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Global EngineeringSector Review 2011

Sector Review 2011

ContentsReport 2

Introduction 3

Report Highlights 4

Deal Focus by Country

Contacts 38

Transactions 40

AmericasBrazil 6

Canada 8

Mexico 10

USA 12

Asia and AfricaChina 14

India 16

Japan 18

South Africa 20

EuropeGermany 22

Italy 24

The Netherlands 26

Poland 28

Russia 30

Scandinavia 32

Spain 34

United Kingdom 36

Sector Review 2011

Report

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About the report

Deal Focus

This sector report was coordinated by theCatalyst Corporate Finance research team onbehalf of the international Mergers Alliancepartnership. To compile our findings weconducted interviews with our sector expertsin each member firm within the Mergers Alliancepartnership.

We also surveyed owners and senior executiveswithin engineered product sector organisationsand private equity investors worldwide.

Within each country’s Deal Focus we reviewmerger and acquisition (M&A) activity, focusingon key deals and trends within the engineeringsector defined as including those businesseswith activities involved in the production ofengineered products. Engineered products willtypically require a high design input, ongoingproduct innovation and development and will bemanufactured to a high level of precision. Wealso include a table of recent transactions wherethe target company is located in the countryunder review.

Additionally, we provide an overview ofthe engineered product sector as a whole,highlighting the market structure as wellas commenting on the key trends and thefactors influencing M&A. We end by providingpredications for M&A in the sector overthe course of the next 18 months.

DisclaimerThis publication contains general information and is not intendedto be comprehensive nor to provide financial, investment, legal,tax or other professional advice or services. This publication isnot a substitute for such professional advice or services, and itshould not be acted on or relied upon or used as a basis for anyinvestment or other decision or action that may affect you oryour business. Before taking any such decision you shouldconsult a suitably qualified professional adviser. Whilst

reasonable effort has been made to ensure the accuracy ofthe information contained in this publication, this cannot beguaranteed and neither Mergers Alliance nor any of its memberfirms or other related entity shall have any liability to any personor entity which relies on the information contained in thispublication, including incidental or consequential damagesarising from errors of omissions. Any such reliance is solelyat the user’s risk.

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Sector Review 2011

Introduction

We also examine how the ownership structureof engineering firms in continental Europe willprovide ongoing M&A opportunities forstrategic and private equity acquirers.

As the global recovery takes hold, we at MergersAlliance are ideally placed to help you. Whetheryou seek growth through acquisition, wish torestructure or realize value in your business, ourinternational advisors are in a unique positionto help you – Local knowledge…Global reach.Our member firms have a prominent position inboardrooms across the world and are renownedfor delivering award winning partner-led advisoryservice with seamless international cooperation.

We hope you enjoy reading our report andwelcome any thoughts or additions you mightlike to contribute.

In our own specialism of corporate mergers andacquisitions (M&A), engineering transaction levelsduring the first half of 2010 are showing signs ofrecovery following a torrid 2009. As tradingvisibility improves for the larger engineering firmswe expect buyer confidence and, in due course,transaction levels to rise.

You will find in our report a great deal of market-leading insight into the key issues facing thesector in 2010 and beyond including: howengineering firms in developed economies havecreated positions of clear leadership in keysub-sectors, the demand challenges facingengineering firms in emerging economies and thewide ranging implications of recent governmentpolicy developments on the engineering sector.

Our work also highlights the key role of the BRICnations in the globalisation of the engineeringsector and in the shaping of M&A strategies ofWestern buyers.

Philipp von HochbergCH Reynolds Corporate Finance+49 699 740 3060p.hochberg@chrcf.com

At the time of writing, economies around the world areemerging from the aftermath of the global recession andare on a fragile path to recovery. As you will see from thecontributions by our sector experts across the world it isclear that this year and next will bring both opportunitiesand further challenges for those of us operating in theengineering sector.

Sector Review 2011

Report HighlightsWe at Mergers Alliance believe the main factors to shape M&Ain the engineering sector over the next five years will be:

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USAUS buyers are a dominant force inoutbound M&A and are now focusingon emerging growth markets. However,when acquisition rationale is primarilyIP driven, they still gravitate toengineering-rich developed countries

BrazilAs the economic engine of LatinAmerica, Brazil is an attractiveemerging market. EngineeringM&A will be focused on thosebusinesses which support thenatural resources sector

UKOver half of all engineering deals havebeen in sectors where the UK hasestablished significant comparativeadvantage; aerospace, oil & gas andautomotive components

SpainSpanish engineering firms are expandingoverseas, particularly those involved inthe traditionally strong power generationand automotive sectors

ItalyThe medical equipmentengineering sub-sector has seensignificant growth, attractingsome $2.5bn of M&A investmentover the last five years

Engineering leadership

Engineering firms, particularly those from developedeconomies, have created positions of leadership inspecific engineering sub-sectors. This advantage hasbeen borne out of decades of innovation through R&D,constant refinement of their global supply chains androbust trading track records. Countries which havedeveloped clear engineering leadership include;Germany in industrial machinery, Japan and Spain inautomotive, the US in defence and the UK in aerospace.

Globalisation

The globalisation of the engineering sector has resulted ina significant increase in cross-border M&A volumes overthe past 20 years. During this period, US companies havebeen by far the most dominant acquirers of overseasengineering businesses. Acquisitions have been drivenby US buyers wishing to access new products andtechnologies, geographical markets and to gainexposure to higher growth regions.

RussiaState-owned engineering firms will beimportant players in the M&A market asthe government seeks further influencein strategically important sub-sectors

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Government policy

Following the recession, many countries have emergedwith new or chastened governments in office. Newpolicies have been developed to address budget deficitsand debt repayment plans, predominantly throughausterity measures. Some governments are reverting toprotectionist policy in order to defend key sectors,including the use of subsidies, state sponsoredconsolidation and currency controls to ensure theirexporters remain competitive. Policy has also contributedto supporting new markets, especially renewable energy,and almost all governments now have a ‘green’ policy.Whatever the policy direction taken, we see this having animportant effect on M&A within the engineering sector.

Ownership structure

Beyond the large engineering conglomerates which servea number of engineering sub-sectors, the market remainsfragmented with a large number of SMEs. These firms areoften family owned and focused on a specific engineeringniche. This trend is particularly strong in continentalEuropean countries such as Germany and Italy, wherethere are a number of highly attractive M&A targetsfor domestic and overseas acquirers as well as privateequity investors.

Emerging economies

The growth in the emerging BRIC economies has createda demand for engineering products which cannot besatisfied by local engineering companies alone. Massivepublic infrastructure investment, growth in the naturalresources sector, rapid expansion in consumer spendingand booming export markets are all driving demand.To fully capitalize on the opportunities, engineering firmsare acquiring new technologies, establishing additionalproduction capacity and partnering with global players.

Infrastructure development

The scale of global infrastructure investment isunprecedented and the engineering industry will bepivotal in the delivery of these projects. In emergingeconomies, new infrastructure is needed to supportdevelopment and in developed economies countriesthere is a pressing need to replace existing, obsoleteinfrastructure. Around the world engineering expertiseis increasingly in demand and is stimulating globalM&A across the industry.

ChinaEvolving government regulation of the M&Amarket in China will lead to increased inboundand outbound M&A activity

GermanyGerman Mittlestand companies willcontinue to be attractive mid-market M&Atargets to domestic and overseas tradeacquirers as well as private equity

IndiaIndian engineering firms will seek toacquire technology and engineeringexpertise to transfer into their homemarket

JapanA contracting domestic market is forcingJapanese engineering firms to look overseasand acquire exposure to growing internationalmarkets

M&A activity on the rise

M&A activity across the whole of the Brazilian economyis at record levels with over 350 deals announced up toSeptember 2010. M&A activity in the engineering sectorhas however been modest and is unlikely to reach thepeak of 2008 but nevertheless is rising. Despite this loweractivity level, valuations finally appear to be on the rise,which is a promising development and likely to impactpositively on M&A in the sector over the next year.

Many Brazilian engineering companies have attractedinterest from foreign buyers, especially from the US andWestern Europe, and as a result almost half of allengineering deals over the last four years have involvedoverseas acquirers. The acquired companies supplyproducts into a variety of end markets, often theautomotive sector but increasingly the oil & gas market.Brazil is rich in resources such as iron ore, bauxite andpetroleum and is therefore particularly appealing tointernational companies who are increasingly seekinginvestments in resource-rich countries.

Brazilian engineering expands itsgeographic footprint

There continues to be interest in outbound M&A witha number of active Brazilian acquirers looking to buyforeign businesses to expand their geographical footprint.This year Brazilian machine tool maker Industrias Romioffered $110m to acquire Hardinge Inc, a tool makerbased in New York and owner of the renowned

Bridgeport marque. Whilst the approach was rebuffed,Romi CEO dos Santos argued at the time “that acombined company will have the scale to invest instrategic opportunities to expand in emerging markets”.

Other buyers include Lupatech, a publically listedproducer of industrial valves and micro casting parts forthe oil & gas sector. The company has been seekingtargets across Latin America to expand its productportfolio. In late 2007, Lupatech, together with Frenchprivate equity firm Axxon Group, acquired Argentinabased Aspro, a supplier of equipment for compressingnatural gas for $85m. WEG, another listed Brazilianmultinational, producer of electromechanical andelectronic systems, is currently looking for targets withinthe emerging markets and has acquired Instrutech(Brazil), Voltran (Mexico) and Zest Group (South Africa)within the last three months.

This trend for Brazilian outbound acquisitions is likelyto continue due to the relative cash strength of Braziliancompanies, a booming capital market and the relativestrength of Brazilian banks which have opened creditlines for this type of deal.

Deal Focus

BrazilCapital City: Brasília Population: 198,739,269

Area: 8,511,965 sq km Time zone: GMT -3

“Leading Brazilianengineering companiesare seeking to expandtheir global footprints,

particularly in Latin Americanand emerging markets, so weexpect to see an upward trendin outbound M&A over the nextfew years”

Leonardo Antunes, BroadSpan Capital

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Total deal volume

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M&A activity

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Consumer inclusion driving growth

Brazil is the economic engine of Latin America andaccounts for at least half of the M&A in the region. It hasbeen amongst the most resilient of global economiesduring the downturn as a result of lower levels ofcorporate and consumer debt, which have allowedcompanies and individuals to deal better with theeffects of the financial crisis.

Brazil’s economy has continued to expand in 2010 and isexpected to grow by 7% this year. This growth is beingdriven by domestic consumption and is benefiting frommillions of people emerging from poverty to join theconsumer classes. Brazil’s process of consumerinclusion means that more than 40m people areeither joining the consumer base or moving toa higher level of consumption.

Automotive and oil & gassectors key

Economic development is forcing the country toexpand its production capacity especially in sub-sectorssuch as automotive manufacturing and oil & gasextraction/processing.

Brazil has received substantial investment fromautomotive manufacturers, particularly from Asia, whohave installed production plants to capitalize on theGovernment’s fiscal incentive schemes to increase carsales. This development has directly influenced therecent high growth rates in the autoparts segment.

Growth in the oil & gas sector has been underpinned byrecent oil discoveries by Petrobras in the waters off theBrazilian coast. As the main player in the market,Petrobras dictates the shape of growth in the sector andis planning investments of c.$174bn to 2013, representingan annual increase of 55% compared to their previousfive year plan. This commitment by Petrobras will result insignificant growth for suppliers of engineered productsand should ultimately lead to increased M&A in the oil &gas engineering sub-sector.

Predictions

The trend for foreign companies to acquire Brazilianengineering firms is set to continue in parallel withgrowth of the wider economy

Overseas investment by Brazilian engineering firmsis driven by a desire for geographic expansion,especially in Latin American and emerging markets

The oil & gas and autoparts segments will remainthe most active engineering sub-sectors for M&Ain the next two years

Date Target Description Acquirer Deal Value(US$m)

Jun-10 MWL Brasil Wheels and axles Goergsmarienhuette n/dRodas & Eixos (Germany)

Jun-10 CanberaPumps Pumps ITT Corp (USA) n/ddo Brasil

Apr-10 Eletrônica Loudspeakers Harman n/dSelenium International (USA)

Dec-09 Hiter Industria Valves Tyco Flow n/de Comercio Control (USA)

Nov-09 Mueller Mineira Plastic Magneti Marelli n/dcomponents (Italy)

Aug-09 Certain operations Steel wheels Iochpe-Maxion 180of ArvinMeritor

May-09 Romicron Boring tools Kennametal (USA) n/dProducts

Apr-09 Meridian End modules and Citadel Plastics n/dAutomotive Brazil signal lighting Holdings (USA)

Jan-09 Flywheel business Flywheels Brembo (Italy) 4of Sawem

Nov-08 Vanzin Industrial Automotive parts Tuper n/dAuto Peças

Recent transactions

Consistent transaction volumes

M&A transaction volumes in the Canadian engineeringsector have remained resolutely flat over the last threeyears with 20 to 25 transactions per annum. The averagetransaction value however has fallen significantly from$50m to just $12m during the first half of 2010 as thesector saw only a handful of very small transactionscompleted.

