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DEAL DRIVERS AMERICASThe comprehensive review of mergers and acquisitions throughout the Americas.
2011
Published by:
Full year
edition
®
In association with:
Smarter • Faster • EasierSecure • Precise • Effi cientAward Winning • Global
Certifi ed • Industry Leading24/7/365 Service • Solutions
Smarter • Faster • EasierSmarter • Faster • EasierSmarter • Faster • EasierSmarter • Faster • EasierSecure • Precise • Effi cient
Smarter • Faster • EasierSecure • Precise • Effi cient
Smarter • Faster • EasierSecure • Precise • Effi cient
Secure • Precise • Effi cientSecure • Precise • Effi cientAward Winning • GlobalSecure • Precise • Effi cientAward Winning • GlobalSecure • Precise • Effi cientAward Winning • GlobalCertifi ed • Industry LeadingAward Winning • Global
24/7/365 Service • SolutionsAward Winning • Global
24/7/365 Service • SolutionsAward Winning • Global
Certifi ed • Industry Leading24/7/365 Service • Solutions
Certifi ed • Industry LeadingConfi dential • CompliantCertifi ed • Industry LeadingConfi dential • CompliantCertifi ed • Industry Leading24/7/365 Service • SolutionsBest Practices24/7/365 Service • Solutions
Focusedon yourbusiness
We thought of that.
datasite.com
Don’t you deserve a partner who is as focused on your business as you are?
Dealmakers know they need to be aggressive, determined and experienced to get the best results for their deal. As the best virtual data room (VDR) in the business, Merrill DataSite brings that same intense focus to our customers.
With true transparency in pricing, terms & conditions, award winning customer service, and the highest standard in security certifi cation, Merrill DataSite’s cutting-edge technology and 24-7 client support allows M&A dealmakers to move fast and play to win. Users can easily organize, review and share data for due diligence on a completely secure, simple-to-use datasite, accessible via the Internet globally. Merrill DataSite can have your VDR ready for loading in as little as two hours, with extensive content loaded and ready for review within 24 hours.
Merrill delivers unmatched customer service throughout the entire deal process so the only thing you need to focus on is your deal.
At Merrill DataSite, we believe in sharing ideas and best practices that assist companies in expanding and capturing new opportunities. Case Studies and White Papers are available based on Business Type (M&A, IPO, Bankruptcy, etc.) and for specifi c audiences: Legal Advisors – Investment Banking – Corporate Executive Level. To download our FREE industry survey reports please visit the Merrill DataSite Knowledge Center at www.datasite.com.
M E R R I L L D A T A S I T E
03
DEAL DRIVERS – AMERCIAS
About mergermArket
mergermarket is an independent M&A intelligence service that provides proprietary news on origination and deal flow opportunities, in addition to a comprehensive deals database. With an unrivalled network of 300+ M&A journalists based in 65 locations worldwide, mergermarket is the only comprehensive tool that offers active intelligence on potential transactions, and historical data to analyze past deals, providing 360-degree view of the global M&A landscape. mergermarket is part of The Mergermarket Group, a division of the Financial Times Group. Visit www.mergermarket.com.
contents
Foreword 04
Heat Chart 05
All Sectors 06
Financial Services 14
Industrials, Manufacturing & Engineering 18
Energy, Mining, Oil & Gas 22
Consumer 26
Technology, Media & Telecom 30
Life Sciences & Healthcare 34
Canada 38
West 42
Midwest 46
South 50
Mid-Atlantic 54
New England 58
Latin America 62
About Merrill Corporation 66
About Merrill Datasite® 67
Merrill Corporation Contacts 68
Notes 69
Smarter • Faster • EasierSecure • Precise • Effi cientAward Winning • Global
Certifi ed • Industry Leading24/7/365 Service • Solutions
Smarter • Faster • EasierSmarter • Faster • EasierSmarter • Faster • EasierSmarter • Faster • EasierSecure • Precise • Effi cient
Smarter • Faster • EasierSecure • Precise • Effi cient
Smarter • Faster • EasierSecure • Precise • Effi cient
Secure • Precise • Effi cientSecure • Precise • Effi cientAward Winning • GlobalSecure • Precise • Effi cientAward Winning • GlobalSecure • Precise • Effi cientAward Winning • GlobalCertifi ed • Industry LeadingAward Winning • Global
24/7/365 Service • SolutionsAward Winning • Global
24/7/365 Service • SolutionsAward Winning • Global
Certifi ed • Industry Leading24/7/365 Service • Solutions
Certifi ed • Industry LeadingConfi dential • CompliantCertifi ed • Industry LeadingConfi dential • CompliantCertifi ed • Industry Leading24/7/365 Service • SolutionsBest Practices24/7/365 Service • Solutions
Focusedon yourbusiness
We thought of that.
datasite.com
Don’t you deserve a partner who is as focused on your business as you are?
Dealmakers know they need to be aggressive, determined and experienced to get the best results for their deal. As the best virtual data room (VDR) in the business, Merrill DataSite brings that same intense focus to our customers.
With true transparency in pricing, terms & conditions, award winning customer service, and the highest standard in security certifi cation, Merrill DataSite’s cutting-edge technology and 24-7 client support allows M&A dealmakers to move fast and play to win. Users can easily organize, review and share data for due diligence on a completely secure, simple-to-use datasite, accessible via the Internet globally. Merrill DataSite can have your VDR ready for loading in as little as two hours, with extensive content loaded and ready for review within 24 hours.
Merrill delivers unmatched customer service throughout the entire deal process so the only thing you need to focus on is your deal.
At Merrill DataSite, we believe in sharing ideas and best practices that assist companies in expanding and capturing new opportunities. Case Studies and White Papers are available based on Business Type (M&A, IPO, Bankruptcy, etc.) and for specifi c audiences: Legal Advisors – Investment Banking – Corporate Executive Level. To download our FREE industry survey reports please visit the Merrill DataSite Knowledge Center at www.datasite.com.
M E R R I L L D A T A S I T E
DEAL DRIVERS – AMERCIAS
04
foreword
Welcome to the 2011 full-year edition of Deal Drivers Americas, published by mergermarket in association with Merrill DataSite. This report provides a comprehensive review of M&A activity in the Americas region, with targeted analysis of regional and sector-specific trends.
The 2010 comeback of M&A deal volume persisted in 2011 with just under 4,000 deals. However, deal values shifted to an increase in bulge bracket deals as total reported value for 2011 surpassed US$901.6bn. Private equity firms kept busy completing 729 buyouts and 659 exits worth a reported US$121bn and US$100bn, respectively.
A moderate slowdown in deal volume can be attributed to a slight decline in the North American M&A market. Uncertain domestic economic conditions supplemented with looming crises across the Atlantic caused many dealmakers to balk at pushing transactions through. While value and volume in 2011 is comparable to 2010 numbers, any momentum that carried over was seemingly lost in the second half. Figures had fallen to 906 deals worth US$199bn by Q4 2011, the lowest quarterly totals for 2011 and 14% and 28% decreases to first quarter volume and value, respectively.
Dealmakers in Latin America fared better in 2011 despite the global uncertainty. Deal volume increased in the region up to 618 in 2011, 26% over the previous year. Led by the consolidation of many smaller family-owned businesses, the most significant increase is seen in deals falling under US$100m, while bulge bracket deals took a small dip leading to an overall slight decrease in total reported deal value.Latin American M&A appears set for growth in the year ahead by strength in the energy, financial services and consumer sectors. Throughout financial services in Latin America, consolidation of small to mid-sized banks is expected to increase as the Basel III requirements begin to be implemented across the world’s major
institutions. Brazil’s middle class continues to expand bringing strong growth to the consumer sector. The energy sector, a familiar backbone for the region, is likely to remain active with recent booms in Colombia and Peru. Private equity transactions may see a setback in 2012 due to difficulty in securing acquisition financing. Intraregional and transcontinental cross-border deals with Latin America are both expected to see solid growth.
In keeping the market steady, the energy, industrials and TMT sectors led the Americas in M&A activity. Indeed, each sector is found among the top industries in value and volume throughout the region. Momentum is expected to carry over in 2012 with natural gas prices remaining low (and crude oil high) and growth in specialty manufacturing and technology. Private equity will further drive M&A deals in these sectors with heavy interest in energy.
The consumer sector showed strength in Latin America with 18% of total volume and 14% of total value. With rapidly growing middle class populations and increasing economic growth, the sector trend will likely continue throughout 2012. In the US, personal care and food companies have become targets for foreign buyers. Major US players within the food industry have also stated intentions for cross-border expansion in foreign emerging markets.
The year ahead in M&A dealmaking brings mixed feelings with North America weary and Latin America hopeful. All eyes will be fixed on Europe, but some maintain confidence in the growth of emerging markets and the strength of historically robust sectors like energy. Private equity firms will be challenged amidst changing regulation and dry Latin American capital markets. At a minimum, 2012 will prove to be full of headlining deals in a highly competitive market while answering many lingering questions regarding the state of the global economy.
05
DEAL DRIVERS – AMERICA
the heAt chArt
The Heat Chart represents ‘companies for sale’ stories written in H2 2011, based on mergermarket’s proprietary intelligence. The Heat Chart therefore serves as a barometer of potential deal flow in specific regions and sectors across North America.
‘Companies for sale’ stories written in the second half of 2011 total 5,200, suggesting M&A could heat up across the board. TMT once again tops the chart with 1,004 stories. The energy, mining, oil & gas sector comes in a close second with the large majority of stories once again concentrated in the West and Canada.
The financial services sector has fallen to the middle rankings with 454 stories after placing much higher in the half-year edition with 550 stories. Effectively taking its former spot, business services stories increased by roughly a quarter to 492 ranking just below the four typical mainstay industry sectors.
South West Latin America Midwest Mid-Atlantic Canada New England Total
TMT 189 356 106 67 158 53 75 1,004
Energy, Mining, Oil & Gas 212 136 146 52 40 295 21 902
Life Sciences & Healthcare 186 152 23 116 108 17 85 687
Industrials, Chemicals & Engineering 101 96 89 136 53 43 46 564
Business Services 166 112 55 57 54 23 25 492
Consumer 68 106 106 71 66 40 27 484
Financial Services 142 82 70 52 75 17 16 454
Leisure 51 45 50 35 17 7 10 215
Transportation 25 16 61 14 10 12 8 146
Construction 15 8 40 7 1 9 0 80
Real Estate 10 14 14 13 8 10 1 70
Defense 22 10 1 7 8 1 5 54
Government 17 4 1 1 3 1 27
Agriculture 0 3 9 0 0 5 0 17
Other 0 0 4 0 0 0 4
totAL 1,204 1,140 775 628 601 532 320 5,200
NOrTH AMErICA HEAT CHArT - INTELLIGENCE
hot warm cold
99th* 66th 33rd
88th 55th 22nd
77th 44th 11th
*percentile ranking
The intelligence Heat Chart is based on ‘Companies for Sale’ tracked by mergermarket in North America between 07/01/2011 and 12/31/2011.
Opportunities are captured according to the dominant geography and sector of the potential target company. For definition of states within
regions, see page 69 (Note to Heat Chart).
Note: mergermarket’s Heat Chart of predicted deal flow is based on the intelligence collected in our database relating to companies rumoured
to be up for sale, or officially up for sale in the Americas region. It is therefore indicative of areas that are likely to be active in the months to
come. The intelligence comes from a range of sources, including press reports, company statements and our own team of journalists gathering
proprietary intelligence from M&A practitioners across the region. The data does not differentiate between small and large transactions, nor
between deals that could happen in the short or long-term.
DEAL DRIVERS – AMERICAS -ALL SECTORS
06ALL SECTOrS
ALL sectors
North American M&A decline to continue well into this year as the global economic recovery progresses at a staggeringly slow pace
The M&A market in North America has gone through a whirlwind of a year as many deals were delayed or came to a screeching halt due to uncertainty over the health of the overall global economy.
The economic recovery is progressing similarly to the incredibly slow pace seen after The Great Depression of the 1930’s, which only rebounded with the breakout of World War II.
The US has seen a particularly severe budget crisis this year, which culminated in the country losing its prized top-tier AAA credit rating from Standard & Poor’s in August, following the congressional standoff in Washington over raising the debt ceiling. The 2012 presidential election is quickly approaching, unemployment numbers are still high and the European sovereign debt crisis looms.
The latest US GDP numbers were disappointing and show the slowness of the economic recovery. The US Department of Commerce said that GDP increased at an annual growth rate of 2.8% in Q4 2011 compared to 1.8% in Q3 2011. Although GDP growth showed a notable increase compared to the previous quarter, economists had been anticipating an increase of about 3.1%.
M&A does not exist in a bubble, as there is a direct correlation between M&A levels and the state of the economy. With the recovery progressing at such a slow clip, I anticipate that the decreased levels of deal making seen over the past six months will be seen again well into 2012.
Deal makers typically try to complete their transactions by year-end, which has historically resulted in a flood of deals announced in the fourth quarter. The lack of an increase in M&A activity in North America by value from Q3 2011 to Q4 2011 is cause for concern as it is a strong indicator of the diminished appetite for deal making.
According to mergermarket data, by value there was a 4.3% decline in North American M&A transactions from US$207.8bn in Q3 2011 to US$198.9bn in Q4 2011. By comparison, there were US$173.6bn worth of deals in Q3 10 and that figured rose to US$267.5bn in Q4 10, a 54.1% increase.
Similar to 2010, the M&A landscape in 2011 was once again dominated by strategic players, who remained at the forefront of M&A as buyers were flush with cash and the capital markets were open. In turn, private equity firms seized the opportunity to sell companies in their portfolios that they were unable to unload due to the depressed market. North American exits by private equity firms increased to 659 deals in 2011 from 628 deals the prior year, according to mergermarket data. “There is quite a lot of interest from private equity firms, but we are seeing them wanting to do deals that are smaller and not the US$10bn-US$15bn deals we saw in the past. Deal size is not as big as it was in 2007 as leverage levels are slightly different, but private equity firms have a lot of dry powder to spend,” said David Fox, a partner at Kirkland & Ellis in New York.
North American buyouts rose slightly to US$120.5bn worth of transactions in 2011 from US$105bn the prior year. However, these figures pale in comparison when viewed against the M&A heyday of 2007 when the total value of buyouts was US$441.1bn, according to mergermarket data.
By sector and volume, the highest level of activity was in technology, media and telecommunications (TMT), with 18.8% of all deals in North America; industrials, chemicals and engineering came in at a close second with 17.5%; business services 13%; life sciences and healthcare 11.5%; financial services 10%; energy, mining, oil and gas 9.9%; and consumer 9.5%.
In the telecommunications space, the AT&T/T-Mobile US$39bn deal, which was quashed by regulators, will probably lead to more thoroughness and concern about
anti-trust issues before entering into an agreement, Fox said. “The people that signed that agreement were not expecting that outcome,” he said.
Life sciences and shale oil also saw quite a bit of activity this year, Fox said, highlighting Gilead Sciences acquiring Pharmasset in November in a US$10.4bn deal and BHP picking up Petrohawk Energy in July in a transaction valued at US$14.8bn.
Analyzing deals by sector and value for the full year, energy, mining, oil and gas topped the charts at 32%, with US$288.5bn of deals; industrials, chemicals and engineering was second at 16.1% with US$145.3bn; life sciences and healthcare had 13.6% of the pie with US$122.7bn; TMT had 12.8% with US$115.8bn; and financial services rounded out the top sectors with 8.3% of deals totaling US$75.1bn.
In the energy space, low natural gas prices, the high price of crude oil and weak electricity prices will continue to spur activity this year. That said, Jeffrey Meyers, Chair of Stroock’s energy and project finance practice, does not expect to see a great deal of corporate transactions in 2012. “It is going to be a very perilous year especially given all of the politics and uncertain energy policy,” he said. “People might want to wait to see how it shakes out after the presidential election.”
While the overall all-sector outlook is bleak, companies strengthened their balance sheets and stockpiled cash following the financial crisis of 2008, placing them in much better financial health this time around. As a result of their preparations, companies should look at M&A to help achieve growth targets.
M&A has and will always remain a viable tool that companies can use to execute on growth strategies. The million dollar question now is whether they will have the stomach to pull the trigger. Based on a combination of historical data, instinct and experience, the resounding answer is maybe.
by Amanda Levin, Editor of the Americas
07
DEAL DRIVERS – AMERICAS - ALL SECTORS
ALL sectorsTOp 20 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
20-Mar-11 L AT&T Inc T-Mobile USA Inc TMT Deutsche Telekom AG 39,000
16-Oct-11 P Kinder Morgan Inc El Paso Corporation Energy, Mining, Oil & Gas 37,439
21-Jul-11 P Express Scripts Inc Medco Health Solutions Inc Life Sciences & Healthcare 33,430
10-Jan-11 P Duke Energy Corporation Progress Energy Inc Energy, Mining, Oil & Gas 25,825
27-Apr-11 P Johnson & Johnson Synthes GmbH Life Sciences & Healthcare 21,191
21-Sep-11 P United Technologies Corporation Goodrich Corporation Industrials, Chemicals & Engineering 17,861
31-Jan-11 C AMB Property Corporation ProLogis Real Estate 14,833
18-Jan-11 C Cargill Inc (Shareholders) The Mosaic Company (40% Stake) Industrials, Chemicals & Engineering Cargill Incorporated 14,808
14-Jul-11 C BHP Billiton Ltd Petrohawk Energy Corporation Energy, Mining, Oil & Gas 14,760
13-Jan-11 C Marathon Oil Corporation (Shareholders) Marathon Petroleum Corporation Energy, Mining, Oil & Gas Marathon Oil Corporation 14,667
02-May-11 L The Nasdaq OMX Group Inc; and Inter-continental Exchange Inc
NYSE Euronext Financial Services 13,182
15-Feb-11 P Deutsche Boerse AG NYSE Euronext Financial Services 12,267
28-Apr-11 P Exelon Corporation Constellation Energy Group Inc Energy, Mining, Oil & Gas 10,410
21-Nov-11 C Gilead Sciences Inc Pharmasset Inc Life Sciences & Healthcare 10,367
01-Mar-11 C Blackstone Group LP Centro Properties Group (US operations) Real Estate CNPR Limited 9,400
14-Mar-11 C Berkshire Hathaway Inc The Lubrizol Corporation Industrials, Chemicals & Engineering 9,368
10-May-11 P Microsoft Corporation Skype Global Sarl TMT Silver Lake Partners; Cana-da Pension Plan Investment Board; ebay International AG; Andreessen Horowitz; and Joltid Limited
9,044
16-Jun-11 P Energy Transfer Equity LP Southern Union Company Energy, Mining, Oil & Gas 9,037
16-Jun-11 P Capital One Financial Corporation ING Direct USA Financial Services ING Groep NV 9,000
15-Aug-11 P Google Inc Motorola Mobility Holdings Inc TMT 8,950
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - ALL SECTORS
08
ALL sectorsMIx OF GLObAL M&A DEALS bY GEOGrApHIC rEGION
VALUE VOLUME
uSA
Canada
Western Europe
Northern Europe
Central & Eastern Europe
Southern Europe
Asia-pacific
rest of World
37.3%
8.1%
19.1%
6.2%
5.2%
3.0%
17.6%
3.5%
27.7%
7.7%
19.3%
6.3%
5.1%
5.7% 25.2%
3.6%
MIx OF NOrTH AMErICAN DEALS bY INDuSTrY SECTOr
VALUE VOLUME
16.1%
8.3%
5.3%
4.4%0.4%
13.6%
0.5%1.9%
12.8%
32.0%
3.8%
0.7%
0.2%
17.5%
10.0%
13.0%
2.6%
11.5%
1.7%
3.1%
18.8%
9.9% 9.5%
0.6%
0.6%0.9% Industrials, Manufacturing & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Defense
Agriculture
Based on announced deals, excluding those that lapsed or were withdrawn. Geographic region is determined with reference to the dominant location of the target.
Based on announced deals, excluding those that lapsed or were withdrawn. Geographic region is determined with reference to the dominant location of the target.
09
DEAL DRIVERS – AMERICAS - ALL SECTORS
ALL sectorsNOrTH AMErICAN buYOuTS NOrTH AMErICAN ExITS
VALUE VOLUME
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
201120102009200820072006200520040
100
200
300
400
500
600
700
800
900
1,000
1,100
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
201120102009200820072006200520040
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
Valu
e (U
S$m
)
Year Ended Year Ended
Valu
e (U
S$m
)Volum
e
Volume
VolumeValue (US$m)
TrANSATLANTIC DEALS
Year Ended
VALUE VOLUME
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
25
50
75
100
125
150
175
200
225
250
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q2 08
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Year Ended
Volu
me
Based on announced deals, excluding those that lapsed or were withdrawn. where the dominant location of the target is in North America.
Based on dominant location of target and bidder and excludes all buyouts.
