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No entity in the Deloitte network HDAX 110 Activity and Focus shall be responsible for any loss whatsoever sustained by any person who relies on this communication. 2016 Edition 2017 Deloitte Contents Objective and Key Observations 2 Overview 3 Sector analysis 6 Basic Materials 6 Consumer Goods 9 Consumer Services 12 Industrials 15 Finance, Real Estate and Insurance 18 Information Technology 21 Pharma and Healthcare 24 Telecommunications 27 Utilities 30 Other charts we like 33 Appendix 36 1 – Methodology 36 2 – HDAX Composition and Activity 37 3 – HDAX Transactions by Region and Sector 41 4 – Glossary of Terms 43 Your contacts 44 1 M&A Report – HDAX 110 Activity and Focus 2016 | Objective and key observations Objective and key observations Report objective • This 2016 Edition is a sequel to our • After a recovery in overall activity in • The HDAX is the benchmark for the first report issued in 2014. That report 2010 and 2011, activity slowed down German equity market, representing covered the period from 2005 to again in 2012 and 2013. around 95% of its market capitalization. September 2014 in detail. For this report • Following a short recovery in 2014, we streamlined the sector presentation • The objective of this report is to activity began to slow down towards the and focused on recent developments in provide the reader with insights into end of 2015. This trend in M&A activity comparison to the historical 2005-2014 the transaction activity of the 110 HDAX continued in 2016, resulting in 484 average. companies, with an analysis at the level transactions in all, compared to 571 in of the nine “super-sectors” defined by Year-on-year activity 2015. Deutsche Börse AG. The analysis covers • Overall, activity peaked in 2007, with Transaction type and regional focus activity trends and areas of focus for acquisitions significantly outnumbering • In the period under review, acquisitions different transaction types, key deal- disposals. This development ended with clearly outnumber disposals, with 286 makers, and key regions. the onset of the financial crisis in 2008. versus 198 transactions (i.e. plus 88 on a net basis). • The key transactional focus of HDAX In 2016, the overall M&A activity of members of the companies has been on Europe. North America is the primary driver in the HDAX declined further compared to historical levels. rest of the world, while activity in the Germany and other European countries remained the remaining countries is comparatively low (14% of total M&A activity). On a net key regions of focus. basis, i.e. acquisitions less disposals, the activity shows a shift towards other European countries outside Germany. 775 781 673 659 626 631 644 643 569 571 519 556 481 498 484 413 390 380 346 346 351 350 313 316 317 286 187 215 153 122 108 133 118 66 62 76 56 63 88 (206) (218) (198) (260) (240) (263) (254) (294) (283) (269) (280) (285) (294) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Ø 2016 2016 05–14 Acquisitions Disposals Ø acqusitions (05–14) Ø disposals (05–14) Net acquisitions Total transactions 2 M&A Report – HDAX 110 Activity and Focus 2016 | Overview HDAX Overview HDAX Composition • Compared to 2015, the Consumer • With 21 (19%) companies, the Industrial Goods and Finance, Insurance and Sector formed the largest sector in the Real Estate sectors and the Utilities HDAX and accounted for about 17% industries experienced net entries, of the HDAX’s market capitalization. (+1, +1 and +2 respectively) while the It was followed by the Information sectors related to Consumer Services, Technology segment (17 companies; Telecommunications and Information 9% of total market cap.) and both the Technology experienced net exits, (-1, -1 Finance, Insurance and Real Estate and and -2 respectively). Please see further the Pharma and Healthcare sectors (15 details about the composition of the companies each; 13% of total market cap sectors on the slides dedicated to each for FIRE and 14% for P&H.). one. A total of nine inflows (and