european autumn update · notes: for the purposes of this quarterly update, europe is defined as:...

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European Autumn

Update November 2012

This report has been prepared by Harris Williams & Co. Ltd a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and

regulated by the Financial Services Authority (FRN #540892). Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8900

Red Norrie

Managing Director

[email protected]

Julien Darmon

Managing Director

[email protected]

Thierry Monjauze

Managing Director

[email protected]

Francois Morin

Director

[email protected]

Quarterly Quick Read

European

Economic

Environment1

European M&A

Deal Volume

Activity9

GDP2 Manufacturing Confidence3 Consumer Confidence3

+8.0%

Inbound

M&A Deal Volume

to Europe9

Consumer Prices3

+7.1% +2.7% (0.3%)

M&A

Environment

• The European M&A market declined further during the third quarter, apparent across most sectors, with Business Services

and Aerospace & Defense declining the most in terms of transaction volume

• During the quarter, inbound acquisitions from non-European buyers represented 12.2% of total European transactions, with

North America accounting for 76.1% of those inbound transactions

1

European Equity

Market8

TMT • Digital media companies have dominated VC investment in Q3 as investors target video, cloud, social and mobile

• The European Commission has identified cloud computing to generate about €1 trillion by 2020 across Europe

Consumer

• Nestle has continued to show strong revenue growth and has issued a four year bond at a record low coupon

• Fundamentals continue to support a robust acquisition environment as demonstrated by several large European-led deals

(Nestle, Heineken, Reckitt Benckiser and Bayer) and continued global strategic interest in the European food market (Mizkan,

Hain Celestial, McCain Foods)

ADG

• EADS’ proposed takeover of BAE Systems has been rejected by regulators in Germany – BAE seeking to distribute capital to

shareholder as an alternative. Move by The Carlyle Group to takeover Chemring abandoned

• Strong commercial aircraft orders supporting investment activity in the sector; early signs of growth in the business aviation

sub-sector

Healthcare &

Life Sciences

• The top ten pharmaceutical companies are forming Transcelerate Biopharma to standardise clinical trial standards

• European M&A activity has suffered from the continuing impact of austerity measures across the Eurozone

Energy & Power • Surging energy prices are driving activity for producers and providers of oilfield products and equipment

• National Oilwell Varco has continued its expansion with the acquisition of Robbins & Myers

• Industrial corporates have significant war chests of cash to be used on acquisitions, however, are being more selective on

targets and more disciplined on prices

• Uncertainty over the EU and a potential China slowdown have tempered multiples of publicly-traded groups

Diversified

Industrials

Business Services

• The quarter saw strong performance from testing and inspection group Intertek, however, witnessed challenges for staffing

players including Michael Page amidst a challenging employment environment in Europe

• There has been continued M&A activity in the legal services sector, driven by the introduction of the Legal Services Act.,

which will foster greater competition

Notes: For the purposes of this Quarterly Update, Europe is defined as: United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux

(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); Evolution calculation based on the quarter finishing 30

September, 2012

(1) For the countries based in the EU27; (2) GDP growth for Q2, 2012; (3) PMI, CCI and CPI quarterly growth shown for May-August, 2012; Building Products and

Paper & Packaging; (4) Aerospace, Defense & Government Services; (5) Also includes (6) Telecom, Media & Technology; (7) Also includes Speciality Distribution;

(8) For all listed companies based in the countries mentioned above and with a market cap greater than €50m; (9) Change quarter over quarter

(33.3%) 125.0% (50.0%) (20.0%) (33.3%) (25.0%) (57.1%)

(27.5%) (17.7%) (27.1%) (4.2%) (42.9%) (13.5%) (4.7%)

TMT6 Consumer Diversified

Industrials5

Transport &

Logistics7 ADG4 Business

Services

Healthcare &

Life Sciences

Energy &

Power

Last Quarter 5.0% 7.9% 4.3% 4.6% 8.1% 8.0% 5.3% 6.6%

Last Year 21.7% 21.3% 14.3% 14.2% 10.5% 18.1% 17.3% 6.9%

Last 3 Years 55.7% 28.9% 28.1% 19.9% (0.4%) 8.0% 35.4% 3.2%

Transport &

Logistics

• Hertz Global Holdings announced a deal to merge with Dollar Thrifty worth $2.3 billion

