DEAL DRIVERS AMERICAS The comprehensive review of mergers and acquisitions throughout the Americas. 2012

Transcription

1 Half Year edition DEAL DRIVERS AMERICAS The comprehensive review of mergers and acquisitions throughout the Americas. Published by: In association with:

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3 3 contents Foreword 4 Heat Chart 5 All Sectors 6 Financial Services 14 Industrials, Manufacturing & Engineering 18 Energy, Mining, Oil & Gas 22 Consumer 26 Technology, Media & Telecom 3 Life Sciences & Healthcare 34 Canada 38 West 42 Midwest 46 South 5 Mid-Atlantic 54 New England 58 Latin America 62 About Merrill Corporation 66 About Merrill Datasite 67 Merrill Corporation Contacts 68 Notes 69 About mergermarket mergermarket is an independent M&A intelligence service that provides proprietary news on origination and deal flow opportunities, in addition to a comprehensive deals database. With an unrivalled network of 3+ M&A journalists based in 65 locations worldwide, mergermarket is the only comprehensive tool that offers active intelligence on potential transactions, and historical data to analyze past deals, providing 36-degree view of the global M&A landscape. mergermarket is part of The Mergermarket Group, a division of the Financial Times Group. Visit DEAL DRIVERS NORTH America

4 4 foreword Welcome to the half-year edition of Deal Drivers Americas, published by mergermarket in association with Merrill Datasite. This report provides a comprehensive review of M&A deal flow in the Americas region, with in-depth analysis of recent activity and forwardlooking insight for the remainder of the year. UNITED STATES saw 1,619 deals worth a combined US$31.4bn in the US, compared to, which saw a combined total of 1,648 deals worth US$526.6bn. Regardless of the decrease in both deal size and value, there were still some large ticket deals announced in sectors both familiar and unfamiliar with these hefty price tags. s activity was led by the energy, mining and utilities sector back in April with ConocoPhillips Company spinning off Phillips 66 for a deal value of US$2.9bn. The consumer sector, less familiar with their standing on the top deals table, accounted for two of the top 2 deals in the US. The largest YTD deal for the consumer sector involves Pfizer Inc and Nestle SA. Pfizer Inc, the listed US-based pharmaceutical company, announced that it has agreed to divest and sell Pfizer Nutrition to Nestle SA, the Swiss-based food and nutrition company for a cash consideration of US$11.9bn. The most notable acquisition saw Walgreen Company acquiring a 45% stake in Alliance Boots GmbH from AB Acquisitions Holdings Limited for a consideration of US$6.7bn. Canada Canadian M&A has performed fairly well as optimism for M&A growth through rises with experts predicting that deal is likely to increase. Deal for totaled only 219 compared to, which totaled 248. Amidst the decrease in deal, deal value increased from US$46.3bn in to US$52.3bn in. The energy, mining and utilities sector is still the most dominant experiencing the greatest number of deals (26.9% of overall ). The most notable sectors for increased M&A activity within Canada are agriculture, and energy, mining and utilities. The biggest deal for the agribusiness sector involves Viterra Inc, a Canadian corporation, signing a definitive agreement to be acquired by Glencore International plc, a Swiss corporation for US$7.3bn. Latin America The first half of saw 36 deals, a slight decrease of s total of 32. Aggregate deal value increased over the same timeframe from US$57.5bn to US$66.1bn in the region Activity was lead by the 49.7% stake in the Mexican brewer Grupo Modelo by Anheuser-Busch InBev for US$2.1bn. Mexican M&A activity is predicted to remain strong throughout the remainder of given economic stability and the conclusion of the recent general election. Brazil hosted many of the other largest deals in the region. Announced in February, Itau Unibanco Holding SA agreed to acquire a 49.99% stake in Redecard SA (336,39,251 shares) for US$6.9bn. This was followed by Cosan S.A. Industria e Comercio and Cia de Gas de Sao Paulo. Cosan S.A. Industria e Comercio, acquisition of a 6.1% stake in Cia de Gas de Sao Paulo, the listed Brazil based distributor of natural gas, for a cash consideration of US$2.7bn. Indeed, the consumer and energy, mining oil and gas sectors continue to dominate the region. Outlook In, the top 2 deals for North America totaled US$259bn, while showed a dramatic decrease in its top 2 deals totaling only US$151bn. Amidst the decline in bulge-bracket deals, the projected outlook for H2 is optimistic, with continued strong interest in the consumer sector in Latin America. The food and beverage markets are expected to remain active in H2 receiving funding from strategic players and private equity firms, while others predict the bulk of M&A activity will come from corporate breakups and divestitures. M&A professionals remain on standby to announce the next big deals in each region and sector. We hope you find this half-year edition of Deal Drivers both useful and informative, and as always, we welcome your feedback. While the agribusiness sector held the largest deal, the energy, mining, oil and gas sector is expected to continue to outperform all others in Canada. This sector saw eight out of the top 15 deals for the region totaling US$19.8bn. The sector s largest deal involves Progress Energy Resources being acquired by Petrolium Nasional Berhad for US$5.1bn. The second largest deal saw Provident Energy Ltd., an Alberta corporation, signing a definitive agreement to be acquired by Pembina Pipeline Corporation for US$3.7bn. DEAL DRIVERS NORTH AMERICA