outflows) were recorded in 2016. HDAX | Composition by DAX Type and Sector HDAX | Total Regional Activity Acuisitions TecDAX 4 DAX 21 30 4 12 30 30 65 15 11 (198) 69 106 110 11 484 17 286 78 21 15 46 69 Disposals 50 MDAX Sectors Acuisitions Disposals BM FIRE U Germany Germany CG IT DAX Europe Europe CS P&H MDAX North America North America I T TecDAX Rest of the World Rest of the World 3 M&A Report – HDAX 110 Activity and Focus 2016 | Overview HDAX Most active players and top disclosed • Bayer’s €58bn acquisition of Monsanto recent deals was not only the largest deal conducted • All three most active companies by HDAX companies in 2016, it was also belonged to the FIRE-sector and the second largest deal announced remained the same as in 2015, worldwide. namely: Deutsche Bank, Allianz, and • The two other mega-deals were a) the Commerzbank. These three together merger of Linde and Praxair (€42bn) covered 22% of the overall HDAX M&A and b) the announcement of Deutsche transactions in the year. Börse’s merger with the London Stock • As in 2015, the two most active Exchange Group for €14bn, which was companies remained Deutsche Bank however cancelled at the end of March and Allianz, despite having conducted 2017, after the European Commission fewer (or at least not more) transactions decided to oppose the merger. than in 2015. Deutsche Bank remained a net vendor while Allianz confirmed its net acquirer position. HDAX | Top disclosed recent transactions (2016 – Top 3) Rank Transaction parties Val. 2016 Type HDAX Target Region (m€) Share Status 1 A Bayer AG Monsanto Company NA 58.293 100% Ann. 2 A Linde AG Praxair Inc. DE 42.226 100% Ann. London Stock Exchange 3 A Deutsche Börse AG EU 14.322 100% Ann. Group plc. The deal was however cancelled at the end of March 2017, after the European Commission decided to oppose the merger HDAX | Most active companies (2016 and 2015 – Top 3) Rank Transactions 2016 Transactions 2015 2016 2015 Δ Name Net Total Share Net Total Share 1 1 = Deutsche Bank AG (9) 43 9% (1) 51 9% 2 2 = Allianz SE 17 39 8% 13 39 7% 3 3 = Commerzbank AG (6) 22 5% (9) 21 4% 4 M&A Report – HDAX 110 Activity and Focus 2016 | Overview HDAX Activity overview – transaction type • North America was the only geo- “net acquirer” position, where they made and regional focus graphical area where the number of 36 more acquisitions than disposals. • In 2016, HDAX companies concluded transactions involving an HDAX company • In the rest of the world, about 67% of 484 transactions, down by 15% increased slightly. Focusing on the USA, HDAX-related transactions were located compared to 2015, which was also 25% HDAX members reinforced their 2015 in the Asia and Pacific region. below the historical average (2005-2014). In fact, the number of both acquisitions and disposals declined in 2016 (by 14% HDAX | Global overview and 46% respectively). • Despite a restrained economic outlook 643 571 and uncertainties linked inter alia to 484 the US election and the Brexit vote, the Acquisitions Disposals 380 low interest-rate environment and the Ø acqusitions 317 286 Ø disposals 123 large amount of liquidity available in the (05–14) 63 88 (05–14) (198) market should support mid- to long- Net acquisitions (263) (254) Total transactions term M&A activity. Ø 05–14 2015 2016 • Acquisitions (286) outnumbered disposals (198) in 2016, confirming the past HDAX “net acquirer” trend. This Germany Europe was observed in all key regions except 184 198 Germany. In a nutshell, HDAX companies 257 mainly acquired businesses in foreign 143 217 175 regions and sold part of their activities 161 on the German market. 87 100 133 106 65 64 (10) 2 (13) 49 37 With regard to takeovers, Europe (except • (69) (78) (97) (84) Germany) was the most-targeted region, (97) (98) with 106 acquisitions involving an HDAX company last year. Ø 05–14 2015 2016 Ø 05–14 2015 2016 Regional activity orth America Rest of world • The volume of transactions concluded by HDAX companies declined by 28% in 122 80 Germany, driven by fewer acquisitions 99 69 67 87 (-35) and disposals (-20).