baird m&a update (may 2009)
TRANSCRIPT
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M&A Market AnalysisMay 2009
Global M&A Monthly
A Middle-Market Perspective on U.S., Europe, and AsiaMergers & Acquisitions
Christopher C. McMahon Brian P. McDonagh Howard P. LanserManaging Director Managing Director Director, Mergers & AcquisitionsHead of Global M&A Co-Head of M&A Head of Business [email protected] [email protected] [email protected] 704.998.5757 312.609.5478
J. David Cumberland, CFA Jamie C. Kaplan Thomas J. GaulDirector, M&A Research Associate, Mergers & Acquisitions M&A Market [email protected] [email protected] [email protected] 312.609.5451 312.609.4978
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In This Issue Page
Please refer to Appendix Disclaimers and Other Disclosures on page 32.
Global M& A Commentary and Deal Statistics ...................................................... 1The number of global M&A transactions dropped 39.1%, which was the largest percentage decline in monthly deal count thisdecade. Dollar volume was 43.3% below the year-ago level.
U.S. M&A Commentary and Deal Statist ics ......................................................... 5The total of 518 deals announced in April represented a 35.3% decline from the prior-year period and was well below thelast 12 month (LTM) average of 693 deals. Dollar volume was $65.0 billion, a 33.0% decrease from the year-ago period.
Europe M&A Commentary and Deal Statistics................................................... 10The negative trend for M&A activity worsened in April. The deal count of 543 was 52.5% below the year-ago level, resultingin the largest percentage decrease in monthly deal count for Europe in over a decade.
U.K. Cross-Border M&A Activity ........................................................................ 14Year to date, there was a total of 709 announced U.K. transactions, a 46.7% decrease from the year-ago period. Dollarvolume dropped 40.7% to $55.1 billion through April.
Germany Cross-Border M&A Activity ................................................................ 15A total of 404 German M&A transactions were announced for the year-to-date period, a 25.6% decrease compared to thefirst four months of 2008.
As ia Commentary and Deal Statist ics ............................................................... 16Asia has not escaped the global slowdown in M&A activity. The number of transactions in Asia (ex. Japan) declined 31.1% inApril.
China M&A Activity and Deal Statistics ............................................................. 17China deal activity declined 29.3% through April. Dollar volume of $21.3 billion was down 48.3% compared to the year-agoperiod.
India M&A Activity and Deal Statistics ............................................................. 19Year to date, there was a total of 199 announced India M&A transactions, a 46.9% drop from the year-ago period. IndiaM&A dollar volume decreased 89.1% and totaled a mere $1.4 billion through April.
Japan M&A Act iv ity .......................................................................................... 21Japan M&A performed relatively better than the other regions of the world in the first four months of 2009, with a 16.4%decrease in the number of deals and a 27.9% drop in dollar volume.
Economic Commentary ..................................................................................... 22The incoming economic data continues to paint a picture of recession, although its grip appears to be weakening. Theeconomy shed another 539,000 jobs in April, the sixth consecutive month in which more than half-a-million jobs were lost,but also 200,000 fewer than the nearly three-quarters of a million jobs that were lost in January.
Restructuring New s .......................................................................................... 24The Baird CDS Index declined in April for the second consecutive month, which indicates that the cost to insure against acredit default for non-investment grade companies outside of the financial sector has now fallen for two months in a row.The Index decreased by 16.5% in April, falling to 1320.4 on April 30, a drop of 260.1 points from 1580.5 on March 31.
Transaction Spotlight Sale of Orion Corporation to J ohn Crane (SmithsGroup plc) ........................................................................................................ 25Orion Corporation recently completed its sale to John Crane Inc., a division of Smiths Group plc. The transaction closed inMay 2009, and terms were not disclosed.
Recent Baird M&A Transactions ....................................................................... 26A summary of Bairds announced M&A Transactions over the past 12 months. Baird U.S. Equity Research Coverage ............................................................... 27
In April 2009, Baird added 2 companies to coverage, bringing the total coverage to 520 companies.
Investment Bank ing Contact List ..................................................................... 31Please note that historical M& A data presented in this months issue is differentfrom the information published in previous months. After a thorough duediligence process, Baird has switched to Dealogic as its provider of M& A data.
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Global M&A Commentary
Robert W. Baird & Co. 1
On paper, April global M&A activity continued to add tothe overall gloomy M&A environment. However, theemergence of positive trends in key M&A variables hasinstilled a sense of cautious optimism for M&A activityin the second half of 2009. In terms of the statistics,the number of transactions dropped 39.1%, which was
the largest percentage decline in monthly deal countthis decade. Dollar volume was 43.3% below the year-ago level. The middle-market again witnessed a largefall-off in April, with deal activity down 33.1% anddollar volume declining 54.8%.
Year to date through April, the number of announceddeals declined 32.2%. Dollar volume fell 38.8% in thefirst four months of 2009. The middle-market haslagged overall activity in 2009, with deal count down35.7% and transaction value 53.0% below the year-ago figure.
The continued decline in M&A coincides with ongoingweakness across global economies and tight credit
markets in the U.S. and Europe. The Organization forEconomic Cooperation and Development (OECD) isprojecting economic contraction of 4.3% in its 30member nations during 2009. However, the head ofthe OECD recently noted signs of bottoming amongeconomic indicators and potential for recovery to begintoward the end of this year.
In terms of the U.S. credit markets, the high-yield andleveraged loan markets appear to be thawing, withrelatively high levels of inflows and primary issuances.If fundamentals in these key markets continue toimprove in the second quarter, we would expect morecapital to flow into M&A, thus accelerating deal activity
in the second half of 2009. In contrast, Europeancredit markets have not shown much improvement,and sentiment remains low as additional banking crisesin Germany and Eastern Europe seem imminent.
The rebound in the equity markets, which began inMarch, carried through April. The five major indicespresented in the chart below gained an average of11.2% in April (after rising 7.2% in March). Eventhough equity values remain well below peak levelsfrom 2008, the new issuance market has shown signs
of life, helping inject confidence into the overallmarket, including M&A.
The latest semi-annual survey of middle-marketmerger professionals conducted by the Association forCorporate Growth (ACG) and Thomson Reutersunderscored the impact of challenging global economicand credit conditions on deal activity. Among the 700+respondents, 45% described the current environmentfor M&A as poor, with only 12% characterizing thelandscape as good or excellent. Half of the participantsviewed the recession or the credit crunch as thebiggest obstacle to M&A activity.
Despite recent challenges, participants in the survey
expect an uptick in deal flow in the near term. Amongrespondents, 56% forecast an increase in the numberof transactions over the next six months, and only10% anticipate a decline. Slight improvement in debtmarkets (as predicted by 71% for the upcoming sixmonths) would contribute to a faster pace of M&Aactivity, as noted previously.
Although signals are still mixed, continued positivemomentum in the credit and equity markets coupledwith a sense that the world economies have bottomedcould be the catalyst for a revival of M&A activity in Q32009.
Note: See pages 5, 10, and 16 for specific U.S., Europe, and Asia commentary.
Relative Performance of Global Market Indices
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
1/1/08 3/1/08 5/1/08 6/30/08 8/30/08 10/30/08 12/29/08 2/28/09 4/30/09
S&P 500 FTSE 100 DAX Hang Seng Nikkei 225
(43.6%)
(38.2%)(38.9%)
(33.2%)
(39.9%)
_____________________Source: Capital IQ.
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Global M&A Commentary
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Global M&A Activity
21,70324,309
21,458 19,964 18,395
24,166
31,770
28,015
7,041
20,824
28,198
10,382
0
10,000
20,000
30,000
40,000
#ofDeals
$0
$1,000
$2,000
$3,000
$4,000
DealValue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 21,703 24,309 21,458 19,964 18,395 20,824 24,166 28,198 31,770 28,015 10,382 7,041
# of Deals >$1B 387 436 235 187 201 299 390 538 643 342 135 57
# of Deals Middle-Market 9,448 11,967 9,830 9,095 8,987 10,267 11,977 13,121 14,348 12,915 4,714 3,030
# of Deals Undisclosed 11,868 11,906 11,393 10,682 9,207 10,258 11,799 14,539 16,779 14,758 5,533 3,954
Deal Value $2,762 $2,802 $1,447 $1,053 $1,189 $1,713 $2,448 $3,314 $3,633 $2,241 $757 $463
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion.
Global Middle-Market M&A Activity
9,448
11,967
9,830 9,095 8,987
11,97713,121 12,915
4,7143,030
14,348
10,267
0
5,000
10,000
15,000
#ofDeals
$0
$500
$1,000
$1,500
DealValue
# of Transactions
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Global M&A Deal Statistics
Robert W. Baird & Co. 3
($ in millions)Number of Deals April Deal Value April
2008 2009 % Change 2008 2009 % Change
North America 940 593 (36.9%) $101,342 $66,987 (33.9%)
U.S. 800 518 (35.3%) $96,981 $65,004 (33.0%)
Central / South America 79 45 (43.0%) $6,687 $7,182 7.4%
Europe 1,142 543 (52.5%) $64,303 $22,241 (65.4%)
U.K. 395 154 (61.0%) $19,674 $6,327 (67.8%)
Germany 140 77 (45.0%) $7,689 $3,993 (48.1%)
Africa / Middle East 70 28 (60.0%) $5,276 $862 (83.7%)
Asia-Pacific (ex. Japan) 512 353 (31.1%) $17,297 $14,939 (13.6%)
China 231 166 (28.1%) $10,372 $7,637 (26.4%)
India 95 49 (48.4%) $1,776 $762 (57.1%)
Japan 146 127 (13.0%) $10,378 $7,031 (32.2%)
Global Total 2,637 1,605 (39.1%) $181,876 $103,118 (43.3%)_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the targets and acquirors respective regions.
