EUROPEAN TECHNOLOGY INDUSTRY UPDATE │ JULY 2015 www.harriswilliams.com Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze, authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins. 0 EUROPEAN TECHNOLOGY INDUSTRY UPDATE │ JULY 2015 RECENT DEVELOPMENTS CONTENTS COMPANY SPECIFIC NEWS . RECENT DEVELOPMENTS . 888 has agreed to acquire bwin.party digital entertainment, the UK-based provider of . PUBLIC MARKET TRADING gaming entertainment services, valuing the business at £787m . SOFTWARE . PayPal has agreed to acquire Xoom, the US-based provider of online money transfer . IT SERVICES services, valuing the business at $890m . COMMUNICATIONS . Amadeus IT Group has agreed to acquire Navitaire, the US-based provider of . INTERNET AND DIGITAL MEDIA technology solutions to the airline industry, from Accenture, valuing the business at $830m . Deutsche Boerse has agreed to acquire 360 Treasury Systems, the Germany-based TMT GROUP OVERVIEW provider of multi-bank and multi-product trading platforms for foreign exchange, Our Technology, Media & money market and interest rate derivative instruments, from Summit Partners, valuing Telecom (TMT) Group is the business at €725m dedicated to providing . Schneider Electric has agreed to acquire a 51% stake in Aveva, the UK-based provider superior merger & acquisition of engineering IT solutions and services to the process and power industries, for and capital markets advisory c.£550m services to market leading companies. Our extensive . Cisco Systems has agreed to acquire OpenDNS, the US-based provider of advanced industry knowledge and online threat protection solutions, valuing the business at $635m transaction leadership experience spans the software, . Tele Columbus has agreed to acquire PrimaCom, the Germany-based cable operator digital media, IT services and and provider of broadband services, from Avenue Capital Group, valuing the business communications sectors. Our at €711m professionals in London, Boston . Technicolor has agreed to acquire Customer Premises Equipment business of Cisco and San Francisco have global Systems, valuing the business at €550m relationships with leading technology companies and . The Match Group has agreed to acquire PlentyOfFish Media, the Canada-based financial investors. Thoughtful online dating website, from Markus Frind, valuing the business at $575m advice, deep experience and . Vivendi has acquired an 80% stake in Dailymotion, the France-based provider of web technology expertise, creativity video portal services, from Orange, valuing the business at €265m and attention to detail from our senior technology bankers . Allegion has agreed to acquire SimonsVoss Technologies, the Germany-based have resulted in a track record provider of wireless digital locking and access control systems, from HgCapital, valuing of consistently exceeding our the business at €210m clients' expectations. Carlyle Europe Technology Partners along with the management team have agreed to acquire Cap Vert Finance, the provider of maintenance and repair services for CONTACTS networking equipment, IT storage and servers, from Eurazeo, valuing the business at €137m EUROPE . 1&1 Internet has agreed to acquire home.pl, the Poland-based provider of hosting and Thierry Monjauze internet services, from Value4Capital, valuing the business at €155m Managing Director [email protected] . Modern Times Group has agreed to acquire a 74% stake in Turtle Entertainment, the +44 (0) 20 7518 8901 Germany-based esports company operating under the ESL brand, from Omnes Capital, valuing the business at €105m Jonathan Organ . ITV has acquired a 75% stake in Twofour Group, the UK-based provider of broadcast Vice President programming and communications content for distribution on multimedia platforms, [email protected] from LDC, valuing the business at £73m +44 (0) 20 7518 8900 . TradeFX has agreed to acquire Ava Trade, the Ireland-based provider of an online UNITED STATES forex trading platform, valuing the business at $105m . UPC Communications has agreed to acquire Tv3 Television Network, an Ireland-based Jeff Bistrong provider of television broadcasting services, from Doughty Hanson, valuing the Managing Director business at €80m with an additional €7m contingent payment [email protected] +1 (617) 482-7501 . Tieto has acquired Software Innovation, the Norway-based provider of enterprise content management