Total Euro/Nth American deals
Nth American bidder acq European target
European bidder acq North American target
DEAL DRIVERS – AMERICAS - ALL SECTORS
10
ALL sectorsNOrTH AMErICAN M&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
20112010200920082007200620056.4 6.2 5.7 4.4 3.6 3.5 3.2
885.7
76.769.463.2
678.1
61.454.1
649.6
73.458.6
627.8725.0
77.460.1
1,314.2
97.176.364.9
1,274.7
99.978.962.6
27.638.5
44.7
41.2
35.1 35.9
0
1,000
2,000
3,000
4,000
5,000
6,000
2011201020092008200720062005
420217302
716
1,429
1,441
217
1,001
475
326171
1,926
392
677
246163
1,507
372
311211
838
358
1,910
374223298
1,991
376
819
403270
669
1,477
475
1,815
481
485
1,419
281
2,014
634
119
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
VALUE VOLUME
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
Q411
Q311
Q2 11
Q1 11
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q4 07
Q3 07
Q207
Q107
Q406
Q306
Q206
Q1 06
Q405
Q305
Q2 05
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in North America.
11
DEAL DRIVERS – AMERICAS - ALL SECTORS
ALL sectorsFINANCIAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Goldman Sachs 352,040 190
3 2 JPMorgan 321,171 145
1 3 Morgan Stanley 270,210 150
6 4 Barclays Capital 253,659 112
4 5 Credit Suisse 230,203 111
5 6 Bank of America Merrill Lynch 221,598 146
7 7 Citigroup 187,544 108
10 8 Lazard 164,773 88
9 9 UBS Investment Bank 129,344 109
8 10 Deutsche Bank 113,465 84
12 11 Evercore Partners 92,873 49
14 12 RBC Capital Markets 60,394 103
15 13 Jefferies & Company 53,581 104
46 14 Qatalyst Group 40,177 20
13 15 Perella Weinberg Partners 37,672 16
29 16 Moelis & Company 35,694 42
21 17 BMO Capital Markets 35,296 44
65 18 Foros 34,828 5
20 19 Centerview Partners 34,753 11
22 20 Scotia Capital 30,353 20
H1 2010
H1 2011
Company Name Value (M) USD
Number of Deals
1 1 Goldman Sachs 352,040 190
2 2 Morgan Stanley 270,210 150
4 3 Bank of America Merrill Lynch 221,598 146
5 4 JPMorgan 321,171 145
7 5 Barclays Capital 253,659 112
3 6 Credit Suisse 230,203 111
6 7 UBS Investment Bank 129,344 109
13 8 Citigroup 187,544 108
12 9 Jefferies & Company 53,581 104
10 10 RBC Capital Markets 60,394 103
8 11 Lazard 164,773 88
9 12 Deutsche Bank 113,465 84
11 13 Houlihan Lokey 20,389 80
14 14 Rothschild 28,520 64
22 15 Lincoln International 4,872 58
26 16 Robert W. Baird & Co 5,172 57
30 17 Raymond James & Associates 6,545 52
16 18 KPMG 5,067 51
28 19 Evercore Partners 92,873 49
24 20 William Blair & Company 3,784 47
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
3 1 Sullivan & Cromwell 324,761 100
1 2 Simpson Thacher & Bartlett 284,782 129
9 3 Wachtell, Lipton, Rosen & Katz 278,326 64
2 4 Skadden Arps Slate Meagher & Flom 239,347 154
4 5 Latham & Watkins 219,095 218
14 6 Dewey & LeBoeuf 211,804 108
12 7 Cravath Swaine & Moore 203,404 54
13 8 Shearman & Sterling 175,716 96
5 9 Cleary Gottlieb Steen & Hamilton 157,736 72
8 10 Weil Gotshal & Manges 145,748 109
16 11 Jones Day 111,453 208
6 12 Davis Polk & Wardwell 109,804 94
17 13 Fried Frank Harris Shriver & Jacobson 108,804 54
21 14 Gibson Dunn & Crutcher 104,405 86
20 15 Linklaters 102,179 55
11 16 Freshfields Bruckhaus Deringer 85,640 74
19 17 Vinson & Elkins 84,159 69
28 18 Kirkland & Ellis 82,699 233
7 19 Blake, Cassels & Graydon 79,999 91
35 20 Greenberg Traurig 78,054 66
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Kirkland & Ellis 82,699 233
1 2 Latham & Watkins 219,095 218
2 3 Jones Day 111,453 208
4 4 DLA Piper 31,240 174
5 5 Skadden Arps Slate Meagher & Flom 239,347 154
6 6 Simpson Thacher & Bartlett 284,782 129
8 7 Weil Gotshal & Manges 145,748 109
18 8 Dewey & LeBoeuf 211,804 108
7 9 Sullivan & Cromwell 324,761 100
21 10 Wilson Sonsini Goodrich & Rosati 25,021 100
13 11 Hogan Lovells 43,126 99
17 12 Shearman & Sterling 175,716 96
22 13 Davis Polk & Wardwell 109,804 94
11 14 K&L Gates 8,143 93
9 15 Blake, Cassels & Graydon 79,999 91
15 16 Stikeman Elliott 46,706 89
10 17 Baker & McKenzie 44,908 89
28 18 Goodwin Procter 9,684 88
12 19 Gibson Dunn & Crutcher 104,405 86
16 20 Morgan Lewis & Bockius 48,370 79
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover all sectors.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover all sectors.
DEAL DRIVERS – AMERICAS - ALL SECTORS
12
ALL sectorsFINANCIAL ADVISOrS – MID-MArkET (uS$10M-uS$250M)
LEGAL ADVISOrS – MID-MArkET (uS$10M-uS$250M)
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
3 1 Goldman Sachs 4,839 31
2 2 Jefferies & Company 4,180 31
1 3 Morgan Stanley 4,120 26
9 4 Bank of America Merrill Lynch 4,022 28
18 5 JPMorgan 3,543 22
8 6 UBS Investment Bank 3,523 28
5 7 RBC Capital Markets 3,277 30
16 8 Citigroup 2,814 17
15 9 Deutsche Bank 2,647 20
43 10 Lincoln International 2,476 22
41 11 Robert W. Baird & Co 2,345 22
10 12 Rothschild 2,246 19
6 13 Credit Suisse 2,106 17
7 14 Lazard 2,000 14
13 15 Macquarie Group 1,939 15
22 16 William Blair & Company 1,920 20
4 17 Houlihan Lokey 1,915 23
19 18 Raymond James & Associates 1,912 24
21 19 Barclays Capital 1,877 15
23 20 National Bank Financial 1,852 17
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
6 1 Goldman Sachs 4,839 31
3 2 Jefferies & Company 4,180 31
4 3 RBC Capital Markets 3,277 30
9 4 Bank of America Merrill Lynch 4,022 28
7 5 UBS Investment Bank 3,523 28
2 6 Morgan Stanley 4,120 26
16 7 Raymond James & Associates 1,912 24
1 8 Houlihan Lokey 1,915 23
24 9 JPMorgan 3,543 22
41 10 Lincoln International 2,476 22
37 11 Robert W. Baird & Co 2,345 22
12 12 Sandler O'Neill & Partners 1,476 21
23 13 Deutsche Bank 2,647 20
20 14 William Blair & Company 1,920 20
10 15 Rothschild 2,246 19
17 16 Canaccord Genuity 1,290 18
29 17 Citigroup 2,814 17
8 18 Credit Suisse 2,106 17
19 19 National Bank Financial 1,852 17
39 20 Morgan Keegan & Company 1,451 16
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Kirkland & Ellis 7,550 66
2 2 Latham & Watkins 5,666 69
5 3 Jones Day 5,189 57
7 4 DLA Piper 4,307 60
6 5 Wilson Sonsini Goodrich & Rosati 4,256 52
21 6 Hogan Lovells 4,038 34
3 7 Skadden Arps Slate Meagher & Flom 3,725 32
10 8 Stikeman Elliott 3,548 38
13 9 Dewey & LeBoeuf 3,428 31
4 10 Weil Gotshal & Manges 3,403 27
9 11 Blake, Cassels & Graydon 3,219 29
30 12 Davis Polk & Wardwell 3,109 23
8 13 Simpson Thacher & Bartlett 3,086 28
22 14 Baker & McKenzie 3,084 28
33 15 McDermott Will & Emery 2,911 28
26 16 Cooley 2,801 31
25 17 Clifford Chance 2,741 23
28 18 Ropes & Gray 2,663 20
43 19 Goodwin Procter 2,612 29
14 20 Shearman & Sterling 2,592 20
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Latham & Watkins 5,666 69
1 2 Kirkland & Ellis 7,550 66
2 3 DLA Piper 4,307 60
4 4 Jones Day 5,189 57
5 5 Wilson Sonsini Goodrich & Rosati 4,256 52
10 6 Stikeman Elliott 3,548 38
7 7 Hogan Lovells 4,038 34
39 8 McCarthy Tetrault 2,518 34
6 9 Skadden Arps Slate Meagher & Flom 3,725 32
19 10 Dewey & LeBoeuf 3,428 31
25 11 Cooley 2,801 31
48 12 WilmerHale 2,360 30
9 13 Blake, Cassels & Graydon 3,219 29
20 14 Goodwin Procter 2,612 29
16 15 Simpson Thacher & Bartlett 3,086 28
11 16 Baker & McKenzie 3,084 28
38 17 McDermott Will & Emery 2,911 28
21 18 K&L Gates 1,953 28
8 19 Weil Gotshal & Manges 3,403 27
22 20 Paul Hastings 2,549 26
The financial advisor mid-market eague tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover all sectors.
The legal advisor mid-market league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, and include lapsed and withdrawn deals.The tables are based on advice to a North American bidder, target or vendor and cover all sectors.
13
DEAL DRIVERS – AMERICAS - ALL SECTORS
ALL sectorspr ADVISOrS
pr ADVISOrS – MID-MArkET (uS$10M-uS$250M)
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Brunswick Group 173,041 77
1 2 Joele Frank Wilkinson Brimmer Katcher 156,593 87
4 3 Sard Verbinnen & Co 149,932 87
5 4 Abernathy MacGregor Group (AMO) 131,683 75
2 5 Kekst and Company (Publicis Groupe) 104,345 103
6 6 FTI Consulting 59,554 83
7 7 Finsbury Group 36,160 40
16 8 Cubitt Jacobs & Prosek Communications 17,266 13
61 9 Hinton & Associates 17,223 3
13 10 Citigate 15,854 29
20 11 Pelham Bell Pottinger 15,616 19
11 12 Edelman 14,995 23
10 13 Kreab Gavin Anderson 13,046 5
15 14 CNC 10,955 10
- 15 P&L Corporate Communications 10,189 3
36 16 M:Communications 10,010 15
12 17 Maitland (AMO) 9,714 17
45 18 Ketchum 8,263 4
- 19= Public Strategies 8,156 1
- 19= Qorvis Communications 8,156 1
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Kekst and Company (Publicis Groupe) 104,345 103
3 2 Joele Frank Wilkinson Brimmer Katcher 156,593 87
6 3 Sard Verbinnen & Co 149,932 87
4 4 FTI Consulting 59,554 83
5 5 Brunswick Group 173,041 77
2 6 Abernathy MacGregor Group (AMO) 131,683 75
7 7 Finsbury Group 36,160 40
8 8 Owen Blicksilver Public Relations 5,849 32
9 9 Citigate 15,854 29
12 10 Integrated Corporate Relations 1,777 27
52 11 BackBay Communications 1,757 26
10 12 Edelman 14,995 23
23 13 Pelham Bell Pottinger 15,616 19
29 14 MHP Communications 2,794 19
38 15 Blueshirt Group 1,688 19
14 16 Stanton Public Relations & Marketing 2,246 18
13 17 Maitland (AMO) 9,714 17
36 18 M:Communications 10,010 15
11 19 Cubitt Jacobs & Prosek Communications 17,266 13
33 20 Tulchan Communications 7,910 12
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
5 1 Kekst and Company (Publicis Groupe) 3,161 26
1 2 FTI Consulting 3,102 33
2 3 Joele Frank Wilkinson Brimmer Katcher 2,761 18
4 4 Sard Verbinnen & Co 2,756 22
7 5 Finsbury Group 1,403 14
6 6 Abernathy MacGregor Group (AMO) 1,263 15
3 7 Brunswick Group 1,133 14
85 8 MHP Communications 1,024 15
180 9 Blueshirt Group 866 13
11 10 Integrated Corporate Relations 614 17
17 11 Maitland (AMO) 605 9
140 12 CNC 604 3
29 13 Pelham Bell Pottinger 554 7
10 14 Cubitt Jacobs & Prosek Communications 553 5
8 15 Citigate 518 8
49 16 Hering Schuppener Consulting (AMO) 483 4
12 17 Owen Blicksilver Public Relations 477 5
90 18 Fleishman-Hillard 466 4
13 19 Buchanan Communications 435 7
32 20 Merlin PR 426 4
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 FTI Consulting 3,102 33
5 2 Kekst and Company (Publicis Groupe) 3,161 26
3 3 Sard Verbinnen & Co 2,756 22
2 4 Joele Frank Wilkinson Brimmer Katcher 2,761 18
8 5 Integrated Corporate Relations 614 17
4 6 Abernathy MacGregor Group (AMO) 1,263 15
24 7 MHP Communications 1,024 15
9 8 Finsbury Group 1,403 14
6 9 Brunswick Group 1,133 14
180 10 Blueshirt Group 866 13
15 11 Maitland (AMO) 605 9
16 12 The Equicom Group 283 9
7 13 Citigate 518 8
21 14 Pelham Bell Pottinger 554 7
17 15 Buchanan Communications 435 7
10 16 Edelman 331 6
25 17 College Hill 288 6
65 18 Liolios Group 171 6
12 19 Cubitt Jacobs & Prosek Communications 553 5
13 20 Owen Blicksilver Public Relations 477 5
The PR advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and exclude lapsed and withdrawn deals.The tables are based on advice to a North American bidder, target or vendor and cover all sectors.
The PR advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and exclude lapsed and withdrawn deals.The tables are based on advice to a North American bidder, target or vendor and cover all sectors.
DEAL DRIVERS – AMERICAS - FINANCIAL SERVICES
14 FINANCIAL SErVICES
finAnciAL services
M&A activity could heat up across financial services as buyer confidence increases
BankingBanks looking for expansion, as FDIC deals wane, are likely 2012 deal makers, potentially bringing M&A deal flow back to vibrancy after an anemic 2011, experts predict.
Fewer distressed banks on the fringe of failure and which have overall cleaner bank balance sheets, could lead to more deals, said Tim O’Brien, an analyst at Sandler O’Neill. Banks spent 2011 addressing their balance sheets and that could help lead to more stable valuations, thus possibly leading to more deals, O’Brien explained.
Private banks, particularly those with US$500m to US$1bn, may have more exit options and thus could be relatively more active in 2012, said Ebrahim Poonawalak, an analyst at Morgan Keegan. Deal momentum could gain steam in the second half of 2012, if stock and real estate valuations hold steady, Poonawala said.
Regulatory changes, particularly the effects of the Durbin Amendment and Dodd-Frank, are presenting profit challenges for smaller banks and this will likely lead to an overall increase in smaller bank mergers, predicted Gerald Lipkin, CEO of Valley National Bank, a Wayne, New Jersey-based bank with US$14bn in assets.
Donald J. Musso, president and CEO of Liberty Corner, New Jersey-based FinPro, sees regulatory challenges as double-edged for 2012 M&A. “I think a lot of the M&A hype is wishful thinking,” Musso said, adding, “on the one hand” if such changes lead to a stronger banking system, with better multiples, that would lend itself to better currency to make transactions. That one in five US banking institutions have a formal or informal regulatory agreement, is a challenge for banking M&A, Musso added.
Pricing of deals remains an issue, O’Brien said, noting though that more substantial deals closed on the east coast last year, and yielded larger premiums than deals on the
west coast, a trend which he said could be expected to continue into 2012.
Banks such as Paso Robles, California-based Heritage Oaks Bancorp and San Jose, California-based Heritage Commerce, are the types of banks that could see 2012 acquisition attention, due to their cleaned-up balance sheets and their approximately US$1bn asset size.
InsuranceDivestitures of units by strategic players and private equity firms exiting their insurance investments will drive 2012 sector M&A, two industry sources said.
Facing organic growth challenges, companies of all sizes will look for ways to deploy excess capital, one of the sources said.
Small-to mid-sized companies in the US are the most challenged to grow, the second source said, adding that that factor, combined with less access to capital markets, will bring increasing pressure on those companies to sell. Valuation improvements from an expected rising stock market, will also render such companies more attractive to shareholders, both sources said.
The insurance brokerage space will continue to attract capital and M&A attention, the first source said.
Cross-border M&A in the insurance sector could be blunted by impending Solvency II regulation, which will increase the amount of capital required to be kept in European operations, the first source said.
Unit divestitures, such as Flagstone’s divestiture of its Lloyds and Island Heritage operations, should be a significant M&A force, said the second source. The insurance brokerage space will continue to attract capital, he added. In addition, private equity firms will look to do something to enhance the value of their portfolio companies that haven’t yet gone public or been sold, the second source said.
Financial Services TechnologyThe payments interest is poised for a potential 2012 “shake-up” in M&A, as major non-financial players seek entry into the space, said Kurt Strawhecker, a consultant with Omaha, Nebraska-based Strawhecker Group. The recent hiring of Yahoo! CEO Scott Thompson, a former Paypal president, could indicate the search engine might enter the payments space.
There are a number of companies in the space that are weighing their options or looking to be sold, Strawhecker said.
Wealth ManagementAs buyer interest and confidence continue to increase, deal activity is expected to be hotter this year than last, especially in the independent wealth management space, said Lenny Chang, a partner at New York City-based wealth manager Focus Financial. Companies that experienced volatility over the past few years will begin considering exit opportunities. Another wealth asset manager, Elizabeth Bloomer Nesvold, a managing partner at New York City-based Silver Lane, agreed with Chang’s relatively bullish assessment. “There are a number of sizable transactions in the works, which include both strategic and financial buyers,” Nesvold said, adding “there are also a select number of non-US buyers active in our space, which is also a good sign – especially in light of Europe’s woes over the last few quarters.”
by Jennifer Tekneci and Jessica McHugh
15
DEAL DRIVERS – AMERICAS - FINANCIAL SERVICES
finAnciAL servicesTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Vendor Company Deal Value (US$m)
02-May-11 L The Nasdaq OMX Group, Inc; and Intercontinen-tal Exchange Inc
NYSE Euronext 13,182
15-Feb-11 P Deutsche Boerse AG NYSE Euronext 12,267
16-Jun-11 P Capital One Financial Corporation ING Direct USA ING Groep NV 9,000
29-Aug-11 P Temasek Holdings Pte Ltd; CITIC Securities Co Ltd; National Council for Social Security Fund; and State Administration of Foreign Exchange
China Construction Bank Corporation (5.44% Stake) Bank of America Corporation 8,288
14-Nov-11 P Temasek Holdings Pte Ltd; and China Invest-ment Corporation
China Construction Bank Corporation (4.14% Stake) Bank of America Corporation 6,600
25-Jul-11 L Validus Holdings Ltd Transatlantic Holdings Inc 4,123
16-Dec-11 P United Rentals Inc RSC Holdings Inc Oak Hill Capital Partners LP 4,120
09-Feb-11 L London Stock Exchange Plc TMX Group Inc 3,795
25-May-11 P Maple Group Acquisition Corporation TMX Group Inc 3,730
21-Nov-11 P Alleghany Corporation Transatlantic Holdings Inc 3,686
20-Jun-11 P The PNC Financial Services Group Inc RBC Bank (USA) Royal Bank of Canada 3,450
13-Jun-11 L Allied World Assurance Company Holdings AG Transatlantic Holdings Inc 3,192
22-Nov-11 P IPIC Group Ltd Bank of America Corporation (4.93% Stake) 3,000
21-Dec-11 P Tokio Marine Holdings Inc Delphi Financial Group Inc 2,791
31-May-11 P Intact Financial Corporation AXA Canada Inc AXA SA 2,665
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - FINANCIAL SERVICES
16
finAnciAL servicesM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
20112010200920082007200620050.5 0.5 0.4 0.4 0.2 0.2 0.1
168.4
7.87.97.1
150.0
6.45.8
74.5
5.36.8
101.2
61.6
158.3
12.18.67.3
145.2
8.410.97.2
2.73.2
4.0
3.7
2.4 1.45.64.5
0
50
100
150
200
250
300
350
400
450
500
550
2011201020092008200720062005
47
2244
59
165
125
40
80
38
3318
190
23
65
2218
252
231642
80
32
36
24
216274
26
61
36
56
168
54
45
134
64
24
156
67
192
43
10 13
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
20
40
60
80
100
120
140
160
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Financial Services sector.