The sharp peak and trough in M&A volumes that hascharacterized the sector in many countries did not occurin Canada. This is partly due to the sector being relativelysmall in comparison to Canada’s primary resourcessectors but also due to Canadian corporate fiscalconservatism, which prevented the M&A market over-heating as it did so spectacularly in other economiesaround the world. Canada's major banks emerged fromthe financial crisis of 2008-09 among the strongest in theworld, owing to the country's tradition of conservativelending practices and strong capitalization.

Rich target for US buyers

The majority of transactions were cross-border withinternational buyers acquiring 43 Canadian engineeringbusinesses in the last three years accounting for 53% ofvolume and 77% of value. This is explained by the fact

that US buyers, despite having similar strategic M&Arationales to domestic Canadian acquirers, are classedas overseas buyers.

In the past, many Canadian engineering firms wereconsidered as targets for large, international acquirers.This trend is expected to reverse as the strength of theCDN$, robust corporate balance sheets and the health ofthe Canadian credit markets enables domestic acquirersto competitively engage in outbound M&A.

One such corporate is ATS Automation Tooling Systems,a manufacturer of automation products. In March ATSannounced the proposed $62m acquisition of Germangroup Sortimat. Based in Stuttgart, Sortimat is amanufacturer of specialized assembly systems formedical products and pharmaceutical dosing devices,achieving revenues of c.$80m in 2009. The acquisitionsupports ATS’ strategy to expand its position in the globalautomation market and enhances growth opportunities inthe key strategic segment of healthcare.

Economy tied to natural resources

The majority of Canada’s GDP is tied to the resourcessectors (oil & gas, mining, agriculture and forestry) as thecountry continues to exploit its enormous reserves ofnatural resources. Canada is the US's largest foreignsupplier of energy, including oil, gas, uranium, and electricpower. Given its great natural resources, skilled labourforce, and modern capital plant, Canada enjoys a uniqueposition as one of the US’s most important trading

Deal Focus

CanadaCapital City: Ottawa Population: 33,487,208

Area: 9,984,670 sq km Time zone: GMT -5

“In the past, manyCanadian engineeringfirms were consideredonly as targets for large,

international buyers. This trendis expected to reverse as thestrength of the CDN$, robustcorporate balance sheets andthe health of the Canadiancredit markets enables domesticacquirers to competitively engagein outbound M&A”

Darren Williams, Solaris Capital Advisors

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Total deal volume

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M&A activity

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partners. However, the specialist equipment andmachinery used in these end markets is predominatelymanufactured by overseas companies, with Italian andGerman manufacturers monopolizing supply.

The province of Ontario is Canada's leadingmanufacturing region, accounting for approximately halfof total national manufacturing shipments and is also amajor centre for the natural resources industry. In March2010, The Government of Ontario proposed sweepingnew legislation to attract investment in renewable energytechnology and create new ‘green economy’ jobs. Theproposed bill, the Green Energy Act (GEA), if passed,will provide significant revenue incentives for businessesestablishing and growing renewable energymanufacturing capabilities in the province. Firms such asCanadian Solar, Arise Technologies and of course ATS arelikely to be major benefactors from this new legislation.

Dominant global players

Engineering sub-sectors in which Canada does possessworld leading capabilities include automotive (MagnaInternational), aerospace (Bombardier) andcommunications (Research In Motion).

Ontario based Magna International is one of the world’slargest and most diversified Tier 1 automotive componentsuppliers, generating $17bn revenues annually. Magna’ssuccess has been built on the diversity of its productoffering and the ability to serve OEM clients ona global basis. This success has been supported bystrategic international M&A activity. Recent deals includethe acquisition of Karmann of Japan (manufacturer ofconvertible roofs) and Cadence Innovation of the CzechRepublic (automotive interior and exterior plasticcomponents and systems). With a net cash position of$1.5bn, Magna clearly has the fire power to continuemaking acquisitions and has stated its intention to pursuedeals in the emerging markets of India, Russia, SouthAmerica and China over the coming years.

Predictions

The combination of strong balance sheets,functioning credit markets and a relativelystrong CDN$ will enable major corporates tocontinue be competitive in acquiring overseas

Many larger, global players have M&A strategiestargeting the emerging BRIC economies

The US will continue to be a major inward investorin Canada across a broad range of engineeringsub-sectors

Date Target Description Acquirer Deal Value(US$m)

Aug-10 Micro Thermo Refrigeration Parker Hannifin n/dTechnologies controls (USA)

Jul-10 G&B Specialities Rail signal Wabtec 35products (USA)

Jun-10 Macro Components for Dalian Rubber & 9Engineering plastic film industry Plastics (China)

May-10 Motor Business DC electric motors Bison Gear & n/dof Von Weise Engineering (USA)

Apr-10 NSE- Machinery and NSE Aero n/dAutomatech equipment North America

Apr-10 Routes Aerospace COM DEV 1.5AstroEngineering instrumentation International

Mar-10 Celco Controls Automated control High Road Capital n/dsystems Partners (USA)

Feb-10 Arpeco Printing machines Mark Andy (USA) n/dEngineering

Nov-09 Composotech Composite Oneworld Energy n/dStructures Inc structures

Oct-09 Coretec Printed circuit DDI Corp (USA) 23.4boards

Recent transactions

Deal volumes recover in 2010

As a result of the global crisis and shortage of credit,Mexico like most other countries around the worldsuffered the effects of the global recession. Engineeringtransactions remained at a relatively constant level during2007 and 2008, dipped in 2009 and have recovered in thefirst half of 2010. With more deals completed in H1 2010than the whole of 2009, we are expecting a return to pre-crisis levels for the full year. So far however average dealvalues have remained fairly constant over the period.

Clear interest from Europe and the US

Around three quarters of all deals done in the Mexicanengineering sector typically involve foreign buyers. Theseacquirers have tended to come from developed countries,particularly Western Europe and Mexico’s neighbouringcountry the USA.

EMTE, a Spanish engineering company specialising inclean-room technology, acquired Eolis América Latina tofurther consolidate its position in Latin America. With thispurchase, EMTE revenue base is now over $60m andit employs a team of 300 people worldwide. Mexico,as well as other Spanish speaking countries in LatinAmerica are clearly attractive markets to Spanishcompanies like EMTE and hence the high level ofinbound M&A from Spain.

US companies are also routine investors in the Mexicanmarket, both at a ‘greenfield’ level and throughacquisition. Thanks to Mexico’s membership of NAFTA itis allowed to trade freely with the US and Canada andalso has free-trade agreements with more than 30 othercountries including members of the European Union andJapan. A key reason underlying much of the foreigninvestment within Mexico has to do with the country’sextensive network of these free trade agreements anddouble taxation treaties, with respect to corporation tax.

Latin American expansion

The MERCOSUR trade agreement also has a positivebearing on Mexican interaction with Latin America. WEG,a Brazilian engineering multinational, recently invested inVoltran, a Mexican transformer manufacturer, taking acontrolling stake of 60% in the business. The partnershipbetween the two companies began in 2006, when WEGacquired a 30% stake in Voltran from the controllingshareholders, the Jimenez family. Voltran manufacturespower and distribution transformers and recordedrevenues of around $70m in 2009. WEG’s CEO claimed"the acquisition brings synergy gains which will allow ourprogress in the local production of new lines, such as drytransformers and to supply more complex solutions, suchas power substations.”

Deal Focus

MexicoCapital City: Mexico City Population: 111,211,789

Area: 1,972,550 sq km Time zone: GMT -6

“Although the Mexicanengineering market isrelatively small at themoment, the development

of global industries such asautomotive and aerospace withinthe country will ensure the sectorscales up by 2020”

Luis Garcia, Sinergia Capital

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Total deal volume

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M&A activity

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Auto industry relocating to Mexico

Despite the tough trading conditions within the worldwideautomotive industry, the sector remains attractive inMexico. A number of international OEMs continue torelocate production facilities to Mexico to benefit froma lower cost base. Exports of vehicles from Mexicointernationally have increased over the last five yearsand strategic and institutional investors continue toinvest incrementally.

One of the most notable automotive deals was the $75macquisition of Nugar, a producer of autoparts, by a jointventure between DESC and Spanish firm CIE Automotivein 2007. The transaction allowed the DESC–CIE jointventure to strengthen its position within the industry andtake advantage of the gradual relocation of automotiveindustry suppliers to Mexico. CIE Automotive thenacquired the 50% it did not already own from jointventure-partner Grupo Kuo SAB de CV (formerly DESC)for $90m in a deal which ultimately completed in early2009. In the meantime CIE Automotive made theacquisition of Pintura y Ensamble for $33m, securingits two production plants based in Saltillo and deRamos Arizpe.

Many of the engineering sector’s M&A transactionsinvolve companies supplying into the automotiveindustry and we believe this will continue over thenext two years.

Suppliers to aerospace OEMs

As a result of Mexico’s membership of NAFTA and itsincreasing reputation for quality certified production andcost competitiveness, local aerospace manufactures arenow suppliers to major OEMs including Boeing, Airbusand Bombardier. This development means that Mexiconow ranks as one of the Top 10 largest suppliers ofaerospace products to the US market, above manyleading Asian suppliers such as China and South Korea.

Whilst M&A activity in this sector is low at present, it isinevitable that consolidation will occur at some point asfirms seek to grow through acquisition or look toeliminate competition.

Predictions

Given the low starting point, it is unlikely thatthe Mexican engineering sector will generatesubstantially more M&A transactions in theshort term, however the trend is upwards

We will continue to expect greater inboundM&A than outbound, especially by companieslocated in the US, the European Union and Brazil

The growth in the Mexican aerospace andautomotive industries will inevitably lead toincreased investor interest in the sector, whichwill translate to some extent into M&A activity

Date Target Description Acquirer Deal Value(US$m)

Jul-10 Eolis América Air treatment COMSA EMTE n/dLatinacontrols systems (Spain)

May-10 Spirax-Sarco Steam products Spirax-Sarco 15Mexico and pumps (UK)

May-10 Voltran Power WEG (Brazil) n/dtransformers

May-09 CIE DESC Automotive parts CIE Automotive 90Automotive (Spain)

May-09 CarMex Automotive parts HP Pelzer n/d(Germany)

Mar-09 Pintura y Automotive parts CIE Automotive 33Ensamble (Spain)

Sep-08 Alpe SA Electric heating NIBE Industrier 25elements (Sweden)

Jun-08 Clemex Mexico Engine bearings MAHLE GmbH n/d(Germany)

Apr-08 Damy Cambios Railroad VAE Nortrak (USA) n/dde Via components

Nov-07 Hermosillo Plant Interior auto IAC North America 17components (USA)

Recent transactions

A return to pre-crisis M&A volumes

First the good news: after overcoming the worst yearfor M&A in a long time, 148 engineering deals wereannounced during the first two quarters of 2010.On a pro-rata basis, 2010 is on track to achievea similar number of transactions to 2007. It appearswe have returned, to some degree, to pre-crisis levelsof M&A activity.

However, valuations and average transaction size areentirely another story. The value of engineering M&A in2010 stands at $8.9bn so far, considerably below the$30.8bn achieved in 2007. Average deal values havefallen by over a third to $162m this year as buyer appetitefor larger, riskier transactions has diminished andvaluation multiples lowered. This new environment ofattractive valuations for buyers and slowly adjustingexpectations of sellers has created great opportunitiesfor well-positioned strategic acquirers and opportunisticfinancial buyers.

Appetite for aerospace deals

In March, Triumph Group bucked the trend for smallerdeals by announcing 2010’s first mega-deal, the $1.6bnacquisition of Vought Aircraft from private equity investorThe Carlyle Group. Vought is a leading globalmanufacturer of aero structures for commercial, militaryand business jet aircraft and generated revenues of$1.9bn in 2009.

Vought's customer base is comprised of the leadingglobal aerospace OEMs and over 80% of revenue isfrom sole source, long-term contracts. The integration

of Vought with Triumph will create a leading Tier 1capable supplier with strong positions in commercialand military platforms.

From 1995 to 2010 aerospace sector multiples averaged11.5x EBITDA, peaking in 2007 at 14.3x. Since then,valuations have come down substantially. The Voughttransaction closed at 5.8x EBITDA, which is consistentwith the trend for substantially lower multiples across thewider US engineering sector.

Private equity in exit mode

The number of transactions involving private equity asproportion of total US engineering transactions hasdiminished steadily since 2007. Around 24% ofacquisitions in 2007 were completed by financialinvestors compared to 8% in the first half of 2010.Restricted conditions in the credit markets and continuingeconomic uncertainty have been the driving factorsbehind this sharp fall.