and information management software, from Atlantis Vest, valuing the business at NOK 623m Michael Wilkins Managing Director . Travelport Worldwide has acquired Mobile Travel Technologies, the Ireland-based [email protected] provider of mobile applications for the travel industry, from DFJ Esprit LLP, valuing the +1 (415) 288-4260 business at €55m Sam Hendler . Capita has agreed to acquire Vertex Mortgage Services, the UK-based provider of Managing Director mortgage software and servicing solutions, from Vertex Group, valuing the business at [email protected] £35m +1 (617) 654-2117 . MindTree has agreed to acquire Bluefin Solutions, the UK-based provider of SAP HANA consulting services and digital and real-time-analytics, valuing the business at c.£34m www.harriswilliams.com www.harriswilliams.de PAGE | 1 EUROPEAN TECHNOLOGY INDUSTRY UPDATE │ JULY 2015 RECENT DEVELOPMENTS INDUSTRY TRENDS . New data from Juniper Research has shown that mobile and online messaging traffic will reach 160tr per annum by 2019, up from 94tr this year – equating to c.438bn messages sent and received by users on a daily basis by 2019 . Smartphone penetration is rising in Western Europe, with eMarketer estimating that 218m people in the region will have a smartphone this year, representing more than 65% of all mobile phone users. By 2019 this figure is expected to reach over 280m . According to IDC, public cloud computing spend will reach almost $70 billion in 2015 worldwide, with the top 5 verticals (discrete manufacturing, banking, professional services, process manufacturing and retail) accounting for c.45% of the total market spend . Global enterprise IT spending across all industry markets is forecast to decline 3.5% in 2015 to $2.7bn, but is forecast to reach $2.9bn in 2019, representing a CAGR of 1.7%, according to Gartner. Retail, banking and healthcare will be the fastest-growing industries for both the short-term and long-term . According to IDC, vendors shipped 337.2m smartphones worldwide in Q2 2015, up 11.6% from the 302.1 million units in Q2 14. The Q2 15 shipment volume represents the second highest quarterly total on record Source: Various industry news outlets PUBLIC MARKET TRADING STATISTICS Stock Performance LAST 30 DAYS LAST TWELVE MONTHS 10% 25% 8% 20% 6% 15% 15.1% 4% 14.0% 9.2% 10% 9.1% 2% 1.8% 6.2% 1.3% (13.9%) 0.8% 0% (0.4%) 5% (2.4%) (3.3%) (2%) 0% (4%) (5%) (6%) (8%) (10%) (10%) (15%) 25 Jun 02 Jul 09 Jul 16 Jul 23 Jul Jul 2014 Oct 2014 Jan 2015 Apr 2015 Jul 2015 Communications DJ Stoxx 600 Technology Communications DJ Stoxx 600 Technology Internet and Digital Media IT Services Internet and Digital Media IT Services Software Nasdaq Composite Nasdaq Composite Software PAGE | 2 EUROPEAN TECHNOLOGY INDUSTRY UPDATE │ JULY 2015 PUBLIC MARKET TRADING STATISTICS COMPARABLE TRADING SUMMARY CY2015E EV / Revenue EV / EBITDA P / E Rev. Growth EBITDA Margin CY2015E CY2016E CY2015E CY2016E CY2015E CY2016E Software European Large Cap. Software 18.2% 34.2% 5.3x 4.9x 15.6x 14.1x 23.6x 21.3x Application Software 7.1% 25.7% 4.3x 3.9x 14.2x 14.8x 20.7x 21.7x Infrastructure Software 7.9% 29.7% 3.8x 3.4x 12.9x 11.7x 17.8x 17.6x Large Cap. SaaS 28.8% 13.9% 7.9x 6.3x 27.5x 24.9x 38.8x 38.0x Small Cap. SaaS 22.7% 4.6% 4.9x 4.0x 30.1x 28.3x NM 37.4x HCM/WFM 23.2% 7.6% 7.2x 5.7x 24.7x 18.4x 28.1x 20.7x FinTech 12.6% 26.7% 5.5x 4.8x 16.3x 16.8x 23.9x 21.7x Healthcare IT 12.0% 12.7% 3.8x 3.3x 15.6x 13.6x 24.4x 23.6x Data and Data Analytics 12.1% 24.4% 5.5x 4.7x 11.8x 10.8x 20.1x 18.4x Security Software 18.6% 21.1% 6.4x 5.4x 16.4x 16.6x 20.7x 18.4x CAx/PLM 7.8% 27.4% 4.8x 4.5x 18.0x 16.4x 27.9x 23.5x IT Services IT Services 7.1% 13.6% 1.1x 1.0x 8.3x 7.6x 16.3x 14.6x Offshore IT Services 15.8% 24.0% 3.4x 3.0x 13.9x 12.4x 18.3x 18.2x Managed Services, Colocation and Hosting 14.6% 29.5% 2.8x 2.5x 10.1x 8.9x 22.0x 19.7x Data Centres 8.5% 53.0% 7.6x 7.0x 14.4x 13.1x 30.4x 32.9x PaaS/IaaS 15.2% 24.5% 4.0x 3.3x 10.5x 8.9x 22.5x 18.5x Communications Digital Broadband 1.8% 10.3% 1.2x 1.1x 13.0x 9.1x 18.6x 17.6x Diversified Communication Equipment 6.2% 11.2% 1.2x 1.1x 11.4x 8.7x 21.7x 16.3x Mobile Content/Solutions Providers 27.2% 15.8% 1.6x 1.4x 10.4x 7.8x 25.0x 20.6x Mobile Infrastructure Software 2.3% 23.7% 2.5x 2.3x 13.6x 8.4x 19.1x 16.6x Internet and Digital Media Global Internet Leaders 11.1% 35.1% 6.5x 5.4x 18.4x 15.1x 22.4x 20.7x Chinese Internet Leaders 36.6%