Saudi M&A – Introduction

� Saudi Arabia continues to be the main target for investment in GCC.

� Deal value in Saudi Arabia was driven inbound acquisition of targets in 1H 2013.

� Main deals this year;

• The sale of 38% of Saudi’s Alessa Industries to Aseer Trading, Tourism & Manufacturing

Company for USD151m was one of the largest completed transaction.

• National Industrialization Company, via its Rowad National Plastic subsidiary, taking a 40

2

per cent interest in Clariant Masterbatches from Clariant International

• Etihad Etisalat, through Bayanat Al Oula for Network Services, acquiring a controlling

stake in Etihad Atheeb Telecommunication.

• Investcorp’s acquisition of a stake in Al Yusr Industrial Contracting Company.

• Saudi Basic Industries Corporation and The Mosaic Company’s acquisition of 40% stake

in the Saudi Arabian Mining Company at US$1bn.

• The data in this presentation is sourced from a var iety of public sources

KSA M&A Growth Drivers 1/3

Inbound investment

International players looking to establish a presence in growing Saudi market.

Outbound investment

Saudi businesses acquiring established platforms across borders in GCC and beyond for

regional expansion or product portfolio growth.

Increase in AUM

3

Large influx of Investment Bankers and Assets Managers Post 2008 has resulted in more

AUM than before as Investors are institutionalized.

Family investment houses

Prominent business families with excess free cash flow form core activities establishing

private investment platforms.

Lack of liquidity across regions

Business valuations are low in many regions as funding is scarce in those economies.

KSA M&A Growth Drivers 2/3

Mid-sized businesses

Owners of mid-sized family businesses with attractive growth prospects and strong

fundamentals are increasingly preparing these businesses for sale.

Private sector liquidity

Businesses and individuals that divested from overseas assets post 2008 started focusing

more on local structured deals.

4

Banking sector liquidity

Willingness of Saudi banks to provide funding for both onshore and cross border

acquisitions deals.

Regulation

CMA is evermore structured than before with a team of professionals dedicated to

facilitating M&A transactions. There are also many legal regulations and codes in place to

make transactions more transparent

KSA M&A Growth Drivers 3/3

SUKUK’s

Finance or refinance of acquisitions through sukuk is enabling large ticket size M&A deals

become a reality.

Awareness

Like, acceptance of Forward EBITDA based payment structures in Saudi M&A market.

Professional Advisory Services

5

Availability of well priced local and international deal advisory teams that speak local

language and provide world class services.

GCC Financial Institutions

Institutions like DIFC are facilitating cross border M&A activities to and from KSA. The are

also used to mitigate financial and legal risks.

Main reasons for M&A in KSA

Maximizing shareholders

value via aggressive

growth

Growth of existing product

lines

Achieving economies of

scales

Upstream or Downstream integration to

increase productivity and

6

growth

Product Diversification

Enhanced market share

Accessing complex and

difficult technologies

productivity and reduce costs

Why Saudi Arabia

A higher degree of political stability than many of its Gulf neighbors

Expanding economy, with excellent growth.

Robust regulatory climate.

Billions of dollar of government spending on social & other infrastructure projects

7

projects

World’s largest proven oil reserves.

Positive fundamentals like high oil prices and output

Sound liquidity & favorable interest rates

Growing Population

Real Revenue Growth outweighs transaction risk for buyers in KSA

M&A Activity: Number & Value of Announced Transactions

8

KSA M&A volume and value

100

136 16

0

141

101

206

100

193

138

150

200

250

9

100

24

37 39

8

23

101

13

100

31 31

88

48

15

30

94

73

30

0

50

100

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

Value Volume

KSA M&A Completion Tracker

166

166

204

161

169

250

238

137

199

185

221

174

176

164

124150

200

250

300

10

100

107

75

36

83

100

137

98

63

81

124

0

50

100

150

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

Value Volume

KSA Value of announced deals vs. value of completed deals

123

290 289

149181

150

200

250

300

350

11

10278

123

45

8452

78104 109

46

87 75 7254

92 79 84 86 90 91

0

50

100

150

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

Average value of announced deals (US$m)

Average value of completed deals (US$m)

Middle East Deals by volume and value

153

185

101

189212

244

283

202

146

103 110 109150

200

250

300

4,000

5,000

6,000

7,000

8,000

9,000

10,000

12

7,85

1

3,99

6

2,00

6

4,96

4

5,43

9

4,22

4

2,95

8

5,23

3

4,97

0

6,24

2

1,75

7

2,49

7

5,84

8

3,35

9

9,39

1

7,34

7

4,52

7

4,13

5

441

101 10378

94

66 7388

110 10990

62

0

50

100

0

1,000

2,000

3,000

4,000

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Aggregate deal value (mil USD) Number of deals