($ in millions) Number of Deals YTD Deal Value YTD
2008 2009 % Change 2008 2009 % Change
North America 3,975 2,706 (31.9%) $393,503 $276,852 (29.6%)
U.S. 3,447 2,385 (30.8%) $373,080 $242,248 (35.1%)
Central / South America 289 160 (44.6%) $38,171 $14,236 (62.7%)
Europe 4,140 2,618 (36.8%) $271,589 $125,858 (53.7%)
U.K. 1,329 709 (46.7%) $92,981 $55,107 (40.7%)
Germany 543 404 (25.6%) $17,721 $22,888 29.2%
Africa / Middle East 270 145 (46.3%) $19,789 $12,350 (37.6%)
Asia-Pacific (ex. Japan) 1,906 1,289 (32.4%) $86,741 $39,787 (54.1%)
China 841 595 (29.3%) $41,288 $21,331 (48.3%)
India 375 199 (46.9%) $12,848 $1,404 (89.1%)
Japan 719 601 (16.4%) $40,616 $29,279 (27.9%)
Global Total 10,382 7,041 (32.2%) $756,506 $462,719 (38.8%)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of April 30.Note: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the targets and acquirors respective regions.
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Global Middle-Market M&A Deal Statistics
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($ in millions)Number of Deals April Deal Value April
2008 2009 % Change 2008 2009 % Change
North America 396 278 (29.8%) $35,038 $13,236 (62.2%)
U.S. 302 229 (24.2%) $30,676 $11,254 (63.3%)
Central / South America 43 23 (46.5%) $3,706 $2,462 (33.6%)
Europe 422 177 (58.1%) $32,985 $11,666 (64.6%)
U.K. 191 69 (63.9%) $12,092 $2,727 (77.5%)
Germany 31 18 (41.9%) $3,566 $2,318 (35.0%)
Africa / Middle East 42 18 (57.1%) $1,813 $862 (52.5%)
Asia-Pacific (ex. Japan) 330 250 (24.2%) $13,817 $9,241 (33.1%)
China 173 138 (20.2%) $8,155 $6,431 (21.1%)
India 44 13 (70.5%) $1,776 $762 (57.1%)
Japan 62 64 3.2% $1,932 $2,199 13.9%
Global Total 1,189 795 (33.1%) $78,183 $35,309 (54.8%)_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the targets and acquirors respective regions.
($ in millions)Number of Deals YTD Deal Value YTD
2008 2009 % Change 2008 2009 % Change
North America 1,611 1,102 (31.6%) $128,287 $55,626 (56.6%)
U.S. 1,289 917 (28.9%) $116,921 $49,304 (57.8%)
Central / South America 154 78 (49.4%) $12,858 $7,515 (41.6%)
Europe 1,525 747 (51.0%) $123,160 $46,146 (62.5%)
U.K. 664 251 (62.2%) $43,985 $13,959 (68.3%)
Germany 126 76 (39.7%) $13,597 $7,286 (46.4%)
Africa / Middle East 153 69 (54.9%) $11,729 $6,061 (48.3%)
Asia-Pacific (ex. Japan) 1,281 832 (35.1%) $56,427 $29,278 (48.1%)
China 632 467 (26.1%) $30,122 $17,292 (42.6%)
India 181 55 (69.6%) $7,312 $1,404 (80.8%)
Japan 388 348 (10.3%) $20,457 $17,589 (14.0%)
Global Total 4,714 3,030 (35.7%) $310,355 $145,896 (53.0%)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of April 30.Note: Global Total will not equal the sum of the individual regions listed above, as cross-border transactions are reflected in both the targets and acquirors respective regions.
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U.S. M&A Commentary
Robert W. Baird & Co. 5
MAJOR M&A DOWNTURN EXTENDS INTO APRIL
The landscape for M&A in the U.S. remained rocky inApril. The number of announced U.S. transactions fell35.3%, which represented modest deteriorationcompared to the average decline of 28.2% in theprevious six months. Overall dollar volume decreased33.0%. The U.S. middle-market deal count was down24.2%. Middle-market dollar volume declined 63.3%due largely to the 60.6% drop in the number of largerdeals ($100 million to $1 billion).
Extensive economic weakness year to date in the U.S.has caused the Federal Reserve to lower its 2009 GDPprojection to down 1.3-2.0% from its previous forecastof down 0.5-1.3%. A slight increase in GDP is stillexpected in the second half of the year as stimulusspending is implemented to a greater extent. While theunemployment rate rose to 8.9% (from 8.5%), the
reduction in payrolls (539,000) was below the six-month average (656,000). According to outplacementconsultancy Challenger, Gray & Christmas, the numberof planned layoffs announced in April was 12% underthe March figure and the lowest level since October2008. These updates reinforce recent perceptions thatthe rate of economic deterioration has stabilized.
The S&P 500 rose 9.4% in April for the best monthlyperformance for this index in nine years. The rally(which began in March) reflects signs of bottoming forsome economic indicators along with improvement insentiment among consumers and business leaders.Although management teams are still coping with heftydeclines in equity values over the past year (S&P 500 -
37.0% in the 12 months through April), the marketrebound has resulted in a sizable increase in follow-onofferings, potentially providing needed capital for M&A.
Credit markets still remain a constraint to deal activity,but the latest metrics are somewhat encouragingrelative to early 2009. In the Federal Reserves Aprilsurvey of senior loan officers, fewer respondents(compared to the prior survey in January) notedhaving recently tightened standards for loans tobusinesses. This improving tone for the credit marketsis evident in sequential declines in TED spreads andLIBOR as well as increasing inflows into the high-yieldand leveraged loan markets. Firmer footing for thecredit markets on a broader basis likely depends onstabilization for delinquency rates, which havecontinued to rise.
The latest CEO survey conducted by the BusinessCouncil (an association of business leaders) could bodewell for an upturn in the U.S. M&A market. One-thirdof respondents expect business conditions in the U.Sto improve in the next six months (compared to 9% inthe early 2009 survey), while only 16% anticipateworsening conditions (down from nearly two-thirds inpreviously). With CEO confidence a crucial determiningfactor for M&A activity, we view the survey as apotential leading indicator of better deal flow.
U.S. M&A Activity
The total of 518 deals announced in Aprirepresented a 35.3% decline from the prior-yeaperiod and was well below the last 12 month(LTM) average of 693 deals. Dollar volume totaled$65.0 billion, a 33.0% decrease from the year-ago period.
Through the first four months of 2009, thenumber of U.S. M&A deals was 2,385, a 30.8%decline compared to January-April 2008. Dollavolume totaled $242.2 billion, a 35.1% drop fromlast year.
Year to date, there was a total of 24 billion-dollar-plus deals compared to 49 in 2009. Billion-dollarplus deal value has decreased 24.7%.
U.S. Middle-Market Activity
In April, there was a total of 229 announced U.Smiddle-market M&A transactions, representing a24.2% decrease from April 2008. Middle-markedollar volume dropped 63.3% to $11.3 billion.
On a year-to-date basis, the middle-markeexperienced a 28.9% decline in the number odeals and a 57.8% fall-off in dollar volume.
For all announced U.S. middle-marketransactions across industry sectors over the las12 months, the median Enterprise Value/EBITDAmultiple was 7.1x, compared to a multiple of 8.4xin 2008 and 10.5x in 2007. Of note, valuationshave dropped significantly over the first foumonths of 2009, with the median multiple sinkingto 5.9x.
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U.S. M&A Activity
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U.S. M&A Activity
11,416 11,206
8,8587,900 7,856
8,918
11,089 11,619
9,369
3,4472,385
8,887
0
5,000
10,000
15,000
#ofDeals
$0
$400
$800
$1,200
$1,600
$2,000
DealValue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 11,416 11,206 8,858 7,900 7,856 8,887 8,918 11,089 11,619 9,369 3,447 2,385
# of Deals >$1B 243 226 141 74 91 161 188 249 308 129 49 24
# of Deals Middle-Market 4,557 5,851 3,954 3,429 3,706 3,966 3,861 3,847 3,591 3,527 1,289 917
# of Deals Undisclosed 6,616 5,129 4,763 4,397 4,059 4,760 4,869 6,993 7,720 5,713 2,109 1,444
Deal Value $1,632 $1,551 $841 $504 $612 $897 $1,226 $1,592 $1,641 $977 $373 $242
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion.
U.S. Middle-Market M&A Activity
3,9543,429
3,706 3,966 3,861 3,847 3,591 3,527
1,289917
5,851
4,557
0
2,000
4,000
6,000
#ofDeals
$0
$150
$300
$450
$600
DealValue
# of Transactions
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U.S. Middle-Market M&A Deal Statistics
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Number of Deals Deal Value
2008 2009 % Change ($ in millions) 2008 2009 % Change
April April
$1B $66,305 $53,750 (18.9%)
Undisclosed 486 275 (43.4%) Undisclosed ** ** **
Total 800 518 (35.3% ) Total $96,981 $65,004 (33.0%)
LTM Monthly Average 948 693 (26.9%) LTM Monthly Average $113,292 $70,800 (37.5% )
YTD YTD
$1B $256,159 $192,944 (24.7%)
Undisclosed 2,109 1,444 (31.5%) Undisclosed ** ** **
Total 3,447 2,385 (30.8%) Total $373,080 $242,248 (35.1% )
LTM LTM
$1B $942,879 $627,426 (33.5%)
Undisclosed 7,332 5,051 (31.1%) Undisclosed ** ** **
Total 11,370 8,314 (26.9%) Total $1,359,501 $849,606 (37.5% )
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.YTD and LTM as of April 30.
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.YTD and LTM as of April 30.
U.S. Middle-Market Enterprise Value to Median EBITDA, EBIT, and Revenue Multiples
Transaction Size 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008LTM2009
EV/EBITDA
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U.S. Middle-Market M&A Deal Statistics
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U.S. Middle-Market Median Acquisition P remiums
15.0%
25.0%
35.0%
45.0%
55.0% 1-Week Premium 4-Week Premium
1-Week Premium 35.1% 37.7% 40.4% 37.0% 35.4% 30.3% 29.4% 27.4% 27.9% 33.9% 39.0%
4-Week Premium 42.1% 43.5% 43.7% 39.3% 39.2% 33.1% 33.5% 31.9% 29.8% 34.4% 38.7%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM 2009
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. LTM as of April 30.