US private equity firms have hundreds of billions incommitted but uncalled capital that needs to be investedin the next three years or returned to investors. GeneralPartners are deeply incentivized to put this capital towork, so we expect private equity activity to pick up inthe next year. However, as strategic buyer appetitereturns, recent data suggests that the second quarterof 2010 was the most active three month period forUS private equity exits in nearly two years.

Deal Focus

USACapital City: Washington,D.C. Population: 307,212,123

Area: 9,826,630 sq km Time zone: GMT -5

“The global recessionhas helped US-centricengineering firms realizethe importance of

diversifying their marketsinternationally, thus diminishingtheir exposure to a singlegeography”

Horacio Facca, Headwaters MB

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Source: Capital IQ

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One such private equity exit was DLJ Merchant BankingPartners sale to Goodrich of DeCrane Holdings (CabinManagement Assets) for $280m. Goodrich paid justunder 8x EBITDA. Going forward, we expect Goodrichto continue to be interested in M&A opportunitiesparticularly as OEM production rates accelerate,Goodrich’s out of warranty installed base growsand aftermarket demand rebounds.

Geographic diversification animperative

Historically US acquirers have been the dominant forcein outbound M&A. The global recession has helpedUS-centric engineering firms realize the importance ofdiversifying their markets internationally, thus diminishingtheir exposure to a single geography. Many are now alsofocusing on politically-stable, Western-friendly countrieswith compelling demographics, such as Eastern Europe,Brazil and India. When the M&A rationale is primarilydriven by the need to access intellectual property, USfirms tend to gravitate more towards engineering-richcountries such as the UK, Germany and Japan.

Government policy will impactengineering sector

Highly-engineered products and processes account forabout 35% of the US GDP. Virtually all key engineeringsub-sectors have dominant, large, well-known USplayers, ranging from Boeing in aerospace andExxon Mobil in oil & gas to Raytheon in defense.Current government policy will have an impact inall these sectors.

In 2009, 30 Defense programs were cut yielding anestimated $330bn in future budget savings. Despite thesecuts, the US will remain the number one Defense spenderin the world, accounting for 41% of the top 15 worlddefense spenders worldwide.

The American Recovery and Reinvestment Act of 2009claims to be distributing $787bn across multiple USgeographies and industries with the twin objectives ofgenerating employment and revamping decaying USinfrastructure. The two sub-sectors that appear to benefitmost from the legislation are construction and energy,including nuclear power. Finally, the ban on offshoredrilling, which is due to expire at the end of Novemberwill inevitably have an effect on the oil & gasengineering sector.

Predictions

Surplus cash on corporate balance sheets in theUS, combined with compelling valuations point torebounding domestic M&A activity especially if theUS market turns more optimistic about the globaleconomic outlook

Inbound M&A is expected to continue, as favorablevaluations give overseas acquirers extra motivationto establish or expand their North Americanfootprints

The volume of private equity acquisitions isexpected to increase as committed capital isput to work over the coming year

Date Target Description Acquirer Deal Value(US$m)

Aug-10 Godwin Pumps Pumps ITT Corp 585of America

Jun-10 Vought Aircraft Aerostructures Triumph Group 1,600Industries

Jun-10 K-TEK Level detection ABB (Switzerland) n/ddevices

May-10 Ralph A. Hiller Nuclear actuators Rotork (UK) 8

Mar-10 Equipment Produces aerial Palfinger AG 25Technology lifts (Austria)

Mar-10 Eagle Tool Precision Heroux-Devtek 34& Machine machined tools (Canada)

Dec-09 Quincy Air compressors Atlas Copco 190Compressor (China)

Sep-09 Hi-Shear Pyrotechnic Chemring Group 132Technology Corp devices (UK)

Sep-09 Axsys Precision General Dynamics 643Technologies components

Jul-09 Certain assets Aerostructures Boeing Co 1,002of Vought

Recent transactions

Engineering M&A to reachrecord levels

Transaction volumes in the Chinese industrials /engineering sector have rebounded strongly during thefirst half of 2010 following a fall of 10% in 2009. On thebasis of H1 2010, engineering M&A on a pro-rata basis,is forecast to achieve record levels in 2010, representingapproximately a third of all M&A activity in China. Themoderate fall in M&A activity in 2009 and strong startto 2010 reflects how well the Chinese economy hasnavigated the global recession.

M&A activity in China has historically been driven bydomestic acquirers given the regulatory challengesinternational buyers faced when entering the Chinesemarket. Domestic consolidation is particularly prevalentamong engineering firms which provide equipment tosupport China’s huge public infrastructure developmentprogramme. However, as the regulatory burden lessens,inbound M&A from overseas acquirers in the engineeringsector has been on the rise, now accounting for a fifth ofall transactions. Overseas buyers are primarily attractedby the opportunity to acquire exposure to China’sstaggering GDP growth which has grown at a compoundannual growth rate of 10% over the past decade.

Investment in renewable energy

Transactions have occurred across all sub-sectors ofthe Chinese engineering sector. However, the long termgrowth potential in power engineering and renewableenergy has attracted significant recent interest. TheChinese wind power sector is forecast to grow rapidlyover the coming decade, in line with the government’s

plan to increase the total installed wind power basefrom 12 GW in 2008 to 150 GW by 2020. Recent dealsinclude, Hong Kong based private equity firm AffinityEquity Partners’ $200m buy-out of Beijing Leader &Harvest Electric Technologies, and GalaxySemiconductor’s $127m acquisition of ChengdeRuifeng Renewable Energy.

Acquisition of technology and brands

Outbound M&A activity by Chinese engineering firmsis primarily focused on acquiring technology andengineering expertise which can be transferred back intotheir domestic market. Chongqing Machinery & ElectricCo’s acquisition of UK based Holroyd Precision, amanufacturer of precision tools, is a prime example ofhow mid-market companies are being acquired for theirengineering know-how. Another interesting example wasChina International Marine Containers’ (CIMC) acquisitionof TGE Gas Engineering, a Luxembourg based specialistin bulk storage of refrigerated gasses for $50m. A dealthat was clearly beneficial to CIMC in terms of capturingintellectual property and expertise and also to TGE bygaining access to the valuable Far East commercialmarket of CIMC.

The acquisition of respected global brand names isanother important driver of large, outbound M&A.A recent example was Chinese car maker GeelyAuto’s acquisition of Volvo from Ford for $1.8bn.

Deal Focus

ChinaCapital City: Beijing Population: 1,338,612,968

Area: 9,596,960 sq km Time zone: GMT +8

“Chinese companies willincreasingly look aboardto acquire engineeringtechnology and expertise

which can be transferred backinto their domestic market”

Keith Pickering, Catalyst Corporate Finance

14

100

200

400

300

500

600

700

0510

20

40

3035

45

0

25

15

2007 2008 2009 H1 2010

Tran

sact

ion

volu

me

Ave

rag

ed

eal v

alue

$m

Source: Dealogic

Total deal volume

Average deal value $m

M&A activity

15

Continuing economic growth

Following the implementation of a two year, $586bneconomic stimulus package in 2008, the Chineseeconomy sustained impressive growth during the globaldownturn. The stimulus package delivered tax cuts andvastly increased spending on public infrastructureprojects including roads, railways, schools and hospitals.The stimulus package is widely expected to end in 2010as planned. The Chinese government is now takingmeasures to limit bank lending and dampen a rapidly overheating property market in an effort to control inflation.

China’s continued expansion through the recessionhas acted as a lifeline to many engineering exportingcountries. China’s demand for engineered goods tosupport the massive infrastructure build out and thecontinued growth in the country’s natural resourcessector has taken up the slack of reduced demand fromdeveloped economies. At a macro level, imports to Chinaincreased to $1trn in 2009, giving a ten year compoundannual growth rate of 20%.

Regulatory regime remains a hurdle

The regulatory environment for both inbound andoutbound M&A in China is evolving. In years gone by,regulation had been designed to restrict, even block,international investors in favor of domestic acquirers /investors. The government has now implemented anumber of initiatives to ease the regulation of the M&Amarket. Firms engaging in outbound M&A can nowbenefit from government subsidies and less restrictiveregulations when trying to securing acquisition financing.However, the regulatory burden remains significant, largeoutbound deals still require Chinese government approvalfrom five different government departments (six if thebusiness is a state-owned enterprise).

One area in which the regulatory burden has eased is forforeign private equity firms. Regulations have evolved toencourage foreign private equity firms to operate yuan-denominated investment funds. Funds representingdomestic investors face fewer regulatory obstaclescompared to overseas funds and this has translatedinto a sharp increase in fund commitments during thefirst half of 2010 which we expect to translate into dealflow in 2011.

Predictions

Chinese engineering M&A activity is expected tocontinue at a similar level, especially for businessesconnected to the country’s infrastructure build out

As regulatory hurdles soften over time, we expectthat inbound M&A will grow as a proportion ofoverall M&A

Chinese companies will be selective over overseasacquisition focusing on companies with leadingtechnologies or recognised brand names

Date Target Description Acquirer Deal Value(US$m)

Apr-10 Chengde Ruifeng Wind turbine blades Galaxy 127Renewable Energy Semiconductor

Apr-10 Hukai Electric High voltage LS Industrial n/dbreakers Systems (South Korea)

Feb-10 Tau Energy Heat exchangers Danfoss District n/dProducts Energy (Denmark)

Dec-09 Tieben Steel Co Metal components Jinsong Special 104Steel

Nov-09 Jiangsu Tieben Iron products Changzhou 29Iron and Steel Jiajiang Material

Nov-09 Shenzhen Power supplies New Energy 24Anytone Systems

Oct-09 Division of Crystal solar LDK Solar Co 21Best Solar modules

Oct-09 Beijing Leader & Motors and wind Affinity Equity 200Harvest Electric turbines (Hong-Kong)

Oct-09 Changzhou Marine cables Zhongli Science 22Marine Cable And Technology

Sep-09 High-Voltage High-voltage Nkt Cables 26Cable Factory cables (Denmark)

Recent transactions

High levels of M&A again in 2010

The Indian engineering sector continues to be buoyed byrobust internal consumption, which has encouraged bothinbound as well as outbound cross border M&A. Inboundacquisitions were generally made by European and USbuyers, however there are a number of Indian engineeringcorporates such as Mahindra & Mahindra who continue toacquire both at home and abroad.

Deal volumes and values in 2010 are expected to be inline with 2009 levels, although it appears that the averagetransaction values are on the rise, currently around $20mfor disclosed deals.

Accessing growth markets a priorityfor overseas buyers

One of the more notable transactions of early 2010, andthe largest to date, was the acquisition by Prysmian SpA,an Italian firm and one of the world’s leading cableproducers, of a majority stake in Ravin Cables for $37m.Based in Mumbai, Ravin is one of India’s leading cablemanufacturers and a key supplier to the power industry.

India is planning to add over 100 GW of capacity before2017 and Prysmian was clearly positioning itself tocapitalize on this infrastructure build-out. We expectfurther significant inward investment through acquisition(and JVs) across the power sector over the next threeyears especially of engineering businesses with interestsin transmission equipment such as cables, switchgearand transformers.

Going abroad

Whilst the Indian engineering sector is clearly full ofopportunities for growth, local firms face a numberof challenges in capitalizing on them. Larger foreignmultinationals operating in India are often better equippedto respond. Local firms may have little experience inexecuting large scale projects or may lack technologicalor process know-how. This has prompted several Indiancompanies to acquire overseas to address theseweaknesses.

Equally, the larger Indian corporates are seeingopportunities for growth beyond India, often in theemerging markets of Asia, Africa and South America andto a lesser extent in the developed economies. Mahindra& Mahindra, Crompton Greaves and Ashok Minda areprominent Indian engineering companies which havemade a number of acquisitions in the automotive, powerand aerospace sectors in recent years. Depressedvaluations due to the recent recession in the developedworld have increased the attractiveness of an outboundacquisition strategy.

Deal Focus

IndiaCapital City: New Delhi Population: 1,166,079,217

Area: 3,287,590 sq km Time zone: GMT +5:30

“With a GDP growth ratein excess of 8% in 2009and 2010, we have seenthe emergence of several

$50-$100m companies acrossthe engineering, power andmining sectors. These companiespresent good consolidationplatforms for global players andthere is growing acceptance ofthe merits of such alliances bythese domestic mid-sizedbusinesses”

Sapna Seth - Singhi Advisors

16

10

20

30

40

50

60

0

5

10

25

35

30

40

0

15

20

2007 2008 2009 H1 2010

Tran

sact

ion

volu

me

Ave

rag

ed

eal v

alue

$m

Source: Mergermarket

Total deal volume

Average deal value $m

M&A activity

17

Engineering is a national focus

The Indian engineering sector accounts for c.12% ofIndia’s economy and it has been growing at a steadypace over the last decade. Long dominated by heavyengineering it is highly structured and technology driven.

