QUA E D RTERLY ITION A MERGERMARKET REPORT ON GLOBAL M&A ACTIVITY MONTHLY M&A INSIDER JANUARY 2013 INSIDE: GLOBAL OVERVIEW LATIN AMERICA NORTH AMERICA ASIA-PACIFIC EUROPE MIDDLE EAST & AFRICA ABOUT MERRILL CORPORATION Monthly M&A Insider | January GLOBAL OVERVIEW The year’s end brought about a much-needed reprieve from 2012’s overall gloomy M&A climate. A slew of bulge-bracket deals were announced in the last three months of the year, with eight valued at US$10bn or more. Accompanying this boost, the second half of the year saw impressive gains in value, increasing 16% year-on-year (YoY). Deal numbers have struggled to rebound as quickly, falling by 2% over the period. Private equity Defence After quarters of sluggish activity, private equity has perked When comparing H2 2012 with H2 2011, defence has up somewhat. Although buyout volume and value remains experienced the largest YoY gains out of any sector, and grew by depressed YoY in H2 2012, there were patches and periods of 30% in volume to 26 deals, and by 453% in value, or US$7.2bn, positive buyout activity. In the USA, for instance, there were even with EADS and BAE’s failed merger, which was expected to six more buyouts in H2 2012 than H2 2011, and buyout value prompt a wave of consolidation in the sector. The majority of H2 increased by 20%, or US$11.2bn, to US$67bn. 2012’s sizeable deals were a fraction of the size of the ill-fated tie-up, and were often aimed at more modest changes, or to More exciting has been the improving exit climate. In H2 2012, take advantage of the cheap financing market in the months exit value increased by 17%, to US$135bn, even with volume leading up to the fiscal cliff in the US. One of the most notable dropping by 9%. Many of the investments made in the boom defense deals of H2 2012, Carlyle Partners and BC Partners’ days of 2006 and 2007 have yet to exit, long past normal holding US$3.5bn buyout of Hamilton Sundstrand, reflects both of these periods. Yet, it does appear that those portfolio companies that trends. The buyout is slated to give the US-based aerospace and do exit are now fetching higher price-tags: the top ten biggest industrial producer a wider geographical footprint and to further exits of H2 2012 have a combined value of US$25.5bn, while its development capabilities. BC Partners has eagerly scooped those in the same period of 2011 have a value of US$20.1bn. up American businesses, with the European additions to its portfolio of a much smaller value in 2012. One confidence-inspiring exit, and the second biggest of H2 2012, was the US$4.4bn sale of Avio’s aviation arm to General Electric from PE house Cinven and Italy-based Finmeccanica, Outlook one of the world’s largest industrials conglomerates. Avio had The moderately positive numbers at the year’s end may partially been PE-owned since 2006, and was looking for a buyer for some be due to changing tax regimes and political worries, with time, as an IPO was considered to be too risky. The deal valued dealmakers hurrying through deals in the last few weeks of Avio at around double Cinven’s initial investment and was rushed 2012, but there may be other forces at play. With higher-value through in the last days of 2012 largely because Mario Monti, the deals being completed, there is gradually returning optimism pro-foreign investment Italian prime minister, had announced surrounding the M&A climate. More corporates may view the plans to step down in early 2013, with many concerned that his coming months as the right time to put themselves on the replacement may be less business-friendly. For its part, GE was market in the wake of the year end’s positive findings. looking to secure its supply chain, since it has used Avio as a supplier of jet engine parts for nearly 30 years. Head of Research: Elias Latsis Global overview: Kristina Thompson Editor: Laura Resetar Latin America: Ashley Klepach and Fabio Lopes North America: Dan Kim and Urna Chakraborty For advertising opportunities contact: Asia-Pacific: Susie Xiao and Brandon Taylor Erik Wickman Tel: + (1) 212 686 3329 Europe: Peter Kruk and Alicia Molina [email protected] Middle East & Africa: Silvia Paparello and Rika Niekzad Monthly M&A Insider | January | 01 LEAGUE TABLES TOP 20 GLOBAL FINANCIAL ADVISERS VALUE Ranking H2 2012 H2 2011 H2 2012 H2 2011 Company name Value Deal count Value Value change (US$m) (US$m) (%) 1 1 Goldman