• Value of European inbound M&A increased substantially as a result of Toyota Tsusho Corp.’s acquisition of CFAO in France

11.5%

11.1%

(6%)

(4%)

(2%)

0%

2%

4%

6%

Q1 08 Q4 08 Q3 09 Q2 10 Q1 11 Q4 11 Q3 12 Q2 13E Q1 14E Q4 14E Q3 15E

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

(40)

(30)

(20)

(10)

0

10

20

Oct-08 Oct-09 Oct-10 Oct-11 Oct-12

Co

nsu

mer P

ric

e I

nd

ex

(%

)

Co

nsu

mer C

on

fid

en

ce I

nd

icato

r

CCI CPI Y-o-Y %

European Economic Climate

Source: Eurostat

NTM

Source: Bloomberg, Markit Economics, S&P Capital IQ

Notes: (1) Purchasing Managers’ Index – A figure above 50 indicates economic growth, and below 50 indicates decline; (2) Consumer Confidence Index; (3) Consumer

Price Index

Quarterly Real GDP Growth (% Y-o-Y for EU-27)

European Manufacturing Confidence European Consumer Confidence

• European GDP contracted for the second successive quarter by 0.3% y-o-y in Q3 2012

• According to the Office for National Statistics, UK GDP grew by 1.0% in Q3 2012 and the economy has

emerged from a double-dip recession

• S&P slashed forecasts for the Eurozone, estimating further decline in Q4 2012, stagnation in 2013 and a

return to growth in 2014

• Despite the depressed climate, corporate profits in the financial, energy & power, TMT and chemical

sectors have improved

• Eurozone downturn continued in Q3 2012 with manufacturing and services sector outputs declining

• Business confidence within the EU remains depressed with the Composite Purchasing Managers Index

decreasing to 45.7 in October, meaning that the EU has been contracting (i.e. below 50) for the last ten

months

• Consumer confidence also remained bleak in October with the Consumer Confidence Indicator falling 1.1

points over the last 3 months

• Consumer Price Index increased by 5.2% in October over the last 3 months

• Annual inflation rate in the EU was recorded at 2.5% in October 2012

• European exports have been boosted by the weak Euro but net growth is expected to halt as global trade

slows down

(1) (2) (3)

Key Countries (Q3 13E)

UK

Germany

France

Spain

Italy

Netherlands

Sweden

+1.6%

+0.6%

(0.2%)

(2.0%)

(1.5%)

(0.3%)

+1.4%

2

40

45

50

55

60

(10%)

(5%)

0%

5%

10%

Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

PM

I In

dex

Va

lue

Ch

an

ge in

PM

I (M

-o-M

)

Change (M-o-M %) Eurozone PMI

0

200

400

600

800

1,000

1,200

1,400

1,600

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

Nu

mb

er o

f T

ra

nsa

cti

on

s ADG

Energy & Power

Transportation & Logistics

Healthcare

Business Services

Diversified Industrials

TMT

Consumer

88%

12%

Strategics Financials

European M&A Environment

Market Observations

• The European M&A market contracted 10.7% in the past quarter, with the ADG and Energy and Power sectors

exhibiting the largest declines in activity

• Annual senior loan volume dropped in the third quarter to circa €4.0 bn, down from €7.4 bn in the previous

quarter

• The average purchase multiple1 for deals larger than €1.0 bn was 8.9x EBITDA for the last twelve months

ending in September, whilst deals larger than €500 million had an average multiple of 9.1x EBITDA

• Equity contribution2 averaged at 53% for the last twelve months ending October 2012, compared to 47% during

2011

Transactions by Target Country Buyer Segmentation Q3 20121

1,096

Mid-Market

Transactions

Source: S&P Capital IQ

Notes: (1) Strategic buyers may include portfolio company of private equity groups (2) Benelux defined as Belgium, the Netherlands and Luxembourg; (3) DACH

defined as Germany, Austria, Switzerland; (4) Scandinavia defined as Denmark, Norway, Sweden and Finland


Note: Includes closed M&A transactions of majority stakes only, where deal vale was undisclosed or between €25m – €650m, within United Kingdom, Eire, France,

DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland)

Q3 12

Sector

Breakdown

0.7%

2.6%

7.9%

7.6%

12.0%

14.0%

Change of

Q3 12 over

Q3 11

29.8%

14.3%

(14.7%)