An important feature of the engineering industry hasbeen its ability to spring off a whole sector of small andmedium enterprises, which become an important partof the supply chain due to their contribution to costcompetitiveness and employment generation. Despitethe global recession, the engineering sector continues togrow and the growth momentum is expected to continuefor the next few years primarily on account of thegovernment’s increased emphasis on infrastructure andindustrial development as well as engineering-led exports.

The Ministry of Commerce sponsored EEPC INDIA(Engineering Export Promotion Council) sets ambitioustargets for the total level of Indian engineering exports,and helps Indian engineering businesses penetrate newor expand existing export markets. This emphasis ongreater integration into the global marketplace has clearimplications for overseas M&A in the years to come.

Next decade of investments –energy, mining and ports

The planned infrastructure spending for the five yearplan ending in 2012 has been targeted at $500bn,which is likely to be doubled to $1trn in the followingplanning period. This planned infrastructure spendingis across all core sectors which directly influence theengineering sector.

In the previous decade substantial investments havebeen made in core infrastructure like roads, airports,oil & gas supply and telecom networks. Private equityinvestments alone in the past three years in infrastructurehave amounted to over $3bn.

The next decade however is expected to see substantialinvestment flowing into energy (generation, distributionand transmission), mining, water and waste treatmentand ports infrastructure. We have begun to see thisreflected in the recent trends in M&A and private equityinvestment in these sectors.

Predictions

The next decade in Indian engineering sectorbelongs to power and energy, mining, water andsewage treatment and port infrastructure. Thesesub-sectors will witness an increase in bothdomestic and cross-border M&A activity

Inbound transactions will continue to dominatethe total M&A deal activity. There will also besignificant joint venture opportunities for technicaland operational collaboration for large globalplayers from the developed nations

Average deal values will continue to increase due tothe incremental future opportunity. Companies withthe ability to participate and deliver mega projectswill attract higher valuation multiples

Date Target Description Acquirer Deal Value(US$m)

Jun-10 Parixit Agriculture Emtelle Holdings n/dIndustries irrigation systems (Netherlands)

Jun-10 Kartik Steels Castings Manoir Industries n/d(France)

Jun-10 Valves division Vacuum pumps Circor International n/dof Mazda and valves (USA)

May-10 Reva Electric car Mahindra & n/dElectric Car manufacturer Mahindra

May-10 Valeo Minda Automotive Valeo (France) n/dElectrical Systems components

Mar-10 RPG Cables Power and KEC International 25telecom cables

Mar-10 Pump business of Petrol and LPG Gilbarco 30Larsen & Toubro dispensing systems Veeder-Root (USA)

Jan-10 Sanfield Structural Maurer Sohne n/dprotection systems (Germany)

Jan-10 Standard Electrical Havells India 26Electricals distribution equipment

Jan-10 Ravin Cables Power cables Prysmian Spa 37(Italy)

Recent transactions

Stable M&A volumes

Despite the effects of the global recession, the Japaneseengineering sector has enjoyed stable levels of M&A inrecent years, with full year 2010 transaction volumesexpected to be similar to those of 2009. This sustainedlevel of activity has been due, in part, to larger firmsrestructuring, and mid-market firms acquiring to gainadditional scale to survive in Japan’s highly competitivedomestic market.

Average deal sizes have on the other hand been fallingrapidly, with 2010’s average value being nearly fivetimes less than in 2009. This decline can be attributedto expedited consolidation by SMEs and larger groupsmaking smaller infill acquisitions, rather than engagingin risky, larger transformational deals.

Cultural differences limitcross-border activity

Japan has traditionally seen very low levels of inboundM&A from foreign trade buyers or financial investors –typically less than 10% of total volumes. This low levelof activity is due to a number of issues, primarily thepersistent economic malaise often referred to as ‘Japan’slost decade’, but also due to perceived differences incultural and business practices. These issues can oftenlead to business integration and operational challengesfor the acquirer, which ultimately erodes value.

A recent notable exception to this trend was the $222macquisition of Hoya Corporation’s hard disk glass mediamanufacturing business by US firm Western Digital

Corporation in April. This deal was Western Digital’s firstacquisition outside the US and provides them withaccess to new R&D capabilities and exposure to keyAsian markets.

Asian buyers, particularly from China and India, havebeen interested in Japanese engineering firms, typicallylooking to gain access to their product technology, whichis often industry leading. Japan is considered moreattractive than the US, as fears of a double-dip recessioncontinue there, and more attractive than Europe, which istroubled by ongoing sovereign debt issues.

Private equity investment on the rise

Historically the engineering sector has seen a consistentlylow level of private equity involvement, however, so far in2010, 10% of deals in the sector have been completedby private equity buyers. This increase is attributed togreater trading visibility for funders and improving creditconditions in Japan. There is also a lack of viable exitoptions for private owners and therefore they areprepared to sell stakes to private equity firms,releasing some equity immediately.

One private equity firm of particular interest is Chinabased CITIC Capital Partners, who have been activelyinvesting in Japanese companies for a while. CITIC arefocused on mid-market investments in manufacturingcompanies which have strong brands and technology,and can benefit from greater access to the Chinesemarket. CITIC recently acquired a 67% stake in theJapanese container and packaging manufacturingcompany Tri-Wall K.K for an estimated $66m.

M&A activity

Deal Focus

JapanCapital City: Tokyo Population: 127,420,000

Area: 377,944 sq km Time zone: GMT +9

“A shrinking domesticmarket is forcingJapanese engineeringbusinesses to consolidate

their position at home whileseeking exposure to internationalgrowth markets”

TTeettssuuoo YYaammaazzaakkii,, IIBBSS SSeeccuurriittiieess

18

20406080

100120140160180

020406080100120140160180

02007 2008 2009 H1 2010

Tran

sact

ion

volu

me

Ave

rag

e d

eal v

alue

$m

Source: Capital IQ

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

lum

e

Ave

rag

e D

eal V

alue

($m

)

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

lum

e

Ave

rag

e D

eal V

alue

($m

)

Total deal volume

Average deal value $m

19

Engineering has strong roots in Japan

Japan prides itself on being known as a “mono tsukuri” or“making things” culture and from a wider perspective, theengineering industry in Japan covers a broad range ofsectors including automotive, machinery and electronics.Surprisingly, engineered products in Japan account foronly 11% of the country’s GDP, contrasting starkly withservices which contribute to more than 75%.

Driven by the strong Yen and shrinking market due to the declining population, companies in the sector havecontinued to expand abroad. Domestically, lower tiercompanies have been consolidating in an attempt tocounter the effects of the low cost competition fromabroad, especially Asia.

Mid-sized Japanese engineering firms, particularly incertain niche sectors such as small electric motors, have been active in acquiring businesses globally. Such companies include Minebea and Nidec, whoseacquisitions include Sole Motors, an Italian manufacturerof motors for household appliances.

Key sectors are transforming

There has already been significant consolidation in the Japanese automotive parts industry over the pasttwenty years. The Renault-Nissan alliance, which wasestablished in 1999, started a review of automotive partscompanies with several major mergers forming the firsttier supplier companies of Calsonic-Kansei and Jatco.Much of the current M&A in this sector is among secondand third tier suppliers, who are hoping to gain newbusiness and cut costs.

Outside of Japan, the component manufacturers tend to follow the assemblers in setting up new overseasproduction facilities, either acquiring local part makers orin most cases making greenfield investments. Total salesof the 82 member firms in the Japan Auto Parts IndustriesAssociation declined 17% in 2008 with operating profitdeclining 92%.

The heavy machinery industry, which includes companiessuch as Mitsubishi Heavy Industry (MHI) and KawasakiHeavy Industries have diversified into new areas such as aerospace, renewable energy technologies andtransportation systems, while divesting non-corebusinesses. In 2008, MHI sold its paper manufacturing machinery business to Metso of Finland, and in 2007 sold its turbo molecular pump business to Shimadzu Corp for $26m.

Predictions

Globalization is still the key for large Japaneseengineering groups. Those with significant surpluscash can be expected to be more aggressive inoutbound M&A in 2011

Mid-sized Japanese companies will seek newgrowth markets, especially in Asia and emergingmarkets

Consolidation will continue in the Japanesedomestic market amongst the second and third tiersuppliers, for a long as the strong yen places themat a cost disadvantage compared to foreigncompetitors

Date Target Description Acquirer Deal Value(US$m)

May-10 Marktec Testing CCH5 47 Corp equipment

May-10 RK Japan Automotive parts Kilang 10(Malaysia)

Apr-10 Hoya-Hard Hard disk Western Digital 233 Disk Media manufacturing (USA)

Feb-10 EXCEL Inc Solar batteries Ishi Hyoki 19

Dec-10 Nikko Electric Automotive parts Ningbo 13Yunsheng (China)

Nov-09 Sony Mfg Measuring Mori Seiki 66Systems instruments

Nov-09 Panasonic Electric motors Minebea n/d

Oct-09 Sanyo Energy Batteries FDK Corp 70

Aug-09 Nippon Muki Filters and Daikin Industries 53equipment

Aug-09 EvatechCo LCD A-Power Energy 50manufacturing (China)

JapanRecent transactions

Some encouraging signs from the sector

There have been relatively few engineering transactions inSouth Africa in recent years if compared to other westerncountries with simular populations, such as the UK.Engineering firms have remained conservative in theirapproach toward M&A investment. The poor record ofeconomic stability over the last few years has not helpedand this has had a negative effect on concluding deals.

Improved liquidity and easier access to funding wassustained through H1 2010 and has led to a slight growthin M&A activity across all sectors if compared to H1 2009.Whilst the overall level is still low, we are seeing someencouraging signs for engineering in 2010, with a numberof smaller transactions having already been completed.Transactions have included Hudaco’s acquisition of Filter& Hose for $37m and Germany-based Becker MiningSystems acquisition of EMIS Sales, which are bothmining engineering deals.

Interest from overseas in SA

Since the start of 2007, more than a third of acquisitionshave involved foreign buyers. A significant proportion ofthese deals occurred in 2007, where almost two thirds ofthe companies were acquired by buyers from countriessuch as the US, UK and Germany.

This interest in South Africa is due to the opportunities forgrowth which it presents to those firms from developedcountries, which have already largely exhausted themarket in their home countries. Emerging markets on thewhole have seen higher levels of M&A in 2010, partly asthese countries have rebounded quicker post-recessionthan their developed market counterparts, giving rise togreater investor confidence.

Private equity participation low

Despite South Africa being home to a number of largeprivate equity firms, including Ethos Private Equity andPamodzi Investments, there have only been three privateequity transactions in the engineering sector over the lastthree years, all of which occurred in 2008. The largest ofthese deals was the $698m buyout of the major electricalengineering group Actom SA, by a consortium led by UKprivate equity firm Actis Capital. Although Actis are UKbased, they have been primarily focused on emergingmarket opportunities and have been investing in countriesincluding Brazil, Egypt, Malaysia and India.

‘Companies Act’ to facilitate M&A

The new South Africa Companies Act, which is due tocome into effect by the end of 2010, will alter the currentScheme of Arrangement clauses. These clauses are apopular method of implementing takeover transactionsthrough a court approval process, when 75% ofshareholder approval is reached.

Deal Focus

South AfricaCapital City: Pretoria (exec.) Population: 49,052,489

Area: 1,219,912 sq km Time zone: GMT +2

“Higher risk, capitalscarcity and investorcaution has led tosubdued M&A activity.

This scenario is forecast topersist through 2010 and post-recession trends suggest a shiftaway from an outward M&Afocus towards maintaining strong balance sheets”

Pieter Venter, Bridge Capital Advisors

20

123

654

789

0

20

40

80

120

100

140

0

60

2007 2008 2009 H1 2010

Tran

sact

ion

volu

me

Ave

rag

e d

eal v

alue

$m

Source: Mergermarket

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

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e

Ave

rag

e D

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alue

($m

)

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

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e

Ave

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e D

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($m

)

Total deal volume

Average deal value $m

M&A activity

21

Under the new act, court approval will only be required inlimited instances thus simplifying the approval processand making takeover transactions much easier tocomplete where there are no objections. This changeshould promote increased deal flow in all sectors, despite increasing the personal liability of the directors.

Economic conditions remain subdued

A slow-down in engineering activity post-World Cup isexpected in H2 of 2010, although to some extent theeffects have been mitigated by the recent interest ratecuts (to a 30-year low) alongside improved consumerfundamentals. Additionally, easing inflationary pressureshave reduced debt servicing costs.

The general decline in economic activity shows signs ofhaving bottomed out now, although it is expected thatprivate sector investment will remained slightly depressedfor the next 12 months.

Government infrastructure spending is key

The resumption in government infrastructure spend willcontinue to remain a key factor for the South Africanengineering industry. Reduced industrial and miningactivity; limited private sector commercial investment;delays to the Eskom power program; delays anddisruption to the Gautrain Project; trading conditions in the steel reinforcing sector; as well as the ongoingstrength in the SA Rand and higher costs of financinghave all impacted on the industry and intensifiedcompetition.