5 5 The HEat chart The Heat Chart represents companies for sale stories written in, based on mergermarket proprietary intelligence. The Heat Chart therefore serves as a barometer of potential deal flow in specific regions and sectors across the Americas. Companies for sale stories written in the first half of totaled 5,74 compared to H2 which totaled 5,2, an overall increase of 1.4% which suggests an increase in potential activity over the next six-12 months. Alongside the TMT sector, the consumer sector also showed a significant increase between H2 to of 23.8%. The total number of companies for sale stories from H2 in this sector totaled 484 while saw a total of 599. Keep eyes peeled on Latin America, the West and the Mid-Atlantic for increased activity. The West is ablaze, overtaking the South as the hottest region with 1,354 stories written. Particularly hot in the region is the TMT sector which increased by over 5% from 356 to 537 stories from the second half of. Indeed the TMT sector saw an overall increase of 38.2% over the previous six months, and remains at the top of the chart with 1,388 stories. north america heat chart - intelligence West South Latin America Midwest Mid-Atlantic Canada New England TOTAL TMT ,388 Energy/Mining/Utilities ,5 Life Sciences and Healthcare Consumer Industrials and Chemicals Business Services Financial Services Leisure Transportation Construction Defense Real Estate Agriculture Government Other TOTAL 1,354 1, ,74 Hot Warm Cold The intelligence Heat Chart is based on Companies for Sale tracked by mergermarket in North America between 1/1/ and 6/3/. Opportunities are captured according to the dominant geography and sector of the potential target company. For definition of states within regions, see page 69 (Note to Heat Chart). Note: mergermarket s Heat Chart of predicted deal flow is based on the intelligence collected in our database relating to companies rumoured to be up for sale, or officially up for sale in the Americas region. It is therefore indicative of areas that are likely to be active in the months to come. The intelligence comes from a range of sources, including press reports, company statements and our own team of journalists gathering proprietary intelligence from M&A practitioners across the region. The data does not differentiate between small and large transactions, nor between deals that could happen in the short or long-term. DEAL DRIVERS NORTH AMERICA

6 6 All Sectors All SEctors North American M&A to remain tepid until global economy stabilizes; likely to rank as one of the worst years in M&A The derailment of the economic recovery has led to dramatic declines in the M&A market. If the protracted sluggishness remains, which I anticipate to be the case, then this year stands to rank as one of the worst years in M&A history, second only to the financial crisis of 28 when deal levels also plummeted. I had previously forecasted that companies would have a diminished appetite for dealmaking this year, but a confluence of events in the first half of the year has created the perfect storm, causing the M&A slowdown to be much worse than expected. The deepening of the sovereign debt crisis and the sluggish job market is keeping dealmakers on the M&A sidelines, as they do not see a light at the end of the tunnel. Unemployment numbers remain high with the latest figures from the US Labor Department report showing that employers added just 8, jobs in June and the unemployment rate was unchanged at 8.2%. The May s jobs report was even more of a shock as a paltry 69, jobs were added, the fewest since the same month one year ago. There is also a great deal of uncertainty over whether President Barack Obama will lead the country for another four years or whether former Massachusetts Governor Mitt Romney will take the reins. It is a rarity to see a large number of corporate deals announced during an election year so my expectation is that after the November elections, some big-ticket deals will be announced. Deal activity might also pick up as sellers race to execute their transactions before the Bush tax cuts expire at year-end. All you need are a couple of big deals for there to be a trickle down effect, said John Diggins, a partner at Platinum Equity. We haven t seen any big deals we ve been chasing over the last 18 months. If you hear a huge, major deal in the US$1bn US$3bn range, you ll see stuff start to fall. Right now, they are hunkered down with these rich balance sheets. For now, the two major factors affecting M&A right now are the wide bid-ask spread and the likelihood of completion, said Steven Goldberg, a partner at Baker Hostetler and co-chair of the transactions team. He said his firm was recently involved in a deal where his client, who was a strategic, was not the highest bidder, but ended up winning the auction because the company had a firmer financing commitment in place. There is a pricing mismatch between buyers and sellers. I can t tell you how many times we ve been down the road, where a deal has failed because of a price mismatch. I think that is the biggest obstacle we are facing right now, Golberg said. Structure, creativity and really knowing the seller s requirements are critical nowadays. A bird in the hand is worth two in the bush, said Diggins.Some of those structures include joint ventures, partnerships, earnouts, seller paper, clawbacks, CVRs, and the reverse break-up fee, which mitigates the risk of regulatory issues. Competition in the private equity world has changed significantly as PE behemoths have come down market and that trend will continue. At the end of the day, you don t beat KKR, you don t beat Blackstone, if they want a deal and they ll pay up, then we ll step back. I try and find opportunities where I m not competing with them even though they are coming down market and will show up in some of these opportunities, said Diggins, whose firm s deal size is typically in the US$2m-US$3m range. One of the more fascinating trends seen this year has been the emergence of Pac-Man deals, whereby smaller companies have been trying to take advance of the dislocation in the stock price by taking over larger rivals, said Stavros Tsibiridis, Managing Director, Wells Fargo. He cited Vulcan/Marietta, Coty/ Avon and Xstrata/Glencore. He noted that he does not expect this trend to continue and that these deals likely will cause corporates to think about how much they really want to test the limits. There are pockets of strength in the market, with media, pharmaceuticals and energy as good sectors for deal activity, said Goldberg. In addition to energy, Diggins also cited business services and Stavros identified mining. Geography wise, Diggins said Europe is the best place for his firm to put its capital to work. Stavros agreed that Europe is a good opportunity for private equity, but it is too difficult for strategic players to sell Europe to their shareholders. Stavros said Asia and Latin America, though they have slowed, will still be robust areas for M&A for strategics. All in all, is not going to be a banner year for M&A, but I am cautiously optimistic that the market will have some real legs in the fall and next year. As Peter Halasz, a partner at Schulte, Roth & Zabel, said, there is a great deal of pent up demand from both sides, with private equity firms having the funds to deploy and strategic players having assets to sell. Once the tide turns, hopefully it will turn in a strong way, he said. by Amanda Levin DEAL DRIVERS NORTH AMERICA -ALL SECTORS

