 3% increase by deal value. 3% increase ahead of 2010, almost are equity buyouts private Similarly, date, to at US$105bn. In the year which saw 748 deals valued US$103.9bn. worth transactions 2011 has seen 550 buyout xploration was the second the second was Exploration acquisition of Brigham Statoil’s of US$4.5bn, deal value deal of the month with a total largest US$3.7bn acquisition of HealthSpring for by Cigna’s followed & Utilities sector. in the Pharma, Medical rgy deals domina Energy &A report on report &A M arket A mergerm of Oc the month For ICA MER H A NORT NORTH AMERICA Top deals & Expected deals Top 10 North American announced deals of the month (OCT-11) NORTH AMERICA Announced Bidder company Target company Target dominant Seller company Exit multiples (x) Bid premia Deal value sector Revenue EBITDA P/E 1-day (US$m) before 16-Oct-11 Kinder Morgan Inc El Paso Corporation Energy, Mining 8.1 11.4 25.2 32.3% 37,439 & Utilities 17-Oct-11 Statoil ASA Brigham Exploration Energy, Mining 26.7 72.7 96.1 20.2% 4,520 Company & Utilities 24-Oct-11 Cigna Corporation HealthSpring Inc Pharma, 1.2 10.5 16.2 37.0% 3,734 Medical & Biotech 03-Oct-11 Carlyle Group and Hellman Pharmaceutical Product Pharma, 2.3 13.6 31.1 29.6% 3,416 & Friedman LLC Development Inc Medical & Biotech 10-Oct-11 Superior Energy Services Inc Complete Production Energy, Mining 2.0 8.3 30.6 62.3% 3,101 Services Inc & Utilities 17-Oct-11 AmeriGas Partners LP Titan Energy Partners LP Energy, Mining Energy Transfer - 2,871 and Heritage Operating LP & Utilities Partners LP 10-Oct-11 China Petroleum & Daylight Energy Ltd Energy, Mining 5.1 8.1 41.9 121.6% 2,760 Chemical Corporation & Utilities 11-Oct-11 Ares Management LLC 99 Cents Only Stores Consumer 1.1 10.6 21.0 7.4% 1,531 and Canada Pension Plan Investment Board 19-Oct-11 Permira Genesys Technology Alcatel-Lucent 3.0 - 1,500 Telecommunications Laboratories Inc 12-Oct-11 Pratt & Whitney International Aero Engines Industrials & Rolls-Royce Plc - 1,500 AG (undisclosed stake) Chemicals Based on announced deals, including lapsed and withdrawn bids Source: mergermarket Based on dominant geography of target company being North America (US + Canada) Data correct as of 07-Nov-11 Monthly M&A Insider 12 Top deals & Expected deals Pipeline of North American expected deals NORTH AMERICA Situation Target company Sector Potential bidder Financial advisor to Seller Market Comments company bidder (B); target company cap/ est. (T); seller (S) value (US$m) Expected Deal InterDigital Telecommunications Google Inc; Barclays (T), 2,362 InterDigital Inc, the listed US Apple Inc; Intel Evercore Partners based company engaged in the Corporation; (T) design and development of digital Ericsson AB; wireless technology solutions, Research in Motion announced on 19-Jul-2011 that its Limited; Microsoft Board of Directors has initiated a Corporation; Sony process to explore and evaluate Corporation potential strategic alternatives for the company, including a possible sale. Interested parties are said to have included Google, Apple, Intel, Ericsson, Research in Motion, Microsoft, and Sony. Expected Deal Jakks Pacific Inc Consumer Oaktree Capital Rothschild (T) 492 On 13-Sep-2011, Jakks Pacific Inc, the listed US-based manufacturer of toy products, received a public unsolicited offer from Oaktree Capital to buy the target at US$20 per share. The bidder already owns a 4.99% stake in Jakks. This offer was unanimously rejected by the target's Board of Directors on 05-Oct-2011 Expected Deal SemGroup Energy, Mining & Plains All American 1,190 On 24-Oct-2011, Plains All American Corporation Utilities Pipeline Pipeline, L.P. made an offer of US$24 per share for SemGroup Corporation, the listed US based provider of transportation and storage services to the oil and gas sector. Plains stated that the offer represented a 16% premium over Semgroup's 10-day average closing price through 05-Oct- 2011. Nonetheless, SemGroup has rejected the offer as being too low and claimed that the offer actually represented a mere 2% premium over the previous trading day's close. Expected Deal AMAG Pharma, Medical & MSMB Capital MA 286 On 03-Aug-2011, AMAG Pharmaceuticals Inc Biotech Pharmaceuticals, the listed US based biopharmaceutical company, received an unsolicited proposal from MSMB Capital Management to acquire the company at US$18 per share in cash. AMAG Board of Directors has unanimously opposed the proposal and urged stockholders to take no action on the offer. One of the reasons why the Board of Directors might not support the acquisition is that MSMB is proposing to remove six of the seven current members of AMAG's Board and to replace them with its own nominees. Expected deals based on confirmed announcements by companies involved Monthly M&A Insider 13 Trend graphs North American M&A quarterly trend north American M&A quarterly private NORTH AMERICA equity trend 600 1,600 250 350 1,400 300 500 200 1,200 Number of deals 250 Number of deals 400 1,000 150 200 300 800 alue (US$bn) alue (US$bn) V V 150 100 600 200 100 400 50 100 50 200 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Q4 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume north American M&A ANNUAL TREND north American M&A Annual private equity trend 1,600 6,000 500 1,200 450 1,400 5,000 1,000 400 1,200 Number of deals Number of deals 350 4,000 800 1,000 300 800 3,000 250 600 alue (US$bn) alue (US$bn) V V 200 600 2,000 400 150 400 100 1,000 200 200 50 0 0 0 0 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume Monthly M&A Insider 14 Trend graphs North American M&A Sector