Opportunities will in all likelihood emanate from publicinfrastructure contracts, private and renewable powerprojects and concessions as well as recovery intraditional mining, real estate and civil works markets.

Predictions

Based on historical trends, the engineering sector is likely to maintain relatively low levels of M&Aactivity given the limited number of players

M&A activity is however expected to gain sometraction in 2011, as companies which have built upstrong balance sheets and cash flows start to targetacquisitive growth companies in niche sectors

Growth in public sector infrastructure spending anda recovery in the traditional mining and real estatemarkets will help the engineering sector as a whole

Date Target Description Acquirer Deal Value(US$m)

Jun-10 Filter & Hose Mining machinery Hudaco 37

Apr-10 Braybar Pumps Pumps Kirloskar Brothers 2(Netherlands)

Mar-10 Wegezi Power Transformers and Invicta n/d switch gear

Mar-10 Cryoshield Cryogenic process PSV Holdings n/dequipment

Feb-10 Emis Sales Electrical mining Becker Mining n/d2002 equipment Systems (Germany)

Dec-09 Phoenix Power Wire and cable General Cable n/dCables manufacturer (US)

Aug-08 ACTOM Power generation Actis Capital (UK) 698parts and Old Mutual

Mar-08 Aard Mining Mining machinery Nedbank Capital / 16Equipment Matasis Investment

Jan-08 Astore Specialised pipe Hudaco 16fittings

Dec-07 CH Warman Slurry pumps The Weir Group 233Pump (UK)

Recent transactions

Overseas buyers active

M&A activity in the German engineering sector has notbeen immune to the effects of the global slowdown. The total transaction value peaked at $6.1bn in 2007before falling by 90% during 2008 and 2009 registeringjust $600m. Based on the first half of 2010, transactionvolumes are on track to be broadly similar to thoseachieved in 2009. Sentiment in the market suggests that the worst of the M&A malaise is over and that activity levels will begin to rise steadily from 2011onwards when the steadily increasing order intakes will begin to be reflected in the order books and P&Laccounts of engineering firms. This applies especiallyto those businesses operating in the machinery andequipment sector.

Since 2007 overseas buyers have been the major forcecompleting 40% of deals, with a third sold to privateequity buyers and the remainder sold to domesticacquirers. In gerneral, interest from abroad in the Germanengineering sector is not surprising given its worldwidereputation for high quality, innovative products and highlyefficient production processes. Over the last three years,global giants such as Honeywell, Moog and AkerSolutions have all made substantial acquisitions ofGerman engineering businesses. Private equity investorswere very active until Q4 2008, especially in the industrialmachinery and equipments sector on both the buy-sideand sell-side.

M&A in 2009

In 2009 there were only a few large transactions (reflectedby an average deal value of below $10m), also theexpected wave of distressed sales did not materialise asdomestic banks decided to hold their engineering assetsthrough the downturn aided in part by the extension ofthe government’s short term allowance which assistsbusinesses with their personnel costs.

During the economic crisis there were many opportunitiesfor strategic M&A to consolidate specific niches and toposition businesses for the economic recovery. Forexample, the acquisition of Kiefel Extrusion by plasticprocessing equipment manufacturer Reifenhauser.

The acquisition of Kiefel improves Reifenhauser’s marketposition in a specific technical niche and the combinedbusiness will be able to leverage the ability to deliver afully integrated offering as the demand for capitalequipment recovers.

In the automotive sector a remarkable number of wellknown automotive suppliers went into administration or were acquired by private equity turnaround funds, for example the acquisition of TMD Friction by Pamplona Capital.

Deal Focus

GermanyCapital City: Berlin Population: 82,329,758

Area: 357,021 sq km Time zone: GMT +1

“German engineering firms are at the forefront ofinnovation, especially in theindustrial equipment and

machinery sub-sector. The effectof the sharp increase in orderintakes following the recession will feed through to the M&Amarket in 2011 seeing the returnof both international and domesticstrategic acquirers and privateequity investors”

Philipp von Hochberg, CH ReynoldsCorporate Finance

22

10

20

30

40

0

100

300

400

0

200

2007 2008 2009 H1 2010

Tran

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ion

volu

me

Ave

rag

e d

eal v

alue

$m

Source: Mergermarket, Capital IQ

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

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e D

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($m

)

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

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e D

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($m

)

Total deal volume

Average deal value $m

M&A activity

23

Growth from international markets

After a protracted decline in the German engineeringsector, there are now strong signs of life returning to themarket as 2010 order intakes are reported to be 30-60%higher than 2009. This is primarily driven by strong exportdemand for German engineered products. More than70% of capital goods produced by German companiesare exported to international markets and therefore thefuture growth path of the sector is intertwined with thehealth of the global economy. Growth in recent years hasbeen primarily driven by demand from emerging marketsin Asia, particularly China.

Industry structure

Beyond the dominant global engineering giants (e.g. Siemens, GEA, Robert Bosche and Voith) theGerman engineering market remains highly fragmented,consisting mainly of mid-sized family owned, highlyinnovative, niche players. These businesses are referredto as Mittelstand companies. Some of these businessesare hampered by succession issues and funding needswhich make them attractive targets for larger strategicacquirers of mid-markets orientated private equity firms.

However, we should also note that certain Mittelstandcompanies are now aggressively seeking internationalacquisition opportunities to strengthen their productportfolios on a global basis.

The backbone of GermanEngineering

The largest engineering sub-sector and backbone of the German economy is the industrial machinery andequipment sub-sector. The worldwide reputation of highquality, ‘made in Germany’ products is unparalleled.Industry players continue to invest in R&D to ensure theyare at the forefront of innovation, current areas of R&Dfocus include energy efficiency and further automationof industrial processes.

During the economic crisis, this sub-sector sufferedseverely from postponed and cancelled orders as clientsdelayed making significant capital investments in plantand machinery. However, as the economy emerges fromthe worst of the recession, for those buyers who havecome through with their balance sheets intact, strategicacquisitions are now back on the agenda and deals arebeing completed for example, the sale of AutomatikPlastics Machinery to Maag Pumps Systems and TIGAutomation’s acquisition of Wulff Energy Technologies.

Predictions

German engineering firms will be sought after byinternational acquirers for their technical know-howand high quality product portfolios

German Mittelstand engineering companies will look for domestic and international acquisitionopportunities to strengthen their product portfolios

M&A activity will increase in 2011 as the certainty ofrecovery increases buyer confidence and the upturnin valuations enables private equity to exit legacyengineering investments

Date Target Description Acquirer Deal Value(US$m)

Sep-10 BOA Group Automotive AEA Investors 120 components (USA)

Sep-10 Bowe Systec Mailroom systems Axentum Capital n/d(Switzerland)

Jul-10 STRACK & Phoenix Valves AXA Private Equity n/dArmaturen-Werke

Jul-10 Ilmvac GmbH Laboratory Gardner Denver n/dequipment (USA)

Jun-10 Automatik Pelletizing Maag Pumps 186Plastics Machinery equipment Systems (Switzerland)

Mar-10 Gautschi Casting machines Ebner (Austria) n/dEngineering

Jan-10 Dunkermotoren Precision motors Triton Partners 208

Dec-09 3S Industries AG Solar module Meyer & Burger 294equipment (Switzerland)

Aug-09 MASO and SINE Pumps Watson-Marlow 36Pump business (USA)

Aug-09 Kiefel Extrusion Film extrusion Reifenhauser GmbH n/dequipment & Co

Recent transactions

Cross border M&A remains key

M&A transaction volumes in the Italian engineering sectorfell in 2009 to almost half of the M&A boom years of 2007and 2008. The combination of the global recession andthe resulting cautiousness among large engineeringcorporates to engage in M&A as well as the stubbornlyhigh price expectations of private owners has contributedto the fall in volumes. The first half of 2010 has seenvolumes on track to achieve a similar level to 2009,however the average transaction value has reboundedstrongly to $66m, highlighting investor appetite for larger transactions.

Cross border M&A has historically been a significantfeature of the Italian engineering sector. In 2009 forexample, over half of businesses were sold to overseasbuyers. Italian businesses are attractive to internationalacquirers for their specialist expertise. Businessesrecently acquired by overseas buyers including Comem, a manufacturer of advanced transformer components byABB (Switzerland) and Turboden, a manufacturer of highefficiency turbo generators for clean energy production byPratt & Whitney (USA). Overseas M&A interest has alsobeen sparked by the opportunity to take advantage ofsemi-distressed transactions, particularly by USacquirers.

Private equity appetite for large deals

In November 2009 a consortium of investors, led by AresLife Sciences, backed the $340m secondary buy-out ofEsaote, a leading manufacturer of medical diagnosticequipment. The deal highlights the growing interest in the Italian medical equipment sector, specifically thediagnostic segment which has recently exhibited doubledigit growth rates as healthcare providers seek to reducelong term costs through early diagnosis and preventivetreatments.

In June 2010, Charme Investments acquired a majoritystake in Octo Telematics SpA, a provider of vehicletracking systems to the auto and auto insurance markets.The deal valued Octo at an enterprise value of $197m,representing a multiple of 5 times historic EBITDA. Therising cost of auto insurance in Italy and elsewhere inEurope is forcing consumers to look for ways to lowertheir premiums through vehicle tracking systems.

In the absence of engineering mega deals, Fiat’sacquisition of a 20% stake in US automotive groupChrysler, grabbed the headlines. The transaction was inline with Chrysler’s strategy to restructure as a conditionset by the US government for receiving $4bn in federalbailout funds. The deal gives Fiat an entrance to the USautomotive market following a 30 year absence and alsogives Chrysler the opportunity to leverage Fiat’senvironmentally friendly vehicle technologies in the US market.

Deal Focus

ItalyCapital City: Rome Population: 58,126,212

Area: 301,230 sq km Time zone: GMT +1

“We predict the M&Atrends which will dominatethe Italian engineeringsector over the next few

years are domestic consolidationamong small, family ownedbusinesses and inbound M&Afrom international buyers seekingworld-class, niche engineeringexpertise”

Piero Manaresi, Ethica Corporate Finance

24

20

10

40

30

60

70

50

80

0

20

60

70

50

80

0

10

40

30

2007 2008 2009 H1 2010

Tran

sact

ion

volu

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Ave

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eal v

alue

$m

Source: Mergermarket

201816

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100

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300400

500

600700800

14

2005 2006 2007 2008

Dea

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($m

)

201816

121086420 0

100

200

300400

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600700800

14

2005 2006 2007 2008

Dea

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rag

e D

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($m

)

Total deal volume

Average deal value $m

M&A activity

25

Family owned businesses dominatelandscape

The Italian engineering industry is dominated by small,family-owned niche businesses, a structure which issimilar to a number of Italy’s continental neighbours suchas Germany and Spain. The approach and ethos of thesefamily owned businesses has long been credited as aparticular strength of the industry, ensuring high productquality and inspiring loyalty among customers. However,as the engineering market increasingly operates on aglobal basis, this loyalty will be tested as larger players,with the ability to serve clients internationally, competeaggressively with ‘traditional’ Italian engineering firms. In response to aggressive price competition from the FarEast, Italian engineering businesses have specialised inproviding higher added-value engineering in order toretain a competitive advantage.

The sector accounts for c.40% of Italy’s total industrialproduction, with strength in the key sub-sectors ofindustrial, construction and automotive. The effects of the global recession on the construction market havesignificantly reduced orders books in the construction and industrial equipment segments. However, thosebusinesses operating in the medical and clean technology niches have faired better through acombination of robust investment levels, lowercompetition and higher profit margins.

Medical sub-sector growing

The Medical equipment engineering sub-sector hasgrown rapidly over the last five years, emerging as one of Italy’s new, world leading specialisms. The sector hasattracted over $2.5bn of M&A investment in the last fiveyears with 35 transactions, the majority of which werecompleted by overseas buyers acquiring state-of-the-arttechnology to sell into their domestic markets. Buyershave focused on the medical equipment and surgicaltools segments, the latter seeing landmark deals such as US firm Medtronic’s $434m acquisition of Invatec, amanufacturer of cardiovascular surgery equipment. In themedical sub-sector we expect to see continued M&Agiven the opportunity to acquire proven technologieswhich, in the long run, can be cheaper than developingthem through in-house R&D divisions.