17
DEAL DRIVERS – AMERICAS - FINANCIAL SERVICES
finAnciAL servicesFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Morgan Stanley 28,443 18
1 2 Bank of America Merrill Lynch 27,341 17
7 3 JPMorgan 19,032 17
8 4 Barclays Capital 17,339 12
9 5 Deutsche Bank 16,559 14
5 6 Goldman Sachs 16,068 23
- 7 Centerview Partners 15,720 4
- 8 ING 9,100 2
26 9 UBS Investment Bank 7,404 13
6 10 Credit Suisse 7,227 10
3 11 Citigroup 7,111 13
44 12 CIBC World Markets 6,612 3
12 13 Sandler O'Neill & Partners 4,658 37
27 14 Keefe, Bruyette & Woods 4,381 41
- 15 National Bank Financial 4,185 4
20 16 Scotia Capital 4,030 2
10 17 HSBC 4,011 4
21 18 RBC Capital Markets 3,988 5
28 19 Lazard 3,952 3
13 20 TD Securities 3,805 2
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Keefe, Bruyette & Woods 4,381 41
2 2 Sandler O'Neill & Partners 4,658 37
6 3 Goldman Sachs 16,068 23
3 4 Morgan Stanley 28,443 18
4 5 Bank of America Merrill Lynch 27,341 17
7 6 JPMorgan 19,032 17
13 7 Deutsche Bank 16,559 14
8 8 UBS Investment Bank 7,404 13
9 9 Citigroup 7,111 13
10 10 Barclays Capital 17,339 12
5 11 Credit Suisse 7,227 10
24 12 Raymond James & Associates 128 10
59 13 Financial Technology Partners 1,667 9
20 14 Evercore Partners 2,318 8
16 15 Stifel, Nicolaus & Company 136 8
21 16 Hovde Financial 46 7
14 17 Macquarie Group 3,317 6
11 18 RBC Capital Markets 3,988 5
93 19 IBI Corporate Finance 1,595 5
28 20 Jefferies & Company 919 5
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Sullivan & Cromwell 44,144 22
4 2 Cleary Gottlieb Steen & Hamilton 33,615 13
18 3 Wachtell, Lipton, Rosen & Katz 32,932 22
44 4 Mayer Brown 26,345 13
3 5 Simpson Thacher & Bartlett 22,318 22
2 6 Davis Polk & Wardwell 19,249 15
12 7 Dewey & LeBoeuf 17,779 15
8 8 Cravath Swaine & Moore 17,060 6
10 9 Herbert Smith/Gleiss Lutz/Stibbe 16,577 6
- 10 Covington & Burling 16,463 4
25 11 Linklaters 14,834 10
- 12 Darrois Villey Maillot Brochier 12,712 3
13 13 White & Case 12,631 6
67 14 Milbank Tweed Hadley & McCloy 12,495 4
93 15 Hengeler Mueller 12,454 2
250 16 De Brauw Blackstone Westbroek 12,267 1
24 17 Shearman & Sterling 11,768 7
84 18 Morrison & Foerster 11,600 4
23 19 Blake, Cassels & Graydon 11,380 13
28 20 Gibson Dunn & Crutcher 11,247 7
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Skadden Arps Slate Meagher & Flom 9,248 30
1 2 Sullivan & Cromwell 44,144 22
6 3 Wachtell, Lipton, Rosen & Katz 32,932 22
2 4 Simpson Thacher & Bartlett 22,318 22
23 5 Jones Day 4,740 18
4 6 Davis Polk & Wardwell 19,249 15
7 7 Dewey & LeBoeuf 17,779 15
9 8 Allen & Overy 8,216 14
14 9 Cleary Gottlieb Steen & Hamilton 33,615 13
17 10 Mayer Brown 26,345 13
21 11 Blake, Cassels & Graydon 11,380 13
58 12 Willkie Farr & Gallagher 8,617 12
10 13 Kirkland & Ellis 7,124 12
5 14 Debevoise & Plimpton 10,767 11
8 15 Weil Gotshal & Manges 7,373 11
16 16 Linklaters 14,834 10
34 17 Luse Gorman Pomerenk & Schick 325 10
12 18 Torys 5,510 9
20 19 Sidley Austin 5,452 9
13 20 Latham & Watkins 555 9
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the Financial Services sector.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the Financial Services sector.
DEAL DRIVERS – AMERICAS- INDUSTRIALS, MANUFACTURING & ENGINEERING
18 INDuSTrIALS, MANuFACTurING & ENGINEErING
industriALs, mAnufActuring & engineeringIndustrials M&A to remain strong as debt markets revive
Industrials M&A will remain robust this year, particularly in specialty manufacturing and other “value-added” segments, as mid-tier strategic buyers compete with private equity firms for deals and credit markets strengthen, said several industry sources.
Howard Lanser, managing director, mergers and acquisitions at Robert W. Baird, said the conditions that boosted M&A in 2011 remain in place, including trillions of dollars on corporate balance sheets, over US$400bn in uninvested private equity capital, and a strengthening credit market. The credit market saw a “nice recovery in November-December 2011,” with “good momentum into 2012,” he said.
Lanser said the industrials sector tends to recover later in the business cycle than other sectors, such as health care, technology, business services and consumer products, so there is now pent-up demand to sell. The median multiple for industrials companies has risen to 9x EBITDA from 8.4x in 2010, he added.
Scott George, managing director in Chicago of P&M Corporate Finance, a Michigan- based investment bank, said many companies restructured in 2011 and during the downturn that came before. Some of these organizations now have clean balance sheets and want to invest capital.
The US auto industry, in particular, has emerged healthier from a spate of restructurings. The “unnatural owners” of some of these companies--namely hedge funds, private equity firms and lenders--are expected to exit their investments this year, for sizeable amounts, said an automotive banker. However, strategic players will be hesitant to borrow heavily to finance automotive deals, the automotive banker said.
Even private equity firms, which have the financial wherewithal to execute billion dollar deals, are likely to be reticent about any transactions that require turning to
the loan markets. Private equity-backed deals have been notably weak in the auto sector, as evidenced by the cancellation of Cooper-Standard’s sale process and the reported cancellation of TI Automotive’s sale process. Auto companies with US$150m or more in EBITDA are less likely to be sold, as current industry multiples of between 6x and 8x EBITDA would price deals too high, the automotive banker said. Instead, most auctions will likely be in the mid-market range, similar in size to 3i’s US$154m purchase of Hilite International, he added. Both Cooper-Standard and TI Automotive have annual EBITDA in excess of US$250m.
Overall, however, leverage multiples are trending higher, Lanser said. For companies with more than US$50m in EBITDA, multiples are moving toward total debt of six times the target’s EBITDA versus 5.5x in the fourth quarter of 2011.
Jeff Drazan, managing partner at Bertram Capital, said activity has been pretty vibrant in the smaller industrials M&A market, particularly among companies with market capitalizations of less than US$250m. Going forward, he expects industrials companies with market capitalizations of more than US$1bn to become very acquisitive. Growth can be hard to come by for large industrials companies because they can be challenged for new product development, making acquisitions appealing, Drazan explained. Industrials companies have been forced to pay higher valuation multiples for companies in the last year or two to compete with private equity firms, Drazan noted.
In the defense sector, private equity firms are likely to rush to sell off portfolio companies amid government spending cuts, an industry source said. Potential targets among commercial aerospace companies include LMI Aerospace and Ducommun, the source said. Another one to keep an eye on is simulation technology company CAE, which could be a nice add-on for larger defense contractors, the industry source said. Valuations are down right now but are expected to rise as the year progresses, the source said.
In plastics, Bill Ridenour, president of Polymer TransAction Advisors, expects more private equity group deals given that banks are lending more than before (bank debt now funds 58% of middle market deals compared to 50% at the start of 2011). Strategic buyers will still be the price leaders especially on synergistic deals such as ColorMatrix, which was acquired by PolyOne in 2011, he said. The threat of a hike in the capital gains rate as the government tries to balance the budget will be a major incentive to sell, added Ridenour. In addition, US buyers are likely to invest more in India, a “hot” market with ready sellers, he added.
Higher-margin specialty manufacturing and niche manufacturing will be in demand, Lanser said. Meanwhile, basic materials and specialty chemicals will attract global interest with many private equity sponsors looking to exit holdings or add on to their platforms.
More US strategic players will target Europe, continuing a trend that began last year, Lanser noted. There was a significant increase in US acquisitions in Europe in 2011, the bulk of them by industrials companies, he said. European private companies, which are struggling as economies weaken and local banks tighten lending, are more open to being bought by US companies than other foreign entities. Typically, these transactions are worth betweeen US$100m and US$1bn, he said.
by Marlene Givant Star with additional reporting by Mary McGuire, Craig Barner, Sam Weisberg, Richard Tekneci and Mark Andress
19
DEAL DRIVERS – AMERICAS - INDUSTRIALS, MANUFACTURING & ENGINEERING
industriALs, mAnufActuring & engineeringTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Vendor Company Deal Value (US$m)
21-Sep-11 P United Technologies Corporation Goodrich Corporation 17,861
18-Jan-11 C Cargill Inc (Shareholders) The Mosaic Company (40% Stake) Cargill Incorporated 14,808
14-Mar-11 C Berkshire Hathaway Inc The Lubrizol Corporation 9,368
18-Jan-11 C Cargill Inc (Debtholders) The Mosaic Company (23.98% Stake) Cargill Incorporated 8,878
20-Jul-11 C Ecolab Inc Nalco Holding Company 8,138
10-Jan-11 C E. I. du Pont de Nemours and Company Danisco A/S 6,312
12-Jan-11 C ITT Corporation (Shareholders) Xylem Inc ITT Corporation 5,360
29-Mar-11 C GE Energy Converteam Group SAS (90% Stake) Equistone Partners Europe Limited; and LBO France 4,562
31-Mar-11 C Delphi Automotive Delphi Automotive LLP (Class A & Class C Membership Interest)
Pension Benefit Guaranty Corporation; and General Motors Company
4,394
17-Jun-11 C Reynolds Group Holdings Limited Graham Packaging Company Inc Blackstone Group LP 4,332
01-Jun-11 P Sealed Air Corporation Diversey Holdings Inc Clayton, Dubilier & Rice LLC; and Johnson family 4,262
11-Jul-11 P International Paper Company Temple-Inland Inc 4,167
23-Jan-11 C Rock-Tenn Company Smurfit-Stone Container Corp 3,953
13-Apr-11 L Silgan Holdings Inc Graham Packaging Company Inc Blackstone Group LP 3,940
31-May-11 C Ashland Inc International Specialty Products Inc 3,200
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - INDUSTRIALS, MANUFACTURING & ENGINEERING
20
industriALs, mAnufActuring & engineeringM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
225
250
20112010200920082007200620050.9 1.0 1.1 0.7 0.7 0.5 0.7
43.6
8.39.89.5
64.8
9.97.17.9
72.7
7.87.5
53.5
118.4
12.78.6
99.8
12.812.99.6
211.4
14.210.510.2 3.7
4.12.5
4.8 4.90
100
200
300
400
500
600
700
800
900
1,000
1,100
2011201020092008200720062005
61
32
101
217
322
4428
77
169
451
93
281
75
3545
12077
121
3653
39
375334
56
3581
226
113
43
425
7439
224
65
489
116 718
23
24
27
23
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
1,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
25
50
75
100
125
150
175
200
225
250
275
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Industrials, Manufacturing & Engineering sector.
21
DEAL DRIVERS – AMERICAS - INDUSTRIALS, MANUFACTURING & ENGINEERING
industriALs, mAnufActuring & engineeringFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 JPMorgan 75,085 25
2 2 Goldman Sachs 70,092 23
7 3 Credit Suisse 60,501 16
13 4 Lazard 46,162 29
5 5 Citigroup 43,621 15
3 6 UBS Investment Bank 35,806 26
15 7 Bank of America Merrill Lynch 32,157 18
- 8 Evercore Partners 18,410 10
4 9 Morgan Stanley 17,670 18
12 10 Perella Weinberg Partners 15,524 4
6 11 Deutsche Bank 14,587 9
8 12 Barclays Capital 13,833 11
- 13 Nordea Corporate Finance 9,580 2
79 14 Hawkpoint 7,534 2
28 15 Houlihan Lokey 6,897 24
45 16 SG 6,397 5
57 17 BNP Paribas 6,153 6
18 18 Blackstone Group 5,721 4
9 19 HSBC 5,387 8
11 20 Rothschild 5,261 18
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Lincoln International 1,666 35
6 2 Lazard 46,162 29
14 3 UBS Investment Bank 35,806 26
5 4 JPMorgan 75,085 25
7 5 Houlihan Lokey 6,897 24
2 6 Goldman Sachs 70,092 23
15 7 Robert W. Baird & Co 2,551 20
22 8 Bank of America Merrill Lynch 32,157 18
4 9 Morgan Stanley 17,670 18
10 10 Rothschild 5,261 18
3 11 Credit Suisse 60,501 16
9 12 Citigroup 43,621 15
8 13 Harris Williams & Co 2,260 13
18 14 KPMG 998 12
16 15 Barclays Capital 13,833 11
19 16 Jefferies & Company 2,771 11
- 17 Evercore Partners 18,410 10
25 18 M&A International 236 10
12 19 Deutsche Bank 14,587 9
66 20 BDO 536 9
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
11 1 Simpson Thacher & Bartlett 63,827 21
85 2 Cravath Swaine & Moore 50,206 11
6 3 Jones Day 41,358 52
66 4 Dewey & LeBoeuf 40,111 16
29 5 Wachtell, Lipton, Rosen & Katz 32,235 6
2 6 Skadden Arps Slate Meagher & Flom 30,710 23
9 7 Latham & Watkins 30,425 36
73 8 Fried Frank Harris Shriver & Jacobson 28,893 14
4 9 Cleary Gottlieb Steen & Hamilton 26,520 12
75 10 McDermott Will & Emery 25,391 15
15 11 Sullivan & Cromwell 25,272 9
30 12 Linklaters 24,854 10
26 13 Allen & Overy 21,167 15
35 14 Weil Gotshal & Manges 19,934 16
46 15 Davies Ward Phillips & Vineberg 19,921 10
153 16 Alston & Bird 18,437 8
250 17 Crowell & Moring 17,901 3
19 18 Davis Polk & Wardwell 15,318 12
20 19 Loeb & Loeb 14,721 4
10 20 Freshfields Bruckhaus Deringer 13,736 19
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Jones Day 41,358 52
2 2 Kirkland & Ellis 11,840 42
3 3 Latham & Watkins 30,425 36
5 4 K&L Gates 1,359 24
6 5 Skadden Arps Slate Meagher & Flom 30,710 23
22 6 Simpson Thacher & Bartlett 63,827 21
8 7 DLA Piper 2,252 21
4 8 Baker & McKenzie 11,375 20
7 9 Freshfields Bruckhaus Deringer 13,736 19
21 10 Stikeman Elliott 3,365 19
17 11 Hogan Lovells 4,785 17
65 12 Dewey & LeBoeuf 40,111 16
26 13 Weil Gotshal & Manges 19,934 16
16 14 Sidley Austin 1,311 16
32 15 McDermott Will & Emery 25,391 15
23 16 Allen & Overy 21,167 15
9 17 Mayer Brown 5,730 15
20 18 CMS 1,586 15
66 19 Fried Frank Harris Shriver & Jacobson 28,893 14
43 20 Gibson Dunn & Crutcher 10,084 14
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the following sectors: Automotive; Chemicals & Materials; Industrials- electronics; automation and products and services; and Manufacturing- other.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and cover the following sectors: Automotive; Chemicals & Materials; Industrials- electronics; automation and products and services; and Manufacturing- other.
DEAL DRIVERS – AMERICAS - ENERGy, MINING, OIL & GAS
22 ENErGY, MINING, OIL & GAS
energy, mining, oiL & gAs
Commodity prices to drive M&A as natural gas flags and crude stays king Low natural gas prices and high crude oil prices will continue to spur activity in 2012, much as it guided energy deal-making in 2011, industry sources said. The energy industry will remain one of the more vigorous markets for merger and acquisition activity in 2012, they said.
US natural gas prices continued to tumble in the second half of 2011, reaching 10-year lows on the NYMEX this January. Low demand and increasing supply will force big producers to pull back production and cut capital expenditures until prices rebound, said one banker. Oil-weighted assets and liquids-rich natural gas will continue to command a premium over standard dry gas, and natural gas properties will not likely be sold unless they are distressed, the banker said. Particular acquisition interest may fall on oil-weighted companies, such as Canadian oil sands company Connacher Oil and Gas, which recently announced a strategic alternatives process.
US natural gas players will continue to be incentivized to support liquefied natural gas (LNG) projects to take advantage of higher natural gas prices in Europe and Asia, said Bob Nimocks, an analyst with Zeus Consulting. Efforts on that front are led by Cheniere and Freeport LNG, and supported by production companies looking to diversify their end markets for oil and gas production. The entrance of independent oil and gas players including Apache, Anadarko, EOG Resources, and Hunt Oil into the LNG market in 2011 should propel more deals going forward in 2012, Nimocks said.
Asian companies continue to invest in North America as they seek resources for their growing economies and aim to capture North American production techniques. In addition to China and Korea, Japan will be “among the most active players - not just in North America but Latin America too,” according to Daniel Bartfeld, partner at Milbank and a member of the firm’s Project Finance Group.
private Equity pushPrivate equity deal flow and fundraising increased in 2011, with many of the largest buyout firms, including Blackstone, Apollo, TPG and Goldman Sachs raising funds and committing capital to energy. Riverstone and Apollo are reportedly considering a US$7bn bid for the exploration and production assets of El Paso, after its acquisition by pipeline company Kinder Morgan.
Onshore shales could see 2012 deal activity, as the highest quality acreage has already been snapped up and a number of companies will be looking for liquidity, whether in the form of joint ventures or sales, said Sean Moran, co-chair of the Buchanan Ingersoll & Rooney’s Energy Section and Oil & Gas Practice Group.
The Eagle Ford Shale in South Texas remains appealing to companies targeting oil and liquids-rich gas, although it’s unlikely to see a deal bigger than BHP Billiton’s US$14.8bn acquisition of Petrohawk in August 2011, which was largely driven by Petrohawk’s Eagle Ford position.
Canadian oil and gas activity was comparatively slow last year, but 2012 will be the year companies play catch-up and become acquisitive again, predicted a second industry banker. Profitable companies with oily profiles will be prompted to sell by their high valuations.
Consolidation in power and Utilities Despite a recent lull, the utilities sector saw “tons” of activity in 2011, something that is unprecedented in a highly regulated sector where deals typically take 12-18 months to close, said a power and utilities investment banker. He highlighted the Duke Energy/Progress Energy and Exelon/Constellation Energy deals as examples. “In the next several months, you’ll see some large M&A transactions announced,” he said.
Consolidation among utilities should continue, said Brian Tate, managing director and head of power and utilities at Wells Fargo Securities. Utilities will have more flexibility and access to capital, which
will help them fund increasing capital expenditure budgets driven by transmission investment, renewable energy projects, and environmental upgrades, said Tate.
Jeffrey Meyers, chair of Stroock’s energy and project finance practice, paints a less rosy picture. He doesn’t expect a great deal of corporate transactions in 2012 because of the lack of a national energy policy.
A utilities executive said that many companies are waiting on the M&A sidelines to see how regulators deal with larger deals before going down a similar path themselves. The Duke/Progress merger, announced in January 2011, and the Exelon/Constellation deal, announced in April 2011, still have to win regulatory approval before they can close.
By contrast, much activity in unregulated power generation is expected because several power plant portfolios will come up for sale as their debt comes due, Meyers said. The preference among most buyers is still to acquire contracted power plants in very liquid markets, but there will be some merchant generation changing hands when there are opportunities to do some hedging, Meyers said.
precious Metals Valuable in 2012Junior precious metal mining companies are likely to be targeted in 2012, with Canada, the state of Nevada, and African nations such as Guyana the areas of focus for majors, said a mining banker.
Silver especially has been “hot” since the middle of 2011, but financing for gold and silver miners dried up in the fourth quarter of 2011, said an analyst. In the face of this capital squeeze, junior developers sitting on multi-hundred million ounce resources could seek much larger joint venture partners, or will be forced to develop the deposits themselves. Mid-tier and major miners could be predatory regarding acquisitions.
by Hana Askren, Chad Watt, Mark Druskoff, Max Brett, Amanda Levin and Divya Balji
23
DEAL DRIVERS – AMERICAS - ENERGy, MINING, OIL & GAS
energy, mining, oiL & gAsTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Vendor Company Deal Value ($m)
16-Oct-11 P Kinder Morgan Inc El Paso Corporation 37,439
10-Jan-11 P Duke Energy Corporation Progress Energy Inc 25,825
14-Jul-11 C BHP Billiton Ltd Petrohawk Energy Corporation 14,760
13-Jan-11 C Marathon Oil Corporation (Shareholders) Marathon Petroleum Corporation Marathon Oil Corporation 14,667
28-Apr-11 P Exelon Corporation Constellation Energy Group Inc 10,410
16-Jun-11 P Energy Transfer Equity LP Southern Union Company 9,037
07-Feb-11 C ENSCO International Inc Pride International Inc 8,735
29-Jan-11 C Alpha Natural Resources Inc Massey Energy Company 8,156
25-Apr-11 C Barrick Gold Corporation Equinox Minerals Limited 7,384
23-Nov-11 C Kohlberg Kravis Roberts & Co; Itochu Corporation; Natural Gas Partners LLC; and Crestview Partners LP
Samson Investment Company The Schusterman family 7,200
01-Mar-11 C Western Power Distribution LLP (subsidiary of PPL Corporation) Western Power Distribution E.ON UK plc 6,506
03-Apr-11 L Minmetals Resources Limited Equinox Minerals Limited 6,410
19-Apr-11 C Temasek Holdings Pte Ltd; Chesapeake Energy Corporation; Public Sector Pension Investment Board; SBI Global Investment Co Ltd; and RRJ Capital
Frac Tech Services LLC 5,000
21-Feb-11 C BHP Billiton Ltd Chesapeake Energy Corporation (Fayette-ville shale assets)
Chesapeake Energy Corporation 4,750
20-Apr-11 C AES Corporation DPL Inc 4,658
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - ENERGy, MINING, OIL & GAS
24
energy, mining, oiL & gAsM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
225
250
275
300
20112010200920082007200620050.6 0.7 0.7 0.5 0.5 0.5 0.2
169.7
10.715.18.9
99.2
13.812.9
120.6
13.624.9
12.919.212.210.8
185.6
251.6261.2
21.69.47.9
229.5
15.214.28.2
5.35.8 6.1 6.00
50
100
150
200
250
300
350
400
450
500
550
2011201020092008200720062005
50
30
89
177
64
37
76
40
56
113
51
58
66
40
38
128
59
55
69
94
81
126
108
21
72
54
84
5896
54
58
61
175
70
83
56
94
43
89
171
48
68
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
Q411
Q3 11
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Energy sector.