Breakdown YTD 2011 NORTH AMERICA value volume 1.0% 0.5% 0.4% 0.4% 2.0% 0.1% 0.1% 4.0% 2.0% 16.0% 1.0% 7.0% Industrials & Chemicals 3.0% 17.0% Industrials & Chemicals 1.0% 3.0% Technology 2.0% Technology Business Services 3.0% 9.0% Business Services 9.0% Pharma, Medical & Biotech Pharma, Medical & Biotech Financial Services Financial Services 15.0% Energy, Mining & Utilities 5.0% Energy, Mining & Utilities 10.0% Consumer Consumer Media Media 30.0% Leisure 13.0% Leisure Construction 10.0% 13.0% Construction Transportation 9.0% Transportation 12.0% Telecommunications Telecommunications Real Estate Real Estate Defence Defence Agriculture Agriculture north American M&A deal size breakdown value volume 0.7% 0.7% 0.6% 100 100 0.9% 1.1% 1.1% 0.9% 1.3% 0.9% 1.0% 1.1% 1.5% 1.8% 1.6% 90 3.7% 3.5% 32.1% 4.5% 5.7% 80 42.9% 44.0% 95 5.4% 46.5% 6.3% 5.3% 52.1% 49.3% 58.8% 4.1% 3.8% 70 4.8% 5.2% 60 18.0% 90 5.3% entage 5.9% entage 5.3% rc 50 19.0% rc Pe 15.8% 20.0% 13.8% Pe 14.9% 40 85 13.3% 27.8% 90.6% 91.0% 30 18.1% 21.8% 17.5% 17.1% 18.2% 88.5% 87.4% 86.3% 13.2% 86.8% 20 85.6% 7.0% 7.2% 9.6% 80 6.3% 6.6% 5.4% 8.0% 10 12.6% 12.2% 12.5% 9.6% 9.6% 9.2% 9.8% 0 75 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* Monthly M&A Insider 15 16 cific acific rises in an with a Monthly M&A Insider Monthly etailing, could buy a rival buy a rival could etailing, R ast etail sector, sector, in the Retail urthermore ng just 100 deals ivity, witnessi ct orea National Oil (KNOC), which has Korea or example, s aside, Asia-Pa obal market concern eports indicate the Reports indicate its size or bigger in the US or Europe. and anemic stock of the Yen the strength believes company equity In the private buy. time to it a good make markets that a indicates intelligence mergermarket proprietary space, firm, and investment trader Hong Kong-based commodities equity fund private a new US$100m for raise is seeking to on all focused in Africa, in junior explorers that will invest As Asia-P resources. and mineral types of metal take to will continue the region from bidders strength, relative of M&A opportunities abroad. advantage Asian bidders set to do some buying globally set to Asian bidders outbound up ramp could Asian bidders Going forward, global struggling deal making as opportunities arise in the F economy. energy US$10bn acquiring overseas approximately invested in efforts in Kazakhstan oil assets 2009, is eyeing since assets its oil fields from year a day next 300,000 barrels produce to F the world. throughout F company, Japanese clothing me, amidstlu decline in vo e and a 29% alu wever, gl China, ber a ame up short of Septem w c o ber. hout Octo ivity throug ct ic cif deals in Q3 2011, Q4 beg rry of larger ed a flu tness cific region wi a orth Asian countries including countries Asian North a 69% decline in v al of US$11.4bn, rbulence. Ho obal market tu t a tot ber deal fl Octo art. w st o ed a alu acific deal value, making it the hottest in the region for the region in the value, making it the hottest acific deal sting a did see some intere continued gl v Pa While the Asia- sl In terms of geography, geography, of terms In A solid month in North Asia ctober’s top deals were domestic, but there but there domestic, deals were top Many of October’s well. as transactions cross-border some significant were both involved month by value deals of the largest The two saw The first sector. Leisure in the Japanese companies manufacturer, device gaming casino Heiwa, the Japan-listed golf club operator PGM Holdings, the Japan-listed purchase to Heiwa, the deal is an effort to US$2.2bn. According for business. leisure a full-scale into company the transform No rest for the Leisure sector the Leisure for No rest apital, the US-based private equity firm the US-based private Bain Capital, In the second, chain operator, restaurant the Japan-based Skylard, acquired a total and NPF-Harmony for Principal Finance Nomura from these two to attributable of US$1.7bn. Largely consideration of Asia- one third over represented sector deals, the Leisure P month of October. &A report on report &A M arket A mergerm ASIA-p &A activity in M the strongest showed Japan and South Korea transaction greatest Japan saw the during October. the region to attributable the month, with the bulk largely over value Heiwa and Bain acquisitions. But China the aforementioned number of deals, with 19 transactions largest the hosted often, the month. Most over place US$1.9bn taking worth Consumer, Energy, targeted Chinese assets for bidders Close sectors. & Chemicals and Industrials Construction which saw was South Korea, of volume behind China in terms worth transaction In a noteworthy US$1.2bn. 18 deals worth online retailer, a South Korea-based US$378m, Interpark, a South Korea-based Korea, iMarket acquire to agreed procurement consulting and outsourcing strategic, of provider 2011. December in close to The deal is expected services. ASIA-Pacific Top deals Top 10 Asia-Pacific announced deals of the month (OCT-11) ASIA-PA Announced Bidder company Target company Target dominant Seller company Exit multiples (x) Bid premia Deal value sector Revenue EBITDA P/E 1-day before (US$m) C I F 26-Oct-11 Heiwa Corporation PGM Holdings K K Leisure 2.1 15.0 4.0 28.6% 2,190 21-Oct-11 Bain Capital LLC Skylark Co Ltd (77.76% stake) Leisure Nomura Principal 0.5 - 1,677 Finance Co Ltd; and NPF Harmony 11-Oct-11 Eurasian Natural Shubarkol Komir JSC Energy, Mining Eurasian Industrial 10.0 - 650 Resources (75.00% stake) & Utilities Company JSC Corporation Plc 17-Oct-11 Super Retail Group Rebel Sport Limited Consumer