U.S. Middle-Market Transaction Composi tion Strategic vs. Sponsor Deal Value
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
%o
fDealValue
Strategic Sponsor
Sponsor 13.9% 14.9% 16.8% 24.4% 27.3% 32.2% 32.6% 29.8% 30.2% 27.3% 28.5% 16.3%
Strategic 86.1% 85.1% 83.2% 75.6% 72.7% 67.8% 67.4% 70.2% 69.8% 72.7% 71.5% 83.7%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 4/08 4/09
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
U.S. Middle-Market M&A Payment Method by Number of Deals
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
%o
fDeals
Cash Stock Cash/Stock
Cash/Stock 6.4% 6.1% 6.6% 5.8% 5.5% 6.6% 6.2% 4.5% 6.0% 4.2% 3.8% 2.5%
Stock 27.4% 24.9% 25.5% 18.4% 15.0% 14.9% 13.1% 9.9% 11.2% 10.2% 9.1% 7.6%
Cash 66.2% 69.0% 67.9% 75.8% 79.5% 78.6% 80.7% 85.6% 82.8% 85.6% 87.1% 89.9%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 4/08 YTD 4/09 YTD
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
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U.S. Cross-Border M&A Activity
Robert W. Baird & Co. 9
U.S. Inbound and Outbound M& A Activity
771
1,413
887 800
1,082822
1,003 941
784 580
1,023
1,2381,382
1,2291,067
1,515
1,1771,048 1,266
1,5311,463
1,205
0
500
1,000
1,500
2,000
#ofDeals
$0
$50
$100
$150
$200
$250$300
$350
DealValue
Inbound M&A Outbound M&A Inbound Deal Value Outbound Deal Value
Inbound M&A 822 1,003 941 784 580 771 1,023 1,238 1,382 1,229 1,067
Outbound M&A 1,413 1,515 1,177 887 800 1,048 1,082 1,266 1,531 1,463 1,205
Inbound Deal Value $263 $294 $102 $72 $55 $93 $122 $199 $324 $181 $164
Outbound Deal Value $148 $112 $110 $58 $73 $87 $102 $120 $181 $102 $73
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 4/09 LTM
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Inbound M&A represents U.S. target/non-U.S. acquiror; Outbound M&A represents non-U.S. target/U.S. acquiror.
Top 10 U.S.Target Industries Acquiredby Non-U.S. Companies -
YTD
Top 10 Non-U.S.Acquirors of U.S. Targets -
YTD
Top 10 Non-U.S. TargetIndustries Acquired by U.S.
Companies - YTD
Industry# of
Deals Country# of
Deals Industry# of
Deal
1. Computers & Electronics 54 1. Canada 78 1. Computers & Electronics 66
2. Healthcare 45 2. United Kingdom 43 2. Professional Services 53
3. Mining 25 3. Japan 24 3. Healthcare 33
4. Professional Services 22 4. Germany 15 4. Telecommunications 18
5. Utility & Energy 14 5. Australia 15 5. Food and Beverage 13
6. Oil & Gas 13 6. Switzerland 14 6. Consumer Products 13
7. Telecommunications 12 7. France 12 7. Mining 13
8. Finance 11 8. India 8 8. Oil & Gas 12
9. Chemicals 10 9. Sweden 7 9. Transportation 11
10. Retail 10 10. Netherlands 6 10. Chemicals 9
_____________________
Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of April 30, 2009.
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Europe M&A Commentary
Robert W. Baird & Co. 10
The negative trends in European M&A activityworsened in April. The deal count of 543 was 52.5%below the year-ago level, resulting in the largestpercentage decrease in monthly deal count for Europein over a decade. Reported dollar volume plunged65.4% to $22.2 billion. The pace of deal activity lagged
further in the middle-market, as the number of dealsfell 58.1%. Middle-market dollar volume dropped64.6%.
Year to date, there were 2,618 announced EuropeanM&A transactions, a 36.8% decrease compared to theyear-ago period. Dollar volume experienced a 53.7%decline through April.
The downturn in M&A largely reflects continuedeconomic deterioration in Europe. The EuropeanCommission recently cut its 2009 economic outlook forthe European Union, forecasting contraction of 4.0%(previously projected a decline of 1.9%). Thecommission cited the usual suspects: the globaleconomic crisis, weak global trade, and plummeting
home values. The commission is not optimistic about areturn to growth in 2010 (as is anticipated in othermajor regions), with the eurozone economy expectedto shrink 0.1% next year.
For the 12 month period through April, the medianEV/EBITDA multiple for European middle-market dealsstood at 7.8x, which compares to median valuations o8.8x in 2008 and 10.0x for 2007. Interestinglyvaluation levels in Europe have declined at a slowerate than in the U.S.
Year to date, there was a total of 709 announced U.Ktransactions, a 46.7% decrease from the year-agoperiod. Dollar volume dropped 40.7% to $55.1 billionthrough April. Domestic M&A represented 64.6% ototal deal activity.
A total of 404 German M&A transactions wereannounced for the year-to-date period, a 25.6%decrease compared to the first four months of 2008Dollar volume was up 29.2% due to RWE AGs $12.6billion acquisition of Essent N.V.; this transactionaccounted for approximately 55% of year-to-datedollar volume. Domestic M&A represented 52.0% oyear-to-date activity.
Europe M&A Activity
8,477
10,8499,782
8,6067,324
9,78010,629
11,95010,490
4,140
2,618
8,065
0
5,000
10,000
15,000
#
ofDeals
$0
$400
$800
$1,200
$1,600
$2,000
DealVal
ue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 8,477 10,849 9,782 8,606 7,324 8,065 9,780 10,629 11,950 10,490 4,140 2,618
# of Deals >$1B 156 219 86 101 94 108 177 212 283 175 69 19
# of Deals Middle-Market 3,676 4,592 4,020 3,518 3,130 3,505 4,193 4,577 4,721 3,823 1,525 747
# of Deals Undisclosed 4,645 6,038 5,676 4,987 4,100 4,452 5,410 5,840 6,946 6,492 2,546 1,852
Deal Value $1,233 $1,252 $536 $481 $456 $629 $973 $1,358 $1,650 $984 $272 $126
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Middle-market transactions defined as those with a disclosed transaction value of less than $1 billion.
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Europe Middle-Market M&A Deal Statistics
Robert W. Baird & Co. 11
Number of Deals Deal Value
2008 2009 % Change ($ in millions) 2008 2009 % Change
April April
$1B $31,319 $10,575 (66.2%)
Undisclosed 704 362 (48.6%) Undisclosed ** ** **
Total 1,142 543 (52.5%) Total $64,303 $22,241 (65.4% )
LTM Monthly Average 1,030 747 (27.5%) LTM Monthly Average $111,793 $69,796 (37.6%)
YTD YTD
$1B $148,429 $79,712 (46.3%)
Undisclosed 2,546 1,852 (27.3%) Undisclosed ** ** **
Total 4,140 2,618 (36.8%) Total $271,589 $125,858 (53.7% )
LTM LTM
$1B $878,758 $603,254 (31.4%)
Undisclosed 7,266 5,797 (20.2%) Undisclosed ** ** **
Total 12,362 8,967 (27.5%) Total $1,341,517 $837,546 (37.6% )
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.YTD and LTM as of April 30.
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.YTD and LTM as of April 30.
Europe Middle-Market Enterprise Value to Median EBITDA, EBIT, and Revenue Multiples
Transaction Size 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008LTM2009
EV/EBITDA
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Europe Middle-Market M&A Deal Statistics
Robert W. Baird & Co. 12
Europe Middle-Market Median Acquisition Premiums
0.0%
20.0%
40.0%
60.0%1-Week Premium 4-Week Premium
1-Week Premium 30.1% 31.6% 28.4% 29.0% 25.8% 23.6% 23.5% 20.4% 26.8% 35.9% 36.2%
4-Week Premium 37.1% 38.2% 34.2% 33.2% 30.2% 26.5% 28.5% 26.3% 31.7% 38.0% 35.9%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM 2009
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. LTM as of April 30.
Europe Middle-Market Transaction Composition Strategic vs. Sponsor Deal Value
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
%o
fDealValue
Strategic Sponsor
Sponsor 17.8% 17.6% 19.6% 22.3% 27.1% 34.3% 30.4% 23.8% 23.9% 22.3% 25.0% 16.6%
Strategic 82.2% 82.4% 80.4% 77.7% 72.9% 65.7% 69.6% 76.2% 76.1% 77.7% 75.0% 83.4%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 4/08 4/09
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
Europe Middle-Market M&A Payment Method by Number of Deals
0.0%20.0%40.0%60.0%80.0%
100.0%
%o
fDeals
Cash Stock Cash/Stock
Cash/Stock 6.9% 7.2% 6.0% 3.3% 2.4% 4.1% 3.9% 3.3% 3.9% 3.0% 3.5% 2.1%
Stock 15.9% 23.2% 18.1% 11.0% 8.8% 10.5% 10.8% 8.9% 8.8% 7.5% 7.5% 9.2%
Cash 77.2% 69.6% 75.9% 85.7% 88.9% 85.4% 85.3% 87.9% 87.2% 89.6% 88.9% 88.6%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 4/08 4/09
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
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Europe Cross-Border M&A Activity
Robert W. Baird & Co. 13
Europe Inbound and Outbound M&A
1,043 1,198 1,1401,035
845996
9371,063
1,1891,098
872927757
980
1,235
1,006
540726
1,1251,290 1,172 1,005
0
500
1,000
1,500
#ofDeals
$0
$100
$200
$300
$400
DealValue
Inbound M&A Outbound M&A Inbound Deal Value Outbound Deal Value
Inbound M&A 1,043 1,198 1,140 1035 845 996 937 1,063 1,189 1,098 872
Outbound M&A 980 1,235 1,006 757 540 726 927 1,125 1,290 1,172 1,005
Inbound Deal Value $116 $93 $78 $64 $74 $91 $121 $169 $181 $115 $77
Outbound Deal Value $268 $357 $104 $71 $38 $72 $119 $175 $342 $176 $160
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 4/09 LTM
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Inbound M&A represents European target/non-European acquiror; Outbound M&A represents non-European target/European acquiror.