(9.4%)

(30.3%)

(33.5%)

(6.3%)

(25.0%)

Mid-Market M&A Activity – By Sector

3

33% 33%

19%15%

15%17%

14% 15%

9% 7%

5% 6%

5% 6%

0%

20%

40%

60%

80%

100%

Q2-12 Q3-12

Italy

Spain

Benelux

France

DACH

Scandinavia

UK & Eire

25.3% (21.1%)

100.0% (19.5%) Total

Source: S&P Leveraged Commentary & Data

Notes: (1) Multiple of pro-forma trailing EBITDA, where pro-forma figures are available; (2) Equity contribution including retained equity/vendor financing and

contributed equity

3

2

4

0

2,000

4,000

6,000

8,000

10,000

0

50

100

150

200

Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12

Dea

l V

alu

e (

€m

)

Nu

mb

er o

f T

ra

nsa

cti

on

s

International Activity by Number International Activity by Value

North America76%

South America4%

China1%

India4%

Asia (excl. China & India)9%

Africa & Middle East5%

European

Inbound M&A Environment

Acquisitions by Non-European Buyers1,2

Non-European Buyers by Country Q3 121,2

Non-European Buyers as a Percentage of Sector Deal Volume1,2

4

% of Total Deal Volume Q3-10 Q4-10 Q 1-11 Q2-11 Q 3-11 Q4-11 Q1-12 Q2-12 Q 3-12

ADG 29% 0% 0% 17% 14% 23% 0% 29% 25%

Business Services 6% 5% 12% 5% 10% 9% 10% 8% 5%

Consumer 5% 7% 5% 6% 8% 8% 9% 9% 6%

Diversified Industrials 9% 10% 8% 8% 10% 10% 8% 11% 10%

Energy & Power 8% 10% 21% 13% 18% 23% 19% 8% 7%

Healthcare 11% 13% 14% 9% 18% 9% 15% 16% 14%

TMT 13% 15% 15% 14% 20% 17% 16% 18% 21%

Transportation & Logistics 12% 4% 9% 6% 7% 7% 5% 5% 10%

Market Observations

• International inbound M&A volume declined by 10.7% in the third quarter with 134 transactions

• The ADG and TMT sectors attracted the highest level of international inbound M&A investment whilst

Transportation and Logistics exhibited the largest increase in international interest, up 125% compared to

the previous quarter

• North American groups dominated non-European buyers closing 102 transactions during the quarter


Notes: (1) Includes closed M&A transactions of majority stakes only, where deal vale was undisclosed or between €25m – €650m, within United Kingdom, Eire,

France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and

Finland); (2) International buyer defined as from outside Europe

Aerospace, Defense & Government

Services

5

European ADG Equity Markets1

European ADG Mid-Market M&A Activity2

Source: S&P CapitalIQ

Notes: (1) Based on HW&Co. indices including the most relevant Aerospace, Defense, & Government Services companies for each country; (2) Includes transactions

with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland),

Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO,

CFO or Chairman

M&A Deals by Country of Target Acquisitions by Non-European Buyers

Selected European ADG Mid-Market M&A

Market Observations

• Order activity has continued to stimulate M&A interest throughout the supply chain

• EADS’s planned merger with UK defense giant BAE Systems failed to receive approval from regulators in

Germany. Since then KfW has acquired 13% of EADS from Daimler and others

• The Carlyle Group abandoned its takeover of Chemring due to operational performance

• The optronics sector has seen two significant partnerships with the completion of the Sagem-Thales JV and

Cassidian’s purchase of 75% of Carl Zeiss Optronics

• Over the quarter the Brent Oil price increased 14.1%, impacting margins for several major airlines

• Management moves3: Chemring Group

0

2

4

6

8

10

12

14

16

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

Nu

mb

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UK & Eire Scandinavia DACH France Benelux Spain Italy

0

1

2

3

4

5

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

Nu

mb

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North America Asia (excl. China & India)