Archer Capital Pty 1.0 7.9 - 631 Limited Limited 5-Oct-11 Aeon Co Ltd Marunaka Co Ltd Consumer Nakayama family 0.2 1324.1 - 474 (94.96% stake) 24-Oct-11 Jizhong Energy Group North China Pharmaceutical Pharma, 1.6 21.5 71.1 - 468 Co Ltd Company Limited Medical & (25.39% stake) Biotech 31-Oct-11 Interpark Corporation iMarketKorea Co Ltd Business Samsung Group 0.5 20.6 24.1 24.7% 378 (48.7% stake) Services 14-Oct-11 Wuhan Linuo Solar Xiamen Hongfa Electroacoustic Industrials & Jiangxi Electronics 1.3 12.6 - 359 Energy Group Co Ltd Co Ltd (75.01% stake) Chemicals Group; Lianfa Group; and Xiamen Hongfa Electroacoustic Co Ltd (management and employees) 17-Oct-11 H'ng Bok San; H'ng Leader Universal Holdings Energy, Mining 0.5 11.9 9.4 31.2% 355 Chun Hsiang; and Berhad (85.59% stake) & Utilities H'ng Hsieh Ling (senior management of Leader Universal Holdings Berhad) 28-Oct-11 Undisclosed bidder Evans Shoal Gas Field Energy, Mining Santos Ltd - 350 (40.00% stake) & Utilities Based on announced deals, including lapsed and withdrawn bids Source: mergermarket Based on dominant geography of target company being Asia-Pacific Data correct as of 07-Nov-11 Monthly M&A Insider 17 Trend graphs asia-pacific M&A quarterly trend asia-pacific M&A quarterly private ASIA-PA equity trend C I F 180 900 25 100 160 800 90 20 80 140 700 Number of deals Number of deals 70 120 600 15 60 100 500 50 alue (US$bn) 80 400 alue (US$bn) V V 10 40 60 300 30 40 200 5 20 20 100 10 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume asia-pacific M&A ANNUAL TREND asia pacific M&A Annual private equity trend 500 3,000 70 350 450 60 300 2,500 400 Number of deals Number of deals 350 50 250 2,000 300 40 200 250 1,500 alue (US$bn) alue (US$bn) V V 30 150 200 1,000 150 20 100 100 500 10 50 50 0 0 0 0 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume Monthly M&A Insider 18 Trend graphs ASIA-PACIFIC M&A GEOGRAPHIC BREAKDOWN YTD 2011 ASIA-PA value volume C I F 7.0% 8.0% 2.0% 2.0% 20.0% Australia 16.0% Australia 8.0% China China 11.0% Hong Kong Hong Kong 3.0% India India 4.0% Indonesia 4.0% Indonesia Japan Japan 3.0% Malaysia Malaysia 25.0% Singapore Singapore 17.0% 24.0% South Korea 14.0% South Korea Taiwan Taiwan 2.0% Other 3.0% 4.0% Other 9.0% 4.0% 10.0% Asia-Pacific M&A Sector Breakdown YTD 2011 value volume 1.2% 1.0% 2.6% 3.3% 0.05% 4.0% 2.7% 21.0% Industrials & Chemicals 3.8% 3.4% 20.0% Industrials & Chemicals 4.0% Consumer 3.4% Consumer 4.0% Technology 4.0% Technology 4.0% Business Services 4.0% Business Services Energy, Mining & Utilities 6.0% Energy, Mining & Utilities 3.0% Financial Services 13.0% Financial Services 15.0% Pharma, Medical & Biotech Pharma, Medical & Biotech Leisure 9.0% Leisure 16.0% Construction Construction 5.0% Transportation 11.0% Transportation 3.0% Real Estate 10.0% 15.0% Real Estate 10.0% Media Media Agriculture Agriculture Telecommunications Telecommunications Defence Monthly M&A Insider 19 Trend graphs asia-pacific M&A deal size breakdown ASIA-PA value volume C I F 0.4% 0.3% 0.3% 0.4% 0.4% 0.2% 0.4% 100 100 1.0% 1.2% 0.9% 0.9% 1.0% 1.7% 0.8% 11.6% 19.0% 15.6% 23.0% 19.9% 21.3% 90 4.5% 29.6% 5.1% 4.8% 5.1% 5.5% 4.7% 5.4% 80 95 17.1% 29.4% 13.9% 22.7% 17.0% 70 18.8% 4.5% 4.9% 5.8% 5.4% 5.3% 5.0% 15.8% 5.9% 60 90 entage entage 30.4% 31.8% rc rc 50 30.5% Pe Pe 28.6% 26.9% 22.13% 27.6% 40 85 12.6% 30 11.1% 12.5% 89.0% 88.8% 9.3% 11.0% 12.0% 10.4% 88.3% 88.4% 87.9% 88.4% 87.5% 20 80 24.4% 20.3% 20.4% 20.4% 21.5% 20.4% 10 20.9% 0 75 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* US$251m-US$500m US$251m-US$500m US$501m-US$2,000m US$501m-US$2,000m US$2,001m-US$5,000m US$2,001m-US$5,000m >US$5,001m >US$5,001m Monthly M&A Insider 20 A mergermarket M&A report on EUROPE European M&A on course to close 2011 lower than 2010 europe As of 31 October 2011, Europe saw a total of €423.4bn worth of M&A deals announced in 2011, about €80.7bn short of the €504.1bn recorded at the end of 2010. With an average of €42.3bn worth of deals announced per month in Europe this year, it does not seem too unrealistic to at least reach the 2010 figure, as the year still has two months to go. Looking more closely at Europe, there has been a constant Zimbabwean diamonds versus Anglo-American/ decline in the total value of deals announced on a monthly De Beers basis. Since the peak of €59.7bn reached in April, the value The US, EU and African countries lifted the ban on continued to slide, with October closing at €27.6bn, the Zimbabwean diamond exports in early November, after second lowest month of the year behind January (€21.3bn). having imposed it in 2009. The decision will significantly The biggest one month drop was in June, when European boost the global diamond supply because, as suggested by M&A recorded €42.1bn worth of deals, a 25.5% drop from the the Financial Times, Zimbabwe may hold about a quarter of €57.9bn seen in May. the world’s current diamond reserves. This poses a threat Conventional wisdom states that deals are scarce during to De Beers, which currently controls 35% of the diamond the summer months due to holidays, which is very much market according to the same source, after its cartel virtually reflected in this year’s stats. However, a linear monthly monopolised the diamond market over the last century. decline since April to September, and October’s confirmation Almost immediately, Anglo-American announced the that the decline did not stop at the end of summer, tells us US$5.1bn acquisition of a 40% stake in De Beers held by an altogether different story. Is the recovery in European the Oppenheimer family. The acquisition