7 7 all sectors top 2 announced deals for year ending 3 JUNE Announced Date Status Bidder Company Target Company Sector Vendor Company Deal (US$m) 4-Apr-12 C ConocoPhillips Company (shareholders) Phillips 66 Energy, Mining, Oil and Gas ConocoPhillips Company 2,79 21-May-12 P Eaton Corporation Cooper Industries Plc Industrials, Chemicals & Engineering 11,94 23-Apr-12 P Nestle SA Pfizer Nutrition Consumer Pfizer Inc 11,85 23-Jan-12 C Lehman Brothers Holdings Inc Archstone-Smith Trust (26.5% Stake) Real Estate Bank of America Corporation; and Barclays Plc 11,825 2-Mar-12 P Glencore International plc Viterra Inc Agriculture 7, Feb-12 C Apollo Global Management, LLC; Riverstone Holdings LLC; Access Industries; and Korea National Oil Corporation EP Energy Corporation Energy, Mining, Oil and Gas El Paso Corporation 7,15 2-May-12 P Alibaba Group Holding Ltd Alibaba Group Holding Ltd (2% Stake) TMT Yahoo! Inc 7,1 3-Apr-12 P Energy Transfer Partners LP Sunoco Inc Energy, Mining, Oil and Gas 6, Jan-12 L Roche Holding Ltd Illumina Inc Life Sciences & Healthcare 6, Mar-12 P United Parcel Service Inc TNT Express NV Transportation 6, Jun-12 C Walgreen Company Alliance Boots GmbH (45% Stake) Consumer AB Acquisitions Holdings Limited 6,69 29-Jun-12 P Bristol-Myers Squibb Company Amylin Pharmaceuticals Inc Life Sciences & Healthcare 6, Apr-12 P Watson Pharmaceuticals Inc Actavis Group hf Life Sciences & Healthcare 5,86 29-May-12 P Marubeni Corporation Gavilon LLC Business Services General Atlantic LLC; Soros Fund Management LLC; and Ospraie Management, LLC 5,3 28-Mar-12 P Tyco Flow Control Pentair Inc Industrials, Chemicals & Engineering 5,23 28-Jun-12 P Petroliam Nasional Berhad Progress Energy Resources Corp Energy, Mining, Oil and Gas 5,55 15-Mar-12 C Cisco Systems Inc NDS Group Limited TMT Permira; and News Corporation 5, 27-Jan-12 C Eastman Chemical Company Solutia Inc Industrials, Chemicals & Engineering 4,6 2-May-12 P DaVita Inc HealthCare Partners LLC Life Sciences & Healthcare 4, May-12 P SAP AG Ariba Inc TMT 4,311 C= Completed; P= Pending; L= Lapsed DEAL DRIVERS NORTH AMERICA - ALL SECTORS

8 8 All SEctors mix of global M&A deals by geographic region USA Canada 9.3% 8.3% Western Europe Northern Europe 18.7% 3.8% 19.2% 28.3% Central & Eastern Europe Southern Europe Asia-Pacific RoW 6.2% 3.4% 5.4% 5.5% 4.3% 3.8% 3.1% 23.1% 5.5% 25.1% Based on announced deals, excluding those that lapsed or were withdrawn. Geographic region is determined with reference to the dominant location of the target. mix of north american deals by industry sector Industrials, Chemicals & Engineering Financial Services Business Services.4% 6.4% 2.4% 8.6% 5.5% 1.%.6% 1.3%.4% 2.4% 18.2% Consumer Energy, Mining, Oil & Gas TMT Leisure 12.2%.6% 3.6% 6.6% 11.% 1.9% 3.5% 8.8% Transportation Life Sciences & Healthcare 12.2% 2.4% 1.6% Construction Real Estate 3.5% 11.1% 1.8% Defense Agriculture Based on announced deals, excluding those that lapsed or were withdrawn. Geographic region is determined with reference to the dominant location of the target. DEAL DRIVERS NORTH AMERICA - ALL SECTORS

9 9 All SEctors North American buyouts North american exits 5, 12 2, 12 4, 1 15, 1 (US$m) 3, 2, 8 6 Volume (US$m) 1, 8 6 Volume 4 4 1, 2 5, Year Ended Year Ended (US$m) Volume Based on announced deals, excluding those that lapsed or were withdrawn. where the dominant location of the target is in North America. transatlantic deals 15, 25 12, 2 (US$m) 9, 6, Volume , 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q 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 Q Year Ended Year Ended Based on dominant location of target and bidder and excludes all buyouts. Total Euro/North American deals deals Nth American bidder acq European target deals European bidder acq North American target DEAL DRIVERS NORTH AMERICA - ALL SECTORS

10 1 All SEctors North american M&A split by deal size 1,6 6, (US$m) 1,4 1,2 1, , , Volume 5, 4, 3, 2, 1, , , , , , , , , , >$51m $251m - $5m $11m - $25m $15m - $1m $5m - $14m >$51m $251m - $5m $11m - $25m $15m - $1m $5m - $14m not disclosed north american quarterly M&a activity 6, 1,5 5, 1,2 (US$m) 4, 3, Volume 9 6 2, 1, 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q 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 Q Quarter Ended Quarter Ended Moving average trend line Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in North America. DEAL DRIVERS NORTH AMERICA - ALL SECTORS