25
DEAL DRIVERS – AMERICAS - ENERGy, MINING, OIL & GAS
energy, mining, oiL & gAsFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Barclays Capital 132,859 27
1 2 Goldman Sachs 111,545 36
4 3 Morgan Stanley 97,903 22
7 4 JPMorgan 73,920 22
8 5 Bank of America Merrill Lynch 66,440 24
3 6 Credit Suisse 60,944 26
20 7 Evercore Partners 59,368 9
9 8 Citigroup 55,703 33
19 9 Lazard 33,037 8
14 10 RBC Capital Markets 28,788 33
15 11 Jefferies & Company 27,916 20
11 12 UBS Investment Bank 26,358 17
10 13 Scotia Capital 24,984 11
12 14 BMO Capital Markets 24,829 20
5 15 Tudor, Pickering, Holt & Co 18,821 18
6 16 Deutsche Bank 18,625 14
13 17 CIBC World Markets 15,138 7
17 18 TD Securities 14,134 10
18 19 GMP Securities 12,843 15
- 20 Loop Capital Markets 10,410 1
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
2 1 Goldman Sachs 111,545 36
16 2 Citigroup 55,703 33
1 3 RBC Capital Markets 28,788 33
7 4 Barclays Capital 132,859 27
3 5 Credit Suisse 60,944 26
10 6 Bank of America Merrill Lynch 66,440 24
4 7 Morgan Stanley 97,903 22
9 8 JPMorgan 73,920 22
19 9 Jefferies & Company 27,916 20
8 10 BMO Capital Markets 24,829 20
5 11 Tudor, Pickering, Holt & Co 18,821 18
13 12 UBS Investment Bank 26,358 17
11 13 GMP Securities 12,843 15
12 14 Macquarie Group 6,016 15
15 15 National Bank Financial 3,379 15
18 16 Deutsche Bank 18,625 14
24 17 Simmons & Company International 3,783 13
17 18 Scotia Capital 24,984 11
26 19 Canaccord Genuity 4,967 11
14 20 TD Securities 14,134 10
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Latham & Watkins 122,042 38
6 2 Sullivan & Cromwell 106,657 21
1 3 Vinson & Elkins 82,274 47
9 4 Wachtell, Lipton, Rosen & Katz 81,404 9
4 5 Baker Botts 59,628 20
5 6 Simpson Thacher & Bartlett 57,067 18
3 7 Skadden Arps Slate Meagher & Flom 55,075 16
- 8 Cravath Swaine & Moore 54,280 4
85 9 Weil Gotshal & Manges 48,923 6
12 10 Dewey & LeBoeuf 46,199 16
13 11 Bracewell & Giuliani 43,355 15
56 12 Greenberg Traurig 31,691 5
38 13 Shearman & Sterling 26,182 13
7 14 Blake, Cassels & Graydon 26,109 29
88 15 Hunton & Williams 25,825 1
10 16 Alston & Bird 23,637 7
48 17 Allen & Overy 22,447 8
21 18 Jones Day 22,159 18
62 19 Morgan Lewis & Bockius 22,153 7
8 20 Osler, Hoskin & Harcourt 19,452 11
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Vinson & Elkins 82,274 47
2 2 Latham & Watkins 122,042 38
3 3 Blake, Cassels & Graydon 26,109 29
10 4 Burnet Duckworth & Palmer 5,283 22
11 5 Sullivan & Cromwell 106,657 21
5 6 Baker Botts 59,628 20
19 7 Akin Gump Strauss Hauer & Feld 7,157 19
7 8 McCarthy Tetrault 5,819 19
8 9 Simpson Thacher & Bartlett 57,067 18
13 10 Jones Day 22,159 18
43 11 Clifford Chance 8,071 18
17 12 Andrews Kurth 13,176 17
24 13 Bennett Jones 10,249 17
65 14 Gowling Lafleur Henderson 5,163 17
9 15 Stikeman Elliott 4,762 17
6 16 Skadden Arps Slate Meagher & Flom 55,075 16
31 17 Dewey & LeBoeuf 46,199 16
12 18 Fulbright and Jaworski 3,353 16
21 19 Bracewell & Giuliani 43,355 15
44 20 Shearman & Sterling 26,182 13
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Energy, Mining, and Utilities- other.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Energy, Mining, and Utilities- other.
DEAL DRIVERS – AMERICAS - CONSUMER
26CONSuMEr
consumer
Consumer sector could see M&A uptick led by personal care and food, among other segments
The first half of the year could bring increased M&A activity among strategic players in the consumer sector, as major companies participate as both buyers of targets and sellers of underperforming assets, according to industry dealmakers.
In personal care, the first half of the year could see the logical strategic buyers participate in higher levels of M&A activity, said Richard Gersten, a partner at Tengram Capital. The personal care industry remains a healthy area of dealmaking as specialty channels drive growth and strategic players pay healthy prices for growing businesses, explained Gersten.
Global companies could become more visible as foreign buyers of US personal care companies, such as Japan’s Pola Orbis, which acquired Australian skincare brand Jurlique at the end of last year, seek to expand into new geographies. A number of large personal care and consumer products companies have captive brands they would like to divest, which could also drive deal activity in the first half, according to industry dealmakers.
Company breakups remain in style for the first half. The auction for footwear wholesaler and retailer Collective Brands is proceeding, but it is still uncertain whether the company will be sold in whole or in parts.
While acquirers in the apparel industry remain cautious, dealmakers expect brands in fast-growing categories such as outdoor clothing and action sports to drive M&A in the first half.
The food industry could also see an uptick in M&A in the first half, particularly among strategic buyers, said bankers. Large strategic players are targeting buys in emerging markets as they seek global expansion, with buyers such as Sara Lee and Heinz inking international deals within the last year.
Dealmakers still have their eyes on Kraft, which last summer announced plans to divide into two entities, one focused on its North American grocery assets and the other focused on its international snack business. Bankers are watching the company’s slower-growing North American grocery half, which could target a major domestic food player to add scale.
Privately held healthy or natural brands and prepared food makers continue to experience growth and could drive M&A in the first half. As has been typical of the last several years, private equity firms are expected to participate in targeting these companies.
On the retail front, volatile public markets could keep private equity owners who are ready to move on from realizing exits. Talk of retail take-privates by private equity has slowed some, although specialty retail is expected to remain a bright spot and the window is still open for fast-growing chains to change private equity hands in the first half. Restaurant deal flow appears to be holding up, with private equity interest remaining strong and strategic players such as Landry’s on the hunt for targets.
by Ellena kleinman
27
DEAL DRIVERS – AMERICAS - CONSUMER
consumerTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Vendor Company Deal Value (US$m)
29-Jun-11 C CVC Capital Partners Limited; and Leonard Green & Partners LP
BJ's Wholesale Club Inc 2,609
05-Apr-11 P Diamond Foods Inc Procter & Gamble Company (Pringles snack business) Procter & Gamble Company 2,518
15-Aug-11 P Cargill Incorporated Provimi Holding BV Permira 2,167
12-Jun-11 C VF Corporation The Timberland Company 1,961
11-Nov-11 P Universal Music Group Inc EMI Group Limited (Recorded Music Division) EMI Group Limited 1,929
10-Nov-11 P Svenska Cellulosa Aktiebolaget SCA Georgia-Pacific LLC (European tissue operations) Georgia-Pacific LLC 1,796
11-Oct-11 C Canada Pension Plan Investment Board; and Ares Management LLC
99 Cents Only Stores 1,531
07-Nov-11 P Best Buy Co Inc Best Buy Mobile US (50% Stake) The Carphone Warehouse Group Plc 1,344
20-May-11 C Fila Korea Ltd; and Mirae Asset Maps Investment Acushnet Company Beam Inc 1,255
06-Dec-11 C Leucadia National Corporation National Beef Packing Company LLC (78.95% Stake) US Premium Beef 1,178
18-May-11 C General Mills Inc Yoplait SAS (51% Stake); and Yoplait Marques SAS (50% Stake)
PAI Partners 1,154
14-Dec-11 P The Coca-Cola Company Aujan Industries Co LLC (beverage business) (49% Stake)
Aujan Industries Co LLC 980
28-Jan-11 C Rank Group Limited Honeywell International Inc (Automotive Consumer Products Group)
Honeywell International Inc 950
23-Mar-11 C Colgate-Palmolive Company Sanex Unilever Plc 947
17-Dec-11 P MeadWestvaco Corp (consumer & office products business)
Acco Brands Corporation MeadwestVaco Corp 830
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - CONSUMER
28
consumerM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
20
40
60
80
100
120
140
160
20112010200920082007200620050.6 0.5 0.5 0.2 0.3 0.2 0.3
131.6
6.05.16.4
111.2
7.44.1
36.053.1
3.9
22.2
4.64.3
81.6
8.95.46.1
131.0
9.87.24.4
2.83.8 2.23.52.5
2.94.0
0
50
100
150
200
250
300
350
400
450
500
550
600
2011201020092008200720062005
281631
134
71
190
26
1620
95
25
235
22
56
158
36
29
25
60
1628
73
27
17
222194
2734
132
47
37
228
362844
97
300
53
71213
14
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q4 05
Q305
Q205
Q105
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Consumer sector.
29
DEAL DRIVERS – AMERICAS - CONSUMER
consumerFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Goldman Sachs 12,768 17
4 2 Morgan Stanley 11,509 11
2 3 Credit Suisse 10,585 16
3 4 Bank of America Merrill Lynch 8,814 14
7 5 JPMorgan 8,150 10
12 6 Citigroup 6,569 7
8 7 Barclays Capital 6,240 8
15 8 Rothschild 5,966 16
13 9 Deutsche Bank 4,685 6
28 10 Jefferies & Company 4,513 6
5 11 Lazard 4,101 8
10 12 Greenhill & Co 3,645 3
21 13 Nomura Holdings 3,559 5
11 14 UBS Investment Bank 3,022 5
44 15 HSBC 2,831 5
26 16 BMO Capital Markets 2,687 7
20 17 RBC Capital Markets 2,329 9
9 18 Allen & Company 2,326 2
31 19 Rabobank 2,294 12
27 20 PwC 2,266 4
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
7 1 Houlihan Lokey 1,714 19
1 2 Goldman Sachs 12,768 17
4 3 Credit Suisse 10,585 16
5 4 Rothschild 5,966 16
2 5 Bank of America Merrill Lynch 8,814 14
18 6 Rabobank 2,294 12
8 7 Morgan Stanley 11,509 11
26 8 Robert W. Baird & Co 1,228 11
9 9 JPMorgan 8,150 10
19 10 William Blair & Company 1,663 10
35 11 RBC Capital Markets 2,329 9
6 12 Barclays Capital 6,240 8
3 13 Lazard 4,101 8
10 14 KPMG 1,190 8
23 15 Citigroup 6,569 7
13 16 BMO Capital Markets 2,687 7
12 17 Deutsche Bank 4,685 6
25 18 Jefferies & Company 4,513 6
28 19 M&A International 212 6
44 20 Nomura Holdings 3,559 5
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
47 1 Freshfields Bruckhaus Deringer 7,356 7
12 2 Davis Polk & Wardwell 7,351 7
1 3 Latham & Watkins 6,488 17
5 4 Cleary Gottlieb Steen & Hamilton 5,096 6
16 5 Shearman & Sterling 4,964 4
4 6 Skadden Arps Slate Meagher & Flom 4,932 15
238 7 Slaughter and May 4,869 4
32 8 Clifford Chance 4,510 3
15 9 Simpson Thacher & Bartlett 4,325 10
19 10 Weil Gotshal & Manges 4,323 10
58 11 Baker & McKenzie 4,191 12
9 12 Sullivan & Cromwell 4,058 6
63 13 SJ Berwin 3,763 6
26 14 Herbert Smith/Gleiss Lutz/Stibbe 3,735 4
128 15 Greenberg Traurig 3,475 14
227 16 Munger Tolles & Olson 3,460 2
53 17 Jones Day 3,217 16
7 18 Wachtell, Lipton, Rosen & Katz 2,891 7
83 19 Allen & Overy 2,877 5
36 20 Torys 2,728 4
31 20= Clifford Chance 1,601 1
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Kirkland & Ellis 2,459 27
2 2 Latham & Watkins 6,488 17
5 3 Jones Day 3,217 16
6 4 Skadden Arps Slate Meagher & Flom 4,932 15
53 5 Greenberg Traurig 3,475 14
45 6 Baker & McKenzie 4,191 12
15 7 Simpson Thacher & Bartlett 4,325 10
7 8 Weil Gotshal & Manges 4,323 10
44 9 Bryan Cave 1,014 10
4 10 DLA Piper 885 10
11 11 Ropes & Gray 2,212 9
39 12 Morgan Lewis & Bockius 204 9
32 13 Paul Hastings 110 9
12 14 Dechert 2,417 8
80 15 McCarthy Tetrault 441 8
28 16 Freshfields Bruckhaus Deringer 7,356 7
33 17 Davis Polk & Wardwell 7,351 7
23 18 Wachtell, Lipton, Rosen & Katz 2,891 7
19 19 Blake, Cassels & Graydon 2,649 7
43 20 Willkie Farr & Gallagher 1,406 7
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Consumer-retail, food and other.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and incude lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Consumer-retail, food and other.
DEAL DRIVERS – AMERICAS - TMT
30 TECHNOLOGY, MEDIA & TELECOM
technoLogy, mediA & teLecom (tmt)
Technology, Media and Telecommunications M&A expected to continue skyrocketing in 2012
Technology, media and telecommunications should remain one of the most active M&A sectors in 2012, although weak capital markets and low multiples could hinder some areas of deal activity.
Digital Media & Internet: Social media to dominate 2012Despite healthy 2011 deal flow in the digital media and Internet space, a lot of remaining companies need to be sold, said an industry banker. In social gaming, Facebook will be an active buyer, and Asian buyers such as Nexon, NHN and Tencent will be looking for a North American foothold. Companies such as iWin, KIXEYE, Storm8, TinyCo, and wooga are potential targets with good revenue traction, scale and management teams, he said.
In spite of Zynga’s lower than expected performance following its debut in the public markets, bankers anticipate Facebook’s IPO will be successful. But they are skeptical about how long that window will stay open for smaller players. “Sadly, I don’t think [the IPO market] is going to get better,” said David Siemer, founder and general manager of Siemer & Associates, a boutique investment bank focused on Internet and digital media companies. Flat capital markets will not be able to absorb all of the companies desiring an IPO, he predicted.
Many IPO filings saw high valuations after Groupon’s good showing in its November IPO; but some of them may soften after their initial offerings, as Zynga did, Jeff Dearth, partner at DeSilva & Phillips, said. Venture capitalists have higher expectations in a sale, so they will hold onto their portfolio companies or wait for another IPO window, he said.
Outside of the public markets, the ad network model is shifting and a lot of publishers are thinking about banding together to create their own ad networks to make more money, Dearth said. The downward prices in CPMs (cost per mille) are forcing publishers to find other solutions,
while ad networks will look for other content, such as ValueClick’s acquisition of Dotomi and Investopedia.
Telecommunications: All eyes on T-MobileTelecom M&A in 2011 was “dynamic,” said a second industry banker. Savvis and Hughes Communications were “world class businesses” that found buyers for US$2.7bn and US$1.9bn, respectively (Note: Savvis is tracked as a business services deal by mergermarket). Yet several auctions and agreements ended without deals. AT&T failed to acquire T-Mobile after its US$39bn deal was quashed by regulators. AboveNet and Telesat ran auctions, but appear to have balked on bid-ask issues. Depending on the health of the capital markets in 2012, these businesses could come up for sale again. Despite the broken merger between AT&T and T-Mobile, one could argue that the FCC’s analysis of that deal is a roadmap for how a buyer should approach an acquisition of T-Mobile, an industry lawyer said. Alternative buyers could include competitors such as Sprint, a consortium of mid-sized regional carriers, private equity, or a foreign competitor like Telefonica.
“DT (Deutsche Telekom) is very serious about selling T-Mobile,” the lawyer said, adding that there is a strong possibility a deal will get done in 2012. If so, DT needs to launch a sale process by the end of the first quarter, especially before the election.
Clearwire and Leap Wireless stand out as potential M&A targets for other buyers trying to expand their spectrum assets to cope with increasing bandwidth demands, the third banker said. LightSquared is also a potential spectrum target as it attempts to cope with interference issues along its satellite network, said a second industry lawyer.
Meanwhile, spectrum buyers may have to wait until 2013 or later to purchase US$25bn worth of spectrum that the US government hopes to sell, four lawyers said.
Traditional Media to recoverTV broadcast advertising is expected to show strong recovery in 2012 due to political spending. As a result, many TV chains that are owned by private equity or hedge funds will take the opportunity to sell at higher multiples in 2012 or 2013, said Lee Ann Gliha, an investment banker at Houlihan Lokey.
The newspaper market could see more deals once multiples rise, but that won’t happen until distressed assets are weeded out of the system, said a third banker. Multiple deals, including Gatehouse Media and Freedom Newspapers, are in limbo, the third banker said. Many newspapers are over levered and The Journal Register, which was acquired by Alden Global Capital, was the first cash deal to be done since 2007, Gliha said.
“Probably at least 50% of the daily newspaper owners of the country would like to sell their papers right now – and weeklies too - but the multiples are depressed,” the second banker said.
Software: The expanding cloudSoftware as a Service (SaaS) companies are aggressively increasing their market share by introducing businesses to cloud-based services, said Brian Mutert, CEO of Strategem Partnering, a boutique investment bank for software and Internet companies. Buyers will seek acquisitions to gain those customers and flesh out their service offerings, such as AT&T’s buy of Savvis and Verizon’s buy of Terremark, he said. VMware wants to maintain its leadership position, but Citrix has also made “interesting moves” to build its cloud position such as its buy of Cloud.com and ShareFile.
Solid state drive (SSD) companies include Nutanix, Virident Systems and Violin Memory, which previously told this news service it plans to go public in H1 2012.
by Monique Lewis, Sarah Cohen and Stuart Newman
31
DEAL DRIVERS – AMERICAS - TMT
technoLogy, mediA & teLecom (tmt)TOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Vendor Company Deal Value (US$m)
20-Mar-11 L AT&T Inc T-Mobile USA Inc Deutsche Telekom AG 39,000
10-May-11 P Microsoft Corporation Skype Global Sarl Silver Lake Partners; Canada Pension Plan Investment Board; ebay International AG; Andreessen Horowitz; and Joltid Limited
9,044
15-Aug-11 P Google Inc Motorola Mobility Holdings Inc 8,950
04-Apr-11 C Texas Instruments Incorporated National Semiconductor Corporation 6,281
15-Aug-11 P Time Warner Cable Inc Insight Communications Company Inc The Carlyle Group LLC; MidOcean Partners LLP; and Crestview Partners LP
4,687
21-Mar-11 C Liberty Global Inc Kabel Baden-Wuerttemberg GmbH & Co KG EQT Partners AB 4,495
04-May-11 C Applied Materials Inc Varian Semiconductor Equipment Associates Inc 4,331
07-Mar-11 P Western Digital Corporation Hitachi Global Storage Technologies Hitachi Ltd 4,250
12-Sep-11 P Broadcom Corporation NetLogic Microsystems Inc 3,449
14-Dec-11 P Lam Research Corporation Novellus Systems Inc 3,298
03-Dec-11 P SAP AG SuccessFactors Inc 3,273
06-May-11 C Access Industries Inc Warner Music Group Corp Bain Capital LLC; Thomas H. Lee Partners LP; and Private Investor (Edgar Bronfman, Jr.)
2,959
05-Jan-11 C Qualcomm Incorporated Atheros Communications Inc 2,741
10-Mar-11 C Cumulus Media Inc Citadel Broadcasting Corporation 2,463
01-Jul-11 C Kohlberg Kravis Roberts & Co; Silver Lake Partners; and Technology Crossover Ventures
The Go Daddy Group Inc (undisclosed stake) 2,250
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - TMT
32
technoLogy, mediA & teLecom (tmt)M&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
20112010200920082007200620051.7 1.5 1.2 1.0 0.7 0.9 0.7
229.1
18.013.512.8
125.4
10.0
85.377.4
12.4
84.0
14.39.110.6
286.2
15.317.014.6
171.3
21.514.512.4
7.66.98.96.8
5.56.34.7
0
100
200
300
400
500
600
700
800
900
1,000
2011201020092008200720062005
66
52
80
305
194
232
62
27
215
112
303
4132
144
254
82
403571
160
81
474257
178
346385
90
44
104
329
161
65
297
69
61
83
297
320
135
19
14
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
25
50
75
100
125
150
175
200
225
250
275
300
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Technology, Media & Telecom sector.