increases Anglo- M&A deal making we saw in 2010 losing steam, and now American’s holding in the diamond company to 85%, on potentially prolonged bearish territory? As argued in the effectively consolidating it. It sends a strong message to last edition of this report, 2010 was the year for companies De Beers’ strongest competitor Alrosa, as well as to looking for cut-price deals in Europe whilst boosted by cash competitors, such as Rio Tinto and Petra Diamonds, that hoarded during the crisis years of 2008 and 2009. That cash Anglo-American means business in the diamond sector. It is seemed to begin to run out by 2011. The record in October, ready to beef up De Beers to challenge the ever-increasing the first month of Q4 2011, again confirmed that. competition, especially now that Zimbabwe’s huge diamond With an average of 10.6% monthly decline in value since reserve is up for grabs. Bids for Marange Resources and May, assuming the downward trend continues in the two Mbada, both diamond producers in Zimbabwe, are therefore remaining months, European M&A will record €470bn worth expected in the coming weeks and months, especially from of deals in 2011, down 7% from 2010. De Beers’ big competitors. Anglo-American may also be in a position to buy as well. Monthly M&A Insider 21 Top deals & Expected deals Top 10 european announced deals of the month (OCT-11) EUROPE Announced Bidder company Target company Target dominant Seller company Exit multiples (x) Bid premia Deal value sector Revenue EBITDA P/E 1-day (€m) before 17-Oct-11 G4S Plc ISS A/S Industrials & EQT Partners AB; andGS 0.6 9.0 5,927 Chemicals Capital Partners 10-Oct-11 Government of Dexia Banque Belgique S.A. Financial Dexia SA 5.9 4,000 Belgium Services 31-Oct-11 China Investment GDF Suez Exploration & Energy, Mining 3.5 5.5 2,300 Corporation Production (30.00% stake) & Utilities 10-Oct-11 Banco Popular Banco Pastor S.A. Financial 1.1 30.6% 1,349 Espanol S.A. Services 27-Oct-11 Sony Corporation Sony Ericsson Mobile Technology Ericsson AB 0.3 23.2 1,050 Communications Management Ltd (50.00% stake) 12-Oct-11 Marubeni A.P. Moeller – Maersk Transportation A.P. Moller – Maersk A/S 1,048 Corporation; (8 LNG carriers) and Teekay LNG Partners LP. 10-Oct-11 Precision Capital KBL European Private Financial KBC Groep NV 14.8 1,000 Bankers S.A. Services 14-Oct-11 Unilever Plc OJSC Concern Kalina Consumer 2.1 12.9 23.8 57.8% 604 31-Oct-11 China Investment GDF Suez SA (train 1 of the Energy, Mining GDF Suez SA 600 Corporation Atlantic LNG liquefaction & Utilities plant located in Trinidad and Tobago) (10.00% stake) 27-Oct-11 Lansforsakringar AB Lansforsakringar Fondliv Financial Lansforsakringar Liv 587 Services Forsakrings AB Based on announced deals, including lapsed and withdrawn bids Source: mergermarket Based on dominant geography of target company being Europe Data correct as of 07-Nov-11 Monthly M&A Insider 22 Top deals & Expected deals EUROPE Pipeline of european expected deals Situation Target company Sector Potential bidder Financial adviser to Seller company Market Comments company bidder (B); target cap/est. (T); seller (S) value (€m) Rumoured Telecom Italia SpA Telecommunications Vivendi SA 16,200 Vivendi [VIV FR], the listed takeover French media and telecom group, today denied any interest in listed Italian group Telecom Italia (TI). Expected Orange Switzerland Telecommunications Doughty Hanson; 1,650 Second round bids for France deal Providence; EQT; Telecom-owned Orange Goldman Sachs; Switzerland are due on 12 and Apax December, two sources close to the situation said. Potential Detskiy Mir Consumer AFK Sistema; 478 Detskiy Mir, a private, Russian takeover Sberbank retailer of children's goods, target is interested in approaches from strategic investors, chief financial officer Katerina Laryushkina told this news service at the Adam Smith CFO Summit in Moscow Potential Magellan SA Pharma, Medical Enterprise Investors 55 Magellan, the listed Polish takeover & Biotech medical sector financing target provider, is holding off a decision on a possible management buyout (MBO) and on its planned entry into the Hungarian market, Chief Executive OfficerK rzysztof Kawalec said Potential Ad2One Technology France Telecom; 46 Ad2One, a UK-based digital takeover BSkyB Group Plc sales agency, will look to hire target an advisor in Q1 2012 with a view to selling, Grant Alloway, joint Managing Director said Note: Expected deals based on confirmed announcements by companies involved Source: mergermarket Monthly M&A Insider 23 24 Number of deals Number of deals 450 400 350 300 250 200 150 100 50 0 1,600 1,400 1,200 1,000 800 600 400 200 0 Q4 11* 11 Q3 11 Q2 Exit volume Exit volume YTD 2011* 11 Q1 10 Q4 10 Q3 10 Q2 2010 Monthly M&A Insider Monthly 10 te Q1 a 09 Q4 Buyout volume 09 Q3 te equity trend Buyout volume 09 a Q2 2009 09 Q1 08 Q4 08 Q3 Exit value 08 Q2 2008 Exit value 08 Q1 07 Q4 07 Q3 07 Q2 2007 07 Q1 Buyout value Buyout value 06 Q4 06 Q3 06 Q2 2006 06 Q1 05 Q4 05 Q3 05 Q2 2005 05 Q1 0 0 90 80 70 60 50 40 30 20 10 50 110 100 120 € bn) ( alue V 300 250 200 150 100 € bn) ( alue V equity trend rly priv arterly european M&A qu european M&A Annual priv Number of deals Number of deals 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Q4 11* 11 Q3 et volume et volume 11 Q2 YTD 2011* 11 Q1 10 Q4 Mid-mark Mid-mark 10 Q3 2010 10 Q2 10 Q1 09 Q4 09 Q3 2009 09 tal volume tal volume Q2 To To Q 09 08 Q4 08 Q3 e e 2008 08 Q2 08 Q1 et valu et valu 07 Q4 07 Q3 2007 Mid-mark Mid-mark 07 Q2 07 Q1 06 Q4 e e 06 Q3 2006 06 Q2 tal valu tal valu To To 06 Q1 05 Q4 05 Q3 2005 05 Q2 05 Q1 0 