Predictions

Overseas acquirers will continue to be attracted tothe niche expertise of Italian engineering businesses

Consolidation will increase among small to mediumsized engineering firms as they seek scale tocompete on an international basis

Domestic firms operating in lower marginengineering sub-sectors will diversify into highermargin sub-sectors through the acquisition ofmedical, clean technology and electronicsengineering businesses

Date Target Description Acquirer Deal Value(US$m)

Jul-10 Valbart Ball valves Flowserve (USA) 192

Jul-10 OMVL Fuelling systems for Westport Innovations 24gas-propelled cars (Canada)

Apr-10 Octo Telematics Telematic systems Charme Investments 118for cars Private Equity

Mar-10 Società Esplosivi Defence products Rheinmetall Defence n/dIndustriali (SEI) (Germany)

Jan-10 Invatec Cardiovascular Medtronic (USA) 434equipment

Nov-09 Esaote Medical Ares Life Sciences 403equipment

Oct-09 Sole Home appliance Nidec (Japan) 64motors

Jul-09 Fantuzzi Industries Cranes and lifting Terex (USA) 223(port equipment) equipment

Jul-09 Turboden Turbogenerators Pratt & Whitney n/d(USA)

Jan-09 Vertical Spa Steel pumps Franklin Electric n/d(USA)

Recent transactions

Restructuring pushes M&A volumes higher

Somewhat surprisingly, transaction volumes in the Dutchengineering sector peaked in 2009 during which 64 dealswere completed. Deeper analysis of the nature of thedeals shows that this pronounced peak in activity can be attributed to corporate restructuring programmeswhich led to the disposal of a number of non-coreengineering assets.

The trend for disposals appears to be dissipating during2010 as transaction volumes have slowed on a pro ratabasis to just a third of 2009 levels. Domestic buyerappetite remains low, as corporates who have completedrecent restructurings take stock before engaging inacquisitions to support their new, refocused strategy. The engineering M&A market is relatively inactive and islikely to remain so until businesses have clear visibility on earnings which will in turn give them confidence toacquire again.

US is a major investor

Overseas interest in the Dutch engineering sector isclearly evident from the statistic that over a third of allM&A has been completed by overseas acquirers. TheUSA has been the dominant international acquirercompleting 25% of all inbound cross-border M&A. US based buyers have also been the dominant acquirer in many of the countries analysed in this report. Afavourable exchange rate between the US Dollar and the Euro has enabled US acquirers to compete stronglyfor overseas assets.

Private equity attracted to Dutchindustrial markets

Over the period, the average transaction value has beenheavily skewed by two international mega-deals. The$1.5bn buy-out of Stork NV by UK based private equityinvestor Candover in 2007 and the acquisition ofNumonyx by US based Micron Technology in 2010.

The acquisition of semiconductor engineering companyNumonyx by Micron creates a global giant spanningseveral key semiconductor sub-sectors. The deal furtherstrengthens Micron’s market leading position in memorysemiconductors, provides increased global manufacturingscale and most importantly, gives access to Numonyx’scustomer base into which they can cross-sell a multi-chipoffering. The deal was structured as an all-stocktransaction which valued Numonyx at $1.3bn whichrepresented a historic Enterprise Value / EBITDA multipleof 6.3 times.

In the mid-market, European private equity house BencisCapital made two acquisitions in November 2009 as partof a buy-and-build strategy in the engineered buildingproducts segment. It acquired Daalderop Group and IthoGroup (now Tree House Group) in secondary buy-outtransactions from 3i and Rabo Private Equity respectively.Daalderop Group is a manufacturer of gas fired boilersand Itho Group provides ventilation and air conditioningsystems. Bencis followed these deals up with theacquisition of Smulders Groep.

Deal Focus Capital City: Amsterdam Population: 16,715,999

Area: 41,526 sq km Time zone: GMT +1

“As global leaders inhigher added-valueengineering, Dutchindustrial markets will

continue to attract the interest of international buyers”

Bart Jonkman, BlueMind Corporate Finance

26

The Netherlands

10

20

30

40

50

60

70

0

100

300

400

500

0

200

2007 2008 2009 H1 2010

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Source: Mergermarket

201816

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100

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300400

500

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14

2005 2006 2007 2008

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201816

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100

200

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14

2005 2006 2007 2008

Dea

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($m

)

Total deal volume

Average deal value $m

M&A activity

27

Focus on higher added-valueproducts

The Dutch engineering market is relatively small in thecontext of the global industry, valued at $39bn in 2009.The domestic industry has shrunk significantly over thepast 25 years as engineering businesses have chosen tomove production facilities to low-cost countries such asTurkey, India and China. As a result, those remainingbusinesses tend to focus on innovation, flexibility andknowledge-based production techniques to distinguishthemselves from larger foreign competitors.

Today, The Netherlands is a world class centre for high-added-value engineering which requires a highlyeducated and technical work force. This expertise andaccess to white-collar engineers is encouragingengineering businesses to relocate the most complexparts of their production process back to TheNetherlands. We expect the high added-value businessesto continue to be attractive acquisition targets for thelower margin, traditional engineered product groups whoare seeking new, higher margin growth markets.

Key sub-sectors

An example of a high added-value sub-sector in whichThe Netherlands is a leading international player iselectronics engineering. Dutch based companies such as Phillips and ASML, in conjunction with their domesticsupply chain partners, are at the forefront of productinnovation and development.

Other important sub-sectors include medical devices and food processing. Despite being a mature market, the medical devices sector is forecast to grow at 5.8%per annum over the coming two years. Growth isattributed to an increase in demand for healthcareservices following the introduction of new healthcareinsurance system in 2006.

Predictions

High added-value Dutch engineering groups will be the target of international acquirers

Private equity firms will continue to target distressedengineering groups for non-core disposals

M&A activity in the medical devices market willcontinue to grow with interest from trade and private equity acquirers

Date Target Description Acquirer Deal Value(US$m)

Apr-10 Hydrospex Heavy lifting Actuant (USA) 20 equipment

Feb-10 Numonyx Flash memory Micron Technology 1,270(USA)

Feb-10 NRF Heating and Banco Products 29cooling equipment (India)

Feb-10 Division of Stork Processing systems Nimbus n/dFood Systems food & dairy

Jan-10 Smulders Groep Steel constructions Bencis Capital n/dand wind turbines Partners

Nov-09 Tree House Air conditioning Bencis Capital n/dGroup unit manufacturer Partners

Nov-09 Princess Holding Electric household WMF AG 8appliances supplier (Germany)

Oct-09 Dutch Opthalmic Ophthalmic Friesland Bank n/dResearch Center products Investments

Jun-09 Ligtvoet Wheelchairs and Handicare (Norway) 37Products stair lifts

Mar-09 Vanderlande Baggage handling NPM Capital n/d Industries systems

Recent transactions

Abundant mid-market deals

Transaction volumes in the Polish engineering sector havebeen very low over the past three years. However, on apro-rata basis, transaction volumes in 2010 are forecastto be four times higher than those achieved in 2009. Thisgrowth in deal volume is being driven by a combinationstrategic international trade buyers and private equityinvestors who are focusing their attentions on the highgrowth markets of the Polish and Central and EasternEuropean (CEE) engineering sectors.

The average transaction value, when adjusted for onelarge transaction in 2009, has remained resolutely in the$30m to $40m range indicating that the sector is highlyactive for lower and mid-market deal opportunities.

Foreign buyers jump in

Two thirds of all transactions were sold to overseasbuyers highlighting the appetite for Polish engineeringassets. Furthermore, the average transaction value forcross border acquisitions was $70m, showing thatoverseas acquirers have a clear preference for acquiringlarger, more substantial operations in Poland to give thema significant market position from day one. The majorityof overseas bidders were from Western Europe, acquiringexposure to tangential geographic markets, examplesinclude UK based Caparo Group and Swedishengineering company ABB who have both recentlyacquired in Poland.

The largest transaction in the Polish engineering sectorover the last three years was the $360m public to privateacquisition of HTL-Strefa by private equity group EQT,completed in December 2009. HTL-Strefa is a worldleading developer and manufacture of blood samplingequipment. EQT paid an eye watering 22 times historicEBITDA for the business, showing their confidence inboth the growth prospects for the medical devices marketand HTL-Strefa’s position as a global leader in bloodsampling technology. EQT will provide both financial andmanagerial resource to assist the company in its nextstage of development which may include bolt-onacquisitions. Another notable transaction was the $44macquisition of Optopol, a supplier of advanced ophthalmicdiagnostic equipment, by Japanese technology firm Canon.

Mining equipment M&A activity

During recent years, there has been a clear trend forconsolidation among engineering businesses in the Polishmining equipment sector. Much of this M&A activity hasbeen led by Famur and Kopex who have completed anumber of small domestic transactions and also severaldeals in CEE countries. One notable transaction wasKopex’s acquisition of Ryfama for $22m. Ryfama extendsKopex’s product portfolio into the scraper conveyormarket and strengthens their ability to provide integratedsolutions in the European market.

Deal Focus

PolandCapital City: Warsaw Population: 38,482,919

Area: 312,679 sq km Time zone: GMT +1

“Private equity andinternational trade buyershave been cherry pickingniche Polish engineering

firms for the last 12 months. Weexpect M&A activity to focus onthe automotive and energy sub-sectors during 2011”

Piotr Olejniczak, IPOPEMA Securities

28

2

4

6

8

10

12

14

0

20

80

100

120

140

0

60

40

2007 2008 2009 H1 2010

Tran

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ion

volu

me

Ave

rag

e d

eal v

alue

$m

Source: Mergermarket,Capital IQ

201816

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100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

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($m

)

201816

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100

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300400

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600700800

14

2005 2006 2007 2008

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($m

)

Total deal volume

Average deal value $m

M&A activity

29

We expect to see major players such as Famur andKopex engage in outbound M&A as they seek exposureto the mining sector in high growth countries such asIndia and Vietnam. Given the nature of the equipment andmachinery, proximity to your client is a key considerationin the mining sector and one of the reasons whyacquisition, as opposed to organic start-up, is thepreferred route into new geographic markets.

Changing ownership structure

The engineering sector in Poland is vital to the health of the economy. Its expertise has been shaped by thecountry’s reliance on core industries of energy, miningand heavy equipment. The top five companies listed on the Warsaw stock exchange, measured by marketcapitalization, are all manufacturers of engineeredproducts.

The top five companies, also all happen to be formerlystate-owned companies that have been privatizedfollowing the overthrow of the communist government inPoland in 1989. The Government has retained significantstakes in a number of companies and we expect furtherdisposals over the coming year which will representunique opportunities for overseas acquirers to buy intolarge, stable Polish engineering businesses.

Power engineering catch up

The Polish power sector has suffered from decades ofunder investment, sector experts estimate than more than$35bn is needed to be spent over the next five years toupgrade plant and equipment in order to be able to meetPoland’s energy requirements for the next decade. Thishuge capital investment should benefit participantsacross the length of the supply chain from specialistniche suppliers to OEMs.

Despite the prominence of heavy industry, other sub-sectors have also grown significantly in recent years. Theboom in construction (both infrastructure and commercial)has rapidly increased demand for engineered buildingproducts including HVAC and communicationsequipment. Tier 1 and Tier 2 automotive suppliers havebenefited from a number of automotive assembly linesbeing relocated to Poland.

Predictions

Modernization of the Polish power sector will igniteM&A demand for Polish power engineering firms

Tier 1 and Tier 2 supplier to the automotive sectorwill be attractive acquisition targets for privateequity and international buyers

Polish engineering companies in the mining sector will engage in outbound M&A to access high growth markets

Date Target Description Acquirer Deal Value(US$m)

Jun-10 Maflow Polska Auto components Boryszew 21

Mar-10 Amica Wronki Consumer Samsung 71appliances (South Korea)

Mar-10 Zamet Industrial Pioma Industry 30equipment

Feb-10 Ryfama Mining equipment Kopex 22

Dec-09 Optopol Diagnostic Canon (Japan) 44Technology equipment

Aug-09 HTL-Strefa Blood sampling EQT Private Equity 360equipment

May-09 Fabryka Lin i Wires, ropes and Penta Investments 37Drutu Drumet staple bands

Feb-09 PZL Swidnik Helicopter Finmeccanica 78manufacturer (Italy)

Recent transactions

Recovery after economic crisis

The economic crisis has affected all of Russia’sindustries, including the engineering sector. The slump inproduction, rollback of investment programs and a plungein sales were the major signs of trouble within the sectorand have resulted in the recent low M&A activity levels.

Even with this softening, there have been some notabletransactions during 2009 and 2010. UK based TechnixMaritime Investment acquired a 90% stake inSpetsMontazhStroy, a Russian company specialising inhydraulic engineering, excavation and drilling equipment.The state-owned industrial corporation “Oboronprom”continued to acquire, providing evidence of itsconsolidation strategy in the Russian helicopter and aircraft engines market. As with many transactions in Russia, the considerations of these deals were not disclosed.

Growing domestic private equityinvestment

The number of private equity investments in theengineering sector increased in 2009 and H1 2010 toseven deals compared to only one in 2008. Gazprombankacquired an 85% stake in Forpost-Management, a Russiabased investment company of manufacturing service

equipment companies for the nuclear, oil and gas industry. There were also acquisitions of miningcompanies by Gazprombank Asset Management and ofVolgograd manufacturing assets by Russian FinancialCorporation.