11 11 All SEctors Financial advisors top 2 - ranked by VALUE TOp 2 - ranked by 2 1 Goldman Sachs 119, JPMorgan 89, Deutsche Bank 88, Morgan Stanley 88, Bank of America Merrill Lynch 86, Credit Suisse 79, Barclays 76, Citigroup 61, RBC Capital Markets 41, Lazard 36, UBS Investment Bank 36, Rothschild 29, Evercore Partners 28, Centerview Partners 27, Jefferies & Company 24, BMO Capital Markets 2, Rabobank 19, TD Securities 19, Scotia Capital 17, Moelis & Company 16, Goldman Sachs 119, JPMorgan 89, RBC Capital Markets 41, Barclays 76, Morgan Stanley 88, Bank of America Merrill Lynch 86, Lazard 36, Deutsche Bank 88, Credit Suisse 79, Houlihan Lokey 2, Jefferies & Company 24, Citigroup 61, Evercore Partners 28, UBS Investment Bank 36, Rothschild 29, Moelis & Company 16, Robert W. Baird & Co 3, Lincoln International 1, Harris Williams & Co 1, BMO Capital Markets 2,98 24 The financial adviser league tables by value and have been run from 1/1/ to the 6/3/, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover all sectors. Legal Advisors top 2 - ranked by VALUE TOp 2 - ranked by 7 1 Skadden Arps Slate Meagher & Flom 89, Simpson Thacher & Bartlett 6, Kirkland & Ellis 58, Sullivan & Cromwell 57, Weil Gotshal & Manges 52, Latham & Watkins 5, Wachtell, Lipton, Rosen & Katz 48, Cleary Gottlieb Steen & Hamilton 48, Davis Polk & Wardwell 47, Jones Day 42, Clifford Chance 41, Bracewell & Giuliani 38, Blake, Cassels & Graydon 36, Gibson Dunn & Crutcher 35, Freshfields Bruckhaus Deringer 33, Vinson & Elkins 33, Shearman & Sterling 33, Stikeman Elliott 26, Allen & Overy 25, White & Case 24, Jones Day 42, Kirkland & Ellis 58, Latham & Watkins 5, DLA Piper 21, Skadden Arps Slate Meagher & Flom 89, Weil Gotshal & Manges 52, Sullivan & Cromwell 57, Blake, Cassels & Graydon 36, Vinson & Elkins 33, Morgan Lewis & Bockius 3, Baker & McKenzie 21, Stikeman Elliott 26, Wilson Sonsini Goodrich & Rosati 7, Simpson Thacher & Bartlett 6, Morrison & Foerster 13, Davis Polk & Wardwell 47, White & Case 24, Paul Weiss Rifkind Wharton & Garrison 23, Greenberg Traurig 9, Gowling Lafleur Henderson 3, The legal adviser league tables by value and have been run from 1/1/ to the 6/3/ and include lapsed and withdrawn deals. The tables are are based on advice to a North American bidder, target or vendor and cover all sectors. DEAL DRIVERS NORTH AMERICA - ALL SECTORS

12 12 All SEctors Financial advisors Mid -market (US$1m-US$25m) top 2 - ranked by VALUE TOp 2 - ranked by 1 1 Goldman Sachs 2, RBC Capital Markets 2, Barclays 2, Jefferies & Company 1, Lazard 1, Stifel, Nicolaus & Company 1, Morgan Stanley 1, Houlihan Lokey 1, JPMorgan 1, Evercore Partners 1, Credit Suisse 1, Bank of America Merrill Lynch 1, Rothschild 1, Sandler O'Neill & Partners 1, Macquarie Group William Blair & Company Citigroup Keefe, Bruyette & Woods BMO Capital Markets Peter J Solomon Company RBC Capital Markets 2, Goldman Sachs 2, Stifel, Nicolaus & Company 1, Sandler O'Neill & Partners 1, Houlihan Lokey 1, Barclays 2, Lazard 1, Evercore Partners 1, Morgan Stanley 1, Macquarie Group Jefferies & Company 1, JPMorgan 1, Bank of America Merrill Lynch 1, Raymond James & Associates Credit Suisse 1, Rothschild 1, Keefe, Bruyette & Woods William Blair & Company Citigroup BMO Capital Markets The financial adviser mid-market league tables by value and have been run from 1/1/ to the 6/3/, excluding lapsed and withdrawn deals. The tables are are based on advice to a North American bidder, target or vendor and cover all sectors. Legal advisors Mid -market (US$1m-US$25m) top 2 - ranked by VALUE TOp 2 - ranked by 1 1 Kirkland & Ellis 3, Latham & Watkins 2, Jones Day 2, Skadden Arps Slate Meagher & Flom 2, White & Case 1, Morrison & Foerster 1, DLA Piper 1, Wilson Sonsini Goodrich & Rosati 1, Vinson & Elkins 1, Hogan Lovells 1, Weil Gotshal & Manges 1, Sidley Austin 1, Baker Botts 1, Paul Hastings 1, Allen & Overy 1, Greenberg Traurig 1, Blake, Cassels & Graydon 1, Norton Rose 1, Baker & McKenzie 1, Morgan Lewis & Bockius 1, Latham & Watkins 2, DLA Piper 1, Kirkland & Ellis 3, Jones Day 2, Wilson Sonsini Goodrich & Rosati 1, White & Case 1, Morrison & Foerster 1, Gowling Lafleur Henderson 1, Mayer Brown Skadden Arps Slate Meagher & Flom 2, Vinson & Elkins 1, Hogan Lovells 1, Sidley Austin 1, Stikeman Elliott K&L Gates Weil Gotshal & Manges 1, Blake, Cassels & Graydon 1, Morgan Lewis & Bockius 1, Gibson Dunn & Crutcher 1, Davis Polk & Wardwell 1,57 12 The legal adviser mid-market league tables by value and have been run from 1/1/ to the 6/3/ and include lapsed and withdrawn deals. The tables are are based on advice to a North American bidder, target or vendor and cover all sectors. DEAL DRIVERS NORTH AMERICA - ALL SECTORS