0 500 200 400 600 800 100 200 300 400 € € ( alue V bn) ( alue V bn) european M&A ANNUAL TREND rly trend arterly european M&A qu aphs d gr Tren 1,000 1,200 EUROPE 25 als es es al & Biotech ations e s Servic ogy e e y, Mining & Utilities s ommunic c dic enc y le ance ansportation echnol Nor Germany Benelux Ital Other UK CEE Iberia Fr Agricultur Def T Consumer Busines Energ Financial Servic Pharma, Medic Industrials & Chemic Construction Leisur Media Tr Real Estate Te Monthly M&A Insider Monthly 11.8% 15.6% 6.2% 22.1% 20.0% 12.7% 14.0% 0.2% 1.0% 1.3% 1.3% 9.1% 3.6% 7.9% 13.4% 3.7% 5.7% 7.5% 4.1% 4.1% 9.2% 7.5% 11.9% 6.0% me lu vo me lu vo als es es al & Biotech ations e s Servic ogy e e s y, Mining & Utilities ommunic dic c y enc ance le ansportation echnol UK CEE Iberia Fr Nor Germany Benelux Ital Other Agricultur Def Industrials & Chemic Consumer Busines T Energ Financial Servic Pharma, Medic Construction Leisur Media Tr Real Estate Te 15.0% 10.2% 3.4% 5.5% 11.5% 18.0% 17.6% 0.1% 22.2% 10.8% 0.2% 5.7% 2.4% 13.2% 10.5% 2.0% 1.6% 2.2% 5.3% 1.3% 8.0% 16.1% 9.1% e alu e alu 8.1% v own Ytd 2011 kdown Brea European M&A Sector own Ytd 2011 OGRAPHIC Breakdown European M&A GE v phs gr a d Tren EUROPE 26 e 0.7% 3.4% 3.0% 0.3% 92.6% osed valu YTD 2011* 2010 0.7% 3.3% 2.8% 0.2% 93.1% Monthly M&A Insider Monthly <€250m or undiscl €251m-€500m €501m-€2,000m €2,001m-€5,000m >€5,001m 0.2% 2009 0.6% 2.0% 2.2% 95.0% 2008 0.6% 2.7% 3.2% 0.4% 93.1% 2007 0.9% 4.0% 3.9% 0.4% 90.8% 2006 0.5% 0.9% 3.8% 3.5% 91.4% 2005 0.5% 0.7% 3.3% 3.9% 91.6% 98 96 94 92 90 88 100 entage rc Pe me lu vo e 21.2% 22.0% 29.7% 10.3% 16.8% osed valu YTD 2011* 2010 9.2% 17.1% 23.5% 20.4% 29.8% <€250m or undiscl €251m-€500m €501m-€2,000m €2,001m-€5,000m >€5,001m 2009 9.0% 20.3% 26.7% 20.3% 23.7% 2008 8.8% 16.6% 40.3% 14.5% 19.9% 2007 8.3% 13.7% 39.2% 16.4% 22.4% 2006 8.4% 17.7% 23.2% 15.7% 35.1% 2005 15.1% 23.9% 10.1% 17.9% 33.0% 0 90 80 70 60 50 40 30 20 10 100 entage rc e alu Pe v deal size breakdown european M&A phs gr a d Tren EUROPE A mergermarket M&A report on THE MIDDLE EAST & AFRICA Slow month for Middle East and Africa Middle E ast & A frica The total amount of deals in the Middle East and Africa region amounted to US$950m for the month of October, representing a 71% decrease in value compared to the month of September (US$3.3bn) and a 77% decrease compared to the same period last year. This shows that the political uncertainty in the region has an important impact on M&A activity and remains a big challenge to growth. Energy, Mining & Utilities has been the dominant sector by Political uncertainty hampers negotiations far for YTD 2011, with 33.5% of the total M&A activity in value, October has been marked by the cancellations of several accounting for US$10.4bn. This is mainly due to the large acquisitions announced earlier this year. Saudi food deals that occurred in this sector, including the acquisition processing company, The Savola Group, has decided to drop of South Africa based multi-commodity mining company its plans to acquire Al-Hokair’s stake in Al-Aziza Panda Metorex Ltd by Jinchuan Group International Resources Co. United Company, a deal valued at US$80m, citing that the Ltd for US$1.4bn and Tronix Inc’s US$1.3bn purchase of two companies failed to reach an agreement within the Namakwa. Industrials & Chemicals came in second position timeframe. National Metal Manufacturing and Casting with a total of US$6.3bn worth of deals and 20.6% of the total Company (Maadaniyah), the Saudi steel wire manufacturer, deal value, when in 2010 the sector had only 4.8% of the total has also decided to stop negotiations to acquire Gulf Twisted M&A activity in value. Steel Co. and its sister company Techno Ceram Middle East. With some countries in the region still suffering from The deal was valued at around SAR255.56m (US$68.1m). political unrest, South Africa was the most popular target It seems that companies find it more and more difficult to for investments in October, with six deals valued at a total of reach a friendly agreement in a hectic political situation. US$367m, representing 39% of total M&A value for the month. However, despite the difficult environment, some investors The Prescient Holdings tender offer by PTB Group topped the are trying to look beyond the current uncertainty and focus M&A deals in the ME&A region for the month of October. on looking for untapped opportunities. Monthly M&A Insider 27 Top deals Top 10 Middle Eastern & African announced deals of the month (OCT-11) Middle E ast & A frica Announced Bidder company Target company Target dominated Seller company Exit multiples (x) Bid premia Deal value sector Revenue EBITDA P/E 1-day (US$m) before 03-Oct-11 PBT Group Prescient Holdings Financial Services 201 20-Oct-11 France Telecom SA Congo-China Telecom TMT ZTE Corporation; 196 SARL and Government of Democratic Republic of Congo 03-Oct-11 Hikma Pharmaceuticals Promopharm SA Pharma, Medical 3.5 11.9 57.4% 158 Plc & Biotech 03-Oct-11 Shanduka Group Pty Ltd Western Platinum Ltd. Energy, Mining & Lonmin Plc 139 (50.00% stake) Utilities 18-Oct-11 Savola Foods Limited El-Maleka Food Industries Consumer 95 (78.00% stake); and Al- Farasha (78.00% stake) 20-Oct-11 Qafila for Trade and B-Tech for Trading and Consumer 0.3 16.2 25.1 2.5% 35 Distribution Distribution (90.77% stake) 20-Oct-11 Fipar Holding Jibal Safilait SA Consumer 1.1 25 (37.00% stake) 04-Oct-11 Heritage Energy Sahara Oil Services Energy, Mining & 20 International, Limited Holding Limited Utilities (51.00% stake) 31-Oct-11 Magic Software BluePhoenix Solutions Ltd TMT BluePhoenix 