33
DEAL DRIVERS – AMERICAS - TMT
technoLogy, mediA & teLecom (tmt)FINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Computer- software, hardware and semiconductors; Telecommunications: Hardware; Internet/e-Commerce; Media; and Telecommunications: Carriers
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011 and include lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Computer- software, hardware and semiconductors; Telecommunications: Hardware; Internet/e-Commerce; Media; Telecommunications: Carriers
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
8 1 Goldman Sachs 56,053 33
22 2 Qatalyst Group 40,177 19
1 3 JPMorgan 38,680 22
2 4 Morgan Stanley 34,764 32
3 5 Barclays Capital 32,289 22
11 6 Bank of America Merrill Lynch 31,524 25
10 7 UBS Investment Bank 31,493 19
18 8 Citigroup 18,042 8
4 9 Deutsche Bank 17,815 20
7 10 Lazard 16,823 15
9 11 Credit Suisse 13,194 14
6 12 Perella Weinberg Partners 11,200 4
12 13 RBC Capital Markets 9,607 20
30 14 Centerview Partners 9,561 3
26 15 Moelis & Company 7,048 13
23 16 Houlihan Lokey 6,068 11
5 17 Evercore Partners 5,020 14
17 18 Jefferies & Company 4,584 14
61 19 Royal Bank of Scotland Group 4,495 1
- 20 Peter J Solomon Company 4,292 4
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Goldman Sachs 56,053 33
1 2 Morgan Stanley 34,764 32
10 3 Bank of America Merrill Lynch 31,524 25
5 4 JPMorgan 38,680 22
11 5 Barclays Capital 32,289 22
7 6 Deutsche Bank 17,815 20
6 7 RBC Capital Markets 9,607 20
73 8 Qatalyst Group 40,177 19
9 9 UBS Investment Bank 31,493 19
4 10 Pagemill Partners 415 16
18 11 Lazard 16,823 15
25 12 Morgan Keegan & Company 710 15
8 13 Credit Suisse 13,194 14
17 14 Evercore Partners 5,020 14
3 15 Jefferies & Company 4,584 14
24 16 Moelis & Company 7,048 13
13 17 GCA Savvian Group 432 12
12 18 Houlihan Lokey 6,068 11
175 19 Financial Technology Partners 1,822 10
30 20 Raymond James & Associates 1,333 10
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
4 1 Shearman & Sterling 76,795 31
3 2 Simpson Thacher & Bartlett 62,228 23
19 3 Sullivan & Cromwell 59,904 12
16 4 Cleary Gottlieb Steen & Hamilton 58,478 20
6 5 Wachtell, Lipton, Rosen & Katz 48,989 6
34 6 Fried Frank Harris Shriver & Jacobson 41,037 6
- 7 Wiley Rein 39,134 3
12 8 Dewey & LeBoeuf 30,303 31
1 9 Skadden Arps Slate Meagher & Flom 29,970 28
14 10 Davis Polk & Wardwell 26,740 17
13 11 Gibson Dunn & Crutcher 25,407 22
2 12 Latham & Watkins 23,738 50
18 13 Jones Day 22,770 45
10 14 Morrison & Foerster 19,376 24
38 15 Freshfields Bruckhaus Deringer 18,585 13
47 16 DLA Piper 18,281 60
33 17 Cravath Swaine & Moore 17,415 15
32 18 Kirkland & Ellis 14,625 49
63 19 Morgan Lewis & Bockius 13,839 16
11 20 Wilson Sonsini Goodrich & Rosati 13,676 66
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Wilson Sonsini Goodrich & Rosati 13,676 66
1 2 DLA Piper 18,281 60
2 3 Latham & Watkins 23,738 50
8 4 Kirkland & Ellis 14,625 49
4 5 Jones Day 22,770 45
5 6 Fenwick & West 5,774 42
7 7 Cooley 1,846 41
6 8 Goodwin Procter 4,572 35
10 9 Shearman & Sterling 76,795 31
17 10 Dewey & LeBoeuf 30,303 31
12 11 Skadden Arps Slate Meagher & Flom 29,970 28
11 12 O'Melveny & Myers 9,963 25
13 13 Morrison & Foerster 19,376 24
16 14 Simpson Thacher & Bartlett 62,228 23
14 15 Hogan Lovells 5,576 23
9 16 Gibson Dunn & Crutcher 25,407 22
22 17 WilmerHale 1,692 21
21 18 Cleary Gottlieb Steen & Hamilton 58,478 20
15 19 Weil Gotshal & Manges 13,110 19
30 20 Bingham McCutchen 4,769 19
DEAL DRIVERS – AMERICAS - LIFE SCIENCES & HEALTHCARE
34 LIFE SCIENCES & HEALTHCArE
Life sciences & heALthcAre
Healthcare M&A sets sights on 2014
While the uncertainty surrounding healthcare reform made M&A “headline oriented” in 2010 and early 2011, the M&A deals of late last year prepared companies for the healthcare marketplace of 2014, when consumers will have more options in purchasing services and treatments.
In 2014, health insurance exchanges will be introduced to the US market, forcing greater competition among insurers and providers. Significant transactions demonstrating the need to position for 2014 included Express Scripts’ plan to buy Medco Health Solutions for US$33.4bn, Gilead Sciences’ US$10.4bn bid for Pharmasset, and Cigna’s plan to expand in Medicare through its US$3.7bn purchase of HealthSpring.
Express Scripts and Medco recognize drug pricing pressures will increase with more competition when an estimated 12 million consumers will buy insurance off the exchanges, according to US Congressional Budget Office estimates. By combining forces, the two large pharmacy benefit companies can cut costs, offer support services in more locations, and gain more market share with the new providers. Express Scripts CEO George Paz told Congress following the deal announcement that the new company would “negotiate with drug companies and partner with independent pharmacies, grocery chains and others to create networks of pharmacies where patients -- not profits – come first.” The efforts would lead to lower drug prices, that are “far too high,” said Paz.
The Supreme Court is expected to rule on legal challenges to the 2010 healthcare reform bill by June 2012. The pending Supreme Court case and the US Presidential election later this year are unlikely to derail the healthcare reform movement already underway, according to healthcare executives. Earlier rulings, in which conservative and liberal judges supported the legislation, as well as the apparent tendencies of judges do
not point to a complete reversal of the bill, HealthNet CEO Jay Gellert told investors recently. The court appears to be split 4 to 4 on the merits of reform with Justice Anthony Kennedy as the swing vote. “And if anyone claims to know what Kennedy is thinking, they are probably wrong,” quipped Gellert.
The court could rule on the legality of the most controversial issue – the requirement that all individuals purchase health insurance – and still leave the exchanges in place, noted Gellert. Under that scenario, an insurer such as HealthNet still could prepare to participate in new programs that expand Medicaid coverage to 2 million people in California, added Gellert.
The potential for a new administration in 2013 also won’t be likely to change the course of reform. Mitt Romney, the anticipated Republican nominee, could change how some healthcare services are adminstered, but not likely too many, said Ann Lamont, a managing partner at Oak Investment Partners, which has exited several healthcare service companies in the last two years. Future changes in the healthcare system likely will be driven by the market and efficient commercial operations, once patients become true consumers, said Lamont. For example, patients – rather than the patient’s employer – will be able to decide on which insurance to purchase once the exchanges are introduced. Patients also could receive a flat sum to have certain services performed, such as a hospital-administered diagnostic test. The patient would then choose a hospital with the price closest to that sum, rather than having the test completed by a hospital recommended by the insurer. A new administration will not influence such market changes, predicted Lamont.
In pharmaceuticals, drug companies likewise are preparing for future growth markets and plan to be less reliant on blockbuster drugs, said one biotech executive who closed a deal in 2011.
Gilead and Bristol-Myers Squibb, like many drug companies with considerable cash, are preparing for the markets of the future and not relying on legacy blockbuster drugs, said the biotech executive. Gilead, which already owned a significant market share in the HIV and hepatitis markets, observed the success of Vertex in introducing a novel hepatitis C treatment in early 2011. Gilead then bid a hefty premium to Pharmasset’s stock price in November, giving investors pause. Yet two months later, Bristol-Myers Squibb bid US$2bn for Inhibitex, another company developing a promising hepatitis C treatment. The deals partly were driven by the fact that hepatitis is a chronic disease and patients will require treatment on a continual basis, said the biotech executive.
In medical devices, cross-border deals were significant as Johnson & Johnson paid US$21.2bn to buy Synthes, FujiFilm paid US$778m to acquire SonoSite, and Shire paid US$744m for Advanced BioHealing.
In another large cross-border deal, Teva outbid the specialty pharmaceutical company Valeant to acquire Cephalon for US$6.2bn. Southern California-based Valeant followed that rejection by acquiring dermatology units from Sanofi and Janssen Pharmaceuticals, respectively, as well as drug companies in Eastern Europe and Australia. Valeant now plans to acquire one additional platform company outside of the US in 2012, where it anticipates more growth and expects it can leverage its specialty sales force, according to company executives.
by William Langbein
35
DEAL DRIVERS – AMERICAS - LIFE SCIENCES & HEALTHCARE
Life sciences & heALthcAreTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Vendor Company Deal Value (US$m)
21-Jul-11 P Express Scripts Inc Medco Health Solutions Inc 33,430
27-Apr-11 P Johnson & Johnson Synthes GmbH 21,191
21-Nov-11 C Gilead Sciences Inc Pharmasset Inc 10,367
07-Feb-11 C Danaher Corporation Beckman Coulter Inc 6,724
02-May-11 C Teva Pharmaceutical Industries Ltd Cephalon Inc 6,171
13-Jul-11 C Apax Partners LLP; Canada Pension Plan Investment Board; and Public Sector Pension Investment Board
Kinetic Concepts Inc 5,663
24-Oct-11 P Cigna Corporation HealthSpring Inc 3,734
19-May-11 C Thermo Fisher Scientific Inc Phadia AB Cinven Limited 3,535
03-Oct-11 C The Carlyle Group LLC; and Hellman & Friedman LLC
Pharmaceutical Product Development Inc 3,416
14-Feb-11 C Clayton, Dubilier & Rice LLC Emergency Medical Services Corporation 2,914
07-Mar-11 C Terumo Corporation CaridianBCT Holding Corp Gambro AB 2,625
11-Apr-11 C Endo Pharmaceuticals Holdings Inc American Medical Systems Holdings Inc 2,537
04-Apr-11 C Kohlberg Kravis Roberts & Co Capsugel Pfizer Inc 2,375
22-Jun-11 C DENTSPLY International Astra Tech AB AstraZeneca Plc 1,800
01-Jul-11 C Trinity Health Corporation Loyola University Health System Loyola University Chicago 1,780
C= Completed; P= Pending; L= Lapsed
DEAL DRIVERS – AMERICAS - LIFE SCIENCES & HEALTHCARE
36
Life sciences & heALthcAreM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
20
40
60
80
100
120
140
160
180
200
20112010200920082007200620050.6 0.6 0.7 0.5 0.4 0.4 0.4
4.84.6
2.9 4.13.1
4.1
52.6
8.26.45.5
63.3
6.9
179.0
6.2
73.6
7.5
100.5
10.27.46.8
167.4
8.07.16.2
106.5
12.37.05.3
0
50
100
150
200
250
300
350
400
450
500
2011201020092008200720062005
3025
43
132
63
104
1920
29
109
51
134
201821
74
114
40
3423
42
102
92
48
29
36
45
212173
41
21
41
145
64
38
126
49
36
45
134
123
74
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
10
20
30
40
50
60
70
80
90
100
110
120
130
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant industry of the target is the Life Sciences & Healthcare sector.
37
DEAL DRIVERS – AMERICAS - LIFE SCIENCES & HEALTHCARE
Life sciences & heALthcAreFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
4 1 Credit Suisse 65,895 8
3 2 JPMorgan 52,702 27
1 3 Goldman Sachs 48,122 21
2 4 Morgan Stanley 46,528 23
11 5 Citigroup 41,246 15
8 6 Lazard 39,564 12
- 7 Foros 33,430 1
9 8 Bank of America Merrill Lynch 28,947 20
10 9 Barclays Capital 24,971 16
12 10 Deutsche Bank 14,590 10
17 11 UBS Investment Bank 8,434 12
32 12 RBC Capital Markets 7,161 8
13 13 Jefferies & Company 7,108 31
6 14 Evercore Partners 5,000 2
24 15 Moelis & Company 4,287 5
- 16 Mizuho Financial Group 2,950 2
33 17 Rothschild 2,586 5
15 18 Guggenheim Partners 2,375 2
34 19 Houlihan Lokey 1,640 12
36 20 Royal Bank of Scotland Group 1,490 2
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
4 1 Jefferies & Company 7,108 31
2 2 JPMorgan 52,702 27
5 3 Morgan Stanley 46,528 23
1 4 Goldman Sachs 48,122 21
6 5 Bank of America Merrill Lynch 28,947 20
7 6 Barclays Capital 24,971 16
10 7 Citigroup 41,246 15
8 8 Cain Brothers 431 14
3 9 Lazard 39,564 12
14 10 UBS Investment Bank 8,434 12
12 11 Houlihan Lokey 1,640 12
15 12 William Blair & Company 1,062 11
13 13 Deutsche Bank 14,590 10
23 14 Morgan Keegan & Company 351 10
9 15 Credit Suisse 65,895 8
17 16 RBC Capital Markets 7,161 8
29 17 Robert W. Baird & Co 512 8
11 18 Piper Jaffray & Co 879 7
35 19 Oppenheimer & Co 567 7
38 20 Canaccord Genuity 324 7
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
3 1 Skadden Arps Slate Meagher & Flom 77,910 23
12 2 Sullivan & Cromwell 72,036 14
15 3 Dewey & LeBoeuf 67,057 15
9 4 Cravath Swaine & Moore 55,583 6
4 5 Simpson Thacher & Bartlett 45,131 10
7 6 Wachtell, Lipton, Rosen & Katz 43,570 3
17 7 Gibson Dunn & Crutcher 43,366 9
43 8 Dechert 35,354 6
6 9 Weil Gotshal & Manges 32,629 18
14 10 Shearman & Sterling 29,642 13
5 11 Linklaters 27,656 5
74 12 Freshfields Bruckhaus Deringer 25,820 5
178 13 Stikeman Elliott 21,716 12
262 14 Homburger 21,301 2
11 15 Blake, Cassels & Graydon 21,200 2
- 16 Pestalozzi Attorneys at Law 21,191 1
8 17 Latham & Watkins 21,180 32
1 18 Fried Frank Harris Shriver & Jacobson 15,699 10
23 19 Kirkland & Ellis 15,262 23
19 20 Greenberg Traurig 13,297 8
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
1 1 Latham & Watkins 21,180 32
2 2 Ropes & Gray 6,977 24
5 3 Skadden Arps Slate Meagher & Flom 77,910 23
4 4 Kirkland & Ellis 15,262 23
7 5 DLA Piper 3,233 23
3 6 Jones Day 7,917 22
46 7 WilmerHale 8,164 21
16 8 Weil Gotshal & Manges 32,629 18
12 9 McDermott Will & Emery 787 18
9 10 Paul Hastings 1,395 17
17 11 Dewey & LeBoeuf 67,057 15
11 12 Baker & McKenzie 4,237 15
22 13 Sullivan & Cromwell 72,036 14
19 14 Wilson Sonsini Goodrich & Rosati 4,859 14
20 15 Goodwin Procter 836 14
6 16 K&L Gates 390 14
30 17 Shearman & Sterling 29,642 13
36 18 Squire Sanders 1,687 13
79 19 Stikeman Elliott 21,716 12
21 20 Cooley 3,609 12
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Biotechnology; Medical; and Pharmaceuticals.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/20111 and include lapsed and withdrawn deals.The tables are based on advice to a North American bidder, target or vendor and are based on the following sectors: Biotechnology; Medical; and Pharmaceuticals.
DEAL DRIVERS - CANADA
38CANADA
cAnAdA
Canada M&A likely to increase in 2012; gold and base metal mining to be particularly active
Led by its stalwart resource sector, Canada M&A should catapult in 2012 above 2011 levels, experts agreed. Larger strategic players armed with cash, and small- and mid-market companies finding access to capital markets relatively constrained, should drive 2012 increases in both M&A value and volume, according to the experts. Constrained capital markets could also lead to an increase in private equity M&A activity, particularly in energy and energy infrastructure, the experts said. Real estate companies, and utilities, already performing well in the market, might use their strong share prices as currency for 2012 M&A, said the experts. Canadian banks have opportunities for buying distressed assets in the USA and Europe, said Mike Boyd, managing director and head of M&A at CIBC World Markets. The technology and biotech sectors should also see activity, said Boyd. Lower valuations in the mining sector should spur M&A activity, with gold and base metal mining being particularly active in 2012, predicted Boyd. Gold producers have built their balance sheets and thus are in a position to add to resources through M&A, explained Daryl Hodges, president and CEO of Jennings Capital. For larger mining companies, buying an explorer could be cheaper than exploring for resources, thus sparking M&A, said Scott Samuel, head of investment banking at Octagon Capital. There will be a number of IPOs of potash and phosphate companies in the first half of 2012 and of a number of iron ore miners throughout the year, predicted Samuel. Producers whose projects are considered technically solid could borrow or raise capital through off-take agreements, he explained. A number of private equity firms, as well as other funds, could liquidate gold bullion holdings and use the proceeds to take gold miners private, Samuel said.
Despite uncertainty as to pipeline construction for Alberta’s oil sands, there likely will be strong demand for oil sands assets, particularly from Asian buyers, said Boyd. China will continue deal making in Canadian mining and energy, and this will include takeovers, partnerships and off-take agreements, said Samuel. Korea also will be interested in Canadian commodity-related deals, he said. Mergers of smaller shale gas companies are also likely to occur in 2012, as oil companies will be selective in investments in shale gas extraction activities due to the capital intensive nature of such activity, said Hodges. Additionally, there will be ongoing consolidation among oil companies in Western Canada, Hodges said. One sector that is unlikely to see big M&A deals are life insurers, which are struggling with low interest rates, said Boyd. Increased regulation and capital requirements for all regulated financial institutions will be an important M&A consideraton in that sector in 2012, Boyd added.
Canadian M&A started 2011 at a healthy pace, but then saw a marked slowdown in the second half, due to chilling effects of the US treasury debt downgrade and the European debt crisis, said the experts. They agreed that absent those types of factors, M&A throughout 2012 should maintain the healthy pace seen in the first half of 2011.
by Ron Mandel
39
DEAL DRIVERS - CANADA
cAnAdATOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
25-Apr-11 C Barrick Gold Corporation Equinox Minerals Limited Energy, Mining, Oil & Gas 7,384
03-Apr-11 L Minmetals Resources Limited Equinox Minerals Limited Energy, Mining, Oil & Gas 6,410
28-Feb-11 L Equinox Minerals Limited Lundin Mining Corporation Energy, Mining, Oil & Gas 4,614
11-Jan-11 C Cliffs Natural Resources Inc Consolidated Thompson Iron Mines Ltd Energy, Mining, Oil & Gas 4,330
12-Jan-11 L Inmet Mining Corporation Lundin Mining Corporation Energy, Mining, Oil & Gas 3,937
09-Feb-11 L London Stock Exchange Plc TMX Group Inc Financial Services 3,795
25-May-11 P Maple Group Acquisition Corporation TMX Group Inc Financial Services 3,730
10-Oct-11 C China Petroleum & Chemical Corporation
Daylight Energy Ltd Energy, Mining, Oil & Gas 2,760
31-May-11 C Intact Financial Corporation AXA Canada Inc Financial Services AXA SA 2,665
20-Jul-11 C China National Offshore Oil Corporation Ltd
OPTI Canada Inc Energy, Mining, Oil & Gas 2,432
19-Dec-11 P Eldorado Gold Corporation European Goldfields Limited Energy, Mining, Oil & Gas 2,316
06-Dec-11 P KGHM Polska Miedz SA Quadra FNX Mining Ltd Energy, Mining, Oil & Gas 2,247
03-May-11 C Berkshire Partners LLC; and OMERS Private Equity Inc
Husky Injection Molding Systems Ltd Industrials, Chemicals & Engineering
Onex Partners LP 2,100
03-Feb-11 C Newmont Mining Corporation Fronteer Gold Inc Energy, Mining, Oil & Gas 2,088
20-Jun-11 C Atlantic Power Corporation Capital Power Income LP Energy, Mining, Oil & Gas 1,797
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Agriculture
Defense
7.4%
10.4%
1.0%
1.8%
2.2%
5.3%
64.8%
2.3%
1.3%
3.2%0.3%
15.6%
6.6%
10.1%
7.0%
2.2%1.5%
27.0%
8.1%
2.6%
1.8%
13.2%
4.2%
VALUE VOLUME
DEAL DRIVERS – CANADA
40
cAnAdAM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
20112010200920082007200620051.0 1.1 0.8 0.8 0.6 0.7 0.5
62.5
7.68.87.9
72.1
7.97.45.5
54.0
6.86.06.2
52.5
13.8
52.0
8.810.45.4
8.55.5
108.2
11.26.77.2
162.3
12.810.67.3
0
50
100
150
200
250
300
350
400
450
500
550
600
650
2011201020092008200720062005
302250
179
111
98
312345
129
80
147
242038
133
118
64
3738
50
126
59
2433
119
50
170159
72
31
45
161
113
43
112
68
36
66
161
144
82
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in Canada.Industry sector is based on dominant industry of target.
