Mid-­‐Market  M&A  Snapshot...  30th  September  2011      

  Overall  disclosed  mid-­‐market  deal  volume  in  the  

month  of  September  stood  at  1056 equating  to  US$46,733bn  (average  deal  value  US$44.26m).  

  The  figures  are  down  from  September  2010  when  

there  were  1228  deals  equating  to  US$59,964bn  (average  deal  US$56.83m).    

  The  majority  of  deals  took  place  in  the  financial  

services  and  consumer  sectors.    There  was  also  notable  activity  from  the  real  estate  industry  with  Hong  Kong  Based  Henderson  Land  Development  Co  involved  in  20  transactions  and  Blackstone  Real  Estate  also  participating  heavily.  

 Source:  Capital  IQ  

 Sector  Focus:  Practically  no  large  company  in  the  chemical  industry  has  missed  the  chance  to  use  the  economic  recovery  for  acquisitions.  During  the  global  crisis  the  market  players  were  more  or  less  focused  on  their  internal  issues:  cost  cutting  programs,  portfolio  and  capacity  optimization,  internal  restructuring,  repositioning  etc.  Mega  M&A  deals  did  not  take  long  to  materialise.  The  takeover  of  Cognis  GmbH  by  BASF  SE  in  June  2010  kicked  off  a  period  of  acquisitions  in  the  European  chemical  industry.  

  Since  then  a  number  of  prominent  deals  have  

followed.  In  summary,  the  second  half  of  2010  and  the  first  half  of  2011,  have  seen  M&A  activity  in  the  European  chemical  industry  fully  recover  and  reach  the  pre-­‐recession  levels  in  terms  of  company  valuation,  cumulated  deal  value  and  volume.  

 

Globalisation  of  activities  and  location  of  production  capacities  in  the  emerging  markets  along  with  acquisition  and  development  of  new  cutting-­‐edge  technologies  (for  instance  industrial  biotechnology)  will  be  in  the  focus  of  potential  investors.  In  these  segments  there  should  be  a  flurry  of  deals  and  it  is  also  likely  the  next  mega-­‐deals  will  be  observed  in  this  space.  

 Macro  Snapshot:    In  an  attempt  to  drive  down  long  term  interest  rates  the  US  Federal  Reserve  

US$400bn  of  long  Treasuries,  which  will  be  paid  for  by  selling  short-­‐dated  bonds.  The  outcome  will  be  increased  costs  for  short  term  borrowing.  Perversely,  this  will  likely  have  a  detrimental  effect  on  the  profit  margins  of  banks  which  will,  in  turn,  

   

We  do  not  rule  out  another  round  of  full-­‐on  QE  in  the  US  while  there  have  been  murmurings  of  an  additional  round  of  monetary  stimulus  in  the  UK  in  the  form  of  its  own  QE2.  This  will  have  an  adverse  effect  on  the  pucurrencies.  However,  a  lack  of  competition  will  keep  the  dollar  king  for  now,  although  expect  gold  to  rally  after  its  recent  spiral.  Elsewhere,  EU  senior  officials  are  to  discuss  proposals  for  a  fiscal  union  and  apportioned  responsibility  in  fiscal  indiscipline.      

   Word  from  the  ground  Our  local  experts  give  the  latest  M&A  indicators  from  their  respective  regions    

 Owen  Hultman,  General  Manager,  IBS  Yamaichi  Securities  Outbound  Japan  M&A  is  accelerating  as  the  JPY  reaches  new  highs  against  the  USD  and  EUR,  recently  reaching  JPY  102/EUR.  The  Japanese  automotive  brake  materials  

manufacturer,  Nisshinbo  announced  the  acquisition  of  European  brake  manufacturer  TMD  for  EUR  440m,  placing  Nisshinbo  in  the  top  position  globally  in  this  sector.  The  president  commented  that  the  strong  Yen  makes  the  current  environment  the  best  time  for  overseas  M&A  for  Japanese  companies.    Driven  by  shrinking  markets  from  the  declining  population  in  the  domestic  market,  consumer  products  groups  are  actively  looking  abroad  for  acquisitions  in  new  growth  markets,  especially  Asia.    Japanese  beverage  group  Asahi  Holdings  has  recently  made  large  acquisitions  in  New  Zealand/Australia  and  Malaysia  and  the  paper  diaper  and  personal  care  

Number of Transactions by SectorEnergy 57Materials 88Industrials 103Consumer Discretionary 116Consumer Staples 29Healthcare 47Financials 312Information Technology 79Telecommunication Services 3Utilities 18No Primary Industry Assigned 204Valuation SummaryTotal Deal Value($mm): 46,733.91Average Deal Value: 44.26

products  company  Unicharm  recently  acquired  a  major  diaper  manufacturer  in  Vietnam.  Unless  the  Euro  situation  creates  another  major  global  shock  that  reverberates  in  Japan,  we  expect  the  outbound  M&A  to  continue  over  the  mid-­‐term  as  high  cash  positions  at  Japanese  corporates  and  ready  access  to  capital  from  low  interest  rates  supports  this  trend.      