17 Enterprises Ltd (AppBuilder business) Solutions Ltd. 06-Oct-11 Psagot Ofek Investment Davidoff Pension Financial Services Davidoff Group n/a n/a 13 House Ltd Management (50.00% stake) Based on announced deals, including lapsed and withdrawn bids Source: mergermarket Based on dominant geography of target being Middle East or Africa Data correct as of 07-Nov-11 Monthly M&A Insider 28 Trend graphs Middle eastERN & africaN M&A Middle eastERN & africaN M&A quarterly Middle E ast & A frica quarterly trend private equity trend 40,000 160 7,000 25 35,000 140 6,000 20 30,000 120 Number of deals 5,000 Number of deals 25,000 100 15 4,000 20,000 80 alue (US$m) alue (US$m) V V 3,000 10 15,000 60 2,000 10,000 40 5 1,000 5,000 20 0 0 0 0 Q1 Q2 Q Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11* Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume Middle eastERN & africaN M&A Middle eastERN & africaN M&A Annual ANNUAL TREND private equity trend 100 500 14 70 90 450 12 60 80 400 Number of deals Number of deals 70 350 10 50 60 300 8 40 50 250 alue (US$bn) alue (US$bn) V V 6 30 40 200 30 150 4 20 20 100 2 10 10 50 0 0 0 0 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* Total value Mid-market value Total volume Mid-market volume Buyout value Exit value Buyout volume Exit volume Monthly M&A Insider 29 Trend graphs Middle eastERN & africaN M&A GEOGRAPHIC BREAKDOWN YTD 2011 Middle E ast & A frica value volume 1.7% 1.7% 1.9% 2.4% 1.7% 1.2% 2.6% 1.7% South Africa South Africa 2.2% 2.1% 2.2% Israel 2.5% Israel 4.7% 2.5% United Arab Emirates 33.2% United Arab Emirates 2.9% 4.8% Saudi Arabia Saudi Arabia 41.7% 3.3% Egypt Egypt 2.6% Nigeria Nigeria 3.0% 5.8% Morocco Morocco 7.2% Kuwait Kenya 6.2% Ghana Kuwait Tunisia Ghana Sudan Jordan 20.0% 23.7% Zimbabwe Qatar Namibia Mozambique Values <1% have not been shown Values <1% have not been shown Middle eastERN & africaN M&A Sector Breakdown YTD 2011 value volume 0.3% 0.9% 0.2% 2.3% 0.5% 12.6% 2.8% Industrials & Chemicals 2.8% 20.6% 18.0% Industrials & Chemicals 0.4% 3.7% 0.6% Consumer Consumer 4.2% Energy, Mining & Utilites 7.4% Energy, Mining & Utilites 2.3% TMT TMT Financial Services 5.1% Financial Services 8.3% Business Services 16.6% Business Services 13.5% Pharma, Medical & Biotech Pharma, Medical & Biotech 6.8% Transportation Transportation Construction 10.6% Construction Real Estate Real Estate 13.8% Leisure Leisure 33.5% 12.4% Defence Defence Agriculture Monthly M&A Insider 30 Trend graphs Middle eastERN & africaN M&A DEAL SIZE BREAKDOWN Middle E ast & A frica value volume 100 100 5.6% 3.8% 3.4% 5.8% 9.2% 7.2% 7.5% 5.7% 4.1% 5.1% 8.6% 5.7% 5.8% 90 90 6.2% 13.2% 11.2% 11.2% 10.7% 10.4% 80 80 14.2% 15.4% 54.8% 47.7% 53.2% 52.9% 70 70 65.9% 66.9% 67.2% 32.2% 27.8% 36.8% 33.3% 60 60 34.8% entage entage 32.6% 34.0% rc rc 50 50 Pe Pe 19.0% 40 13.2% 14.3% 40 21.5% 30 12.8% 30 11.3% 11.6% 11.6% 48.5% 17.5% 19.2% 47.1% 44.6% 42.5% 20 20 40.3% 39.1% 12.1% 8.2% 36.4% 12.5% 13.3% 11.0% 10 14.1% 10 10.3% 12.9% 13.0% 7.8% 7.3% 9.3% 0 1.3% 1.0% 0.9% 1.7% 1.6% 1.1% 0 2005 2006 2007 2008 2009 2010 YTD 2011* 2005 2006 2007 2008 2009 2010 YTD 2011* US$15m-US$100m US$15m-US$100m US$101m-US$250m US$101m-US$250m US$251m-US$500m US$251m-US$500m >US$501m >US$501m Monthly M&A Insider 31 About Merrill Corporation Founded in 1968 and headquartered in St. Paul, Minnesota, Merrill Corporation is A BOU T M ERRILL C O R PO RATI ON a leading provider of outsourced solutions for complex business communication and information management. Merrill’s services include document and data management, litigation support, language translation services, fulfillment, imaging and printing. Merrill serves the corporate, legal, financial services, insurance and real estate markets. With more than 5,000 people in over 40 domestic and 22 international locations, Merrill empowers the communications of the world’s leading organisations. Merrill Transaction and Compliance Services About Merrill DataSite® Through a broad range of tools and services, Merrill Revolutionising the due diligence process Corporation streamlines document composition, filing, printing, distribution and electronic access to the transaction Merrill DataSite is designed for rapid deployment and can be and regulatory compliance activities of its clients engaged up and running within two hours of a client’s need. Our team in securities offerings, reorganisations, mergers and can scan, upload and organise thousands of pages of content acquisitions, SEC and other regulatory filings. As a registered, from any source in 24 hours or less. Every aspect of the third-party service provider offering public companies expert process, from document scanning to VDR hosting and project EDGARization and XBRL filing services, Merrill professionals management is delivered by Merrill’s multilingual team, can compose, edit, electronically file, manage and distribute available around the clock worldwide. data in printed or electronic format. With Merrill DataSite, all documents are captured and indexed Merrill Legal Solutions provide both on-demand and on-site to an online database and because all rights are designated litigation support, information management and electronic by the client, security and control are guaranteed. Each user’s and print document management services for law firms, ability to view, print or access source documents is set up corporate legal departments and professional services firms. by the client administrator and can be changed at any time. Merrill DataSite provides useful tools, including full search, Examples of our expertise include the