Top 10 European Target Countries Acquiredby Non-European Companies - YTD
Top 10 European Target Industries Acquiredby Non-European Companies - YTD
Country # of Deals Indus try # of Deals
1. United Kingdom 71 1. Computers & Electronics 43
2. Germany 25 2. Professional Services 28
3. France 20 3. Healthcare 17
4. Spain 12 4. Consumer Products 14
5. Russian Federation 9 5. Telecommunications 13
6. Sweden 8 6. Auto/Truck 10
7. Netherlands 7 7. Food and Beverage 10
8. Belgium 7 8. Machinery 9
9. Finland 6 9. Mining 8
10. Switzerland 5 10. Transportation 8
Top 10 Non-European Target CountriesAcquired by European Companies - YTD
Top 10 Non-European Target IndustriesAcquired by European Companies - YTD
Country # of Deals Indus try # of Deals
1. United States of America 119 1. Healthcare 36
2. Australia 17 2. Computers & Electronics 31
3. China 15 3. Professional Services 27
4. Canada 13 4. Chemicals 16
5. Brazil 11 5. Consumer Products 14
6. India 10 6. Finance 14
7. Mexico 6 7. Construction/Building 13
8. New Zealand 4 8. Telecommunications 13
9. Singapore 4 9. Mining 13
10. United Arab Emirates 4 10. Oil & Gas 12
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD as of April 30, 2009.
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U.K. Cross-Border M&A Activity
Robert W. Baird & Co. 14
U.K. Number of Deals (Domestic/Outbound/ Inbound)
3,040
3,828
3,3342,994
2,4672,763
3,346 3,3943,717
2,951
1,329
709
0
1,000
2,000
3,000
4,000
#ofDeals
Domestic M&A Outbound M&A Inbound M&A
Total 3,040 3,828 3,334 2,994 2,467 2,763 3,346 3,394 3,717 2,951 1,329 709
Inbound M&A 646 892 699 579 433 488 576 626 718 629 293 115
Outbound M&A 743 845 725 545 487 581 764 757 870 679 268 136
Domestic M&A 1,651 2,091 1,910 1,870 1,547 1,694 2,006 2,011 2,129 1,643 768 458
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents U.K. target/U.K. acquiror; Outbound M&A represents non-U.K. target/U.K. acquiror; Inbound M&A represents U.K. target/non-U.K. acquiror.
U.K. Deal Value (Domestic/Outbound/ Inbound)
$643 $613
$197 $201$159
$231
$363$408
$666
$277
$93$55
$0
$250
$500
$750
DealValue
Domestic M&A Outbound M&A Inbound M&A
Total $643 $613 $197 $201 $159 $231 $363 $408 $666 $277 $93 $55
Inbound M&A $143 $173 $76 $50 $34 $78 $135 $176 $171 $80 $26 $2
Outbound M&A $354 $154 $35 $53 $28 $45 $84 $71 $280 $61 $34 $12
Domestic M&A $146 $287 $86 $99 $97 $108 $144 $161 $215 $136 $33 $42
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents U.K. target/U.K. acquiror; Outbound M&A represents non-U.K. target/U.K. acquiror; Inbound M&A represents U.K. target/non-U.K. acquiror.
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Germany Cross-Border M&A Activity
Robert W. Baird & Co. 15
Germany Number of Deals (Domestic/ Outbound/ Inbound)
1,202
1,633
1,2781,111
9931,140 1,126
1,335
1,979
1,587
543404
0
500
1000
1500
2000
#ofDeals
Domestic M&A Outbound M&A Inbound M&A
Total 1,202 1,633 1,278 1,111 993 1,140 1,126 1,335 1,979 1,587 543 404
Inbound M&A 335 418 397 394 329 388 402 442 675 458 161 88
Outbound M&A 386 537 375 269 224 268 313 354 478 443 165 106
Domestic M&A 481 678 506 448 440 484 411 539 826 686 217 210
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents Germany target/Germany acquiror; Outbound M&A represents non-Germany target/Germany acquiror; Inbound M&A represents Germanytarget/non-Germany acquiror.
Germany Deal Value (Domestic/ Outbound/ Inbound)
$206
$108$73 $59
$84
$132
$180
$256
$159
$18 $23
$377
$0
$100
$200
$300
$400
DealValue
Domestic M&A Outbound M&A Inbound M&A
Total $377 $206 $108 $73 $59 $84 $132 $180 $256 $159 $18 $23
Inbound M&A $242 $58 $28 $34 $19 $24 $51 $58 $66 $23 $5 $2
Outbound M&A $98 $98 $45 $22 $13 $22 $35 $58 $119 $35 $6 $18
Domestic M&A $36 $51 $36 $17 $27 $38 $46 $64 $70 $100 $7 $3
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents Germany target/Germany acquiror; Outbound M&A represents non-Germany target/Germany acquiror; Inbound M&A represents Germanytarget/non-Germany acquiror.
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Asia M&A Commentary
Robert W. Baird & Co. 16
Asia has not escaped the global slowdown in M&Aactivity. The number of transactions in Asia (ex. Japan)declined 31.1% in April. The deal count fell 28.1% inChina, which accounts for nearly half of deal activity inAsia (ex. Japan). Dollar volume for the month wasdown 13.6%.
Year to date, there was a total of 1,289 announcedAsia (ex. Japan) M&A transactions, a 32.4% drop fromthe prior-year period. The middle-market accounted forabout 65% of this deal activity. Dollar volume totaled$39.8 billion, a 54.1% decrease compared to the year-ago figure.
Deal activity has stalled as the economies of Asiacontend with severe deterioration in global trade. TheInternational Monetary Fund (IMF) recently predictedthat economic growth across Asia would decelerate to1.3% in 2009 from 5.1% in 2008. The IMF highlightedthe collapse in exports to advanced economies as thecritical constraint to growth. For example, exports from
China to the U.S. declined 16% in April. The IMFprojects economic improvement in late 2009 (withAsias domestic demand supported by fiscal policyefforts) and in 2010 (growth of 4.1% projected),expecting a revival that runs in parallel with trends inthe U.S.
China deal activity declined 29.3% through April.Dollar volume of $21.3 billion was down 48.3%compared to the year-ago period. Domestic M&Adeals represented 77.3% of the total deal count.
The China middle-market experienced declines
similar to the overall market, with the number ofdeals down 26.1% and dollar volume off 42.6%Middle-market deals represented nearly 79% of totadeal activity.
Year to date, there was a total of 199 announcedIndia M&A transactions, a 46.9% drop from theyear-ago period. India M&A dollar volume decreased89.1% and totaled a mere $1.4 billion through April.
Similarly, Indias middle-market activity continued todeteriorate: the number of deals was down nearly70%, while dollar volume experienced an 80.8%decrease for the year-to-date period.
In contrast, for the year-to-date period, Japan M&A
performed relatively better than the other regions ofthe world in the first four months of 2009, with a16.4% decrease in the number of deals and a 27.9%drop in dollar volume. Domestic, middle-market M&Aaccounted for 51.6% of the year-to-date deaactivity.
Asia (ex. Japan) M&A Activity
1,1151,629 1,486
1,833 1,701
3,017
3,973
5,222 5,494
1,9061,289
2,158
0
2,000
4,000
6,000
#ofDea
ls
$0
$100
$200
$300
$400
D
ealValue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 1,115 1,629 1,486 1,833 1,701 2,158 3,017 3,973 5,222 5,494 1,906 1,289
# of Deals >$1B 13 23 15 13 13 21 19 42 42 40 18 6
# of Deals Middle-Market 689 1,000 900 1,165 1,180 1,544 2,145 2,822 3,756 3,715 1,281 832
# of Deals Undisclosed 413 606 571 655 508 593 853 1,109 1,424 1,739 607 451
Deal Value $78 $161 $90 $74 $76 $111 $129 $223 $307 $270 $87 $40
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
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China M&A Activity
Robert W. Baird & Co. 17
China M&A Activity
325505 478
746 651
1,2741,698
2,3382,511
841595
890
0
500
1,000
1,500
2,000
2,500
3,000
#ofDeals
$0
$40
$80
$120
$160
$200
DealValue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 325 505 478 746 651 890 1,274 1,698 2,338 2,511 841 595
# of Deals >$1B 4 8 6 8 7 12 9 17 13 20 7 3
# of Deals Middle-Market 202 343 311 500 459 665 967 1,346 1,899 1,956 632 467
# of Deals Undisclosed 119 154 161 238 185 213 298 335 426 535 202 125Deal Value $31 $101 $33 $40 $39 $59 $56 $89 $115 $160 $41 $21
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
China Number of Deals (Domestic/ Outbound/ Inbound)
325505 478
746 651890
1,274
1,698
2,3382,511
841595
0
1,000
2,000
3,000
#ofDeals
Domestic M&A Outbound M&A Inbound M&A
Total 325 505 478 746 651 890 1,274 1,698 2,338 2,511 841 595
Inbound M&A 98 134 119 157 151 271 356 412 448 474 163 82
Outbound M&A 65 99 68 67 62 81 95 125 177 184 76 53
Domestic M&A 162 272 291 522 438 538 823 1,161 1,713 1,853 602 460
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents China target/China acquiror; Outbound M&A represents non-China target/China acquiror; Inbound M&A represents China target/non-Chinaacquiror.
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China M&A Deal Statistics
Robert W. Baird & Co. 18
China Number of Deals
Domestic Outbound Inbound Total
2008 2009 2008 2009 2008 2009 2008 2009
April
Middle-Market 134 118 13 10 26 10 173 138
>$1B 2 0 0 1 0 0 2 1
Undisclosed 33 14 5 2 18 11 56 27
Total 169 132 18 13 44 21 231 166
YTD
Middle-Market 484 386 56 37 92 44 632 467
>$1B 4 2 2 1 1 0 7 3
Undisclosed 114 72 18 15 70 38 202 125
Total 602 460 76 53 163 82 841 595
LTM
Middle-Market 1,647 1,461 144 109 290 221 2,081 1,791
>$1B 10 10 3 4 1 2 14 16
Undisclosed 275 240 54 48 183 169 512 457
Total 1,932 1,711 201 161 474 392 2,607 2,264_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of April 30.Note: Domestic M&A represents China target/China acquiror; Outbound M&A represents non-China target/China acquiror; Inbound M&A represents China target/non-Chinaacquiror.