13 13 All SEctors PR advisors top 2 - ranked by VALUE TOp 2 - ranked by 1 1 Sard Verbinnen & Co 79, Brunswick Group 79, Kekst and Company (Publicis Groupe) 77, Joele Frank Wilkinson Brimmer Katcher 48, Abernathy MacGregor Group (AMO) 26, RLM Finsbury 2, Maitland (AMO) 12, Rubenstein Associates 9, FTI Consulting 9, Capital MSL (Publicis Groupe) 9, Prosek Partners 8, Citigate 7, Hinton & Associates 7, Hill + Knowlton Strategies 7, National Public Relations 5, Hering Schuppener Consulting (AMO) 4, LLORENTE & CUENCA (AMO) 3, Owen Blicksilver Public Relations 3, Kreab Gavin Anderson 3, Fleishman-Hillard 3, Kekst and Company (Publicis Groupe) 77, Sard Verbinnen & Co 79, Brunswick Group 79, Joele Frank Wilkinson Brimmer Katcher 48, Abernathy MacGregor Group (AMO) 26, FTI Consulting 9, Owen Blicksilver Public Relations 3, RLM Finsbury 2, Integrated Corporate Relations 1, BackBay Communications Maitland (AMO) 12, Prosek Partners 8, Edelman Euro RSCG C&O (AMO) 1, Sloane & Company Citigate 7, Fleishman-Hillard 3, Tulchan Communications Rubenstein Associates 9, National Public Relations 5,716 5 The PR adviser league tables by value and have been run from 1/1/ to the 6/3/ and exclude lapsed and withdrawn deals. The tables are are based on advice to a North American bidder, target or vendor and cover all sectors. PR advisors Mid -market (US$1m-US$25m) top 2 - ranked by VALUE TOp 2 - ranked by 1 1 Joele Frank Wilkinson Brimmer Katcher 2, Kekst and Company (Publicis Groupe) 1, FTI Consulting 1, Abernathy MacGregor Group (AMO) 1, Sard Verbinnen & Co Brunswick Group Owen Blicksilver Public Relations Integrated Corporate Relations RLM Finsbury Maitland (AMO) Fleishman-Hillard Buchanan Communications Lippert/Heilshorn & Associates BackBay Communications Liolios Group The Equity Group The Piacente Group Blueshirt Group Dennard Rupp Gray & Lascar Sloane & Company Joele Frank Wilkinson Brimmer Katcher 2, FTI Consulting 1, Kekst and Company (Publicis Groupe) 1, Abernathy MacGregor Group (AMO) 1, Sard Verbinnen & Co Brunswick Group Integrated Corporate Relations Owen Blicksilver Public Relations RLM Finsbury Maitland (AMO) Liolios Group Fleishman-Hillard Buchanan Communications MHP Communications Blueshirt Group College Hill Tulchan Communications Lippert/Heilshorn & Associates BackBay Communications The Equity Group The PR adviser league tables by value and have been run from 1/1/ to the 6/3/ and exclude lapsed and withdrawn deals. The tables are are based on advice to a North American bidder, target or vendor and cover all sectors. DEAL DRIVERS NORTH AMERICA - ALL SECTORS

14 14 financial services Financial services Financial Services M&A to see strong activity with banking consolidation on the rise Consolidation in the financial services space will most likely be restricted to small-sized players until after November s presidential election. Cleaner loan portfolios, regulatory hurdles and overbanked regions will stimulate banking deal flow. Insurance brokerages are attracting private equity and financial technology that will continue to maintain its strength despite slower growth. Banking M&A activity has been vibrant over the first half of the year and it is expected to continue, said Charles Ingram, managing director at Commerce Street Capital. Banks in some parts of the country, such as Texas, are yielding fabulous valuations, he said. A number of banks are seeking capital raises to make acquisitions, he said. There has been some activity on the east coast, and there is a lot of need for activity in the Midwest; however, there are too many sellers and not enough buyers, he added. In addition to difficulty dealing with regulatory overhead, boards are tired of fighting the battles, Ingram said. In many cases, management teams of closely held banks lack succession plans, causing them to sell, Ingram said. Half the deals we re doing right now are those kinds of deals. An overall struggle to generate revenue on the fee side and margin side with historically low interest rates is going to also drive consolidation, said Richard Foggia, managing director at Commerce Street Capital. There will be a continuing flow of smaller banks starting to go first, he said. Places such as Kansas are experiencing immense consolidation. So far, the state saw eight bank transactions announced and all except one bank sold with less than US$1m in assets, he said. Buyers who became skittish following the recession are becoming more comfortable with risk, as banks clean up their loan portfolios, which has been driving up prices, Foggia said. Overall in every market except the Mid- Atlantic, where pricing has been either flat or down over the last year, pricing has gone up and should continue, Foggia said. It will not be a large and fast moving consolidation wave, but it will gradually pick up within the next six months, he said. Albeit, deals will be much smaller and off the radar, mostly acquisitions of banks with US$15m to US$5m in assets, an industry analyst said. Banks with US$5m in assets or less are still affected by regulatory burdens, he added. It is a war of attrition for underperforming banks with a lack of growth strategies, he said. Overbanked regions like Pennsylvania will have increased consolidation. Indiana, Pennsylvania-based S&T Bancorp, Boyertown-based National Penn Bancshares, Hermitage-based FNB Corporation, as well as Lancaster-based Fulton Financial will continue to be regional consolidators. Insurance The next six months will be lamentable for underwriter consolidation, with the backdrop of the elections coming up, as one side is attempting to undo everything that the other side has done, an industry banker said. There is a great deal of regulatory uncertainty in the government, and due to the fact that the insurance industry is heavily influenced by the political landscape, there will be more clarity once the election is over, he explained. It will be difficult to get people to buy into the notion that making meaningful acquisitions before the November election is a great idea, he added. Some decent-sized strategic transactions may get done for companies that simply add small complementary businesses or platforms to their existing ones, he said. The brokerage space will see a fair amount of deals especially involving private equity, similar to. Life insurance will also see its fair share of deals, said a second industry banker. He expects several more deals of decent size, including the potential Aviva US operations sale, as well as the New York-based Hartford Financial s life insurance unit sale. But the property & casualty space is likely to see relatively slow growth, he said. Valuations for specialty firms are depressed, and if you re a seller, you re not motivated to sell right now, he said. There is also potential M&A overhang for Bermuda reinsurers and deals are likely to be serendipitous. Financial Technology Ken Marlin of Marlin & Associates said his firm had a strong first half with six completed transactions. Although the firm expects a reasonably strong second half in the space, the latter half of the year might be flat, or even down from the first half, he said. The market is seeing more firms displaying considerable nervousness about their ability to achieve budget goals this year, Marlin said. The problem is a combination of very cautions buyers along with sellers whose growth has slowed down or flattened, he said. He sees little or no interest from strategics and financial buyers looking to acquire firms that are too small to move the needle or ones lacking a unique product. by Jennifer Tekneci DEAL DRIVERS NORTH AMERICA - FINANCIAL SERVICES

