12.10.10 Mergers FRIDAY BRIEF Emerging Markets Buyers to Drive 2011 M&A M&A Announcements TARGET ACQUIRER TOTAL NAME NAME VALUE BY BRETT FOLEY ($M) Asian companies seeking Survey Expectations for 2011 M&A EnBW Energie Republic of Germany 12,947 to expand internationally may EnBW Energie (EDF) Republic of Germany 6,250 Nicor Inc AGL Resources 3,138 propel modest gains in merg- ASIA 17% 57% 9% 7% Banco BTG Multiple acquirers 1,800 ers and acquisitions next year, Trade House Kopeyka X5 Retail Group 1,650 extending the recovery that 2% Conforama SA Steinhoff Int'l 1,596 began in 2010, a Bloomberg EUR 16% 58% 8% 1% Attfund Retail Hyprop Investments 1,303 survey showed. 2% Aster Sp Zoo Liberty Global 793 There will be at least a small US 17% 53% 8% 1% Ceske Radiokomunikace Macquarie Group 763 increase in mergers and ac- Two Power Plants Xcel Energy Inc 739 quisitions in 2011 after a 12 0% 20% 40% 60% 80% 100% Total SA Assets Arkema 736 percent gain to $1.96 trillion Large Increase Small Increase No Change Hochtief AG Qatar Investment Auth 531 so far this year, according Small Decrease Large Decrease to the Global M&A Outlook, Source: Bloomberg 2011 M&A Survey which queried 1,030 invest- ment bankers, research ana- Recent Completed Deals lysts, traders, portfolio managers and sales- showed. Deals involving China have jumped TOTAL DATE TARGET ACQUIRER VALUE people. Fifty-eight percent said the most in 2010, with Zhejiang Geely Holding active buyers would be based in Asia Pacific Group Co.'s agreeing to buy Ford Motor Dec 6 Mirant Corp GenOn Energy 2,112 or Central Asia, followed by North America, Co.’s Volvo Cars unit for $1.6 billion in August. Dec 6 Sara Lee Assets Unilever NV 1,871 the report found. Bright Food Group Co., Shanghai’s biggest Dec 6 Banco BTG Multiple 1,800 Asia and North America will have the most food and dairy company, is in talks to acquire Dec 6 McKechnie TransDigm 1,270 attractive targets for acquisitions next year, vitamin retailer GNC Holdings Inc., people Dec 6 Snyder's Lance Inc 827 followed by Western Europe, the survey with knowledge of the matter said this week. continued on next page Weekly Data Comparisons Deal Type SUMMARY TOTAL 52-DAY AvG. YEAR TO DATE DEAL TYPE SUMMARY DEAL COUNT VOLUME ($) PERCENT Number of Announced Deals 511 464 22,628 Company Takeover 223 30.64B 57 Volume ($) 53.8 billion 40.6 billion 1.98 trillion Cross Border 200 23.9B 44 Avg Disclosed Deal Size ($M) 176.5 163 164.5 Additional Stake Purchase 53 14.52B 27 Average Premium 13% 23% 22% Minority purchase 63 11.17B 21 Asset sale 135 9.94B 19 Deal Multiples Private Equity 29 3.26B 6 NUMBER Private Placement 20 1.17B 2.2 MEASUREMENT MIN-MAX MEDIAN OF DEALS Majority purchase 45 854.12M 1.6 Free Cashflow 17 4.78 - 454.55x 25.6x Venture Capital 4 58.21M 0.11 Net Income 26 0.16 - 330.41x 18.44x Government Privatization 3 56.87M 0.11 Income B/F XO 24 0.13 - 227.16x 16.7x Joint Venture 25 38.57M 0.07 EBIT 23 1.72 - 151.09x 12.03x Management Buyout 4 15.07M 0.03 Cashflow from Ops. 24 0.98 - 307.36x 11.54x Net Income + Deprec 27 0.12 - 330.41x 8.86x Top Regions EBITDA 20 1.02 - 27.50x 8.56x TARGET REGION DEAL COUNT VOLUME ($) PERCENT Book Value 41 0.01 - 34.34x 2.01x Europe 104 28.83B 20 Stockholder Eqty 41 0.01 - 34.34x 1.95x North America 161 12.10B 32 Enterprise Value 37 0.00 - 37.34x 1.16x Asia Pacific 211 6.75B 41 Market Cap 39 0.01 - 41.35x 1.03x Latin America & Caribbean 16 4.73B 3 Total Assets 46 0.00 - 17.41x 1.03x Middle East & Africa 15 2.47B 3 Revenue 40 0.02 - 6.48x 1x Global 511 53.8B 100 12.10.10 MERGERS | Bloomberg Brief 2 ASIA M&A... continued from page 1 because companies year, the data show. About 70 percent of Most Signicant Obstacles to are “highly liquid,” debt survey respondents expect an increase Dealmaking in 2011 is becoming cheaper in M&A volume next year, compared and asset prices are with 90 percent who anticipated a rise Slow Economic Growth at historically attractive this year. levels, he said. Forty-four percent of those surveyed Market Volatility Domestic competi- said equity will be the major source of tion is also expected to capital for deal financing next year, fol- Government Regulation be a catalyst for global lowed by cash and debt. In last year’s Unrealistic Valuations M&A next year, and survey, debt issuance was expected to market volatility will be be the main source of M&A financing. Target Finances the biggest obstacle, Cross-border deals dominated with the survey showed. more