41
DEAL DRIVERS - CANADA
cAnAdAFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
6 1 BMO Capital Markets 27,529 32
4 2 RBC Capital Markets 27,296 40
8 3 CIBC World Markets 23,791 15
5 4 TD Securities 23,239 21
1 5 Morgan Stanley 22,069 12
10 6 Bank of America Merrill Lynch 18,470 18
3 7 Goldman Sachs 17,578 15
2 8 JPMorgan 16,970 9
12 9 GMP Securities 14,110 21
11 10 Scotia Capital 9,871 15
17 11 National Bank Financial 9,552 25
7 12 Citigroup 9,170 12
9 13 UBS Investment Bank 9,045 12
38 14 Lazard 6,945 6
16 15 Barclays Capital 6,723 6
24 16 Macquarie Group 6,710 15
14 17 Credit Suisse 6,532 7
28 18 Canaccord Genuity 6,255 17
15 19 Rothschild 4,491 10
91 20 Greenhill & Co 3,247 3
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 RBC Capital Markets 27,296 40
6 2 BMO Capital Markets 27,529 32
5 3 National Bank Financial 9,552 25
1 4 TD Securities 23,239 21
4 5 GMP Securities 14,110 21
14 6 Bank of America Merrill Lynch 18,470 18
7 7 Canaccord Genuity 6,255 17
19 8 KPMG 225 16
3 9 CIBC World Markets 23,791 15
8 10 Goldman Sachs 17,578 15
10 11 Scotia Capital 9,871 15
12 12 Macquarie Group 6,710 15
9 13 Morgan Stanley 22,069 12
21 14 Citigroup 9,170 12
11 15 UBS Investment Bank 9,045 12
16 16 Cormark Securities 2,381 11
15 17 FirstEnergy Capital 1,816 11
20 18 Rothschild 4,491 10
18 19 Peters & Co 1,341 10
13 20 JPMorgan 16,970 9
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
1 1 Blake, Cassels & Graydon 39,107 72
12 2 Torys 31,075 39
6 3 Osler, Hoskin & Harcourt 30,112 52
13 4 Davies Ward Phillips & Vineberg 21,191 35
11 5 Sullivan & Cromwell 19,380 8
46 6 Allen & Overy 18,508 7
10 7 McCarthy Tetrault 15,113 65
2 8 Stikeman Elliott 15,077 78
23 9 Norton Rose 15,036 26
56 10 Weil Gotshal & Manges 15,020 11
16 11 Goodmans 13,578 26
21 12 Cassels Brock & Blackwell 13,173 16
14 13 Simpson Thacher & Bartlett 12,259 8
18 14 Fraser Milner Casgrain 11,524 14
37 15 Bennett Jones 10,529 27
5 16 Skadden Arps Slate Meagher & Flom 10,298 12
67 17 Gowling Lafleur Henderson 9,330 34
65 18 Kirkland & Ellis 8,557 14
41 19 Clayton Utz 8,422 3
38 20 Freehills 8,303 6
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Stikeman Elliott 15,077 78
2 2 Blake, Cassels & Graydon 39,107 72
4 3 McCarthy Tetrault 15,113 65
3 4 Osler, Hoskin & Harcourt 30,112 52
7 5 Torys 31,075 39
8 6 Davies Ward Phillips & Vineberg 21,191 35
17 7 Gowling Lafleur Henderson 9,330 34
5 8 Fasken Martineau Dumoulin 7,491 29
12 9 Bennett Jones 10,529 27
6 10 Norton Rose 15,036 26
10 11 Goodmans 13,578 26
11 12 Burnet Duckworth & Palmer 5,316 24
9 13 Borden Ladner Gervais 4,772 23
51 14 Miller Thomson 6,168 21
14 15 Cassels Brock & Blackwell 13,173 16
13 16 Fraser Milner Casgrain 11,524 14
29 17 Kirkland & Ellis 8,557 14
30 18 Skadden Arps Slate Meagher & Flom 10,298 12
24 19 Weil Gotshal & Manges 15,020 11
15 20 McMillan 4,839 11
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a Canadian bidder, target or vendor.
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, including lapsed and withdrawn deals. The tables are based on advice to a Canadian bidder, target or vendor.
DEAL DRIVERS – WEST
42WEST
west
Technology and financial services to drive West Coast M&A
West Coast dealmaking in 2012 should pick up again following a couple of slow quarters, particularly in the technology and financial services sectors, said several dealmakers.
Private equity firms expect another solid year of dealmaking. Steven Yager, senior managing director at Los Angeles-based The Gores Group, said he expects a balanced year with exits at three or four of his portfolio companies and perhaps four or five acquisitions of new platform companies. These anticipated deals are in addition to any acquisitions by portfolio companies at Gores. Financing is readily available again, Yager said, with private equity firms able to land twice as much debt as equity. Gores is also flush with cash, having raised US$2.1bn for its third fund and US$400m for a small-cap fund, and it is able to write equity checks of up to US$400m. “Consumer retail has been very busy. We expect to see a couple more deals there,” said Yager. Other sectors in which Gores expects deals in 2012 are technology and industrials, particularly in automotive, said Yager.
In technology, few IPOs are expected beyond Facebook’s in the second quarter. Nonetheless, a record number of companies are waiting to go public, having previously filed registration papers, including the likes of Yelp, Kayak Software, and Gamefly. Yager said he expects to see more deals in technology given that sellers’ expectations on valuation are more realistic and given that investors are now more willing to put two or three properties together.
Further consolidation is expected in semiconductors, particularly among West Coast companies specializing in Ethernet networking, long-haul infrastructure, microprocessors, and wireless networking, according to an industry consultant. “There are smaller companies that have not done a lot in the last four or five years and some sort of consolidation probably
will help them,” said the consultant. Broadcom, Marvell, Qualcomm and Intel likely will pick up smaller players in several of these market segments.
Cavium, a microprocessor company, might be attractive to Marvell Technology and Qualcomm following the US$3.4bn acquisition of its peer NetLogic Microsystems by Broadcom last fall.
Several of the West Coast’s medium-sized semiconductor companies, such as AppliedMicro, Vitesse, PMC-Sierra, Ikanos, and Exar, have been unable to increase revenue despite growth in the market, and these may decide to merge with each other, according to the consultant. Several others, such as Chelsio and Cortina Systems, have created a large enough revenue stream to go public and will be evaluating their options for an IPO or merging with a large vendor.
Pent-up demand in financial services is finally expected to be unleashed in 2012, following a disappointing 2011, according to one West Coast banker. “There are lots of early-stage merger discussions going on,” he said. Those that acquired distressed banks in government-assisted deals in the past likely will re-engage in normal M&A activity this year. Potential acquirers include OpusBank, PacWest Bancorp, Grandpoint Capital, and Columbia Banking System. Sellers will feature many of the smaller banks whose boards and management teams are approaching retirement. Valuations are a far cry from before the 2008 financial crisis, when banks commonly sold for three times book value, but sellers’ expectations have dropped to be more in line with the 1.25x book value that buyers are now willing to pay for healthy banks, noted the banker.
Cleantech companies in Silicon Valley have shown much promise, but often disappoint when providing exits for investors. That was true in 2011. Several West Coast leading lights filed for IPOs last year but have yet to go public, including BrightSource Energy, Enphase, and Silver Spring Networks. Others have raised prodigious amounts
of venture capital and are primed for an exit, such as Fisker Automotive, Stion and Miasole. Given the poor state of the solar sector because of global overcapacity, few bankers can envisage an exit for thin-film solar start-ups Stion or Miasole beyond partnering with a cash-rich Asian manufacturer. Areas to watch, however, continue to be energy storage, energy efficiency and bioefuels.
The West Coast’s biotech industry is expecting a year of average deal activity, following a largely unremarkable 2011. Gilead’s US$10.3bn purchase of Pharmasset was the landmark life science investment of 2011. Large biopharmaceutical companies like Gilead will continue to seek acquisitions of promising startups on the West Coast, according to biotech executives.
West Coast dealmakers are hoping to build on a largely disappointing 2011 for technology, financials and cleantech. The great hope is that after four economically-stagnant years, companies in various sectors will be sufficiently frustrated to finally uncork a vintage year of dealmaking. Yet a steady increase is probably closer to reality.
by Mark Andress
43
DEAL DRIVERS – WEST
westTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
20-Mar-11 L AT&T Inc T-Mobile USA Inc TMT Deutsche Telekom AG 39,000
31-Jan-11 C AMB Property Corporation ProLogis Real Estate 14,833
28-Feb-11 C Ventas Inc Nationwide Health Properties Inc Real Estate 7,159
07-Feb-11 C Danaher Corporation Beckman Coulter Inc Life Sciences & Healthcare 6,724
04-Apr-11 C Texas Instruments Incorporated National Semiconductor Corporation TMT 6,281
07-Mar-11 P Western Digital Corporation Hitachi Global Storage Technologies TMT Hitachi Ltd 4,250
16-Dec-11 P United Rentals Inc RSC Holdings Inc Financial Services Oak Hill Capital Partners LP 4,120
12-Sep-11 P Broadcom Corporation NetLogic Microsystems Inc TMT 3,449
14-Dec-11 P Lam Research Corporation Novellus Systems Inc TMT 3,298
03-Dec-11 P SAP AG SuccessFactors Inc TMT 3,273
14-Feb-11 C Clayton, Dubilier & Rice, LLC Emergency Medical Services Corporation Life Sciences & Healthcare 2,914
05-Jan-11 C Qualcomm Incorporated Atheros Communications Inc TMT 2,741
07-Mar-11 C Terumo Corporation CaridianBCT Holding Corp Life Sciences & Healthcare Gambro AB 2,625
10-Mar-11 C Cumulus Media Inc Citadel Broadcasting Corporation TMT 2,463
01-Jul-11 C Kohlberg Kravis Roberts & Co; Silver Lake Partners; and Technology Crossover Ventures
The Go Daddy Group Inc (undisclosed stake) TMT 2,250
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Agriculture
Defense
5.0%
8.1%
3.8%
2.8%
16.9%
1.2%
36.8%
6.6%
1.8%0.2%
16.4%
0.1%
0.3%
10.3%
9.0%
11.1%
1.1%
10.6%
6.3%
12.1%
31.0%
3.7%
0.9%
2.8%
0.6%
0.4%
VALUE VOLUME
DEAL DRIVERS – WEST
44
westM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
20112010200920082007200620051.7 1.5 1.5 1.1 1.0 1.0 0.8
7.27.9
182.1
20.315.115.1
98.3
10.4
10.812.9
130.9
8.9
102.2
16.4
99.4
18.112.510.0
10.99.3
269.3
23.416.815.3
200.0
24.617.414.8
0
200
400
600
800
1,000
1,200
2011201020092008200720062005
6358
93
355
183
293
443185
250
118
456
4933
179
365
107
524468
208 234
5053
77
88
475499
103
64
102
351
159
79
419
81
69
105
342
427
163
26
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
120,000
130,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
020406080
100120140160180200220240260280300320340
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in West.Industry sector is based on dominant industry of target.
45
DEAL DRIVERS – WEST
westFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Morgan Stanley 82,567 51
5 2 Goldman Sachs 81,828 43
2 3 JPMorgan 66,346 37
3 4 Barclays Capital 53,595 26
7 5 Bank of America Merrill Lynch 48,737 33
17 6 Qatalyst Group 39,296 17
6 7 Lazard 28,634 32
4 8 Deutsche Bank 27,262 28
12 9 UBS Investment Bank 22,850 22
14 10 Citigroup 20,958 18
15 11 Centerview Partners 20,367 4
23 12 RBC Capital Markets 18,570 32
10 13 Credit Suisse 18,439 29
8 14 Perella Weinberg Partners 13,040 5
16 15 Moelis & Company 8,849 18
11 16 Jefferies & Company 8,270 30
22 17 Houlihan Lokey 7,978 33
28 18 Rothschild 6,335 17
9 19 Evercore Partners 6,040 19
64 20 Royal Bank of Scotland Group 4,495 1
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Morgan Stanley 82,567 51
1 2 Goldman Sachs 81,828 43
6 3 JPMorgan 66,346 37
4 4 Bank of America Merrill Lynch 48,737 33
5 5 Houlihan Lokey 7,978 33
8 6 Lazard 28,634 32
15 7 RBC Capital Markets 18,570 32
2 8 Jefferies & Company 8,270 30
7 9 Credit Suisse 18,439 29
10 10 Deutsche Bank 27,262 28
9 11 Barclays Capital 53,595 26
12 12 UBS Investment Bank 22,850 22
17 13 Lincoln International 1,024 21
32 14 Evercore Partners 6,040 19
16 15 Citigroup 20,958 18
11 16 Moelis & Company 8,849 18
13 17 GCA Savvian Group 1,323 18
50 18 Qatalyst Group 39,296 17
20 19 Rothschild 6,335 17
25 20 Robert W. Baird & Co 920 17
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
5 1 Wachtell, Lipton, Rosen & Katz 79,980 17
7 2 Sullivan & Cromwell 79,916 28
3 3 Shearman & Sterling 77,210 36
4 4 Simpson Thacher & Bartlett 72,501 26
15 5 Cleary Gottlieb Steen & Hamilton 63,937 23
1 6 Skadden Arps Slate Meagher & Flom 49,678 44
18 7 Davis Polk & Wardwell 48,411 29
43 8 Fried Frank Harris Shriver & Jacobson 44,623 18
2 9 Latham & Watkins 40,932 98
251 10 Wiley Rein 39,000 1
14 11 Gibson Dunn & Crutcher 35,825 50
25 12 Greenberg Traurig 34,387 26
17 13 Dewey & LeBoeuf 29,897 39
12 14 Jones Day 29,834 64
83 15 Davies Ward Phillips & Vineberg 26,913 11
11 16 Morrison & Foerster 24,406 33
16 17 Kirkland & Ellis 23,127 87
41 18 Freshfields Bruckhaus Deringer 19,271 9
42 19 DLA Piper 18,458 79
44 20 Proskauer Rose 17,940 7
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
1 1 Latham & Watkins 40,932 98
4 2 Kirkland & Ellis 23,127 87
5 3 Wilson Sonsini Goodrich & Rosati 15,595 82
2 4 DLA Piper 18,458 79
3 5 Jones Day 29,834 64
7 6 Fenwick & West 10,031 52
6 7 Gibson Dunn & Crutcher 35,825 50
10 8 Cooley 3,921 47
8 9 Skadden Arps Slate Meagher & Flom 49,678 44
11 10 K&L Gates 1,686 40
19 11 Dewey & LeBoeuf 29,897 39
15 12 Shearman & Sterling 77,210 36
14 13 Paul Hastings 3,665 34
9 14 Morrison & Foerster 24,406 33
18 15 Goodwin Procter 4,731 33
13 16 O'Melveny & Myers 8,965 32
17 17 Weil Gotshal & Manges 12,786 30
21 18 Hogan Lovells 5,721 30
25 19 Davis Polk & Wardwell 48,411 29
27 20 Bingham McCutchen 5,547 29
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a US (West) bidder, target or vendor. States: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, including lapsed and withdrawn deals. The tables are based on advice to a West Coast bidder, target or vendor. States: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming
DEAL DRIVERS – MIDWEST
46MIDWEST
midwest
Middle market should be ‘center stage’ in Midwest M&A; pE divestitures could also play key role
Fundamentals point to healthy M&A in the Midwest US for 2012, with middle market transactions expected to lead the way, regional experts predict.
Industrials, technology, healthcare, and consumer food segments should be particularly active, and even sectors that struggled most during the economic downturn, such as housing, construction and parts of financial services, could see improvement, according to the experts.
Price stability and the accessibility of credit markets should drive 2012 deals, said the experts. Private equity divestitures of portfolio holdings that were hard to sell in recent years should also drive deals in the Midwest, the experts said.
Middle market transactions in the core US$100m to US$500m range “will be center stage,” in the Midwest US in 2012, said Mike Slattery, central regional managing partner of the Midwest US Mergers & Acquisitions Transaction Services Group of Deloitte. “You’ll still see the potential for the large iconic public-to-public transaction, but in the broader central region, the middle market sweet spot will be significant.”
“The Midwestern middle market, US$25m-US$500m, should be strong” in 2012, said Craig Miller, CEO of the Chicago chapter of the Association for Corporate Growth, an M&A organization. “There is growing confidence in the economy here,” and thus, 2012 should be stronger for Midwest M&A than 2011, Miller said.
The impending 2014 full implementation date for health care reform legislation should be a catalyst for M&A in healthcare, which is a prominent sector in the Midwest, said Miller and Slattery. But factors such as medical device innovations and better ways to document treatments will also drive deals. “We see life sciences being very active,” said Slattery, adding that the desire for continuing
strategic growth and new products should result in “continuing pharma consolidation” in 2012.
Within industrials, the drive for growth and operational efficiencies could push manufacturing deals this year, said Slattery, adding that the agriculture sector could see the same. Consumer foods M&A could be particularly active in staples, which is less dependent on the state of the economy, and in organic and healthier food alternatives, due to growing demand, said a Midwest-based industry executive. An executive with a large technology company based in the region said that while larger deals such as the 2011 acquisition by Google of Libertyville, Illinois-based Motorola Mobility tend to garner media attention, the middle market deal ranges cited by Miller and Slattery could be where M&A action is centered in 2012.
Both Slattery and Miller cautioned that overriding world events, such as European debt issues, could dampen what is expected to be an otherwise solid deal environment in 2012. “Debt markets are key, and can be sensitive to world events,” Slattery said. He noted that world events caused a dramatic pullback in US M&A in August and September of 2011.
Slattery said 2011 was a “solid” though some say “dysfunctional” M&A year, that could have been a “great year” if world events had not intervened. M&A activity picked up as 2011 ended and that is more of the type of environment expected for 2012, according to Slattery and Miller.
Miller said that as 2011 progressed, even slow M&A sectors such as real estate and construction saw increased M&A activity. “If you’d have asked me three or six months ago, I would have said these sectors would be slow in 2012, but as 2011 unfolded, we saw a pick-up there too,” said Miller. “Those sectors have picked up, and could catch up in 2012.”
by Mark Eissman
47
DEAL DRIVERS – MIDWEST
midwestTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
18-Jan-11 C Cargill Inc (Shareholders) The Mosaic Company (40% Stake) Industrials, Chemicals & Engineering
Cargill Incorporated 14,808
13-Jan-11 C Marathon Oil Corporation (Share-holders)
Marathon Petroleum Corporation Energy, Mining, Oil & Gas Marathon Oil Corporation 14,667
14-Mar-11 C Berkshire Hathaway Inc The Lubrizol Corporation Industrials, Chemicals & Engineering
9,368
15-Aug-11 P Google Inc Motorola Mobility Holdings Inc TMT 8,950
18-Jan-11 C Cargill Inc (Debtholders) The Mosaic Company (23.98% Stake) Industrials, Chemicals & Engineering
Cargill Incorporated 8,878
20-Jul-11 C Ecolab Inc Nalco Holding Company Industrials, Chemicals & Engineering
8,138
12-Jan-11 C ITT Corporation (Shareholders) Xylem Inc Industrials, Chemicals & Engineering
ITT Corporation 5,360
20-Apr-11 C AES Corporation DPL Inc Energy, Mining, Oil & Gas 4,658
31-Mar-11 C Delphi Automotive Plc Delphi Automotive LLP (Class A & Class C Membership Interest)
Industrials, Chemicals & Engineering
Pension Benefit Guaranty Corporation; and General Motors Company
4,394
01-Jun-11 C Sealed Air Corporation Diversey Holdings Inc Industrials, Chemicals & Engineering
Clayton, Dubilier & Rice, LLC; and Johnson family
4,262
23-Jan-11 C Rock-Tenn Company Smurfit-Stone Container Corp Industrials, Chemicals & Engineering
3,953
27-Apr-11 C CenturyLink Savvis Inc Business Services Welsh, Carson, Anderson & Stowe 2,706
11-Apr-11 C Endo Pharmaceuticals Holdings Inc American Medical Systems Holdings Inc Life Sciences & Healthcare 2,537
05-Apr-11 P Diamond Foods Inc Procter & Gamble Company (Pringles snack business)
Consumer Procter & Gamble Company 2,518
01-Jul-11 C Trinity Health Corporation Loyola University Health System Life Sciences & Healthcare Loyola University Chicago 1,780
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Agriculture
Defense
49.0%
1.7%
0.3%
10.0%
3.7%5.5%
6.1%
15.6%
0.6% 1.5%
5.9% <1%
31.6%2.6%
1.9%
9.1%
12.5%
11.6%
11.5%
4.0%
3.1%
10.7%
0.6%
0.3%
0.5%
VALUE VOLUME
DEAL DRIVERS – MIDWEST
48
midwestM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
225
250
275
300
325
20112010200920082007200620050.8 1.0 1.0 0.6 0.4 0.6 0.5
7.4 3.94.8
4.67.8
5.19.7
3.47.5
103.6
14.410.59.2
146.1
10.9
96.8102.6
11.9
126.4
10.6
188.8
17.913.09.7
264.3
13.89.7
11.00
200
400
600
800
1,000
1,200
2011201020092008200720062005
4840
201
64
90
325
4431
156
63
383
8529
311
46
533447
111
334
59
115
592949
397
57
5281
234
112
69
373
853863
238
421
1099
22
25
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
120,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
25
50
75
100
125
150
175
200
225
250
275
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in Midwest.Industry sector is based on dominant industry of target.