15 15 Financial services top 15 announced deals for year ending 3 june Announced Date Status Bidder Company Target Company Vendor Company Deal (US$m) 3-Jun-12 P EverBank Business Property Lending Inc GE Real Estate 2,51 16-Apr-12 C Temasek Holdings Pte Ltd Industrial and Commercial Bank of China Limited (1.2% Stake) Goldman Sachs 2,384 6-May-12 C American International Group Inc American International Group Inc (3.66% Stake) US Department of the Treasury 2, 12-Mar-12 P UnionBanCal Corporation Pacific Capital Bancorp 1, Apr-12 C New Mountain Capital LLC AmWINS Group Inc Parthenon Capital Partners 1,3 3-Apr-12 C Royal Bank of Canada RBC Dexia Investor Services (5% Stake) Dexia SA 1, May-12 C BlackRock Inc BlackRock Inc (4.56% Stake) Barclays Plc 1, 11-Jan-12 C Raymond James Financial Inc Morgan Keegan & Company Inc Regions Financial Corporation Mar-12 C SS&C Technologies Holdings Inc GlobeOp Financial Services SA Feb-12 C Grupo Elektra SA de CV Advance America Cash Advance Centers Inc May-12 P Jackson National Life Insurance Company Reassure America Life Insurance Company Swiss Re Ltd Feb-12 C BB&T Corporation The Crump Group (Life and property and casualty insurance operating division) The Crump Group 57 2-May-12 P Intact Financial Corporation JEVCO Insurance Company The Westaim Corporation May-12 P Hilltop Holdings Inc PlainsCapital Bank Apr-12 C Mitsui Sumitomo Insurance Co Ltd Max Life Insurance Company (26% Stake) New York Life Insurance Company 53 C= Completed; P= Pending; L= Lapsed DEAL DRIVERS NORTH AMERICA - FINANCIAL SERVICES

16 16 Financial services m&a split by deal size 2 6 (US$m) Volume >$51m $251m - $5m $11m - $25m $15m - $1m $5m - $14m >$51m $251m - $5m $11m - $25m $15m - $1m $5m - $14m not disclosed Quarterly m&a activity value 1, 2 8, 15 (US$m) 6, 4, Volume 1 2, 5 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 Q 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 Q Quarter Ended Quarter Ended Moving average trend line Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Financial Services sector. DEAL DRIVERS NORTH AMERICA - FINANCIAL SERVICES

17 17 Financial services Financial advisors top 2 - ranked by VALUE TOp 2 - ranked by 1 1 Goldman Sachs 7, Deutsche Bank 5, Morgan Stanley 4, Sandler O'Neill & Partners 3, Bank of America Merrill Lynch 3, RBC Capital Markets 2, JPMorgan 2, Evercore Partners 1, Macquarie Group 1, Stephens 1, Keefe, Bruyette & Woods 1, Financial Technology Partners LLC 1, = Credit Suisse 1, = Willis Capital Markets & Advisory Services 1, Oddo & Cie 1, Barclays 1, GMP Securities Wells Fargo Securities Jamieson Corporate Finance National Bank Financial Sandler O'Neill & Partners 3, Goldman Sachs 7, Keefe, Bruyette & Woods 1, Morgan Stanley 4, RBC Capital Markets 2, Deutsche Bank 5, Evercore Partners 1, Stifel, Nicolaus & Company Lazard JPMorgan 2, Wells Fargo Securities Macquarie Group 1, Aon Benfield Stephens 1, Barclays 1, GMP Securities National Bank Financial Sterne Agee & Leach Group Commerce Street Capital Bank of America Merrill Lynch 3,291 2 The financial adviser league tables by value and have been run from 1/1/ to the 6/3/, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the Financial Services sector. Legal Advisors top 2 - ranked by VALUE TOp 2 - ranked by 2 1 Sullivan & Cromwell 9, Clifford Chance 4, Linklaters 3, Weil Gotshal & Manges 3, Simpson Thacher & Bartlett 3, Wachtell, Lipton, Rosen & Katz 2, Skadden Arps Slate Meagher & Flom 2, Davis Polk & Wardwell 2, McCarthy Tetrault 2, Paul Weiss Rifkind Wharton & Garrison 1, Debevoise & Plimpton 1, Allen & Overy 1, Cleary Gottlieb Steen & Hamilton 1, Cravath Swaine & Moore 1, Morrison & Foerster Heenan Blaikie White & Case K&L Gates Bracewell & Giuliani Vinson & Elkins Sullivan & Cromwell 9, Debevoise & Plimpton 1, Simpson Thacher & Bartlett 3, Wachtell, Lipton, Rosen & Katz 2, Clifford Chance 4, Linklaters 3, Skadden Arps Slate Meagher & Flom 2, McCarthy Tetrault 2, Bracewell & Giuliani Sidley Austin Jones Day Blake, Cassels & Graydon Luse Gorman Pomerenk & Schick Mayer Brown Weil Gotshal & Manges 3, K&L Gates Kilpatrick Townsend & Stockton Arnold & Porter Morgan Lewis & Bockius Norton Rose 76 4 The legal adviser league tables by value and have been run from 1/1/ to the 6/3/, and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the Financial Services sector. DEAL DRIVERS NORTH AMERICA - FINANCIAL SERVICES