China Deal Value
($ in millions) Domestic Outbound Inbound Total
2008 2009 2008 2009 2008 2009 2008 2009
April
Middle-Market $5,881 $5,056 $1,647 $802 $627 $573 $8,155 $6,431
>$1B $2,217 $0 $0 $1,206 $0 $0 $2,217 $1,206
Total $8,098 $5,056 $1,647 $2,008 $627 $573 $10,372 $7,637
YTD
Middle-Market $22,163 $13,970 $5,183 $1,798 $2,776 $1,524 $30,122 $17,292
>$1B $5,220 $2,833 $4,346 $1,206 $1,601 $0 $11,167 $4,039
Total $27,383 $16,803 $9,529 $3,004 $4,376 $1,524 $41,288 $21,331
LTM
Middle-Market $73,297 $53,207 $14,604 $7,440 $10,855 $8,979 $98,757 $69,626
>$1B $16,200 $58,065 $5,378 $8,765 $1,601 $3,300 $23,179 $70,129
Total $89,497 $111,272 $19,983 $16,205 $12,456 $12,279 $121,935 $139,756_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of April 30.Note: Domestic M&A represents China target/China acquiror; Outbound M&A represents non-China target/China acquiror; Inbound M&A represents China target/non-Chinaacquiror.
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India M&A Activity
Robert W. Baird & Co. 19
India M&A Activity
158267
194 209 218
415
636
884 938
375
199216
0
200
400
600
800
1,000
#ofDeals
$0
$10
$20
$30
$40$50
$60
DealValue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 158 267 194 209 218 216 415 636 884 938 375 199
# of Deals >$1B 2 0 1 0 0 0 1 6 6 9 3 0
# of Deals Middle-Market 94 147 116 130 139 117 220 303 421 429 181 55
# of Deals Undisclosed 62 120 77 79 79 99 194 327 457 500 191 144
Deal Value $5 $7 $4 $3 $3 $4 $14 $36 $56 $37 $13 $1
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
India Number of Deals (Domestic, Outbound, Inbound)
158267
194 209 218 216
415
636
884938
375
199
0
200
400
600
800
1,000
#ofDeals
Domestic M&A Outbound M&A Inbound M&A
Total 158 267 194 209 218 216 415 636 884 938 375 199
Inbound M&A 65 90 69 61 74 58 95 139 170 175 69 24
Outbound M&A 9 41 23 21 39 36 117 161 203 217 84 28
Domestic M&A 84 136 102 127 105 122 203 336 511 546 222 147
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents India target/India acquiror; Outbound M&A represents non-India target/India acquiror; Inbound M&A represents India target/non-India acquiror.
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India M&A Deal Statistics
Robert W. Baird & Co. 20
India Number of Deals
Domestic Outbound Inbound Total
2008 2009 2008 2009 2008 2009 2008 2009
April
Middle-Market 22 10 14 1 8 2 44 13
>$1B 0 0 0 0 0 0 0 0
Undisclosed 28 29 14 3 9 4 51 36
Total 50 39 28 4 17 6 95 49
YTD
Middle-Market 96 34 42 10 43 11 181 55
>$1B 1 0 2 0 0 0 3 0
Undisclosed 125 113 40 18 26 13 191 144
Total 222 147 84 28 69 24 375 199
LTM
Middle-Market 274 169 121 65 101 69 496 303
>$1B 2 1 3 3 0 2 5 6
Undisclosed 320 301 113 93 79 59 512 453
Total 596 471 237 161 180 130 1,013 762_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of April 30.Note: Domestic M&A represents India target/India acquiror; Outbound M&A represents non-India target/India acquiror; Inbound M&A represents India target/non-India acquiror.
India Deal Value
($ in millions) Domestic Outbound Inbound Total
2008 2009 2008 2009 2008 2009 2008 2009
April
Middle-Market $430 $754 $925 $2 $422 $7 $1,776 $762
>$1B $0 $0 $0 $0 $0 $0 $0 $0
Total $430 $754 $925 $2 $422 $7 $1,776 $762
YTD
Middle-Market $2,681 $986 $2,261 $216 $2,369 $201 $7,312 $1,404
>$1B $2,231 $0 $3,305 $0 $0 $0 $5,536 $0
Total $4,912 $986 $5,566 $216 $2,369 $201 $12,848 $1,404
LTM
Middle-Market $8,480 $5,523 $8,650 $3,553 $5,452 $2,356 $22,582 $11,432
>$1B $10,956 $1,040 $4,483 $6,324 $0 $6,630 $15,439 $13,994
Total $19,436 $6,563 $13,133 $9,877 $5,452 $8,986 $38,021 $25,426
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis. YTD and LTM as of April 30.Note: Domestic M&A represents India target/India acquiror; Outbound M&A represents non-India target/India acquiror; Inbound M&A represents India target/non-India acquiror.
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Japan M&A Activity
Robert W. Baird & Co. 21
Japan M&A Activity
524718
8881,068 1,094
1,9442,230 2,110
1,940
719 601
1,505
0
500
1,000
1,500
2,000
2,500
#ofDeals
$0
$40
$80
$120
$160
$200
DealValue
# of Deals Undisclosed # of Deals Middle-Market # of Deals >$1B Deal Value
Total 524 718 888 1,068 1,094 1,505 1,944 2,230 2,110 1,940 719 601
# of Deals >$1B 12 14 9 6 11 20 24 33 28 21 8 6
# of Deals Middle-Market 211 336 418 517 566 829 1,138 1,323 1,247 1,084 388 348
# of Deals Undisclosed 301 368 461 545 517 656 782 874 835 835 323 247Deal Value $84 $83 $52 $30 $72 $92 $182 $184 $122 $120 $41 $29
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
($ in billions)
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.
Japan Number of Deals (Domestic/ Outbound/ Inbound)
524718
8881,068 1,094
1,505
1,9442,230 2,110
1,940
719 601
0
500
1,000
1,500
2,000
2,500
#ofDeals
Domestic M&A Outbound M&A Inbound M&A
Total 524 718 888 1,068 1,094 1,505 1,944 2,230 2,110 1,940 719 601
Inbound M&A 47 82 76 68 68 83 52 75 119 79 31 25
Outbound M&A 86 93 88 100 78 102 164 210 178 216 67 59
Domestic M&A 391 543 724 900 948 1,320 1,728 1,945 1,813 1,645 621 517
1999 2000 2001 2002 2003 2004 2005 2006 2007 20084/08
YTD
4/09
YTD
_____________________Source: Dealogic and Robert W. Baird & Co. Incorporated M&A Market Analysis.Note: Domestic M&A represents Japan target/Japan acquiror; Outbound M&A represents non-Japan target/Japan acquiror; Inbound M&A represents Japan target/non-Japanacquiror.
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Economic Commentary
Robert W. Baird & Co. 22
ECONOMY:
U.S. stocks have enjoyed a strong run over the pasttwo months, with gains fueled by the excessivepessimism that is almost by definition present at abottom and the increasingly firm conviction that thepoint of maximum downside momentum in theeconomy was passing. As the rally began investorswere liquidating their equity exposure and moving cashto the sidelines, while expectations for the economywere so depressed that moderation in the rate ofdecline (the much talked about second derivative orthe change in the change) was viewed as a positive.While stocks were not quite priced for Armageddon,they seemed to be anticipating a near-facsimile of suchan outcome. Even as the rally was in its early stages,investors, most of whom were still on the sidelines,remained skeptical, and the lack of participation in the
rally meant there was little follow-through when sellingemerged. Now, however, the real work is beginning.Investors have grown more optimistic, although notexcessively so, and cash has been moved off of thesidelines.
Perhaps more importantly, expectations for theeconomy have shifted dramatically. No longer is thepervasive question Will the recession ever end?, butit is now Has the recession already ended? Someprognosticators are now on record as believing that theNBER will ultimately decide that April represented thetrough in the economy. We think not, but with stocksincreasingly eyeing an economic recovery, data that ismerely less bad will not likely provide much
satisfaction. Output and consumption data that isworse than expected may spark a disappointingreaction in the market. While not in the camp that seesthe recession as already having ended, the massiveamounts of fiscal and monetary stimulus that are nowworking through the system could alone be sufficientto produce a return to growth sometime this summer.The key question in our view is still not if or when therecession will end but what, over the course of thenext year or two, the ensuing recovery will look like.
The incoming economic data continues to paint apicture of recession, although its grip appears to beweakening. The economy shed another 539,000 jobs in
April, the sixth consecutive month in which more thanhalf-a-million jobs were lost, but also 200,000 fewerthan the nearly three-quarters of a million jobs thatwere lost in January. The unemployment rate rosefrom 8.5% in March to 8.9% in April, although this risewas entirely fueled by formerly discouraged workersre-entering the labor force and looking for jobs. Thehousehold survey (from which the unemployment rateis derived) measure of employment showed anincrease in April, its first in a year. This behavior,disgruntled workers re-entering the labor force,
typically occurs towards the end of recessions and theearly stages of a recovery, and is the primary reasonthat the unemployment rate continues to rise evenafter a recession ends. The weekly initial jobless claimsdata offers a more timely snapshot of the economy andis generally viewed as a leading indicator. The trend ininitial claims appears to have peaked in April, althoughthe steep decline in claims that typically signalsimproving conditions has yet to emerge.
Data from the housing market continues to hint amarginal improvement. The yearly change in theCase/Shiller home price index increased in February fothe first time since October 2005, suggesting thadownside momentum in home prices, just as in theoverall economy, is easing. The Feds efforts to drivedown mortgage rates appear to be having the desired
effect, as anecdotal reports suggest that the areas othe country that have been hardest hit in the housingdownturn are seeing a surge in demand.