creation of searchable viewer audit capability, Q&A, bulk uploads and detailed user litigation document repositories, management of electronic activity tracking that help clients maintain tighter control and data discovery and the delivery of real-time court reporting have greater insight into reviewer behaviour. and deposition videography services. Merrill DataSite® enhances transaction success Merrill’s Marketing and Communication Solutions supply brand identity management, customer communication and Merrill DataSite is the industry’s acknowledged leader. More packaged direct marketing programs for sales professionals than 61,000 different private and public companies across the in industries such as real estate, mutual funds and insurance. globe have leveraged Merrill DataSite to increase the value of Examples of our services include customisable corporate the following types of transactions: identity materials, direct-mail marketing pieces and • Mergers, acquisitions and divestitures promotional programs supported by web-based technologies. • Private placement transactions Merrill’s Translations Services provide a range of translation • Leveraged buyout transactions options to help clients achieve the most efficient and cost effective approach to their translation projects. Merrill Brink • Bankruptcy and reorganisation transactions offers extensive legal translation services for international • Financial restructuring transactions litigation, intellectual property, patents, contractual matters, antitrust matters, mergers and acquisitions, arbitration • Initial public offerings and dual-track processes and more. • Asset purchases and liquidations www.datasite.com • Post-merger integration Monthly M&A Insider 32 About Merrill DATASITE Now Smarter, Faster, Easier! A BOU T M ERRILL DATASITE Please visit our website: www.datasite.com Merrill DataSite – built with the client in mind Track all activity accurately. Auditing and reporting tools provide a verifiable account of each individual’s time spent Merrill DataSite was created to meet its clients’ needs and viewing both documents and specific pages – information that built to their specifications. Since 2002 we have consistently adds negotiating leverage. leveraged the experiences of our clients to add leading-edge functionality to the available toolset. Merrill DataSite allows its users and administrators to: Need to work remotely? No problem. Whether you’re working in Beijing or New York, Examine documents immediately. Patented technology you can view your documents online without having to navigate ensures you never have to wait for a document to be through internal firewalls and email restrictions that often downloaded. Because the data resides on Merrill’s servers, you exist for outside company connections and which delay the due can simultaneously view an unlimited number of documents diligence process. in multiple windows without having to close out or save to your “temp” file. When faced with hundreds of documents to review, Security is our highest priority this feature saves significant time and expense. Merrill has been a trusted provider of secure information to Designate user permissions. Team administrators can control the financial and legal industries for more than 40 years. Our which users will be able to view, print or download specific employees execute letters of confidentiality and we are audited documents, folders or projects – simply and quickly. annually (internal and third-party) to make certain our IT Search every word in every document. With large document infrastructure and processes remain sound. collections, sophisticated search features are key to finding Merrill DataSite was the first virtual data room to receive the critical information and accelerating the due diligence process. ISO 27001 certification for its comprehensiveI nformation Merrill DataSite performs Optical Character Recognition (OCR) Security Management System (ISMS). on each and every letter in each and every document. Our search capabilities allow users to search tens – if not hundreds The ISO 27001 standard, developed by the International – of thousands of pages to find what’s relevant to them. Merrill Organisation for Standards to establish international DataSite’s search capabilities ensure nothing is missed in any requirements for information security and certification of ISMS, of the posted documents - regardless of where they may be is designed to ensure effective protection of information assets organised within the index (e.g. find every instance of “contract” in foreign markets, as well as across national and regional and “termination” within 5 words of each other, etc.). Search boundaries. results are returned much faster and are unlimited in terms of document results and hits within a document. The best tool in the industry Merrill DataSite technology allows for the fastest conversion Using wildcard, fuzzy, proximity, boosting, Boolean and of soft and hard copy documents to the electronic viewing grouping modifiers, you can search and find exact matches and platform. As a result, designated administrators are able to near-matches, including misspelled words. Potential buyers review documents the moment they are available. will enjoy increased confidence knowing they’ve received and seen all materials and documents that are relevant to their Through secure, simultaneous access, full text search decision-making. capabilities and robust reporting tools, both archival and transactional due diligence processes are streamlined. As a Protect confidential