Western private equity houses have not been active oflate in the engineering sector principally as sub-sectorssuch as aerospace, defence and power equipment areconsidered to be strategic industries by the RussianGovernment. There are therefore numerous barriers andrestrictions on foreign ownership of such businesses.

Need for innovation and increasedcapacity

The engineering sector is in great need of up-to-datemanufacturing equipment. At least 70% of the existingcapital assets are outdated. Domestic demand for newmetal-machining equipment is over 50,000 units annuallyand the Russian machine tool manufacturers meet lessthan 1% of this internal demand.

This is also true for other engineering sub-sectors such as power engineering, which meets only 30% of thedomestic demand. By 2015, the Russian railwayequipment market is estimated to have a shortfall of over 200,000 units of rolling stock.

Deal Focus

RussiaCapital City: Moscow Population: 140,041,247

Area: 17,075,200 sq km Time zone: GMT +3

“The engineering sector in Russia is affected bytwo forces: the need forinnovation and new

technology and the desire of theRussian authorities to gain controlover the strategically importantcompanies. The balance betweenthese two forces will govern thefuture development of M&Aactivity in this sector”

David Wolfe, Northstar Corporate Finance

30

24

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68

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0200400

1000

160014001200

1800

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600800

2007 2008 2009 H1 2010

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Source: Mergermarket

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2005 2006 2007 2008

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2005 2006 2007 2008

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Total deal volume

Average deal value $m

M&A activity

31

Power engineering is of strategicimportance

The Russian authorities have tried to gain influence in thepower engineering sector by buying (directly or indirectlythrough state owned enterprises) stakes in companies. In the nuclear sector, several companies wereconsolidated within OAO Atomenergomash, including the acquisition of the nuclear equipment manufacturerPetrozavodskmash, from Leonid Beluga, a privateinvestor, for an estimated consideration between $24m - $33m.

Along with the energy reform and the growing demand ofpower generation companies, the equipment producersare trying to modernize their production processes. Thisis being partly achieved through cooperation with foreigncompanies, for example Pratt & Whitney / Iskra andAlstom / Atomenergomash. The growing demand forpower equipment should stimulate M&A in this sectorwhich is likely to increase over the next year, initiated bydomestic industrial holdings along with some of the assetmanagement arms of Russian banks.

Automotive sector should strengthen

The Russian automobile market is expected to becomethe third largest in the world by 2012 after the US andChina. Given this backdrop there are signs that 2011could bring substantial M&A growth, with a number ofdeals already in the pipeline. Germany’s Daimler hasrecently expressed an interest in increasing its 10% stake in heavy trucks maker Kamaz.

Over the past six years, 24 Russian automotive assetshave changed hands for a total of over $2bn. The mostsignificant deal of this period was French manufacturerRenault’s acquisition of a 25% stake in AvtoVAZ, itsRussian counterpart for $1bn. This investment has proved problematic and in November 2009, the Russiangovernment and Renault announced a $1.7bn rescuepackage, with Renault contributing c.$369m.

While foreign corporates have seemingly taken a bullishview of the sector, the same cannot be said for financialinvestors. Just two private equity-related transactionshave occurred in this particular space since 2004.

Predictions

The level of M&A activity in the engineering sector is expected to grow, especially in the power, oil &gas and automotive sub-sectors

State owned holdings will continue to gain controlover the engineering equipment manufacturers in the strategically important engineering sub-sectors

Private equity activity in the engineering sector islikely to pick up over the second half of 2010 and2011, initiated by domestic private equity firms withsome of the state-backed Russian banks providingfunds for investment

Date Target Description Acquirer Deal Value(US$m)

Jul-10 Quartz Group Engineering in Inter RAO n/d energy sector UES ORD SH

May-10 OOO Ural Locomotive Siemens (Germany) n/d Locomotives manufacturer through JV

Mar-10 United Aircraft Aircraft Vnesheconombank 1,566 Corp manufacturer

Feb-10 Petrozavodskmash Nuclear Atomenergomash 46Corp equipment OJSC

Aug-09 Plants of Drilling Russian Financial n/dVolgograd equipment Corp (RFC)

Apr-09 SpetsMontazhStroy Hydraulic Technix Maritime n/d engineering Investment (UK)

Mar-09 Forpost- Heavy industrial Gazprombank n/d Management Zao machinery OJSC

Mar-09 Sibir Technik; Aircraft Alfa Group n/d S7 Engineering engineering Consortium

Jan-09 Aviadvigatel Aero-engines Oboronprom United n/dOJSC Industrial Corp

Recent transactions

Relatively subdued M&A activity

Deal activity in 2009 was depressed in terms of volumeand even more strikingly in terms of value. The first half of2010 has still experienced low activity levels, however theaverage deal size has markedly risen.

There have been a small number of more substantialtransactions this year, such as Nordic Capital’s acquisitionof Norwegian wheel-chair maker Handicare, aconsolidator in the assisted living products market, but in reality the interest for Nordic targets from local orinternational buyers has remained relatively subdued.

Interest from the East

In August, Geely, a young Chinese company (founded in2003) acquired Volvo from Ford for a total considerationof $1.8bn. Through this acquisition, Geely will gain aninternational, well-recognized brand as well as access tosophisticated technology and know-how. These are allimportant factors for the development of Geely tobecome a major player in its rapidly growing domesticauto market.

This deal is particularly attractive when we consider thatFord paid $6.5bn for Volvo 11 years ago. Geely clearlybenefited from Ford’s financial difficulties and theprecarious situation in the auto sector during the twoyears the deal was being discussed. Geely has already

announced plans to produce 300,000 Volvo cars in a newplant in China, and by 2015 it’s intention is to reach atotal output of 2 million cars under the Geely and Volvobrand names.

Export driven economies

The Nordic countries are small, open economies, andwhilst they were all hit hard at the beginning of thedownturn, they were amongst the first to rebound. Theregion is characterized by big international companieswith a high export share and global market presence.

Despite Norway not being part of the EU, the legalharmonization between the four Nordic countries hascome far, which naturally facilitates regional M&A.Norway’s strong economy was not as severely affectedby the recession partly due to its strength in the offshoreoil & gas sector.

In Sweden, the manufacturing and automotive sectorsdominate and although hit hard by the crisis, they haverecovered and business confidence is back.

In Denmark there are some increasingly strong export led businesses including Vestas Wind, which has grownstrongly on the back of increasing demand for their wind turbines.

In Finland, forestry, mineral extraction, heavy industrysuch as ship building and manufacturing all drive engineering demand. With industrial output soaring (up 14% yoy in June 2010) particularly boosted by gains in the forestry and paper sector, we expect astrengthening of the overall engineering sector.

Deal Focus

ScandinaviaCountries: Norway, Sweden, Denmark, Finland Population: 24,784,800

Area: 12,166,85 sq km Time zones: GMT +1 to +2

“We can clearly see thatthe dramatically improvedprofitability in the sectorhas enabled many

Scandinavian engineeringcompanies to renew their efforts in building internationalcompetitiveness through cross-border acquisitions. We expectthis behaviour to continue into the years ahead”

Hakan Persson, Experia Corporate Finance

32

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250

020

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120

140

160

02007 2008 2009 H1 2010

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Source: Capital IQ

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14

2005 2006 2007 2008

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2005 2006 2007 2008

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Total deal volume

Average deal value $m

M&A activity

33

Offshore industry rebounding

The growth in demand for energy, the perceived decline in new large scale hydrocarbon reserves and the race tosecure rights over existing sources are shaping the M&Alandscape of the global oil & gas industry.

The sharp increase in oil prices proved to be a significantdriver of engineering led M&A during 2007 and 2008within the Nordic region. As the price dropped from thepeak of $150 per barrel to the low of $35 so did the levelof M&A. Now that crude prices have recovered and arerising again, more transactions are being completed. Lastyear for example, US based FMC Technologies, a globalprovider of technology solutions for the energy industry,acquired Multi Phase Meters AS (MPM) for c.$45m inorder to secure new technologies for the growinginternational offshore sector.

Power shift in the automotive sector

Many automotive transactions in 2009 were as a result ofdistressed situations in the very difficult market conditionsthat prevailed in the wake of the financial crisis. Globally,the collapse of vehicle sales in the Western worldculminated in the restructuring of the whole industry, and to some extent, the balance in power shifted fromWest to East.

The two main Swedish automakers changed owners.SAAB was acquired by Dutch Spyker in a transaction thatwas finalized only days before the potential liquidation ofthe company by GM, and as previously mentionedChinese carmaker Geely picked up Volvo from Ford. Both these transactions were unusual to the extent thatthe buyers were both considerably smaller than thetargets, in financial terms.

In 2010, the operating environment is showing signs,primarily vehicle sales statistics, that the stress is easingand we have embarked on the path to recovery. Thispotential recovery presents an opportunity for industryplayers to deliver profitability and growth through acontinued restructuring of the industry map. In thisprocess, M&A will be one very important element.

Predictions

We will see growth in cross-border M&A activity for the engineering sector in the region. Nordiccompanies have had a faster recovery from theglobal economic downturn and will aim to growinternationally

Export sales will continue to grow rapidly which willmake the export-oriented Nordic companies moreattractive to foreign investments

Fundamentally low valuations will attract and favourcash-rich international strategic acquirers as theaccess to bank funding is still limited for localinvestors

Date Target Description Acquirer Deal Value(US$m)

Jun-10 Handicare Assisted living Nordic Capital n/d (Norway) products

Jun-10 Daros Piston Piston rings Federal-Mogul n/dRings (Sweden) Corp (USA)

Jun-10 Selantic Lifting equipment Actuant n/d (Norway) Corporation (USA)

May-10 Simrad Optronics Remote-controlled Rheinmetall 105(Norway) weapons (Germany)

Apr-10 Reological Research Malvern Instruments n/d(Sweden) instruments (UK)

Mar-10 Finnveden Connecting rods Mape (Italy) n/dPowertrain (Sweden)

Feb-10 Dantec Dynamics Measurement Nova Instruments 22 (Denmark) Systems (USA)

Jan-10 Carnitech Processing American Industrial n/d(Denmark) equipment Acquisition (USA)

Jan-10 Techno Skruv in Fasteners and Indutrade n/dVärnamo (Sweden) components

Sep-09 Multi Phase High performance FMC Technologies 45Meters (Norway) flowmeter (USA)

Recent transactions

Overseas buyers account for half of all deals

During the last 18 months, the number of engineeringdeals in Spain has decreased slightly in comparison withprevious years, as has the average deal value, althoughthis appears to have stabilised. Interestingly, there has notbeen one engineering mega-deal completed in Spainduring the last two years and the majority have beensmall or mid-market deals between $10m and $50m.

Whilst the number of cross border deals has alsodecreased slightly in absolute terms, as a proportion of overall M&A activity they continue to grow. In relativeterms cross border engineering deals now represent halfof all transactions compared to a third in 2007.

The US has been the most active individual country since 2007, completing 11 deals and investing mainly in industrial and energy related engineering companies. Other international corporate acquirers havepredominantly come from EU countries, especially the UK(7 deals) and Germany (10 deals). The rationale for thesebuyers in particular has tended to be to gain scale tocompete against US and Asian multi-nationals, and theyhave taken advantage of the relatively fragmented state of the Spanish engineering sector to buy mid-marketcompanies.

By contrast, the number of deals involving private equityfirms has decreased sharply since 2007 due to the lack ofcredit in the Spanish banking market.

Renewable energy centre ofexcellence

Spain has developed into one of the most progressivecountries with regards to renewable energy developmentand engineering as a consequence of targeted legislation.

A notable recent transaction in the sector was theacquisition of Isofoton by a consortium of Affirma, aSpanish energy engineering business and TopTec, a listed South Korean business specialising in photovoltaicproducts. Isofoton is one of Europe’s leadingmanufacturers of solar photovoltaics, the acquisition willallow Isofoton to expand its production capacity threefoldto 500 MW annually on the back of a strengthened groupbalance sheet.

Spanish firms are also increasingly looking to acquireoverseas. Gamesa, one of the world’s leading windturbine manufacturers is focused on internationalexpansion. They plan to triple their investment in Chinathrough to 2012 and develop their manufacturing centresto cement their position as one of the top five windturbine suppliers in that country. They have expressed an interest in growing through acquisition.