STOCK MARKET: The rally that emerged in Marchwhich has subsequently been identified as a cyclicabull market, was preceded by, and has subsequentlybeen accompanied by a number of strong breadthreadings. First, while the S&P 500 and Dow Industrialswere plumbing new lows in March, a number odivergences were emerging. Our international indextrend indicator remained well above its late-2008 lowand the NYSE advance/decline line was stronger thanthe indexes during the late-2008 rally, and failed to
match the degree of decline seen in early-2009. Greatconviction that a turning point had occurred came onthe accumulation of up-side breadth thrustsHistorically, single-day breadth thrusts (of more than10 times as much upside volume as downside volumeor vice versa) have signaled important turning pointsfor the stock market. The rise in volatility in recenyears (which is unlikely to fully dissipate anytime soonhas made these breadth thrusts much more commonGiven this new reality, we monitor the accumulation osuch days. In late 2008, upside thrusts were typicallyfollowed in short order by even more substantiadownside thrusts, evidence that selling pressure hadyet to be exhausted. Since the March lows, upside
thrusts have accumulated, and the few downsidethrusts that have emerged have been followed soon byupside thrusts. As the bull market has continuedadditional bullish breadth readings have emerged. The40-day advance/decline ratio on the NYSE had surgedthrough well-tested resistance and surpassed the peakseen as the 2003 rally was gaining strength. Furtherthe percentage of industry groups and sub-industries inup-trends has continued to expand, indicating that therally is carrying most areas of the market higherStrength in the broad market, both in the U.S. and
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Economic Commentary
Robert W. Baird & Co. 23
globally, suggests that the indexes have further to run.
Within the stock market, emphasis should be placed oncyclical sectors and those areas of the global stockmarket that could benefit from the return of thecommodity bull market. Our relative strength rankings
show sector leadership from Consumer Discretionary,Information Technology, and Financials (excludingREITs). Defensive areas of the market, like ConsumerStaples, Utilities, and Health Care are faring poorly inthe rankings. Global investors should continue to tiltequity exposure away from the United States (which isnear the bottom of our global rankings) and towardsEmerging Markets. Regional preferences are fading,although the Americas and Asia are still favored overEurope. Size and style leadership, as is customary inadvance of a turn higher in the economy, remains withsmall-cap and mid-cap growth. Fixed income investorsshould continue to tilt away from Treasuries andtowards higher grade Corporates and Municipals.
Finally, the ECB has joined the Bank of England andthe Federal Reserve in powering up its printing press,providing ample opportunity for paper currencies ingeneral to be further devalued. This suggests thatstrategic investors should continue to look to addcommodity exposure to their portfolios, either asequity investments in the Materials sector or directinvestment in commodities themselves. The traditionalway to hedge against currencies is through gold, atactic that we favor here.
Originally published in Bairds Investment StrategyOutlook: May 2009.
Bruce A. BittlesDirector of Investment Strategy615.341.7114
William A . Delwiche, CFAAssociate Investment Strategy414.298.7802
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Restructuring News
Robert W. Baird & Co. 24
The Baird CDS Index
The graph below shows the Baird CDS Index for thethree-year period ending April 30, 2009. Thisproprietary index of 36 credit default swap contractsreferences non-investment grade debt of non-financial
companies using pricing information from Bloomberg.Green shoots seems to be the increasingly pervasivecharacterization of what has appeared in the equity andcredit markets over the past several weeks. Thepowerful rally in equities, the tightening risk premiumsin corporate debt issues and the overall positive tone ofthe bank stress tests has led many commentators,including the Fed Chairman, to observe cautiously thatthe worst of the meltdown in the financial markets mayhave passed.
Consistent with this theme and representing anothergreen shoot, the Baird CDS Index declined in April forthe second consecutive month, which indicates that the
cost to insure against a credit default for non-investment grade companies outside of the financialsector has now fallen for two months in a row. Thismarks the first time that this has happened in almost ayear. The Index decreased by 16.5% in April, falling to1320.4 on April 30, a drop of 260.1 points from 1580.5on March 31. This brings the Index down by 22.5%from its all time record high of 1703.8 set on February28.
While the movement of the Baird CDS Index in Marand April represents more welcome news on the staof the financial markets, and more specifically on tprice of risk for non-investment grade companies, t
absolute level of the Index on April 30 remained at third-highest level since we began tracking this damore than three years ago. Thus, the healing procein the credit markets has a very long way to go befodebt capital will be accessible by non-investment graborrowers on terms approaching those that wewidely available before 2008.
More germane to corporate restructurings, StandardPoors now expects the non-investment grade defarate to reach 14.3% by March 2010, of which wourepresent an all-time high, and a trough-to-peincrease unprecedented since S&P began trackdefault rate cycles 1981. With Chrysler filing bankruptcy and with GM probably right behind it, t
expected impact of the shutdown of North Americassembly operations will likely cause another round automotive supplier bankruptcies and employee layo dislocations in the real economy that the financmarkets have apparently already discounted.
Baird Non-Investment Grade CDS* Index
0.0
600.0
1,200.0
1,800.0
1/06 4/06 7/06 10/06 2/07 5/07 8/07 11/07 3/08 6/08 9/08 12/08 4/09
Month/Year
Index
_____________________Source: Bloomberg L.P.
*A credit default swap ("CDS") is a derivative whereby one party to a swap agreement transfers credit risk to the counterparty for a periodic fee. Under the swap agreement, theCDS buyer pays a fixed periodic fee in return for a contingent payment by the CDS seller in the event of a credit default, and thus is similar to an insurance policy on the referencdebt. In its simplest form, if there is a default on the reference debt, the CDS buyer puts the debt to the CDS seller in exchange for a payment by the CDS seller of the outstandiprincipal and unpaid interest. In theory, the market's assessment of the likelihood of default for the reference debt should have a close positive correlation with the price of a CDfor that debt. Thus, the Baird CDS Index should increase as the perceived risk of credit default for the reference debt increases, and should decrease as the perceived risk of creddefault for the reference debt decreases. Accordingly, the Baird CDS Index should be a leading indicator of the prospects for restructuring opportunities with respect to the referedebt and, by implication, the overall climate for restructuring opportunities with respect to the debt of financially weaker credits in the wider market. The Baird CDS Index isunmanaged and is not eligible for investment.
William G. WelnhoferManaging Director, Head of Financial Restructuring GroupRobert W. Baird & Co., [email protected]
Justin ShapiroFinancial AnalystRobert W. Baird & Co., Inc.
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Transaction Spotlight Sale of Orion Corporation to John Crane(Smiths Group plc)
Robert W. Baird & Co. 25
Acquiring Company
Headquar t e rs
Orion Corporation
Grafton, WI
Target Company
Headquar t e rs
John Crane (Smiths Group plc)
Morton Grove, IL (London, United Kingdom)
Industry Sector Industrial Hydrodynamic Bearings
Transaction Overview Orion Corporation (Orion or the Company) recently completed its sale to John CraneInc., a division of Smiths Group plc. The transaction closed in May 2009, and termswere not disclosed.
Target CompanyDescription
Founded in 1968, privately-owned and headquartered in Grafton, Wisconsin, Orion is aleading designer and manufacturer of highly-engineered hydrodynamic bearings fohigh speed rotating machinery, such as turbines, compressors, generators and geardrives. Orion manufactures an extensive product line of standard and customhydrodynamic bearings for power generation, oil & gas, petrochemical, marine andother industrial markets.
Acquiring Company
Description
John Crane, Inc. manufactures mechanical seals and associated products for use in
rotating equipment applications. It offers various mechanical seals and sealing supportsystems, bearing isolators, mechanical packing products, power transmission couplingsand centralized lubrication systems. The company also provides training and repairservices. John Crane, Inc. serves customers in petroleum, chemical, pharmaceuticalpulp and paper, power generation, food and beverage, mining and minerals,transportation, industrial, water and waste, refrigeration, automotive, and appliancemarkets worldwide. Orion complements and extends John Crane Bearing Technology,formed after the acquisition of a German-based bearings firm in October 2007. Thecompany is headquartered in Morton Grove, Illinois and has locations in Africa, Asia,Canada, Europe, Latin America, the Middle East, and United States.
Parent CompanyDescription
Smiths Group plc is a global technology company listed on the London Stock Exchange.A world leader in the practical application of advanced technologies, Smiths Groupdelivers products and services for the threat & contraband detection, energy, medicadevices, communications and engineered components markets worldwide. Orion wil
become part of Smiths Groups John Crane business. Smiths Group plc isheadquartered in London, UK, and employs more than 20,000 people in over 50countries.
Advisory Role Robert W. Baird & Co. served as the financial advisor to Orion Corporation on thistransaction. For more information, please contact: Steve Booth, Managing Director, at414.298.7661 or [email protected]; Tom Lacy, Managing Director, at 414.298.7648or [email protected]; or Adam Czaia, Vice President, at 414.298.7358 [email protected].
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Recent Baird M&A Transactions
Robert W. Baird & Co. 26
DateAnnounced Baird Client Client Description Transaction Description
Deal Value($ in
millions) Industry
4/20/09 Chesapeake UtilitiesCorporation
Diversified utility company Acquisition of Florida PublicUtilities Company
*** Utilities
3/26/09 Orion Corporation Manufacturer of hydrodynamicbearings
Sale to John Crane (SmithsGroup plc)
** Industrial
2/12/09 North American Scientific Manufacturer of radioisotopic productsfor the treatment of cancer
Sale to Best Theratronics, Ltd. $5.0 Healthcare
1/29/09 Meade Europe (Meade
Instruments)
Manufacturer of optical products Sale to a management-led buy
out group (Bresser GmbH)
$12.4 Consumer
1/28/09 Appliances ComponentsCompanies Spain S.A.