China India

South America Africa & Middle East

UK and Eire France DACH Spain Italy Benelux Scandinavia

Price Change since last quarter 5.6% (4.2%) 11.3% NA 16.2% 9.4% 15.9%

Cash on Balance Sheet (€ bn) 6.8 4.3 0.3 NA 1.1 0.2 NM

Net Debt / LTM EBITDA Multiple 1.0x 1.6x 1.0x NA 25.5x NM 3.1x

LTM EBITDA Multiple 7.2x 9.1x 7.1x NA NM 9.2x 3.8x

Change since last quarter 0.3x (0.6x) 1.8x NA NA (0.4x) 0.4x

LTM EBITDA Margin 14.6% 9.2% 9.6% NA 1.3% 11.0% 9.3%

Consensus 2Yr Fwd Revenue Growth (p.a.) 7.9% 5.1% 10.1% NA 0.3% 6.3% 2.3%

Target Country Acquirer Country Sub Sector EV (€m)

Goodrich Electric Power Systems Safran Avionics and Electronics 310

Kinch Aviation Services Cessna Aircraft Company Maintenance and Services NA

Combibox Systems Scandinavia Cavotec Maintenance and Services NA

John Huddleston Engineering Magellan Aerospace Structural Components NA

Printca Denmark Graphic Avionics and Electronics NA

Micro Nav Quadrant Systems Avionics and Electronics NA

Tritech International Moog Components Avionics and Electronics 27

Euroavionics Navigationssysteme Equistone Partners Europe Avionics and Electronics NA

Volvo Aero GKN Structural Components 706

Business Services

6

European Business Services Equity Markets1

European Business Services Mid-Market M&A Activity2


Selected European Business Services Mid-Market M&A

Market Observations

• Hellman & Friedman acquired a 63% stake in Wood Mackenzie, placing a valuation of £1.1bn on the world-

leading energy consultancy, with Charterhouse retaining a 13% holding post transaction

• Michael Page’s 1H 12 revenue was down 10% in the United Kingdom amidst ongoing challenges in the

financial recruitment sector

• There has been a trend of consolidation and private equity investment in the UK law firm market, as firms

react to the regulatory changes and look to bolster their competitive advantage in terms of scale, breadth of

offering and geographical reach. The trend has resulted in c.8-10 transactions in the sector so far in 2012

• Strategic buyers accounted for 94% of European business services transactions in Q3 2012

• Management moves3: AMEC and Experian


Price Change since last quarter 8.8% 9.5% 1.4% (1.0%) -% 9.0% 4.7%

Cash on Balance Sheet (€ bn) 4.5 8.3 3.8 199.3 26.8 0.1 NM

Net Debt / LTM EBITDA Multiple 1.4x 1.7x 1.0x 6.0x 1.8x 2.4x 2.2x

LTM EBITDA Multiple 8.4x 6.9x 7.9x 9.8x 5.9x 6.6x 8.1x

Change since last quarter 0.5x 0.7x 0.9x 2.2x 0.4x 0.5x 0.3x

LTM EBITDA Margin 10.8% 9.9% 7.2% 8.0% 10.6% 7.0% 9.8%

Consensus 2Yr Fwd Revenue Growth (p.a.) 8.1% 4.3% 5.3% 9.1% 3.6% 6.2% 8.3%


Notes: (1) Based on HW&Co. indices including the most relevant Business Services companies for each country; (2) Includes transactions with a deal value between

€25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,

The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman

0

5

10

15

20

25

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North America Asia (excl. China & India)China IndiaSouth America Africa & Middle East

0

50

100

150

200

250

300

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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NES Group Ltd. AEA Investors Employment Services 290

Go New Recruitment Limited Staffline Group plc Employment Services NA

NDT Services Intertek Group Testing Services 21

Explore Learning Graphite Capital Management Education Services 38

ICQ Global Underwriters Laboratories Testing Services NA

Impetus Automotive ISIS Equity Consulting Services NA

PRPi Consulting PwC Employment Services NA

Employability & Skills Group Ares Capital Corporation Employment Services NA

SERCOVAM SGS Consulting Services NA

BMG Engineering Arcadis Consulting Services NA

SHL Group Corporate Executive Board Employment Services 525

Consumer

7

European Consumer Equity Markets1

European Consumer Mid-Market M&A Activity2


0

50

100

150

200

250

300

350

400

450

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

Nu

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0

5

10

15

20

25

30

35

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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Price Change since last quarter 9.3% 2.3% 0.6% 3.9% 3.9% 4.2% 4.3%