18 18 Industrials, manufacturing & engineering industrials, manufacturing & engineering Dealmakers hopeful for industrials M&A rebound after notable slowdown in first half of year Industry participants are hoping for an M&A uptick in the North American industrials and chemicals segments, as the market moves past worries over the November US presidential election and the European debt crisis. According to mergermarket data, the North American Industrials & Chemicals sector showed a significant decline in M&A, with US$38.4bn in deals, down 4% from US$64.5bn in. Construction and defense segments were also down sharply, but transport gained 39.6% yearover-year through the first half. The M&A market is marked by uncertainty, said a Chicago-based investment banker who focuses on industrials. This is reflected in the amount of cash some corporations have amassed, but are choosing not to deploy, he said. That said, Scott Budoff of Saw Mill Capital, speaking at the annual ACG New York manufacturing conference recently, predicted tax-driven selling at year-end as US$6bn of Bush tax cuts and payroll tax cuts are set to expire. The fastest-growing industrials sectors this year are aerospace, motor vehicles, electronics, medical equipment and fabricated metals, said Budoff. Paul Jones, a director at Raymond James in charge of transportation deals, also speaking at the ACG event, said he would rather be a seller than a buyer in the current market. He said he closed a deal recently that included 15 strategic and financial bidders, with 2 initial bids. In the end, a strategic won at a price that was higher than expected, he said. Although private equity interest in automotives continues, strategics have won several mid-sized auto auctions this year. Michigan-based Hayes-Lemmerz s US$725m sale to Brazil s Iochpe-Maxion closed in February, while last month Mexico-based Nemak closed its US$215m acquisition of Wisconsin-based J.L. French Automotive Castings. Larger automotive deals are stalling. Mark IV has not yet found a buyer since its sale process was reported last year, while Cooper-Standard canceled its sale process last October due to the weak market. Several automotive bankers have attributed this trend to private equity buyers not wanting to borrow to pay high multiples for large auto groups. Diversified industrial manufacturers will continue shedding less core automotive divisions following sizable acquisitions. For instance, SPX, the industrial equipment manufacturer, acquired Clyde Union Pumps for US$1.25bn last August and five months later sold its automotive service equipment business, Solution Services, to Robert Bosch, for US$1.15bn. Similarly, an industry banker speculated, Eaton, the power management giant that paid US$11.8bn in May for Irelandbased Cooper Industries, may have to sell parts of its less strong automotive and aerospace businesses to avoid dilution. And Eaton s aerospace components could interest groups like United Technologies, Saffran and Rolls-Royce, said the banker. Private equity exits from aerospace portfolio companies are expected to continue into the second half of the year, the industrials banker said. Examples from the first half include Platte River Ventures selling PRV Aerospace to Court Square Capital Partners and Centra being sold to Precision Castparts by PE firm Heritage Partners. In July, Precision Castparts acquired Klune Industries. One other PE-owned aerospace portfolio company that could be acquired over the next six months into next year is Synchronous Aerospace, the industry source said, which is a portfolio company of Littlejohn. On the other end of the spectrum, construction and building products are still facing headwinds, with many bankruptcies in the sector. However, Budoff said Saw Mill Capital is looking at building products because housing appears to have bottomed. In the defense sector, growth is expected to continue in M&A for unmanned aerial vehicles (UAVs), cyber security, and intelligence, surveillance and reconnaissance (ISR), the industry source noted, despite worries over US Department of Defense budget cuts. Some companies that could be targeted include Natal Engineering and Empower RF Systems, which is owned by Summit Partners, he noted. Potential buyers of those types of companies include API Technologies, Comtech, Mercury Computer, Anaren, Kratos and Veritas, the industry source said. Major defense contractors are expected to continue to seek buys in the few areas of growth in the defense sector. One example that has been named as a potential target is KEYW, as it has a strong presence in the cyber security market. In industrial services, waste management is expected to see robust middle market M&A in Northeast metropolitan regions, given that giants Republic Services and Waste Management have gradually left cities like New York due to competition from local groups, a sector banker noted. New Jersey-based Action Carting Environmental Services and Ontariobased Progressive Waste Solutions have been building their Northeast presence and could buy small groups with US$1m to US$3m in revenue, he added. Large groups such as listed, Texas-based Waste Connections could grow their Northeast platforms by targeting any of Connecticut s independents--all Waste, City Carting & Recycling, USA Hauling & Recycling and CWPM, the banker said. Multiples in the space are typically 6x EBITDA for tuck-in deals, but companies with more critical mass or a unique footprint could sell for up to 1x, he said. by Marlene Givant Star and Sam Weisberg with additional reporting by Craig Barner and Richard Tekneci DEAL DRIVERS NORTH AMERICA - INDUSTRIALS, MANUFACTURING & ENGINEERING