Manufacturer of commercialrefrigeration compressors
Sale to Compressor AcquisitionCompany Limited
** Industrial
12/31/08 GSE Scale Systems (SPX
Corporation)
Manufacturer of test and measurement
products
Sale to Illinois Tool Works, Inc. ** Industrial
12/31/08 Palombos Med-RitePharmacy (Ricetta Rx)
Pharmaceutical services Sale to Omnicare, Inc. ** Healthcare
12/31/08 Revenue Cycle Solutions,Inc.
Revenue cycle management Acquisition of Cash RetrieverSystems, Inc.
** Healthcare
11/26/08 McKechnie VehicleComponents USA, Inc.
Manufacturer of automotive products Sale MVC Holdings LLC ** Industrial
11/21/08 Coachmen Industries, Inc. Manufacturer of recreational vehicles Sale to Forest River, Inc. ** Consumer
11/11/08 Independent Bank Corp. Bank holding company Acquisition of Benjamin FranklinBancorp.
$84.5 Financial Services
10/21/08 Integrated Device
Technology, Inc.
Digital media Acquisition of assets of Silicon
Optix
** Technology
10/13/08 TRUMPF InternationalBeteiligungs-GmbH
Industrial lasers and laser systems Acquisition of SPI Lasers plc ** Industrial
10/7/08 FCX Performance, Inc. Distributor of flow control products Sale to Sterling InvestmentPartners
** IndustrialDistribution
10/1/08 Methode Electronics, Inc. Manufactures electro-mechanicaldevices
Acquisition of assets of HetronicHolding, LLC
$53.6 Industrial
9/30/08 Norwesco, Inc. Liquid containment solutions Sale to Olympus Partners ** Industrial
9/10/08 Richter Chemie-TechnikGmbH
Industrial pumps and valves Sale to IDEX Corporation 71.0 Industrial
9/8/08 Gehl Company Construction and agriculturalequipment
Sale to Manitou BF, S.A. $449.9 Industrial
9/2/08 Avery Weigh-TronixHoldings Limited
Industrial weighing products Sale to Illinois Tool Works Inc. ** Industrial
8/4/08 Unipac Business Unit(Illinois Tool Works)
Laminated liners for plastic containers Sale to Selig Sealing Products,Inc.
** Industrial
8/4/08 Amafilter Group HoldingB.V.
Manufactures filtration products Sale to MAHLE Group ** Filtration
7/8/08 TopWorx, Inc. Designer of valve control equipment Sale to Emerson Electric ** Industrial
7/2/08 GTI Diagnostics (Blood
Center of WisconsinResearch Foundation)
Manufactures medical diagnostics
assays
Sale to The Riverside Company ** Healthcare
6/16/08 Primrose Holdings, Inc. Early childhood education Sale to Roark Capital Group ** Education Services
6/13/08 Simmons OutdoorCorporation (MeadeInstruments)
Manufacturer of optical products Sale to Bushnell, Inc. ** Consumer Products
6/5/08 Chamberlin Edmonds &Associates
Revenue cycle management Sale to Charterhouse Group,Inc. (Financial SponsorConsortium)
** Healthcare
5/27/08 STRATTEC SecurityCorporation (in combowith JV WITTE and VAST)
Vehicular access control products Acquisition of Assets of DelphiCorporations Power Products
$7.8 Automotive
5/27/08 Driessen Aerospace GroupN.Y.
Manufacturer of galleys and air cargoequipment
Sale to Zodiac S.A. ** Industrial
_____________________Source: Robert W. Baird & Co. Incorporated M&A Market Analysis.**Closed transactions with undisclosed value; *** Announced and pending transactions with undisclosed value.
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Baird U.S. Equity Research Coverage
Robert W. Baird & Co. 27
BAIRD U.S.EQUITY RESEARCH COVERAGE MONTHLY REPORTS
In April 2009, Baird added 2 companies to coverage,bringing the total coverage to 520 companies. Coveredcompanies have a median and average marketcapitalization of $1.2 billion and $4.8 billion,respectively. In the past three years, Baird hasincreased the number of companies under coverage bymore than 28%.
In April 2009, there were 113 upward and 160downward adjustments to current-year earningsestimates (generally calendar-year 2009). There were94 upward and 143 downward revisions to forward-year (generally calendar-year 2010) earningsestimates.
Sector: Automotivehttp://www.rwbaird.com/docs/yourreports/cruisin.pdf
Sector: Consumer ProductsContact Thomas Gaul at [email protected]
Sector: Diversified Industrial and Machineryhttps://baird.bluematrix.com/docs/pdf/77704.pdf
Sector: Education Serviceshttp://www.rwbaird.com/docs/CN5-09.pdf
Sector: Human Capital Serviceswww.rwbaird.com/docs/yourreports/HCSMAP.pdf
Sector: Radio Frequency Identification (RFID)http://www.rwbaird.com/docs/RFID_Monthly_-_May_2009.pdf
Sector: Retail, Restaurants, Apparel & FootwearContact Thomas Gaul at [email protected]
Sector: Utilitieshttps://baird.bluematrix.com/docs/pdf/78855.pdf
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Baird U.S. Equity Research Coverage
Robert W. Baird & Co. 28
Business Services
Business Process Outsourcing
Convergys Corporation CVG
DST Systems, Inc. DST
ExlService Holdings, Inc. EXLS
Fidelity National Information Services FIS
Fiserv, Inc. FISV
Genpact Limited GGlobal Payments, Inc. GPN
Heartland Payment Systems, Inc. HPY
ICT Group ICTG
Jack Henry & Associates JKHY
MasterCard Incorporated MA
Metavante Technologies, Inc. MV
Net 1 UEPS Technologies Inc. UEPS
Sykes Enterprises, Inc. SYKE
Visa Inc. V
WNS (Holdings) Limited WNS
Education Services
Apollo Group, Inc. APOL
Blackboard, Inc. BBBB
Capella Education Company CPLA
Career Education Corporation CECO
Corinthian Colleges, Inc. COCO
New Oriental Education & Technology Grp EDU
DeVry, Inc. DV
ITT Educational Services, Inc. ESI
K12 Inc. LRN
Lincoln Education Services Corp. LINC
School Specialty, Inc. SCHS
Strayer Education, Inc. STRA
Marketing & I nformation Services
Acxiom Corporation ACXM
Alliance Data Systems Corporation ADS
The Corporate Executive Board Co. EXBD
Equifax Inc. EFX
FTI Consulting, Inc. FCN
Harte-Hanks, Inc. HHS
Huron Consulting Group, Inc. HURN
Journal Communications, Inc. JRN
Navigant Consulting, Inc. NCI
Valassis Communications, Inc. VCI
Facility Services
AECOM Technology Corporation ACM
Cintas Corporation CTAS
Ecolab, Inc. ECL
G&K Services, Inc. GKSRA
Iron Mountain Incorporated IRM
Pike Electric Corporation PEC
Quanta Services Inc. PWR
UniFirst Corporation UNF
URS Corporation URS
Human Capital Services
Administaff, Inc. ASF
Automatic Data Processing ADP
COMSYS IT Partners CITP
First Advantage Corporation FADV
Heidrick & Struggles International HSII
Hewitt Associates, Inc. HEW
Hudson Highland Group, Inc. HHGP
Kforce Inc. KFRC
Korn/Ferry International KFY
Manpower Inc. MAN
Monster Worldwide, Inc. MWW
MPS Group, Inc MPS
Paychex Inc. PAYX
Resources Connection, Inc. RECN
Robert Half International RHI
Human Capital Services (co n t d )
Spherion Corporation SFN
Taleo Corporation TLEO
TrueBlue, Inc. TBI
The Ultimate Software Group Inc. ULTI
Watson Wyatt & Company WW
Industrial Services
American Reprographics Co. ARPClean Harbors, Inc. CLHB
Mobile Mini, Inc. MINI
RSC Holdings Inc. RRR
Stericycle, Inc. SRCL
Communications
Communications Services - Carriers
AT&T, Inc. T
Leap Wireless International, Inc. LEAP
MetroPCS Communications, Inc. PCS
Sprint Nextel Corporation S
Telephone and Data Systems, Inc. TDS
United States Cellular Corp. USM
Verizon Communications, Inc. VZ
Network Technology
ADC Telecommunications, Inc. ADCTD
ADTRAN, Inc. ADTNAlcatel-Lucent ALU
Cisco Systems, Inc. CSCO
CommScope, Inc. CTV
F5 Networks, Inc. FFIV
Juniper Networks, Inc. JNPR
Nortel Networks Corporation NT
PCTEL, Inc. PCTI
Powerwave Technologies, Inc. PWAV
Riverbed Technology, Inc. RVBD
SonicWALL, Inc. SNWL
Sonus Networks Inc. SONS
Tekelec TKLC
Tellabs TLAB
Communications Services Software & Services
Amdocs Limited DOX
Comverse Technology, Inc. CMVT
NeuStar, Inc. NSR
Neutral Tandem Inc. TNDM
Research in Motion Limited RIMM
Synchronoss Technologies, Inc. SNCR
Syniverse Holdings, Inc. SVR
Consumer
Automotive Services
ATC Technology Corporation ATAC
CarMax, Inc. KMX
Copart, Inc. CPRT
LKQ Corporation LKQX
Ritchie Bros. Auctioneers, Inc. RBA
Consumer Leisure
Arctic Cat, Inc. ACAT
Briggs & Stratton Corp. BGG
Harley-Davidson, Inc. HOG