information. ”View-only” documents result, Merrill DataSite gives you more insight and control, and are never downloaded. Merrill DataSite, not the computer’s dramatically reduces transaction time and costs. browser, controls thecaching process providing unmatched security levels. Unlike other VDRproviders, images are never As a leading provider of VDR solutions worldwide, Merrill viewable on the PC’s cache after the conclusion of a session. DataSite has empowered nearly two million unique visitors to perform electronic due diligence on thousands of transactions totalling trillions of dollars in asset value. Monthly M&A Insider 33 ABOUT MERRILL CORPORATION EXECUTIVE MANAGEMENT Vincent Lork Steve Piccone ABOUT MERRILL CORPORATION Regional Director, South Asia Vice President, New York Ed Bifulk Tel: +65 6248 4602 Tel: +1 212 229 6883 President Tel: +1 212 229 6563 Chris Robilliard William Polese Regional Director, Australia & Regional Director, New York Paul Hartzell New Zealand Tel: +1 212 229 6612 Senior Vice President Tel: +612 8667 3064 Tel: +1 212 367 5950 Paul Kleinkauf Manuel Bentosinos Regional Director, Southeast Regional Director, Mexico Tel: +1 404 602 3251 EXECUTIVE SALES Tel: +52 55 9171 2237 Scott Haugen Chris Beckmann Ana Paula Macêd Távora de Castro Regional Director, Minnesota Regional Director, Europe Regional Director, South America Tel: +1 651 632 4375 Tel: +49 69 25617 110 Tel: +55 11 9908 0858 Anthony Crosby Alex Gross Felipe Cunha Regional Director, Chicago Regional Director, Europe Regional Director, Brazil Tel: +1 312 674 6511 Tel: +49 69 7593 7148 Tel: +55 11 3568 2429 Mark Plaehn Michael Hinchliffe Carlos Nogueira Regional Director, Chicago Regional Director, Europe Diretor Regional, Brazil Tel: +1 312 674 6527 Tel: +44 20 7422 6100 Tel: +55 11 3895 8572 Brian Gilbreath Jonathan Hughes Will Brown Regional Director, Omaha Account Manager, Northern Europe Regional Director, Canada Tel: +1 404 934 8085 Tel: +44 20 7422 6100 Tel: +1 514 877 5177 Nicholas Renter Shashank Jain Hank Gregory Regional Director, Dallas Representative, United Arab Emirates SVP, Western Canada & US Tel: +1 214 754 2100 Tel: +52 55 9171 2237 Tel: + 604 603 4360 Andrew Buonincontro Alvaro Ortega Ryan MacMillan Regional Director, Palo Alto Regional Director, Europe Regional Director, Canada Tel: +1 650 493 1400 Tel: +44 20 7422 6100 Tel: +1 416 214 2448 Erik Sandie Merlin J. Piscitelli Michael Kennedy Regional Director, Palo Alto Regional Director, Europe Regional Director, Boston Tel: +1 650 493 1400 Tel: +44 20 7422 6100 Tel: +1 207 829 4369 Dan Phelan Jérôme Pottier Ross Whittaker Regional Director, Los Angeles Regional Director, France Regional Director, New England Tel: +1 213 253 2139 Tel: +33 (0) 1 40 06 13 12 Tel: +1 617 535 1516 Jay Loyola Colin Schopbach Forrest R. Doane Regional Director, Irvine Regional Director, Europe Regional Director, New York Tel: +1 949 622 0663 Tel: +44 20 7422 6100 Tel: +1 917 934 7341 Hans Schumann Anna Scott Adam Kuritzky Regional Director, San Diego Regional Director, Europe Regional Director, New York Tel: +1 760 635 0830 Tel: +44 20 7422 6100 Tel: +1 917 934 7340 David Yeary Hakema El-Hadad Shelle Martin VP, DataSite Life Sciences Regional Director, Northern Africa Regional Director, New York Tel: +1 415 307 4414 Tel: +33 (0) 1 40 06 13 10 Tel: +1 212 229 6613 James Snaza Mark Finnie John McElrone Director, Life Sciences Regional Director, Hong Kong Regional Director, New York Tel: +1 651 632 4585 Tel: +852 2536 2534 Tel: +1 212 229 6656 Ari Lee Matthew Mezzancello Regional Director, Asia-Pacific Regional Director, New York Tel: +852 9855 3758 Tel: +1 917 934 7346 Monthly M&A Insider 34 The following notes pertain to data contained in this publication: • deals are included where the deal value is greater than or equal to €5m. • where no deal value has been disclosed, deals are included if the turnover of the target is greater than or equal to €10m. • deals are included in the graphs and Top Deals in each section based on the dominant geography and dominant sector of the target company. Data underlying the League Tables are based on deals where the bidder, target or parent geography of either is that of the geography in focus. • ytd 2011 refers to the period 01-Jan-11 to 31-Oct-11. Q4 2011 refers to the period 01-Oct-11 to 31-Oct 11. Remark, Part of The Mergermarket Group www.mergermarket.com 80 Strand 11 West 19th Street, Suite 2401-3 London, WC2R 0RL 2nd fl. Grand Millennium Plaza United Kingdom New York, NY 10011 181 Queen’s Road, Central USA Hong Kong t: +44 (0)20 7059 6100 t: +1 212 686-5606 t: +852 2158 9700 f: +44 (0)20 7059 6101 f: +1 212 686-2664 f: +852 2158 9701 [email protected] [email protected] [email protected] Disclaimer This publication contains general information and is not intended to be comprehensive nor to provide financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any investment or other decision or action that may affect you or your business. Before taking any such decision you should consult a suitably qualified professional adviser. Whilst reasonable effort has been made to ensure the accuracy of the information contained in this publication, this cannot be guaranteed and neither Mergermarket nor any of its subsidiaries nor any affiliate thereof or other related entity shall have any liability to any person or entity which relies on the information contained in this publication, including incidental or consequential damages arising from errors or omissions. Any such reliance is solely at the user’s risk. 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