Cash on Balance Sheet (€ bn) 26.9 32.4 23.1 4.6 4.0 NM NM



Change since last quarter 0.3x 0.1x 0.2x (0.0x) 0.2x 0.4x 0.1x




Notes: (1) Based on HW&Co. indices including the most relevant Consumer companies for each country; (2) Includes transactions with a deal value between €25m

and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The

Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman

Selected European Consumer Mid-Market M&A Deals

Market Observations

• European majors continue to look outside for acquisitions: Heineken / Asia-Pacific Breweries, Nestle / Pfizer

Nutrition and Reckitt Benckiser and Bayer / Schiff Nutrition

• Strong strategic interest in nutrition, branded food and ingredients sub-sectors with acquirers including:

− Nutrition: Nestle, Reckitt Benckiser, Bayer and Glanbia

− Branded food: Orkla, Mizkan and Hain Celestial

− Ingredients: McCain Foods, Associated British Foods and Irish Daisy Bakery

• Continued pressure on high street has seen administration of JJB Sports and Comet whilst Hamleys, Mercatone

Uno, Tiger, Pizza Hut UK and Valentino all sold or in final stages

• FY12 commodity inflation expected in mid-single digits while packaging costs have fallen below 2011 levels

• Management moves3: Reckitt Benckiser, Henkel, Pernod-Ricard


Premier Foods (Pickles & Table Sauces) Mizkan Branded Food Products 115

Hamleys Group Ludendo Speciality Retail 75

PinguinLutosa Foods McCain Foods Packaged Foods 225

Premier Foods (Sweets & Spreads) Hain Celestial Confectionery 254

International Cuisine Greencore Group Frozen Foods 21

Vilebrequin International G-III Apparel Group Apparel 108

Pulse Home Products Jarden Household Appliances NA

Actic Sverige IK Investment Partners Leisure Facilities NA

Rexam (Cosmetics, toiletries and

household products) Sun Capital Partners Cosmetics & Toiletries 364

Helly Hansen Teachers' Private Capital Apparel 268

Diversified Industrials

8

European Diversified Industrials Equity Markets1

European Diversified Industrials Mid-Market M&A Activity2


Selected European Diversified Industrials Mid-Market M&A

Market Observations









• The diversified industrials market is facing pressure from uncertainty throughout the Eurozone, stalling growth

in China and slowing capital investment by corporates

• BC Partners and The Carlyle Group acquired the Hamilton Sundstrand division of United Technologies, which

includes Milton Roy Company, Sullair Corporation and Sundyne Corporation for $3.5bn

• Gardner Denver has hired Goldman Sachs to explore strategic alternatives and the Company has attracted a

number of bidders

• ITT announced that it has entered into an agreement to acquire Germany-based Bornemann Pumps

• Following the sale of their automotive services division to Bosch, SPX has over $1 billion to spend on flow

technologies related acquisitions

• Management moves3: Holcim


Notes: (1) Based on HW&Co. indices including the most relevant Diversified Industrials companies for each country; (2) Includes transactions with a deal value

between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux

(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman

0

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100

150

200

250

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Bartec Charterhouse Capital Electronic Equipment 706

Grupo Ascensores Enor Zardoya Otis Industrial Machinery 150

Schabmüller ZAPI Electrical Components 72

ThyssenKrupp Construction Group Kingspan Group Building Products 65

Lemminkäinen Rakennustuotteet Rudus Building Products 55

Global Marine Systems Energy Prysmian Construction 53

Bornemann Pumps ITT Corporation Engineered Machinery 206

European Energy & Power Equity Markets1

European Energy & Power Mid-Market M&A Activity2

Energy & Power


Selected European Energy & Power Mid-Market M&A

Market Observations

• Diversified industrial players, including General Electric and Alfa Laval, have continued to increase exposure

to the sector

• National Oilwell Varco continued its acquisition growth strategy through the announced $2.6 billion takeover

of Robbins & Myers in August 2012

• Energy prices surged in Q3, as natural gas rose 11.2% (TFF) and crude increased 14.1% (Brent)

• Gulf Oil, the lubricants division of the Mumbai-based Hinduja Group, acquired US industrial fluids

manufacturer Houghton International for $1 billion

• Chicago Bridge & Iron has announced the offer to acquire the Shaw Group for $3.1 billion, representing a 1-

day premium of 72%

• Management moves3: BG Group, Royal Dutch Shell, Snam, SSE and Statoil ASA

9

0

5

10

15

20

25

30

35

40

45

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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3