49
DEAL DRIVERS – MIDWEST
midwestFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 JPMorgan 107,032 38
11 2 Lazard 89,505 33
4 3 Credit Suisse 81,140 26
8 4 Citigroup 60,837 25
1 5 Goldman Sachs 57,590 36
3 6 Morgan Stanley 51,230 28
6 7 Bank of America Merrill Lynch 46,419 38
7 8 Barclays Capital 42,923 25
5 9 UBS Investment Bank 39,195 27
- 10 Foros 33,642 2
31 11 Evercore Partners 25,661 11
16 12 Centerview Partners 17,997 4
13 13 Perella Weinberg Partners 14,554 2
- 14 Loop Capital Markets 10,410 1
32 15 Wells Fargo Securities 9,048 8
- 16 Qatalyst Group 8,950 1
15 17 Jefferies & Company 7,944 27
18 18 Houlihan Lokey 7,187 23
30 19 RBC Capital Markets 7,048 22
22 20 BMO Capital Markets 5,403 6
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
5 1 JPMorgan 107,032 38
3 2 Bank of America Merrill Lynch 46,419 38
1 3 Goldman Sachs 57,590 36
10 4 Lazard 89,505 33
17 5 Robert W. Baird & Co 3,818 31
14 6 Lincoln International 1,272 29
2 7 Morgan Stanley 51,230 28
6 8 UBS Investment Bank 39,195 27
16 9 Jefferies & Company 7,944 27
11 10 William Blair & Company 1,986 27
7 11 Credit Suisse 81,140 26
13 12 Citigroup 60,837 25
4 13 Barclays Capital 42,923 25
8 14 Houlihan Lokey 7,187 23
19 15 RBC Capital Markets 7,048 22
9 16 Harris Williams & Co 1,501 17
24 17 Raymond James & Associates 2,088 16
15 18 Keefe, Bruyette & Woods 5,179 12
70 19 Evercore Partners 25,661 11
45 20 PwC 2,524 11
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
4 1 Simpson Thacher & Bartlett 98,105 26
3 2 Skadden Arps Slate Meagher & Flom 87,951 43
8 3 Dewey & LeBoeuf 74,920 35
6 4 Cravath Swaine & Moore 68,390 13
2 5 Sullivan & Cromwell 66,030 18
28 6 Wachtell, Lipton, Rosen & Katz 62,747 16
1 7 Latham & Watkins 51,538 48
14 8 Gibson Dunn & Crutcher 49,510 16
58 9 Dechert 45,653 18
12 10 Davis Polk & Wardwell 34,147 24
17 11 Weil Gotshal & Manges 33,068 26
18 12 Kirkland & Ellis 32,192 85
21 13 Jones Day 29,668 65
59 14 McDermott Will & Emery 27,388 29
29 15 Fried Frank Harris Shriver & Jacobson 25,418 11
26 16 Cleary Gottlieb Steen & Hamilton 20,314 12
9 17 Shearman & Sterling 19,551 15
10 18 Baker & McKenzie 16,243 31
32 19 Baker Botts 14,815 4
30 20 Loeb & Loeb 14,710 3
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
1 1 Kirkland & Ellis 32,192 85
2 2 Jones Day 29,668 65
3 3 Latham & Watkins 51,538 48
4 4 Skadden Arps Slate Meagher & Flom 87,951 43
6 5 Sidley Austin 5,463 41
7 6 DLA Piper 3,617 38
19 7 Dewey & LeBoeuf 74,920 35
5 8 Baker & McKenzie 16,243 31
12 9 Dorsey & Whitney 3,776 31
10 10 McDermott Will & Emery 27,388 29
9 11 Paul Hastings 4,408 28
15 12 Simpson Thacher & Bartlett 98,105 26
13 13 Weil Gotshal & Manges 33,068 26
26 14 Davis Polk & Wardwell 34,147 24
8 15 Mayer Brown 7,846 24
37 16 Baker & Hostetler 2,438 24
17 17 Bryan Cave 2,887 23
52 18 Winston & Strawn 1,368 20
16 19 Ropes & Gray 2,750 19
11 20 Sullivan & Cromwell 66,030 18
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The table are based on advice to a Midwest bidder, target or vendor. States: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, including lapsed and withdrawn deals. The tables are based on advice to a Midwest bidder, target or vendor. States: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
DEAL DRIVERS – SOUTH
50SOuTH
south
South’s M&A professionals see reasons to expect busy year, but also some question marks
Dealmakers in the South see the right conditions for a robust level of M&A activity in 2012: Interest rates remain relatively low for financing deals. Corporations and private equity firms collectively hold more than a trillion dollars in cash that they need to invest, and a soft stock market has left many small-cap public companies vulnerable to unsolicited takeover attempts.
But, as there is always a ‘but’, “there are still so many challenges out there, I don’t think there’s a universal feeling of exuberance,” said Allen Rogers, a managing director at Allen C. Ewing & Co., an investment bank based in Jacksonville, Florida, that focuses on southeastern community banks.
In community banking, the challenges are likely to be the motivators for deal-making, Rogers suggested. As banks struggle with anemic loan growth and increased compliance costs, they could begin surrendering to more widespread consolidation in 2012, which will require that sellers put aside concerns about depressed valuations.
Rogers suggested a major wave of consolidation might simply be waiting for the right trigger, both for community banks and other industries. “It may take a couple of catalytic events, such as a few big deals in the industry to get it started,” he said.
Beyond the financial services sector, a wide range of factors should motivate M&A activity this year. For example, the IPO market that looked somewhat promising in the first half of 2011 now looks weak for all but the biggest names (e.g. Facebook), said Ray Groth, managing director of Charlotte-based investment bank Fennebresque & Co. This shift means many of the venture capital-backed technology and life sciences companies that were thinking about IPOs a year ago might be more inclined to pursue a sale in 2012, he said.
Certain capital-intensive types of businesses also might notice the public debt markets have become more finicky than they once were, which could push some companies to consider M&A alternatives, perhaps including sectors such as energy and industrials, Groth added. Related to those, the realm of automotive suppliers could see opportunities for consolidation in 2012, as that industry comes off a good rebound in 2011, he said.
The industrials sector has become one of the more interesting spaces to watch for another Charlotte-based investment bank, McColl Partners, said Lorin DeMordaunt, a managing director at the firm. Middle-market industrials companies that are in good condition and avoided collapse during the recession are now seeing strong interest from buyers, despite the sector’s relatively cool streak of M&A activity in recent years, he said.
DeMordaunt also sees “a lot of positive dynamics” that set the stage for an active year ahead, “although we’re still not in the most robust economic environment,” he said. Nevertheless, companies that are performing well are attracting strong interest and receiving premium valuations both from strategic and private equity bidders, he observed. He contrasted this trend with the heady M&A days of 2006 and 2007, when targets of all types could attract interest. “The good, the bad and the ugly all got good air time,” he recalled. McColl serves as a sell-side advisor to clients around the US, with clients typically falling in the range of US$10m to US$20m in annual EBITDA.
Healthcare services and business services have been relatively active sectors for the South in the past year, Groth said, adding that he predicts those will continue to see activity. He noted that his firm typically advises companies with revenue or market caps under US$500m, with a primary focus in the Southeast.
DeMordaunt agreed that healthcare and business services remain active sectors for M&A and added that his firm is seeing a good amount of deal flow in the consumer and financial technology sectors as well.
“Overall, the outlook for M&A this year, I think, looks quite good,” Groth said, noting the one major obstacle he foresees is the European debt crisis, if it should spill over to affect the US business community or financial system further. “Absent Europe, or some other significant shock to the system, I think the outlook is good.”
by Chris Marr
51
DEAL DRIVERS – SOUTH
southTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
16-Oct-11 P Kinder Morgan Inc El Paso Corporation Energy, Mining, Oil & Gas 37,439
10-Jan-11 P Duke Energy Corporation Progress Energy Inc Energy, Mining, Oil & Gas 25,825
21-Sep-11 P United Technologies Corporation Goodrich Corporation Industrials, Chemicals & Engineering 17,861
14-Jul-11 C BHP Billiton Ltd Petrohawk Energy Corporation Energy, Mining, Oil & Gas 14,760
28-Apr-11 P Exelon Corporation Constellation Energy Group Inc Energy, Mining, Oil & Gas 10,410
16-Jun-11 P Energy Transfer Equity LP Southern Union Company Energy, Mining, Oil & Gas 9,037
16-Jun-11 P Capital One Financial Corporation ING Direct USA Financial Services ING Groep NV 9,000
07-Feb-11 C ENSCO International Inc Pride International Inc Energy, Mining, Oil & Gas 8,735
29-Jan-11 C Alpha Natural Resources Inc Massey Energy Company Energy, Mining, Oil & Gas 8,156
12-Dec-11 P Martin Marietta Materials Inc Vulcan Materials Company Industrials, Chemicals & Engineering 7,411
23-Nov-11 C Kohlberg Kravis Roberts & Co; Itochu Corporation; Natural Gas Partners LLC; and Crestview Partners LP
Samson Investment Company Energy, Mining, Oil & Gas The Schusterman family 7,200
13-Jul-11 C Apax Partners LLP; Canada Pension Plan Investment Board; and Public Sector Pension Investment Board
Kinetic Concepts Inc Life Sciences & Healthcare 5,663
19-Apr-11 C Temasek Holdings Pte Ltd; Chesapeake Energy Corporation; Public Sector Pension Investment Board; SBI Global Investment Co Ltd; and RRJ Capital
Frac Tech Services LLC Energy, Mining, Oil & Gas 5,000
21-Feb-11 C BHP Billiton Ltd Chesapeake Energy Corporation (Fayetteville shale assets)
Energy, Mining, Oil & Gas Chesapeake Energy Corporation
4,750
17-Oct-11 C Statoil ASA Brigham Exploration Company Energy, Mining, Oil & Gas 4,520
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Agriculture
Defense
6.6%
6.8%
11.5%
4.6%
2.6%
56.7%
7.0%
2.0%
0.2%
0.3% 0.1%
0.5%0.3%
12.1%
15.4%12.9%
16.6%
7.6%13.0%
12.7%
3.7%
1.7%
2.1% 0.9%
0.6% 0.6%
VALUE VOLUME
DEAL DRIVERS – SOUTH
52
southM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
50
100
150
200
250
300
350
400
450
500
550
20112010200920082007200620052.0 1.5 1.5 1.2 0.9 0.8 0.9
12.9 7.011.8
10.9 10.3
12.8
264.9
17.822.319.3
145.2
19.513.7
159.4202.7
19.317.5
291.1
25.816.7
441.4
30.323.920.3
414.0
27.524.318.6
0
200
400
600
800
1,000
1,200
1,400
1,600
2011201020092008200720062005
8851
421
137
223
421
625278
281
126
600
75
48
446
171
108
10054
107
238 231
99
9974
102
556590
88
82
149
458
161
125
586
140
79
146
422
610
171
37
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
50
100
150
200
250
300
350
400
450
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in South.Industry sector is based on dominant industry of target.
53
DEAL DRIVERS – SOUTH
southFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
5 1 Goldman Sachs 193,261 83
4 2 Barclays Capital 158,630 52
1 3 Morgan Stanley 144,119 51
6 4 JPMorgan 131,962 53
3 5 Bank of America Merrill Lynch 102,870 62
7 6 Credit Suisse 83,744 41
2 7 Citigroup 77,805 42
13 8 Evercore Partners 69,043 26
8 9 Deutsche Bank 57,397 33
9 10 Lazard 47,667 31
11 11 UBS Investment Bank 47,507 43
18 12 Jefferies & Company 33,227 42
21 13 Scotia Capital 21,457 5
14 14 Tudor, Pickering, Holt & Co 19,201 21
19 15 RBC Capital Markets 18,519 39
27 16 Wells Fargo Securities 14,412 20
34 17 Moelis & Company 13,526 13
22 18 Centerview Partners 12,796 5
12 19 Perella Weinberg Partners 11,138 7
- 20 10,410 1
y/E 2010
y/E2011
Company Name Value (M) USD
Number of Deals
1 1 Goldman Sachs 193,261 83
4 2 Bank of America Merrill Lynch 102,870 62
5 3 JPMorgan 131,962 53
6 4 Barclays Capital 158,630 52
3 5 Morgan Stanley 144,119 51
10 6 UBS Investment Bank 47,507 43
9 7 Citigroup 77,805 42
11 8 Jefferies & Company 33,227 42
2 9 Credit Suisse 83,744 41
12 10 RBC Capital Markets 18,519 39
13 11 Deutsche Bank 57,397 33
8 12 Lazard 47,667 31
7 13 Houlihan Lokey 4,744 31
22 14 Raymond James & Associates 2,736 28
19 15 Evercore Partners 69,043 26
21 16 Robert W. Baird & Co 1,938 24
25 17 William Blair & Company 2,583 23
15 18 Tudor, Pickering, Holt & Co 19,201 21
23 19 Morgan Keegan & Company 1,015 21
20 20 Wells Fargo Securities 14,412 20
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Sullivan & Cromwell 190,895 41
6 2 Wachtell, Lipton, Rosen & Katz 185,134 34
3 3 Latham & Watkins 154,939 95
2 4 Simpson Thacher & Bartlett 134,937 56
8 5 Cleary Gottlieb Steen & Hamilton 101,922 26
4 6 Skadden Arps Slate Meagher & Flom 97,685 59
13 7 Shearman & Sterling 82,886 32
7 8 Vinson & Elkins 80,404 62
14 9 Weil Gotshal & Manges 74,996 37
15 10 Fried Frank Harris Shriver & Jacobson 71,300 24
9 11 Dewey & LeBoeuf 69,831 35
32 12 Cravath Swaine & Moore 68,608 17
21 13 Jones Day 58,563 72
10 14 Baker Botts 56,256 26
29 15 Bracewell & Giuliani 43,585 19
11 16 Alston & Bird 42,304 37
285 17 Wiley Rein 39,024 2
45 18 Greenberg Traurig 38,791 33
22 19 Kirkland & Ellis 34,386 86
70 20 Morgan Lewis & Bockius 31,570 38
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Latham & Watkins 154,939 95
1 2 Kirkland & Ellis 34,386 86
2 3 Jones Day 58,563 72
4 4 DLA Piper 8,818 72
5 5 Vinson & Elkins 80,404 62
7 6 Skadden Arps Slate Meagher & Flom 97,685 59
6 7 Simpson Thacher & Bartlett 134,937 56
8 8 Fulbright and Jaworski 5,074 44
9 9 Hogan Lovells 26,827 42
10 10 Sullivan & Cromwell 190,895 41
22 11 King & Spalding 20,468 40
17 12 Morgan Lewis & Bockius 31,570 38
14 13 Weil Gotshal & Manges 74,996 37
13 14 Alston & Bird 42,304 37
18 15 Gibson Dunn & Crutcher 29,740 36
43 16 Squire Sanders 15,017 36
15 17 Dewey & LeBoeuf 69,831 35
33 18 Davis Polk & Wardwell 26,703 35
20 19 Wachtell, Lipton, Rosen & Katz 185,134 34
11 20 K&L Gates 2,618 34
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a Southern bidder, target or vendor. States: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, including lapsed and withdrawn deals. The tables are based on advice to a Southern bidder, target or vendor. States: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia
DEAL DRIVERS – MID-ATLANTIC
54MID-ATLANTIC
mid-AtLAntic
Mid-Atlantic dealmakers ‘upbeat on M&A’, as sellers look to avoid future tax increases
Fear of federal budget cuts and the possibility of increased capital gains taxes, combined with an aging business owner population, are likely to motivate sellers and lead to increased M&A activity in the Mid-Atlantic region, according to industry experts.
Furthermore, deal flow should accelerate among the region’s oil and gas services companies as production increases in Pennsylvania’s Marcellus shale. Advisors are seeing a “percolation of deal opportunities” in the oil and gas sector, said Joe Golden, principal at The McLean Group, an investment bank in McLean, Virginia.
The Mid-Atlantic could also see more buy-side interest in M&A, as the region’s large defense/aerospace contractors, government services conglomerates and private equity firms start to spend cash that was largely hoarded during the recession, said Golden.On the buy-side, large companies are concerned with generating revenue growth. Public companies have pressure to meet quarterly earnings, and most have cash on their balance sheet, which equals a perfect formula for M&A, Golden said.
At the same time, small- to mid-sized sellers want to move their businesses to reduce risk. “We are pretty upbeat on M&A” in 2012, Golden said, as The McLean Group is working with “quite a few businesses that are cueing up to sell.”
As a personal motivator, many baby boomer business owners have a significant amount of their total worth tied up in their businesses and will look for liquidity as they prepare for retirement, Golden said.
Another fear for middle-market business owners is the possibility of a future capital gains tax increase, which could drive businesses to market in 2012. To sell a company worth US$20m to US$100m and have to pay an additional 5%, 10%, or 15% in capital gains tax would mean substantially lower net proceeds for the owner, said Golden.
Many businesses in the Mid-Atlantic also have a significant amount of their revenue tied into federal contracts, so fear of budget cuts is also pushing companies to sell, as owners try to reduce risk, he said.
Nevertheless, in the Mid-Atlantic, defense and government services could wait to initiate M&A until there is more political clarity, said Andrew J. Sherman, a partner in the M&A department at Jones Day. He said he is slightly bullish on this year’s M&A outlook. “Until we have a clear picture of the federal budget, budget cuts, who is in the White House, who is in control in Congress, will Congress break their deadlock in decision making, it is a difficult time to be investing capital or people or time in M&A,” he said. Sherman said 2012 could be an above-average year for M&A overall. But the terms of transactions will favor buyers, as valuations will be a little lower, “much to the chagrin of the sellers.” Nevertheless, it will not be so much of a buyer’s market that sellers will be “unwilling to dip their toe in the water,” Sherman said. Sherman and Golden agreed that non-government technology, media and telecommunication (TMT) deals should see an increase this year. McLean sees a lot of activity in TMT, especially for Mid-Atlantic Internet software and telecom businesses, which may be the bank’s fastest growing sector, with new clients and potential clients, Golden said.
TMT has not been affected as much by the recession as other sectors such as construction or real estate. Internet software and telecom companies are somewhat “seeing an emergence of their technology,” and buyers are coming into the Mid-Atlantic looking for targets,” Golden said.
Sherman said non-government technology that involves social media technology or wireless enhancement is driven more by the consumers’ mind-sets than what happens on Capitol Hill, so “those areas may have more M&A, and I’m bullish on those sectors,”
Sherman said. Those sectors may see more activity than traditional government or defense services which often lead the Mid-Atlantic in M&A, and “it has been awhile since we have seen that,” he said. The cyber-security sector could see some M&A, but it is more likely to receive venture capital and private equity capital, Sherman said.
Financial services M&A in the Mid-Atlantic is likely to see an uptick in 2012, said Steven Gurgovits, chairman of F.N.B. Corp, a bank holding company in Hermitage, Pennsylvania, with US$10bn in assets. While the banking market is depressed nationally, the economy in the Mid-Atlantic has been solid, with lower unemployment, relatively stable housing prices, and economic growth from natural resource discoveries in the Marcellus and Utica shale. Pennsylvania’s fragmented banking market should expect to see consolidation, Gurgovits noted. With increased regulations and higher capital requirements on community banks, in addition to compressed margins resulting from low interest rates, some banks will see this as an advantageous time to sell, he said. FNB continues to be an active acquirer, he noted, recently closing on its acquisition of Parkvale Financial based in Monroeville, Pennsylvania for US$127m. “With some small banks trading at a significant discount to their book value, some are looking to raise money privately at a premium to what is possible from the public markets valuation,” noted Braden Ferrari, co-head of investment banking at du Pasquier & Co. “Some health care companies also view this as an opportune time to raise private capital to pursue growth plans as market valuations have remained low and companies with strong balance sheets are in a position to make acquisitions at lower multiples,” he noted.
by Ben koconis and kevin Nafziger
55
DEAL DRIVERS – MID-ATLANTIC
mid-AtLAnticTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
21-Jul-11 P Express Scripts Inc Medco Health Solutions Inc Life Sciences & Healthcare 33,430
02-May-11 L The Nasdaq OMX Group Inc; and Intercontinental Exchange Inc
NYSE Euronext Financial Services 13,182
15-Feb-11 L Deutsche Boerse AG NYSE Euronext Financial Services 12,267
21-Nov-11 C Gilead Sciences Inc Pharmasset Inc Life Sciences & Healthcare 10,367
01-Mar-11 C Blackstone Group LP Centro Properties Group (US operations) Real Estate CNPR Limited 9,400
02-May-11 C Teva Pharmaceutical Industries Ltd Cephalon Inc Life Sciences & Healthcare 6,171
15-Aug-11 P Time Warner Cable Inc Insight Communications Company Inc TMT The Carlyle Group LLC; MidOcean Partners LLP; and Crestview Partners LP
4,687
17-Jun-11 C Reynolds Group Holdings Limited Graham Packaging Company Inc Industrials, Chemicals & Engineering
Blackstone Group LP 4,332
25-Jul-11 L Validus Holdings Ltd Transatlantic Holdings Inc Financial Services 4,123
13-Apr-11 L Silgan Holdings Inc Graham Packaging Company Inc Industrials, Chemicals & Engineering
Blackstone Group LP 3,940
21-Nov-11 P Alleghany Corporation Transatlantic Holdings Inc Financial Services 3,686
31-May-11 C Ashland Inc International Specialty Products Inc Industrials, Chemicals & Engineering
3,200
13-Jun-11 L Allied World Assurance Company Holdings AG
Transatlantic Holdings Inc Financial Services 3,192
06-May-11 C Access Industries Inc Warner Music Group Corp TMT 2,959
21-Dec-11 P Tokio Marine Holdings Inc Delphi Financial Group Inc Financial Services 2,791
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Defense
19.7%
7.5%
7.1%
1.1%2.2%
13.6%2.3%1.5%
38.0%
0.2% 6.5% 0.3%
12.9%
15.9%11.2%
14.3%
10.8%4.0%
19.9%
4.0%
2.2%
1.2%
0.8%2.8%
VALUE VOLUME
DEAL DRIVERS – MID-ATLANTIC
56
mid-AtLAnticM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
150
175
200
225
250
20112010200920082007200620050.8 0.8 0.6 0.6 0.4 0.4 0.4
6.0 3.54.5
5.0 4.2
5.5
164.2
10.18.67.5
166.3
8.98.4
189.2
111.6
8.29.3
128.1
9.08.1
207.3
9.39.08.5
169.9
13.912.67.1
0
100
200
300
400
500
600
700
800
2011201020092008200720062005
5028
164
51
82
201
442450
125
60
232
2724
176
78
43
392356
103
492635
89
49
250229
42
2755
187
86
60
214
84
39
75
172
293
6915
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m >$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
120,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
25
50
75
100
125
150
175
200
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in Mid-Atlantic.Industry sector is based on dominant industry of target.