19 19 industrials, manufacturing & engineering top 15 announced deals for year ending 3 june Announced Date Status Bidder Company Target Company Vendor Company Deal (US$m) 21-May-12 P Eaton Corporation Cooper Industries Plc 11,94 28-Mar-12 P Tyco Flow Control Pentair Inc 5,23 27-Jan-12 C Eastman Chemical Company Solutia Inc. 4,6 3-Jan-12 C ABB Ltd Thomas & Betts Corporation 3,77 8-Mar-12 C Molycorp Inc Neo Material Technologies Inc 1, Jan-12 C Robert Bosch GmbH SPX Service Solutions SPX Corporation 1,15 21-Jun-12 P Cabot Corporation Norit NV Doughty Hanson & Co; and Euroland Investments BV 1,1 19-Jun-12 P Air Products and Chemicals Inc Indura SA (67% Stake) Inversiones y Desarrollo SA Feb-12 C Indorama Ventures Public Company Limited Old World Industries LLC Mar-12 C Amazon.com Inc Kiva Systems Bain Capital LLC; and Meakem Becker Venture Captial 2-Jan-12 C TransDigm Group Inc AmSafe Partners Inc Berkshire Partners LLC; and Greenbriar Equity Group LLC Apr-12 P TechAir Dressel Welding Supply Inc May-12 P General Electric Company Industrea Limited May-12 L Hicks Equity Partners LLC Appleton Inc Paperweight Development Corp Apr-12 C Danaher Corporation X-Rite Incorporated One Equity Partners LLC 621 C= Completed; P= Pending; L= Lapsed DEAL DRIVERS NORTH AMERICA - INDUSTRIALS, MANUFACTURING & ENGINEERING

20 2 industrials, manufacturing & engineering m&a split by deal size 25 1,1 (US$m) Volume 1, >$51m $251m - $5m $11m - $25m $15m - $1m $5m - $14m >$51m $251m - $5m $11m - $25m $15m - $1m $5m - $14m not disclosed Quarterly m&a activity value 12, 3 1, 25 (US$m) 8, 6, Volume , 1 2, 5 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 Q 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 Q Quarter Ended Quarter Ended Moving average trend line Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Industrials, Manufacturing & Engineering sector. DEAL DRIVERS NORTH AMERICA - INDUSTRIALS, MANUFACTURING & ENGINEERING

21 21 industrials, manufacturing & engineering Financial advisors top 2 - ranked by VALUE TOp 2 - ranked by 4 1 Goldman Sachs 2, Citigroup 18, Morgan Stanley 14, Deutsche Bank 14, Lazard 6, Credit Suisse 6, Barclays 5, Bank of America Merrill Lynch 5, Greenhill & Co 5, The Valence Group 4, Moelis & Company 4, Perella Weinberg Partners 4, Rothschild 3, JPMorgan 2, KPMG 1, UBS Investment Bank 1, = Cutfield Freeman & Co 1, = GMP Securities 1, William Blair & Company 1, Banco Itau BBA Houlihan Lokey Lazard 6, Lincoln International Goldman Sachs 2, Rothschild 3, Harris Williams & Co Robert W. Baird & Co Morgan Stanley 14, UBS Investment Bank 1, Citigroup 18, Deutsche Bank 14, Bank of America Merrill Lynch 5, William Blair & Company 1, Credit Suisse 6, Barclays 5, Jefferies & Company JPMorgan 2, DC Advisory Partners Sagent Advisors M&A International 31 5 The financial adviser league tables by value and have been run from 1/1/ to the 6/3/, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the following sectors: Automotive; Chemicals & Materials; Industrials- electronics; automation and products and services; and Manufacturing- other. Legal Advisors top 2 - ranked by VALUE TOp 2 - ranked by 1 1 Simpson Thacher & Bartlett 17, Davis Polk & Wardwell 15, Wachtell, Lipton, Rosen & Katz 13, Blake, Cassels & Graydon 12, Jones Day 12, Cleary Gottlieb Steen & Hamilton 12, Kinstellar 11, = A&L Goodbody 11,94 1-8= Arthur Cox 11,94 1-8= Matheson Ormsby Prentice 11, Skadden Arps Slate Meagher & Flom 11, Kirkland & Ellis 1, Freshfields Bruckhaus Deringer 6, Cravath Swaine & Moore 5, McDermott Will & Emery 5, Homburger 5, Fried Frank Harris Shriver & Jacobson 4, Sullivan & Cromwell 4, Dewey & LeBoeuf 3, Slaughter and May 2, Jones Day 12, Kirkland & Ellis 1, DLA Piper 1, Latham & Watkins 2, McDermott Will & Emery 5, Morgan Lewis & Bockius 1, Blake, Cassels & Graydon 12, Baker & McKenzie Weil Gotshal & Manges 2, Mayer Brown Freshfields Bruckhaus Deringer 6, Paul Weiss Rifkind Wharton & Garrison Norton Rose 2, CMS Fasken Martineau Dumoulin Vinson & Elkins Fulbright and Jaworski Simpson Thacher & Bartlett 17, Skadden Arps Slate Meagher & Flom 11, Stikeman Elliott 1,631 6 The legal adviser league tables by value and have been run from 1/1/ to the 6/3/ and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the following sectors: Automotive; Chemicals & Materials; Industrials- electronics; automation and products and services; and Manufacturing- other. DEAL DRIVERS NORTH AMERICA - INDUSTRIALS, MANUFACTURING & ENGINEERING