than 8,100 transactions worth 0% 10% 20% 30% 40% Deals involving Asia $945 billion announced in the first 11 Source: Bloomberg Pacific companies months of 2010, a 41 percent increase have jumped 25 per- from the same period last year, the data cent this year through show. About 75 percent of the survey Primary Drivers of M&A in 2011 November, surpass- respondents favor such deals over do- Shareholder Demand ing Europe and mak- mestic M&A. 10% Financing ing them the second- Financial services was the most active 16% most active after North sector during the first 11 months, with Domestic America, data com- $329 billion of transactions announced, Market Competition piled by Bloomberg followed by energy with $300 billion, the Stability 17% 11% show. There were data show. Energy may be the most ac- more than 8,700 deals tive sector in 2011 as the industry con- worth about $594 bil- solidates, the survey showed. lion in Asia through Deals in Brazil in the first 11 months hit Target Foreign Nov. 30, up from $429 a 10-year high with more than $130 bil- Valuations Players billion in the first 11 lion of transactions, the data show. 23% 23% months of 2009. The Source: Bloomberg Americas accounted for $1.1 trillion of trans- “You’ll see the developing world actions in the period, up 12 percent invest in the developed world,” said from $979 billion last year, according Bloomberg Brief Mergers Stephen Bird, Citigroup Inc.’s co- to Bloomberg data. Bloomberg LP chief executive officer for Asia Pacific. Global M&A volume rose 12 per- 731 Lexington Avenue, New York, NY 10022 M&A in the region is set to increase cent in the first 11 months of the 212-318-2000 Newsletter Ted Merz Executive Editor [email protected] 212-617-2309 Bloomberg News Katherine Snyder Managing Editor [email protected] Russian M&A Jumps to Three-Year High 212-617-5212 Mergers Editor Rob Williams BY JASON CORCORAN AND DENIS MATERNOVSKY [email protected] Russian mergers and acquisitions and bonds fell. Rates on three- to 212-617-8844 hit a three-year high this quarter as five-year ruble loans have dropped Contributing companies took advantage of a drop to between 8 to 12 percent from 13 Data Editors Carol Chuang [email protected] in dollar borrowing costs. to 15 percent a year ago for Russian 212-617-3642 Deals involving Russian companies companies, said Andrey Goltsblat, reached $33.8 billion since Sept. 30, managing partner at his own Moscow Pratik M. Patel [email protected] the most since the last three months law firm, which focuses on M&A. 212-617-8705 of 2007 and three times the level in “Attractive rates are a key factor Reporter Alex Sherman the same period last year, according in the M&A pickup,” Goltsblat said. [email protected] to data compiled by Bloomberg. The “The cost of funding is dramatically 212-617-8278 figure compares with $37.7 billion for cheaper than 12 months ago.” China and $8.2 billion for Brazil, the Moscow-based X5 is borrowing the To subscribe via the Bloomberg professional data show. equivalent of $1 billion in five-year terminal type BRIEF <go> or on X5 Retail Group NV, Russia’s ruble loans from OAO Sberbank, the web at www.Bloomberg.com/brief/mergers To contact the editors: [email protected] largest food retailer, VTB Capital the lender said, at a rate brokerage and PepsiCo Inc. are doing deals in Renaissance Capital estimates at © copyright 2010 Bloomberg LP. All rights reserved. Russia after interest rates on loans between 7 and 8 percent a year. 12.10.10 MERGERS | Bloomberg Brief 3 THE WIRE BLOOMBERG NEWS ■■Airgas Inc., fending off a hos- ■■Steinhoff International Hold- chines Corp., have already acquired tile $5.9 billion takeover bid by Air ings Ltd. entered into exclusive talks or built such assets. Compellent may Products & Chemicals Inc., should to buy PPR SA’s Conforama chain be able to negotiate a higher price, hold an auction process to get the for 1.2 billion euros ($1.59 billion) in he said. highest price, shareholder Pentwater cash. The total price would be more Capital Management LP said. “The than 1.5 billion euros, including the ■■Johnson Controls Inc. is look- board should run an expedited auc- working capital balance to be taken ing to buy more companies that tion process in an effort to sell Airgas on by the buyer, PPR Chief Financial specialize in components used in to the highest bidder on or before Officer Jean-Francois Palus said premium-seat making, said Detlef January 14, 2011,” Pentwater said today.