4

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6

7

8

9

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Cash on Balance Sheet (€ bn) 23.6 43.5 10.0 15.9 16.3 0.1 0.1



Change since last quarter (0.0x) (0.0x) 0.0x 0.1x 0.5x (0.2x) 0.1x




Notes: (1) Based on HW&Co. indices including the most relevant Energy & Power companies for each country; (2) Includes transactions with a deal value between

€25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,

The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman


Sparrows Offshore Group AEA Investors Oilfield Equipment NA

Star Energy Group IGas Energy plc Integrated O&G 246

Fast Tenaris Oilfield Equipment NA

Sjöbo Energi Bixia Utility 1

Naxys General Electric Oilfield Equipment NA

Ashbrook Simon-Hartley Alfa Laval Industrial Services NA

Ipergas Service Liquigas Petroleum Distribution NA

Ocean Riser Systems AGR Group Oilfield Equipment NA

Integrated Subsea Services Oaktree Capital Management Oilfield Services 143

Vortex Ventures Alfa Laval Oilfield Equipment NA

Healthcare & Life Sciences

10

European Healthcare & Life Sciences Equity Markets1

European Healthcare & Life Sciences Mid-Market M&A Activity2


Selected European Healthcare & Life Sciences Mid-Market M&A

Market Observations

• Top ten pharmaceutical companies have formed Transcelerate Biopharma, a non-profit organisation, to

standardise clinical trials and reduce R&D costs

• Pharmaceuticals remain a high value sector as companies target highly specialised products

• The European Commission is to increase quality and safety inspections for all medical products

• Corin Group is in talks to be taken private with private equity groups

• The Human Genome Sciences and Mediq acquisitions represent 1-day premia of 99% and 53%, respectively

• Medtronic acquired China Kanghui for $720 million, primarily to gain access to the Chinese market

• UnitedHealth Group has acquired Amil Participacoes in Brazil in a deal worth $4.9 billion

• Management moves3: Novartis Diagnostics, Smith & Nephew, Roche Pharmaceuticals, Rhoen Klinikum,

Fresenius Medical Care, Elan Corporation

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160

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China India











Human Genome Sciences GlaxoSmithKline Biotech 4,695

Lincare The Linde Group Services 3,415

Mediq International Advent International Distributor 1,050

Mercury Pharma Group Cinven Pharmaceuticals 593

AENOVA BC Partners Pharmaceuticals 500

deVGen Syngenta Biotech 366

Gasmedi L'Air Liquide Therapeutics 330

Limacorporate AXA Private Equity Orthopaedics 270

Riemser Arzneimittel AXA Private Equity Pharmaceuticals NA


Notes: (1) Based on HW&Co. indices including the most relevant Healthcare & Life Sciences companies for each country; (2) Includes transactions with a deal value



Technology, Media & Telecom

11

European Technology, Media & Telecom Equity Markets1

European Technology, Media & Telecom Mid-Market M&A Activity2


Selected European Technology, Media & Telecom Mid-Market M&A

Market Observations

• Digital companies have dominated VC investment in Q3 as investors target video, cloud, social and mobile

• Mobile devices and applications were the main driver behind global single digit IT sector growth

• The European Commission has forecast cloud computing to generate c.€1 trillion by 2020

• Pearson and Bertelsmann have formed a JV combining Penguin and Random House

• Walt Disney acquired Lucasfilm for $4.1 billion

• The Carlyle Group acquired Getty Images for $3.3 billion

• priceline.com acquired Kayak Software for $1.8 billion

• Management moves3: Pearson, Infosys, Havas, Telefonica, TeliaSonera, Satellite Information Services, Reed

Elsevier

0

50

100

150

200

250

300

350

400

450

500

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

Nu

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f T

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sact

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0

10

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30

40

50

60

70

80

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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China India