Middle East Deals by Type

824

109

112

3

1

2400

500

600

700

800

900

1000

13

13

512

223 191

10762

21

0

100

200

300

2009 2010 2012 2013

Minority stake Acquisition Institutional buy-out

Merger Management buy-out Management buy-in

Middle East Aggregate Deal Values by Major Sectors

Sector 2009 2010 2011 2012 2013 5 Yr total

Banks 11,877 8,119 6,379 6,833 4,626 37,834

Other services 1,579 2,865 1,360 10,354 370 16,528

Construction 1,465 1,061 3,087 377 1,875 7,865

Metals & metal products 104 1,293 203 3,956 - 5,556

Wholesale & retail trade 188 890 86 867 977 3,008

Transport 248 699 432 1,578 22 2,979

14

14

Transport 248 699 432 1,578 22 2,979

Food, beverages, tobacco 279 402 1,055 647 74 2,457

Education, Health 85 113 1,690 299 6 2,193

Machinery, equipment, furniture, recycling 486 561 668 23 157 1,895

Chemicals, rubber, plastics, non-metallic products 541 820 164 99 163 1,787

Primary Sector (agriculture, mining, etc.) 1,035 364 156 35 54 1,644

Insurance companies 235 504 21 95 698 1,553

Gas, Water, Electricity 521 564 96 158 - 1,339

Hotels & restaurants 126 81 25 484 69 785

What is driving GCC healthcare M&A

Industry Profile

• High profit High Growth Sector

Local Expansion Plans

• To support acute shortage of bed space.

Geographical Expansion Plans

• To acquire market share in other cities.

Ownership Hurdles

15

15

• Hospitals held by family groups or businessmen need private capital to expand.

Branding

• In KSA healthcare market the brand sells and cloning is on rise.

Consolidating

• To reduce over-capacity and excessive costs.

Management

• Continued acquisition of personnel and management to meet shortages.

Supporting

• Gap created in healthcare services not focused by government.

Major M&A Deals in the GCC Pharmaceutical Sector

Acquirer Acquirer’s Country Target CompanyTarget’s

CountryYear

Consideratio

n

(US$ million)

Acino Holding AG* Switzerland Cephalon Inc’s Middle East and African drug

business

Saudi Arabia 2011 80.0

National Technology Enterprises Co. and

others

Kuwait / Other countries Oxford Immunotec Ltd UK 2010 39.7

Saudi International Trading Company Saudi Arabia Al-Mawarid Trading Company Ltd. Saudi Arabia 2008 36.0

Ali Abdulwahab Sons and Company Kuwait Safwan Trading and Contracting Company Kuwait 2010 26.1

SPIMACO Saudi Arabia Eirgen Pharma Ltd. Ireland 2012 24.8

Saudi Venture Development Co. and others Saudi Arabia / Other

countries

Surface Logix Inc US 2009 15.0

SPIMACO Saudi Arabia CAD Middle East Pharmaceutical Industries Saudi Arabia 2011 10.9

Dallah Healthcare Holding Company Saudi Arabia Dawara Medical Factory Saudi Arabia 2013 10.1

16

16

Dallah Healthcare Holding Company Saudi Arabia Dawara Medical Factory Saudi Arabia 2013 10.1

National Technology Enterprises Co. and

others

Kuwait / Other countries MTM Laboratories AG Germany 2010 9.8

Ali Abdulwahab Sons and Company Kuwait Safwan Trading and Contracting Company Kuwait 2010 9.1

SPIMACO Saudi Arabia E-Pharma Morocco Morocco 2011 4.6

Tabuk Pharmaceutical Manufacturing

Company

Saudi Arabia Sigma-Tau Sudan Sudan 2010 4.5

Abraaj Group UAE Vine Pharmaceuticals Uganda 2013 N/A

National Bank of Kuwait Kuwait Bavet Turkey 2012 N/A

National Bank of Kuwait* Kuwait Dem Ilac San ve Tic AS Turkey 2012 N/A

Unnamed buyer India Globalpharma Company UAE 2008 N/A

Dubai Investments Industries UAE Globalpharma Company UAE 2008 N/A

Al-Mawarid Trading Company Ltd. Saudi Arabia Al Dawaa Medical Services Company Saudi Arabia 2008 N/A

Al Ritaj Holding Co. Kuwait National Pharmaceutical Industries Oman 2008 N/A

Public Pension Agency Saudi Arabia SPIMACO Saudi Arabia 2008 N/A