Sachs 315,263 167 288,531 9.3% 2 2 Morgan Stanley 286,159 141 217,038 31.8% 3 5 Citi 264,014 105 150,670 75.2% 4 3 JPMorgan 250,784 116 204,579 22.6% 5 4 Barclays 192,569 106 174,636 10.3% 6 6 Bank of America Merrill Lynch 186,064 105 142,999 30.1% 7 8 UBS Investment Bank 178,367 82 117,404 51.9% 8 10 Deutsche Bank 175,626 83 90,842 93.3% 9 7 Credit Suisse 174,645 104 135,417 29.0% 10 13 Rothschild 136,256 123 53,103 157% 11 12 Evercore Partners 100,196 44 54,714 83.1% 12 9 Lazard 65,840 104 92,973 -29.2% 13 45 VTB Capital 63,573 11 11,118 472% 14 14 RBC Capital Markets 61,195 69 42,599 43.7% 15 17 Mizuho Financial Group 53,391 22 36,051 48.1% 16 41 Greenhill & Co 51,592 28 12,312 319% 17 25 Jefferies & Company 51,559 70 26,726 92.9% 18 18 Nomura Holdings 43,092 55 35,827 20.3% 19 34 Centerview Partners 39,446 7 17,024 131.7% 20 11 HSBC 38,972 31 59,931 -35.0% Source: mergermarket TOP 20 GLOBAL FINANCIAL ADVISERS VOLUME Ranking H2 2012 H2 2011 H2 2012 H2 2011 Company name Value Deal count Deal count Deal count (US$m) change 1 1 Goldman Sachs 315,263 167 140 27 2 3 PwC 13,268 148 124 24 3 4 Morgan Stanley 286,159 141 122 19 4 10 Rothschild 136,256 123 93 30 5 5 JPMorgan 250,784 116 117 -1 6 12 Barclays 192,569 106 87 19 7 2 KPMG 11,662 106 129 -23 8 13 Citi 264,014 105 87 18 9 11 Bank of America Merrill Lynch 186,064 105 91 14 10 9 Credit Suisse 174,645 104 96 8 11 6 Lazard 65,840 104 105 -1 12 14 Deutsche Bank 175,626 83 86 -3 13 8 UBS Investment Bank 178,367 82 98 -16 14 15 Deloitte 5,566 73 77 -4 15 18 Jefferies & Company 51,559 70 52 18 16 16 RBC Capital Markets 61,195 69 63 6 17 7 Ernst & Young 5,885 61 103 -42 18 17 Nomura Holdings 43,092 55 58 -3 19 24 Houlihan Lokey 12,135 53 43 10 20 22 Lincoln International 1,294 51 48 3 Source: mergermarket The financial adviser league tables by value and volume have been run from 01-Jul-12 to 31-Dec-12 and include lapsed and withdrawn deals. The tables cover all sectors and are based on the geography of either the target, bidder or seller being Global. GLOBAL OVERVIEW Monthly M&A Insider | January | 02 LEAGUE TABLES TOP 20 GLOBAL LEGAL ADVISERS VALUE Ranking H2 2012 H2 2011 H2 2012 H2 2011 Company name Value Deal count Value Value change (US$m) (US$m) (%) 1 2 Skadden Arps Slate Meagher & Flom 183,001 102 142,294 28.6% 2 9 Cleary Gottlieb Steen & Hamilton 161,176 59 86,746 85.8% 3 6 Cravath, Swaine & Moore 148,214 27 105,339 40.7% 4 14 Weil Gotshal & Manges 115,403 90 65,699 75.7% 5 11 Linklaters 114,114 121 75,660 50.8% 6 7 Latham & Watkins 113,279 146 99,325 14.0% 7 1 Sullivan & Cromwell 103,735 61 181,994 -43.0% 8 12 Freshfields Bruckhaus Deringer 102,983 113 75,612 36.2% 9 29 Baker & McKenzie 98,444 95 35,937 174% 10 46 Morrison & Foerster 96,663 44 18,581 420% 11 31 White & Case 93,506 105 31,889 193% 12 4 Wachtell, Lipton, Rosen & Katz 93,437 42 123,471 -24.3% 13 23 Davis Polk & Wardwell 91,317 48 42,450 115.1% 14 45 Paul Weiss Rifkind Wharton & Garrison 90,074 41 18,812 379% 15 19 Clifford Chance 88,843 100 54,977 61.6% 16 5 Shearman & Sterling 70,956 62 108,079 -34.3% 17 20 Mori Hamada & Matsumoto 61,246 26 50,555 21.1% 18 26 Kirkland & Ellis 60,835 153 39,745 53.1% 19 40 Blake, Cassels & Graydon 55,849 60 21,093 165% 20 3 Simpson Thacher & Bartlett 55,711 63 136,801 -59.3% Source: mergermarket TOP 20 GLOBAL LEGAL ADVISERS VOLUME Ranking H2 2012 H2 2011 H2 2012 H2 2011 Company name Value Deal count Deal count Deal count (US$m) change 1 1 DLA Piper 19,483 190 206 -16 2 2 Jones Day 52,885 161 151 10 3 4 Kirkland & Ellis 60,835 153 136 17 4 3 Latham & Watkins 113,279 146 144 2 5 9 Linklaters 114,114 121 98 23 6 6 Freshfields Bruckhaus Deringer 102,983 113 112 1 7 13 White & Case 93,506 105 75 30 8 11 Skadden Arps Slate Meagher & Flom 183,001 102 91 11 9 7 Clifford Chance 88,843 100 108 -8 10 5 Baker & McKenzie 98,444 95 125 -30 11 8 Allen & Overy 36,323 95 99 -4 12 14 Weil Gotshal & Manges 115,403 90 71 19 13 10 CMS 24,812 76 94 -18 14 12 Hogan Lovells 41,296 67 76 -9 15 16 Norton Rose 15,983 66 66 0 16 18 Simpson Thacher & Bartlett 55,711 63 59 4 17 15 Shearman & Sterling 70,956 62 70 -8 18 30 Sullivan & Cromwell 103,735 61 45 16 19 39 Blake, Cassels & Graydon 55,849 60 40 20 20 20 Cleary Gottlieb Steen & Hamilton 161,176 59 57 2 Source: mergermarket The legal adviser league tables by value and volume have been run from 01-Jul-12 to 31-Dec-12 and include lapsed and withdrawn deals.