Consensus 2Yr Fwd Revenue Growth (p.a.) 9.7% 4.5% 4.7% 2.1% (0.1%) 5.0% 7.4%


Aegis Dentsu Media 3,955

MACH Syniverse Technologies Media 550

LBi International Publicis Media 412

Specialist Distribution Group Tech Data Europe Hardware 278

Lodestone Management Consultants Infosys Consultancy 273

Brightstar Europe Tech Data Corp. Hardware 271

UC4 Software EQT Partners Software 220

vwd Vereinigte Wirtschaftsdienste The Carlyle Group Software 66

Solarsoft Business Systems Epicor Software Software NA


Notes: (1) Based on HW&Co. indices including the most relevant Technology, Telecom & Media companies for each country; (2) Includes transactions with a deal

value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy,

Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or

Chairman

12

Transportation & Logistics

European Transportation & Logistics Equity Markets1

European Transportation & Logistics Mid-Market M&A Activity2


Selected European Transportation & Logistics Mid-Market M&A

Market Observations

0

20

40

60

80

100

120

140

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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0

2

4

6

8

10

12

14

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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China India



Price Change since last quarter 9.6% 10.1% 5.4% 7.6% 12.5% (6.0%) 2.2%




Change since last quarter 0.5x 0.3x 0.5x (0.3x) 0.7x 0.4x 0.2x



• Hertz Global Holdings has announced a deal to merge with Dollar Thrifty Automotive, valued at $2.3 billion

• Genessee & Wyoming, relying heavily on bank and private equity lending, will triple its debt to acquire

RailAmerica for $1.4 billion in cash and create the biggest short-line railroad operator in the U.S.

• In the largest deal for the Japanese giant since 2005, Toyota Tsusho plans to buy the 70% remaining stake in

French distributor CFAO

• Deteriorating market conditions in Europe and intense competition in China is causing European car

manufacturers (Daimler, BMW, VW) to show concern over meeting ambitious revenue and profit estimates

• EU Competition Commission continued its analysis of the acquisition of TNT Express by UPS. Separately,

TNT Express’ Chief Executive stepped down

• Management moves3: Oesterreichische Post, Stagecoach and TNT Express


Notes: (1) Based on HW&Co. indices including the most relevant Transportation & Logistics companies for each country; (2) Includes transactions with a deal value




Dematic (Triton) AEA Investors Logistics NA

CFAO Toyota Tsusho Distribution 1,623

GEFCO JSC Russian Railways Logistics 852

Schustermann & Borenstein AXA Private Equity Distribution 300

Movianto España Owens & Minor Distribution 130

DP World Breakbulk Orienta NV Cargo 40

Feederlink Shipping & Trading Unifeeder Marine 23

Featured Theme

13

“European Acquisition of U.S. Companies”

• Strong rebound in European buyer interest in North American companies in 2011 and 2012 YTD

• The persistent concern over the Eurozone crisis and Europe’s long-term growth prospects has driven a

rebalancing of acquisition priorities towards markets with stronger growth dynamics

• In addition, European corporate buyers have built up significant cash balances as a result of robust

corporate earnings which they are seeking to deploy outside of Europe

• Key sectors of focus for European buyers in North America have been TMT and Diversified Industrials

• Recent Harris Williams & Co. transactions for US-based businesses have seen strong European corporate

interest. Successful European buyers include Weir plc, UK (Seaboard), Tarkett, France (Tandus Flooring),

Faiveley Transport, France (Graham White) and Wanzl, Germany (Cari All)

European Buyer Activity in North America European Buyer Activity in North America by Sector

HW&Co. Representative Transactions

a portfolio company of

has been acquired by has been acquired by


has been acquired by


has been acquired by

0%

20%

40%

60%

80%

100%

Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

TMT Diversified Industrials

Consumer Business Services

Transportation & Logistics Healthcare

Energy & Power ADG

0

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60

80

100

Q1-09 Q3-09 Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12

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Note: Includes closed M&A transactions of majority stakes only, where deal vale was undisclosed or between €25m – €650m, within United States and Canada and

buyers located in the United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and

Scandinavia (Denmark, Norway, Sweden and Finland)

http://www.seaboardusa.com/index.html

http://www.augustequity.com/

http://www.seaboardusa.com/index.html

http://www.faiveleytransport.com/

http://www.wanzl.com/000/En/Home.html

http://www.omerspe.com/Home.htm

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Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and

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Contacts and Disclosures

Thierry Monjauze

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8901

[email protected]

Julien Darmon

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8905

[email protected]

Red Norrie

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8906

[email protected]

Francois Morin

Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8907

[email protected]

european autumn update · notes: for the purposes of this quarterly update, europe is defined as:...

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