 Hakan  Persson,  Managing  Partner,  Experia  Corporate  Finance  Advisors  Before  the  last  financial  run  in  August  the  general  M&A  environment  in  Sweden  was  becoming    increasingly  bullish,  indeed  there  was  an  overhang  of  transactions;  lots  of  

buyers  with  lots  of  cash.  This  coupled  with  strengthening  fundamentals  of  the  Scandinavian  economies  meant  that  transaction  volumes  were  increasing.    Unfortunately,  the  recent  economic  blows  throughout  Europe  has  any  seen  the  gains  subsequently  fizzle  out.  Nonetheless,  two  areas  that  have  remained  unaffected  have  been  healthcare  and  cleantech,  ironically  thanks  to  two  contrasting  forces.  In  healthcare,  deregulation  has  encouraged  firms  to  expand  and  consolidate  while  in  cleantech  a  rise  in  government  support  mechanisms  have  incentivised  firms  to  invest  and  increase  their  M&A  efforts  to  carve  out  market  share.  We  expect  general  M&A  activity  to  return  to  its  peak  levels  once  the  international  unrest  finally  settles  down.          Looking  Ahead:  Mergers  Alliance  Deals  Review  Closed  deals  are  usually  a  good  indicator  of  future  activity.  The  business  services  sector  has  dominated  since  January  which  can  be  partly  attributed  to  increased  financing  and  balance  sheet  vitality.  Business  services  made  up  18%  of  total  deal  volume  followed  by  building  products  and  construction  which  made  up  16%.  Cleantech  and  industrials  were  not  far  behind  with  12%.          

 New  on  Opinions  

 

plight    The  recent  Bankia  IPO  and  Caja  de  Ahorro  del  Mediterraneo  (CAM)  intervention  by  the  Bank  of  Spain  have  been  the  latest  episodes  of  the  drama  played  by  the  Spanish  saving  banks  over  the  recent  months. Click  here  to  read  the  full  report. Reasons  to  remain  optimistic  about  the  industrial  technology  segment  despite  economic  uncertainty  The  US  economy  continues  to  send  conflicting  signals  and  recent  market  volatility  will  certainly  impact  the  psyche  of  investors  globally,  however,  I  remain  positive  in  my  outlook  for  M&A  in  the  industrial  technology  segment.  Click  here  to  read  the  full  report.      Mergers  Alliance  Transaction  Highlights        

Ethica  Corporate  Finance  has  advised  FinProject  in  the  acquisition  of  Foam  Creations,  a  Canada  based  company  active  in  the  injection  of  expanded  foam  plastic  products  for  various  industry  applications.    FinProject  is  an  integrated  group  active  in  PVC  compounds  manufacturing  and  PVC  

and  expanded  materials  molding.  Lead  was  Fausto  Rinallo   The  Bombay  Burmah  Trading  Corp  is  the  second  oldest  company  in  India  being  part  of  INR  35  billion  Wadia  Group,  a  reputed  Indian  business  house  with  interests  in  plantations,  foods,  textiles,  chemicals,  light  engineering  and  real  estate.  Bombay  Burmah,  Bombay  Dyeing  and  Britannia  are  

the  mastheads  of  the  group.  Lead  was  Vikas  Aggarwal                          

In  the  News Headwaters  MB  Announces  Merger  with  Source  Companies    

   Mergers  Alliance's  US  partner  firm  Headwaters  announced  that  it  has  merged  with  Source  Companies,  LLC,  which  was  founded  in  1982  to  provide  business  owning  families  and  family  offices  with  growth  strategy,  company  capitalisation.  Click  here  to  read  more.      Northstar  strengthens  natural  resources  and  energy  wing    

 

strengthen  across  the  board  with  the  appointment  of  Kirill  Dragun  as  a  partner.  Kirill  has  over  17  years  of  experience  in  the  finance  and  energy  segments.    He  has  served  on  the  Board  of  Directors  of  a  number  of  companies  in  Russia  and  internationally.  He  has  a  degree  in  applied  mathematics  from  the  Kazakh  State  University  and  an  MBA  from  the  Graduate  School  of  Business  of  Moscow  State  University  and  is  fluent  in  English.

Mark  Bond,  Chairman  and  Managing  Partner  of  Northstar  welcomed  Kirill  to  the  team  and  said  that  it  was  his  opinion  that  Kirill  would  "increase  the  depth  of  knowledge  within  the  company  in  the  key  area  of  natural  resources,  especially  oil  and  gas  and  add  an  increased  understanding  of  the  markets  of  the  former  Soviet  Union  due  to  his  significant  experience  in  the  areas  of  Kazakhstan  and  new  and  private  Russian  business".  

           

   Reuters:  Daruma  may  advise  5  acquisition  deals  by  end  of  year  

 

 Speaking  to  Reuters,  a  top  executive  from  Daruma,  Turkish  partner  for  Mergers  Alliance  says  a  European  pharmaceuticals  firm  is  interested  in  entering  the  Turkish  market.  A  top  manager  of  Daruma  Corporate  Finance,  an  Istanbul-­‐based  adviser  for  mergers  and  acquisitions,  said  five  large  partnerships  and  capital  finance  transactions  would  be  

automotive  and  construction  products  sector.    

strategic  generic  drugs  manufacturer  that  intends  to  make  a  partnership  by  acquiring  or  buying  major  shares  of  a  

rs  in  a  recent  interview.