Deal Focus

Spain Capital City: Madrid Population: 46,745,807

Area: 504,782 sq km Time zone: GMT +1

“Spanish engineeringcompanies, especiallythose involved in theenergy and power

generation markets, will beobliged to grow, mainly overseas,in order to support their currentclient’s needs and the futuredevelopment of their markets”

Igor Gorostiaga, Norgestion

34

10

20

50

40

30

60

02040

100

160140120

180

0

6080

2007 2008 2009 H1 2010

Tran

sact

ion

volu

me

Ave

rag

e d

eal v

alue

$m

Source: Mergermarket

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

lum

e

Ave

rag

e D

eal V

alue

($m

)

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

lum

e

Ave

rag

e D

eal V

alue

($m

)

Total deal volume

Average deal value $m

M&A activity

35

Opportunities beyond Spain

Overseas expansion is however not limited to renewables.Automotive engineering has become very important aswell, since numerous OEM plants are now located inSpain. CIE Automotive, the Spanish Tier 1 automotivesupplier based in the north of Spain is presently lookingto invest in the US, South America and Russia. ITP, theaircraft-engine manufacturer has also shown interest ingrowing internationally as their recent acquisition ofAlstom Aerospace in the UK demonstrates.

Expect more M&A in powerequipment engineering

The engineering sector in Spain is very fragmented withover 17,000 companies and most of them small andmedium sized. Historically engineering development hasbeen prioritized towards the communication and powerdistribution industries. A large number of domesticcompanies were funded specifically to providetechnologies and services to the large power andcommunication corporates like Iberdrola or Telefonica.

A number of the medium and larger power equipmentcompanies (most of them still family owned) are nowcompeting on the world stage. These companies haverecognised the need to continue growing through(overseas) acquisitions in order to complete their productportfolios and reinforce their presence in key geographicalmarkets; mainly the US, India and Eastern Europe. Someof them have been very acquisitive during the lastdecade, so much so that they are now of a scale to be targets of the larger multinational corporations such as Areva, Siemens and Schneider.

Predictions

Spanish power equipment manufacturers will needto increase their presence overseas through crossborder acquisitions

There are a great number of small engineeringcompanies, mostly industrial and focused in highlyspecialized niche activities, which are willing toenter into a consolidation process

South America, US and India will be main targetregions for Spanish engineering companies in thecoming years

Date Target Description Acquirer Deal Value(US$m)

Jun-10 Isofoton Solar panels Affirma/TopTec 45 (Spain, South Korea)

Jun-10 Dytech ENSA Exhaust gas BorgWarner n/ddevices (USA)

Mar-10 SEMI Power distribution Rooftops of Spain 13equipment

Mar-10 M Torres Olvega Wind turbines El Sewedy Cables n/dIndustrial (Egypt)

Feb-10 Microeletronica Smart Cards American Banknote 13Espanola (Brazil)

Dec-09 Grupo Jema Electronic Irizar Sociedad 16 Equipment Cooperativa

Oct-09 Telde SL Energy projects Energia Pura 35

Oct-09 Hispano Coach Tata Motors n/d Carrocera bodyworks (India)

Sep-09 Grupo Simes Fastening Anclaje 7systems

Jul-09 Grupo Alcor Aerospace Alestis Aerospace 62(9 subsidiaries)

Recent transactions

M&A volumes and values on the rise

During the first half of 2010 over 60 transactions havebeen completed in the UK engineering sector, which on a pro-rata basis suggests volumes will be above 2009,which clearly represented a low point in the engineeringsector M&A cycle. As the global recovery hardens andtrading visibility improves, acquirers are gainingconfidence to acquire larger businesses and pay highervaluation multiples. We have seen a marked increase indeal flow across the sector this year and averagetransaction values have increased to $70m during the first half of 2010 from $50m in 2009.

Leverage buy-outs are back

The stand out deal of the year is the acquisition ofTomkins plc by a club of Canadian private equityinvestors including Onex Corp and Canada Pension PlanInvestment Board (CPPIB). The deal was funded withc.$3bn of debt financing and $2.2bn of equity. Tomkins is seen as one of the last of the great UK industrialconglomerates although in truth 93% of its products aremade outside of the UK and the US represents 52% of its end user markets.

Undoubtedly Tomkins will not be the last UK engineeringbusiness to be a target from North America – pricing isrelatively cheaper than similar US assets, there is moreliquidity in the US debt market at the moment givingNorth American private equity funds more fire power andmaking them more deliverable than their UK counter parts.

Interest from emerging markets

Notable other deals include acquisitions by businessesbased in the emerging markets of India and China. InMarch 2010 the Chinese firm Chongqing Machinery &Electric Co acquired Holroyd Precision, a manufacturer of precision tools for $30m. Chongqing stated that theacquisition was part of a strategic move to reinforce thecompany’s technical capabilities and gain access to theEuropean market. DavyMarkham, a manufacturer ofheavy and complex engineering components andassemblies was sold to Indian buyer Hindustan DorrOliver (HDO) in a $15m deal. HDO acquiredDavyMarkham to access their product expertise in the nuclear market, which they intend to sell back into the Indian power market.

An industry transformed

The UK engineering sector has transformed itself over the last two decades from a sector with turbulent labourrelations, a poor reputation for productivity and qualityand a lack of investment into one which is globallycompetitive and is maintaining its position as the sixthlargest in the world in terms of output.

Over this period, UK engineering has been shaken to itscore having had to eliminate low added value operationsand focus on what it is good at. The sector is now firmlyfocused on high added value niches, creating strong anddefendable intellectual property underpinned by highdesign-to-build capability.

Deal Focus

United KingdomCapital City: London Population: 61,113,205

Area: 244,820 sq km Time zone: GMT

“UK assets are looking likegood targets for those USacquirers who have comethrough the recession with

strong balance sheets. Theexchange rate helps make UKassets feel more affordablecompared to similar US assets”

Mark Humphries, Catalyst Corporate Finance

36

2040

140160

120100

8060

180

0

50

150

250

200

300

0

100

2007 2008 2009 H1 2010

Tran

sact

ion

volu

me

Ave

rag

e d

eal v

alue

$m

Source: Corpfin

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

lum

e

Ave

rag

e D

eal V

alue

($m

)

201816

121086420 0

100

200

300400

500

600700800

14

2005 2006 2007 2008

Dea

l Vo

lum

e

Ave

rag

e D

eal V

alue

($m

)

Total deal volume

Average deal value $m

M&A activity

37

Led by world class management teams, Britishengineering companies navigated the recession bydemonstrating their operational flexibility, strong positionin complex global value chains, ability to exploit newtechnologies and the value of investment in design,branding and R&D.

UK has comparative advantage

Over half of all M&A investment has been in engineeringsectors where the UK has established significantcomparative advantage; aerospace, oil & gas andautomotive. British success in these sectors has evolvedover decades, benefiting from the existence of homegrown world-class OEM multinationals, which sourcefrom clusters of local suppliers. Long term relationshipswith Rolls-Royce, BAE Systems and Shell amongst othershave helped British engineering firms gain advantage inproduct innovation.

Many overseas parties recognise these strengths andconsequently almost 75% of all funds invested in UKengineering over the last four years, through M&A or buy-outs, originated from overseas buyers. US companieshave been by far the most dominant acquirers spending£10bn on over 100 businesses. Similarly, the US hasattracted most UK acquisition investment over thedecades as British firms have sought to access a largeand relatively homogeneous market, especially inindustries such as defence and aerospace. It is howeverclear that firms need to shift some focus to emergingeconomies such as India or they will miss out on asignificant growth opportunity.

Expect more aerospace deals

The UK aerospace industry is second only to the US interms of market size and has attracted £4bn of M&Ainvestment since 2005. The long term outlook for theaviation industry is healthy. The strong relationships with OEMs and major Tier 1 suppliers such as Airbus,BAE Systems, GKN and Rolls-Royce should favour UK suppliers.

UK aerospace is at the forefront of innovation in engineand wing technology, as well as instrumentation andcomposite materials. Niche UK mid-market companieshold important positions across all stages of the supplychain and are attractive M&A targets for both trade andprivate equity buyers.

Predictions

M&A activity will continue to gravitate to the UKengineering sectors of comparative strengthincluding aerospace, oil & gas and automotive

US buyers will continue to dominate M&A inflowsinto the UK over the next decade. There isundoubtedly a pent up demand for M&A and theexchange rate is helping make UK assets feel more affordable

UK Engineering companies will feel compelled toaccess emerging growth markets such as Indianthrough JV’s and M&A

Date Target Description Acquirer Deal Value(US$m)

Jul-10 H&F Drilling Drilling equipment Atlas Copco n/d Supplies (Sweden)

Jun-10 Broady Flow Flow control Valvitalia (Italy) n/d Control systems

Jun-10 AIM Aviation Aerospace Lloyds n/d interiors Development Capital

Jun-10 Crompton Advanced Goodrich Corp n/d Technology Group composites (USA)

Apr-10 Guralp Systems Seismological Primary Capital 30instruments

Jun-10 Delta Plc Support Valmont 287 structures Industries (USA)

Mar-10 Holroyd Precision tools Chongqing 20Precision Machinery (China)

Mar-10 DavyMarkham Complex engineering Hindustan Dorr 10structures Oliver (India)

Feb-10 Gardner Group Aerospace BECAP Fund 67components

Feb-10 Minivator Assisted living Handicare 44 products (Norway)

United KingdomRecent transactions

Sector Review 2011

Contacts

38

Mergers Alliance is a group of award winningcorporate finance specialists focusing on middle-market M&A. The group comprises of 150 transactionprofessionals located in 25 offices around the world.So far in 2010 Mergers Alliance have completed over100 deals worldwide valued in excess of $4bn.

For further information on Mergers Alliance and its member firms, please contact Stas Michael,Mergers Alliance Business Manager:

Stas MichaelMergers Alliance+44 207 881 2990stasmichael@mergers-alliance.com

Internationalcorporate finance

Australia

Austria

Belgium

Brazil

Canada

China

Columbia

Denmark

Finland

France

Germany

India

Italy

Japan

Luxembourg

Mexico

The Netherlands

Norway

Poland

Russia

Singapore

South Africa

Sweden

Switzerland

Spain

Turkey

UK

USA

39

Brazil

Leonardo Antunes

BroadSpan Capital

+55 21 3873 8000

lantunes@brocap.com

Canada

Darren Williams

Solaris Capital Advisors

+1 416 214 1040

dwilliams@solariscapital.ca

Mexico

Luis Garcia

Sinergia Capital

+52 552 167 1810

lgarcia@sinergiacapital.com.mx

USA

Horacio Facca

Headwaters MB

+1 617 312 3420

hfacca@headwatersmb.com

Americas

IndiaSapna SethSinghi Advisors+91 226 634 6666sapna@singhi.com

JapanTetsuo YamazakiIBS Securities+81 3 5521 1251yamazaki.tesuo@ibs-sec.com

South AfricaPieter VenterBridge Capital Advisors+27 11 268 6231pventer@bridgecapital.co.za

TurkeyOzkan YavasalDaruma Corporate Finance+90 212 370 6060ozkan.yavasal@daruma.com.tr

Asia, Africa and Middle East

GermanyPhilipp von HochbergCH Reynolds Corporate Finance+49 699 740 3060p.hochberg@chrcf.com

RussiaDavid WolfeNorthstar Corporate Finance+7 495 937 5855david.wolfe@northstar-cf.ru

ItalyPiero ManaresiEthica Corporate Finance+39 029 288 0400piero.manaresi@ethicacf.com

SpainIgor GorostiagaNorgestion+34 944 352 311igorostiaga@norgestion.com

The NetherlandsBart JonkmanBlueMind Corporate Finance+31 736 238 774bart.jonkman@bluemind.nl

Scandinavia Hakan PerssonExperia Corporate Finance +46 831 8050 hakan.persson@experia.se

PolandPiotr Olejniczak IPOPEMA Securities+48 22 236 9200piotr.olejniczak@ipopema.pl

Europe

United KingdomMark Humphries Catalyst Corporate Finance+44 207 881 2960markhumphries@catalystcf.co.uk

40

Transactions

Sale ofRavin Cables

to Prysmian Cables

India / Italy

Sale ofTGE Gas

Engineeringto CIMC

UK / China

Sale ofGautschi

Engineeringto EBNER Group

Germany

Sale ofG&B Specialitiesto Wabtec Corp

Canada / USA

Advisor onRefinancing of

Aladdin Oil GasCompany

Norway / Russia

Acquisition byDunedin Capital

Partnersof WFEL

UK / USA

Acquisition byCIE Automotive

of Pintura

Spain / Mexico

Sale ofDennis Eagleto Ros Roca

UK / Spain

Sale ofKiefel Extrusionto Reifenhauser

Germany

Acquisition byGeveke

of CompAir

The Netherlands /Belgium

Sale ofBecorit

to Wabtec Corp

Germany / USA

Sale ofCoherent

Technologiesto Lockheed Martin

USA

Mergers Alliance engineering transactions

Sector Review 2011

www.mergers-alliance.com

Internationalcorporate finance

Australia

Austria

Belgium

Brazil

Canada

China

Columbia

Denmark

Finland

France

Germany

India

Italy

Japan

Luxembourg

Mexico

The Netherlands

Norway

Poland

Russia

Singapore

South Africa

Sweden

Switzerland

Spain

Turkey

UK

USA