Polaris Industries, Inc. PII
Thor Industries THO
Winnebago Industries, Inc. WGO
Consumer Products
RC2 Corporation RCRC
Footwear, Apparel & Accessories
Columbia Sportswear COLM
Crocs, Inc. CROX
Deckers Outdoors DECK
Genesco, Inc. GCO
Nike Inc. NKE
Rocky Brands, Inc. RCKY
Quiksilver Inc. 2QKTimberland Co. TBL
Under Armour Inc. UA
VF Corporation VFC
Volcom Inc. VLCM
Wolverine World Wide WWW
Restaurants
BJs Restaurant, Inc. BJRI
Burger King Holdings, Inc. BKC
Buffalo Wild Wings, Inc. BWLD
California Pizza Kitchen, Inc. CPKI
Caribou Coffee Company, Inc. CBOU
The Cheesecake Factory Inc. CAKE
Chipotle Mexican Grill, Inc. CMG
Darden Restaurants, Inc. DRI
McDonalds Corporation MCD
P.F. Changs China Bistro, Inc. PFCB
Panera Bread Company PNRAPeets Coffee & Tea, Inc. PEET
Starbucks Corporation SBUX
Texas Roadhouse, Inc. TXRH
YUM! Brands, Inc. YUM
Retail
Abercrombie & Fitch ANF
Advance Auto Parts, Inc. AAP
AutoZone, Inc. AZO
Dicks Sporting Goods, Inc. DKS
Hibbett Sports, Inc. HIBB
Kohls Corporation KSS
OReilly Automotive, Inc. ORLY
Pacific Sunwear of California Inc. PSUN
PetSmart, Inc. PETM
Regis Corporation RGS
Sally Beauty Holdings, Inc. SBH
Tractor Supply Company TSCO
Ulta Salon, Cosmetics & Fragrance, Inc. ULTA
Zumiez, Inc. ZUMZ
Select Growth
HNI Corporation HNI
Schawk, Inc. SGK
Energy
Utilities
Alliant Energy Corporation LNT
Aqua America, Inc. WTR
California Water Service Group CWT
Chesapeake Utilities Corp. CPK
DPL Inc. DPL
FPL Group, Inc. FPL
Hawaiian Electric Industries HE
Integrys Energy Group TEG
MDU Resources Group Inc. MDU
Nicor Inc. GAS
Otter Tail Corporation OTTR
Piedmont Natural Gas Company, Inc. PNY
PNM Resources, Inc. PNM
Progress Energy, Inc. PGN
TECO Energy, Inc. TE
UIL Holdings Corporation UIL
Vectren Corporation VVC
Wisconsin Energy Corporation WEC
Xcel Energy Inc. XEL
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Baird U.S. Equity Research Coverage
Robert W. Baird & Co. 29
Industrial
Automotive and Truck Supplies
ArvinMeritor, Inc. ARM
Autoliv, Inc. ALV
BorgWarner, Inc. BWA
Commercial Vehicle Group CVGI
Gentex Corporation GNTX
Harman International Industries, Inc. HAR
Johnson Controls, Inc. JCI
Methode Electronics Inc. MEI
Modine Manufacturing Co. MODI
Stoneridge, Inc. SRI
STRATTEC SECURITY CORP. STRT
Tenneco Inc. TEN
Consumer Building Products
Acuity Brands, Inc. AYI
American Woodmark Corporation AMWD
The Black & Decker Corporation BDK
Fortune Brands, Inc. FO
Simpson Manufacturing SSD
Quanex Building Products Corp. NX
Diversified Industrial & Machinery
Actuant Corporation ATU
Astec Industries, Inc. ASTE
Brady Corporation BRC
Bucyrus International, Inc. BUCY
Caterpillar Inc. CAT
Deere & Company DE
Dover Corporation DOV
Illinois Tool Works Inc. ITW
Ingersoll-Rand Company IR
Joy Global Inc. JOYG
Manitowoc Company Inc. MTW
Oshkosh Corporation OSK
Parker Hannifin Corporation PH
Snap-on Incorporated SNA
Sun Hydraulics Corporation SNHY
Terex Corporation TEX
Titan Machinery Inc. TITN
General Industrial
Barnes Group, Inc. B
Carlisle Companies, Inc. CLS
Columbus McKinnon Corp. CMCO
Gibraltar Industries, Inc. ROCK
Kaydon Corporation KDN
Masco Corporation MAS
Middleby Corporation MIDD
RBC Bearings Incorporated ROLL
The Stanley Works SWK
Twin Disc, Inc. TWIN
Woodward Governor Company WGOV
Industrial Distribution
Airgas, Inc. ARG
Anixter International, Inc. AXE
Beacon Roofing Supply, Inc. BECN
Builders FirstSource, Inc. BLDR
Fastenal Company FAST
Grainger, W.W., Inc. GWW
Houston Wire & Cable Company HWCC
Interline Brands, Inc. IBIMSC Industrial Direct Co. MSM
Pool Corporation POOL
Industrial Distribution ( cont d )
Watsco, Inc. WSO
WESCO International, Inc. WCC
Process Controls
Altra Holdings, Inc. AIMC
A.O. Smith Corporation AOS
Baldor Electric Company BEZ
CIRCOR International, Inc. CIRColfax Corporation CFX
Emerson Electric Co. EMR
Flowserve Corporation FLS
Franklin Electric Co., Inc. FELE
Gardner Denver, Inc. GDI
Graco Inc. GGG
IDEX Corporation IEX
ITT Industries, Inc. ITT
Mueller Water Products, Inc. MWA
Pentair, Inc. PNR
Regal-Beloit Corporation RBC
Robbins & Myers, Inc. RBN
Roper Industries, Inc. ROP
Watts Water Technologies, Inc. WTS
Transportation/ Logistics
Arkansas Best Corp. ABFS
C.H. Robinson Worldwide Inc. CHRW
Con-way, Inc. CNW
Expeditors International of Washington EXPD
FedEx Corporation FDX
Forward Air Corporation FWRD
Heartland Express, Inc. HTLD
Hub Group, Inc. HUBG
JB Hunt Transport Services Inc. JBHT
Knight Transportation, Inc. KNX
Landstar Systems Inc. LSTR
Old Dominion Freight Line ODFL
Pacer International, Inc. PACR
Ryder System, Inc. R
TAL International Group TAL
United Parcel Service UPS
UTi Worldwide, Inc. UTIW
Werner Enterprises WERN
YRC Worldwide YRCW
Technology
Computer Hardware & Storage
3PAR Inc. PAR
Brocade Communications BRCD
CommVault Systems, Inc. CVLT
Data Domain, Inc. DDUP
Dell Inc. DELL
EMC Corporation EMC
Emulex Corporation ELX
Hewlett-Packard Company HPQ
NetApp Inc. NTAP
Netezza Corporation NZ
QLogic Corporation QLGC
Seagate Technology STX
VMware VMW
Western Digital Corporation WDC
Xyratex, Ltd. XRTX
Software & Services
Adobe Systems Inc. ADB
ANSYS, Inc. ANSS
Autodesk, Inc. ADSK
Citrix Systems, Inc. CTXS
Concur Technologies, Inc. CNQR
McAfee, Inc. MFE
Omniture, Inc. OMTRRed Hat, Inc. RHT
RightNow Technologies, Inc. RNOW
Salesforce.com, Inc. CRM
SPSS, Inc. SPSSE
Symantec Corp. SYMC
VeriSign Inc. VRSN
Vocus, Inc. VRSN
EMS & Electronics
Littelfuse Inc. LFUS
Plexus Corp. PLXS
Process Technology
Agilent Technologies, Inc. A
AMETEK, Inc. AME
Badger Meter, Inc. BMI
CLARCOR, Inc. CLC
Cognex Corporation CGNX
Danaher Corporation DHRDionex Corporation DNEX
Donaldson Company, Inc. DCI
ESCO Technologies Inc. ESE
FARO Technologies, Inc. FARO
Mettler-Toledo Intl, Inc. MTD
Mine Safety Appliances Company MSA
Nalco Holding Company NLC
National Instruments Corp. NATI
Pall Corporation PLL
Polypore International, Inc. PPO
Rockwell Automation Inc. ROK
Tetra Tech, Inc. TTEK
Varian, Inc. VARI
Semiconductor Components
Altera Corp. ALTR
Analog Devices, Inc. ADI
Broadcom Corp. BRCMDiodes Incorporated DIOD
Fairchild Semiconductor Intl, Inc. FCS
GSI Technology GSIT
Intel Corporation INTC
Lattice Semiconductor Corp. LSCC
Micron Technology, Inc. MU
OmniVision Technologies, Inc. OVTI
ON Semiconductor ONNN
SanDisk Corporation SNDK
Sigma Designs, Inc. SIGM
STMicroelectronics NV STM
Texas Instruments, Inc. TXN
Xilinx Inc. XLNX
Supply Chain Technology
Avery Dennison Corporation AVY
Avocent Corp. AVCT
Bemis Company DDUP
Checkpoint Systems, Inc. CKP
Diebold, Inc. DBD
Garmin Ltd. GRMN
Intermec, Inc. IN
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Technology (co n t d )
Supply Chain Technology ( cont d )
NCR Corporation NCR
Plantronics, Inc. PLT
ScanSource, Inc. SCSC
Sealed Air Corporation SEE
Zebra Technologies Corporation ZBRA
Healthcare/Life Sciences
Biotechnology
Affymax, Inc. AFFY
AMAG Pharmaceuticals, Inc. AMAG
Amgen, Inc. AMGN
Amylin Pharmaceuticals, Inc. AMLN
Array BioPharma Inc. ARRY
Biogen Idec Inc. BIIB
BioMarin Pharmaceutical, Inc. BMRN
Celgene Corporation CELG
Cerus Corporation CERS
Cubist Pharmaceuticals, Inc. CBST
Genzyme Corporation GENZ
Gilead Sciences, Inc. GILD
Human Genome Sciences, Inc. HGSI
Incyte Corporation INCY
Infinity Pharmaceuticals, Inc. INFI
InterMune, Inc. ITMNMannKind Corporation MNKD
Optimer Pharmaceuticals, Inc. OPTR
Pharmasset, Inc. VRUS
Regeneron Pharmaceuticals REGN
Theravance, Inc. THRX
Vertex Pharmaceuticals, Inc. VRTX
Distribution & Services
AmerisourceBergen Corporation ABC
Cardinal Health, Inc. CAH
Charles River Laboratories CRL
Covance Inc. CVD
ICON plc ICLR
IMS Health Incorporated RX
Kendle International Inc. KNDL
McKesson Corporation MCK
MedAssets, Inc. MDAS
Owens & Minor, Inc. OMIPAREXEL International Corp. PRXL
Pharmaceutical Product Development PPDI
PSS World Medical, Inc. PSSI
Facilities