57
DEAL DRIVERS – MID-ATLANTIC
mid-AtLAnticFINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
6 1 Credit Suisse 103,424 49
9 2 JPMorgan 102,437 61
2 3 Bank of America Merrill Lynch 82,046 55
3 4 Goldman Sachs 73,188 68
4 5 Citigroup 72,985 42
1 6 Morgan Stanley 71,684 65
11 7 Lazard 63,148 24
5 8 Barclays Capital 58,624 44
10 9 UBS Investment Bank 45,561 43
7 10 Deutsche Bank 36,500 29
34 11 Foros 33,972 3
23 12 Moelis & Company 28,152 23
19 13 RBC Capital Markets 16,172 24
29 14 Wells Fargo Securities 15,876 12
14 15 Jefferies & Company 15,127 41
12 16 Blackstone Group 9,835 8
- 17 Flagstaff Partners 9,625 2
17 18 Evercore Partners 9,499 18
13 19 HSBC 8,843 9
16 20 Nomura Holdings 7,216 6
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Goldman Sachs 73,188 68
2 2 Morgan Stanley 71,684 65
9 3 JPMorgan 102,437 61
3 4 Bank of America Merrill Lynch 82,046 55
5 5 Credit Suisse 103,424 49
8 6 Barclays Capital 58,624 44
6 7 UBS Investment Bank 45,561 43
10 8 Citigroup 72,985 42
11 9 Jefferies & Company 15,127 41
7 10 Deutsche Bank 36,500 29
4 11 Lazard 63,148 24
17 12 RBC Capital Markets 16,172 24
12 13 Houlihan Lokey 4,925 24
15 14 Moelis & Company 28,152 23
22 15 Evercore Partners 9,499 18
21 16 Robert W. Baird & Co 1,550 18
42 17 Raymond James & Associates 2,754 17
20 18 Lincoln International 748 16
13 19 Harris Williams & Co 2,033 14
26 20 Deloitte 1,235 13
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Simpson Thacher & Bartlett 114,713 73
1 2 Sullivan & Cromwell 111,029 44
10 3 Skadden Arps Slate Meagher & Flom 104,229 57
12 4 Dewey & LeBoeuf 101,603 31
7 5 Cravath Swaine & Moore 88,589 28
13 6 Wachtell, Lipton, Rosen & Katz 63,576 24
17 7 Shearman & Sterling 55,610 36
5 8 Weil Gotshal & Manges 53,874 43
18 9 Linklaters 53,081 19
24 10 Gibson Dunn & Crutcher 51,647 21
3 11 Davis Polk & Wardwell 42,437 37
8 12 Freshfields Bruckhaus Deringer 38,424 25
31 13 Dechert 36,531 26
4 14 Cleary Gottlieb Steen & Hamilton 35,633 31
6 15 Latham & Watkins 34,109 63
9 16 Debevoise & Plimpton 32,473 24
26 17 Kirkland & Ellis 31,303 86
33 18 Jones Day 30,744 86
49 19 Blake, Cassels & Graydon 27,430 15
41 20 Covington & Burling 26,668 14
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Kirkland & Ellis 31,303 86
4 2 Jones Day 30,744 86
2 3 Simpson Thacher & Bartlett 114,713 73
1 4 Latham & Watkins 34,109 63
6 5 Skadden Arps Slate Meagher & Flom 104,229 57
5 6 Sullivan & Cromwell 111,029 44
7 7 Weil Gotshal & Manges 53,874 43
14 8 Davis Polk & Wardwell 42,437 37
18 9 Hogan Lovells 15,672 37
12 10 Shearman & Sterling 55,610 36
25 11 Paul Weiss Rifkind Wharton & Garrison 17,256 36
9 12 Morgan Lewis & Bockius 6,803 36
8 13 DLA Piper 2,445 35
26 14 Dewey & LeBoeuf 101,603 31
21 15 Cleary Gottlieb Steen & Hamilton 35,633 31
23 16 Ropes & Gray 10,195 29
15 17 Cravath Swaine & Moore 88,589 28
28 18 Willkie Farr & Gallagher 19,684 28
24 19 K&L Gates 3,715 28
11 20 Dechert 36,531 26
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a Mid Atlantic bidder, target or vendor. States: New Jersey, New York, Pennsylvania
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, including lapsed and withdrawn deals. The tables are based on advice to a Mid Atlantic bidder, target or vendor. States: New Jersey, New York, Pennsylvania
DEAL DRIVERS – NEW ENGLAND
58NEW ENGLAND
new engLAnd
Technology, healthcare expected to carry New England in brighter 2012 The M&A outlook is brightening in New England due to robust technology and healthcare sectors, which will continue to attract interest in the region, said several investment bankers.
In addition, an improving national economy, the increased availability of cash and credit, and a growing desire by companies to expand by snapping up other businesses will be the rising tide that will keep the region floating higher, the bankers said.
“Everyone got spooked at the end of summer,” said Joshua Benn, a managing director at Duff & Phelps, referring to Standard & Poor’s downgrading the US credit rating and the sovereign debt crisis in Europe. But now, said Benn, deals are moving once again, nationally and regionally.
Technology remains a hot sector for M&A, particularly in New England, and will continue to drive deals well into 2012. Cloud computing has created a “paradigm shift” in the way people interact with data, and companies that provide cloud-based data security and other related services are going to be very attractive targets in 2012, said Murray Beach, a managing partner at TM Capital.
Healthcare, another major industry in New England, also is likely to see more deal flow in the first half of 2012. Pharmaceutical companies will continue to seek innovative therapies to replace drugs that are going off patent soon, said Beach. Genome-related and biologic products are going to continue to be attractive targets, he added. Other companies expected to be hot targets are those specializing in therapies for infectious diseases, oncology, and rare diseases that are in line for faster approval from the FDA, said an industry analyst. Many biopharmaceutical companies hedged their bets in recent years with partnerships instead of engaging in M&A transactions. Many of those maturing relationships could lead to M&A deals in the near future, said the analyst.
Another driver of M&A activity in the healthcare sector could come from an unlikely source. As federal budget cuts continue at the US Department of Defense, many military contractors now seek to diversify by buying companies that will give them new markets for their services. Healthcare companies have been of particular interest to defense contractors, said Peter Alternative, a partner at investment bank Mirus Capital.
Uncertainty about the adoption of alternative energy technology could also create M&A activity in New England, said an analyst. Industry participants suggest wind and solar power companies, lithium battery makers, and other related industries could see sales or divestitures this year.
Pressure from activist shareholders who are “moving up market” could stimulate deals in 2012, said Joseph Johnson, a partner at Goodwin Procter, who was far more cautious on the M&A outlook, but agreed that technology would help keep deals moving in New England specifically. More companies might see pressure from shareholders to unlock value by divesting or spinning off parts of the companies that could be worth more on their own this year, he added. For example, Massachusetts-based Smith & Wesson in November retained Wedbush Securities to begin divesting its perimeter security division.
Though deal flow is picking up in New England, global and national trends such as uncertainty regarding the European monetary situation, the continuing debate about the debt ceiling, and the upcoming elections could ripple over New England deals as well.
by Adam Smith and Ilene Friedland
59
DEAL DRIVERS – NEW ENGLAND
new engLAndTOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
04-May-11 C Applied Materials Inc Varian Semiconductor Equipment Associates Inc
TMT 4,331
29-Jun-11 C CVC Capital Partners Limited; and Leon-ard Green & Partners LP
BJ's Wholesale Club Inc Consumer 2,609
12-Jun-11 C VF Corporation The Timberland Company Consumer 1,961
22-Mar-11 C Energy Transfer Partners LP; and Re-gency Energy Partners LP
LDH Energy Asset Holdings LLC Energy, Mining, Oil & Gas Louis Dreyfus Highbridge Energy LLC 1,925
12-Oct-11 P Pratt & Whitney Company International Aero Engines AG (Undisclosed stake)
Industrials, Chemicals & Engineering
Rolls-Royce Plc 1,500
11-Jul-11 C Lonza Group Ltd Arch Chemicals Inc Industrials, Chemicals & Engineering
1,472
20-May-11 C Neoplux Co Ltd; Fila Korea Ltd; Mirae Asset Financial Group; Blackstone Group LP; and Woori Private Equity Fund
Acushnet Company Consumer Beam Inc 1,255
18-Oct-11 C Oracle Corporation Endeca Technologies Inc TMT 1,100
28-Dec-11 C Alexion Pharmaceuticals Inc Enobia Pharma Inc Life Sciences & Healthcare Fonds de Solidarite FTQ; OrbiMed Advisors LLC; Lothian Partners 27 SARL; Capital regional et cooperatif Desjardins; and CTI Life Sciences Fund LP
1,080
01-Aug-11 C Fairfax Financial Holdings Limited; WL Ross & Co; First Reserve Corporation; PPM America Capital Partners LLC; China Investment Corporation; and Morgan Creek Capital Management
Diamond S Shipping LLC (Undisclosed Stake)
Transportation 1,000
28-Jan-11 C Rank Group Limited Honeywell International Inc (Auto-motive Consumer Products Group)
Consumer Honeywell International Inc 950
22-Feb-11 C Forest Laboratories Inc Clinical Data Inc Life Sciences & Healthcare 900
17-May-11 C Shire Plc Advanced BioHealing Inc Life Sciences & Healthcare Safeguard Scientifics Inc; Canaan Partners; and Wheatley Partners
744
24-Feb-11 C Quest Diagnostics Incorporated Athena Diagnostics Inc Life Sciences & Healthcare Thermo Fisher Scientific Inc 740
03-Oct-11 C Getinge AB Atrium Medical Inc Life Sciences & Healthcare 680
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Agriculture
Defense
19.1%
13.1%
3.8%
3.3%
3.0%
12.4%
23.0%
0.3%
0.7%
21.2%
7.6%
11.4%
19.0%
1.1%0.1%
8.7%5.7%
25.5%
1.5%1.1%
17.5%
VALUE VOLUME
DEAL DRIVERS – NEW ENGLAND
60
new engLAndM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0
25
50
75
100
125
20112010200920082007200620050.3 0.5 0.4 0.4 0.3 0.2 0.2
2.63.3
2.21.8 1.91.83.3
108.4
6.54.14.0
51.6
4.3
18.8
3.9
53.2
5.1
24.0
6.54.8
100.1
4.56.83.8
61.5
6.84.33.6
0
50
100
150
200
250
300
350
2011201020092008200720062005
23
18
98
25
38
103
129
9
24
49
37
110
1111
91
45
30
2015
30
49 62
181822
123
20
117
23
13
43
79
45
29
111
27
19
26
75
120
45Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
10
20
30
40
50
60
70
80
90
100
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q109
Q408
Q308
Q208
Q108
Q407
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in New England.Industry sector is based on dominant industry of target.
61
DEAL DRIVERS – NEW ENGLAND
new engLAnd FINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Goldman Sachs 47,128 36
3 2 Credit Suisse 36,091 18
14 3 Citigroup 31,830 16
4 4 JPMorgan 29,079 22
2 5 Morgan Stanley 28,883 25
5 6 Barclays Capital 26,835 20
10 7 Bank of America Merrill Lynch 14,411 19
12 8 Deutsche Bank 13,245 16
19 9 Rothschild 7,955 12
9 10 UBS Investment Bank 7,473 13
- 11 Centerview Partners 5,800 3
25 12 Jefferies & Company 5,578 15
42 13 Greenhill & Co 4,129 3
49 14 Houlihan Lokey 3,748 15
34 15 Nomura Holdings 3,534 4
11 16 Lazard 3,467 9
26 17 Blackstone Group 3,423 4
35 18 HSBC 2,578 5
58 19 Royal Bank of Scotland Group 2,297 2
21 20 RBC Capital Markets 2,148 4
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 Goldman Sachs 47,128 36
2 2 Morgan Stanley 28,883 25
8 3 JPMorgan 29,079 22
5 4 Barclays Capital 26,835 20
6 5 Bank of America Merrill Lynch 14,411 19
3 6 Credit Suisse 36,091 18
11 7 Citigroup 31,830 16
13 8 Deutsche Bank 13,245 16
9 9 Jefferies & Company 5,578 15
10 10 Houlihan Lokey 3,748 15
4 11 UBS Investment Bank 7,473 13
24 12 Robert W. Baird & Co 1,252 13
12 13 Rothschild 7,955 12
17 14 Lincoln International 347 12
29 15 Morgan Keegan & Company 495 11
7 16 Lazard 3,467 9
27 17 KPMG 1,822 7
26 18 Raymond James & Associates 1,350 7
19 19 Evercore Partners 1,122 7
71 20 Stifel, Nicolaus & Company 527 7
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
13 1 Dewey & LeBoeuf 35,706 18
5 2 Simpson Thacher & Bartlett 27,761 22
18 3 Cleary Gottlieb Steen & Hamilton 26,729 14
22 4 Jones Day 24,966 23
7 5 Linklaters 24,160 8
8 6 Wachtell, Lipton, Rosen & Katz 19,361 3
43 7 Alston & Bird 18,919 6
223 8 Crowell & Moring 17,901 2
109 9 Davies Ward Phillips & Vineberg 17,861 1
4 10 Weil Gotshal & Manges 16,592 29
1 11 Ropes & Gray 14,354 36
19 12 Shearman & Sterling 12,841 16
14 13 Kirkland & Ellis 11,679 45
26 14 WilmerHale 11,580 32
6 15 Latham & Watkins 11,553 43
10 16 Davis Polk & Wardwell 10,774 17
11 17 Sullivan & Cromwell 10,354 11
39 18 Hogan Lovells 10,353 15
42 19 Paul Weiss Rifkind Wharton & Garrison 10,039 13
12 20 Cravath Swaine & Moore 9,191 10
y/E 2010
y/E 2011
Company Name Value (M) USD
Number of Deals
3 1 Goodwin Procter 4,854 49
1 2 Kirkland & Ellis 11,679 45
2 3 Latham & Watkins 11,553 43
4 4 Ropes & Gray 14,354 36
5 5 WilmerHale 11,580 32
6 6 Weil Gotshal & Manges 16,592 29
13 7 Jones Day 24,966 23
8 8 Simpson Thacher & Bartlett 27,761 22
39 9 Bingham McCutchen 2,072 22
11 10 DLA Piper 3,431 20
18 11 K&L Gates 2,751 20
16 12 Dewey & LeBoeuf 35,706 18
9 13 Davis Polk & Wardwell 10,774 17
12 14 Morgan Lewis & Bockius 3,306 17
22 15 Shearman & Sterling 12,841 16
28 16 Wilson Sonsini Goodrich & Rosati 1,120 16
15 17 Hogan Lovells 10,353 15
35 18 Cleary Gottlieb Steen & Hamilton 26,729 14
14 19 Paul Weiss Rifkind Wharton & Garrison 10,039 13
31 20 McDermott Will & Emery 2,132 13
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a New England bidder, target or vendor. States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 12/31/2011, including lapsed and withdrawn deals. The tables are based on advice to a New England bidder, target or vendor. States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont
DEAL DRIVERS – LATIN AMERICA
62 LATIN AMErICA
LAtin AmericA
Latin America: M&A expected to remain strong
M&A activity in Latin America is expected to remain strong in 2012, despite global economic uncertainty. Energy, financial services and consumer are among the sectors that could see significant activity, while regulatory hurdles in Brazil and Argentina will continue to complicate deals in agriculture, financial services and telecommunications.
Intraregional deals will likely stand out in 2012 as contracting economies in the more industrialized world might cause international players to stand back. Smaller markets such as Colombia, Argentina and Chile might be targeted by companies from larger economies in the region, predicted Andrew Janszky, a partner and head of Latin America at Milbank. Colombia, in particular, is on the radar of Mexican and Brazilian companies this year, he said.
The financial sector is likely to consolidate throughout Latin America due to increasing capital requirements, said Luis Miguel Santacreu, a financial institutions analyst at Austin Rating. Medium-sized banks in Brazil will see more pressure than larger banks in times of less liquidity, resulting in mid-market consolidation, he said.
Tightening capital requirements might lead to more foreign banks exiting Latin America, but banks will avoid selling valuable assets, Santacreu said.
BrazilBrazil is expected to continue growing, albeit more modestly than in 2011, and the IPO market should continue to provide liquidity to fund deals, said Janszky. Brazilian M&A should remain strong in the consumer and education sectors, he said.
Cross border M&A activity will continue, but strategic players are not in an aggressive buying mode and PE firms are finding Brazil expensive, said Janszky. However, the natural resources sectors should continue to attract interest from Chinese and Japanese investors, he said.
Brazil is providing great opportunities in logistics and infrastructure, as many ongoing oil and gas or energy-related projects are in need of financing, said Evaldo Fontes Junior, founding partner at Araujo Fontes. Some activity can also be expected among small Brazilian IT companies due to strong growth rates, Fontes added.
Uncertainties surrounding the reform of Brazil’s antitrust system might hamper M&A activity, Fontes said.
MexicoIn Mexico, M&A activity has increased somewhat and should remain stable through 2012, though the Mexican economy is too correlated to the US to allow a strong recovery in the short term, Janszky explained. Uncertainty surrounding the upcoming presidential election might put deals on hold, he added.
ColombiaIn the Andean Region, all eyes are on Colombia following the signing of a free trade agreement with the US in late 2011, an energy boom that shows no sign of abating, and a deficiency in infrastructure made all the more critical following two years of heavy winter rains which damaged roadways and oil pipelines.
The Colombian financial services industry will maintain its dynamism, and the country’s natural resources will continue to attract strong capital flows.
peruSix months into the administration of Ollanta Humala, Peru has reassured international investors that the country remains decidedly pro-business and will do its best to attract foreign capital and promote international trade. The reemergence of the country’s national oil company, Petroperu, as an active player in exploration and production will stimulate new investment in the country’s natural resources, where mining will also remain a hot sector. Consumer products and retail are seeing unprecedented growth, and the financial services industry will continue to strengthen.
ChileChile, the region’s most mature economy, will continue to invest in the region as its major retail, financial services, mining and energy players continue to scour the continent for the kind of growth opportunities no longer possible at home. Colombia, Peru, Brazil and Argentina are likely to be the most important target markets for Chilean buyers.
Central AmericaPanama maintains its edge in Central America thanks to its role as a regional hub for business and commerce and major infrastructure projects. Construction of a Panama City subway system, the expansions of the Panama Canal and Tocumen International Airport promise to solidify the country as a favorable destination for investment.
The influx of Colombian capital in Central America will only continue following the incursion by the South American country’s largest financial institutions, which will support increased trade and transactions. Integration of the power grid across the region and improved infrastructure will also be reflected in increased deal activity.
Trinidad and Tobago, the only major energy producer in the region, will continue to attract the most interest from major producers. Cuba will continue to develop its oil resources, with notable investment from Venezuela and Canada.
Transactions among financial services companies will continue, mostly at the local level, with a few major cross-border deals likely as Colombian buyers look increasingly at the Dominican Republic, especially for insurance and banking opportunities.
by Oliver Hill and priscilla Murphy
63
DEAL DRIVERS – LATIN AMERICA
LAtin AmericATOp 15 ANNOuNCED DEALS FOr YEAr ENDING 31 DECEMbEr 2011
Announced Date
Status Bidder Company Target Company Sector Vendor Company Deal Value (US$m)
26-Aug-11 P Brasil Telecom SA Tele Norte Leste Participacoes SA (55.1% Stake) TMT 12,459
19-Jan-11 P LAN Airlines SA TAM SA Transportation 7,189
01-Aug-11 C America Movil SAB de CV Telefonos de Mexico SA de CV (40.04% Stake) TMT 6,507
25-Mar-11 C Telefonica Brasil Vivo Participacoes SA (33.38% Stake) TMT 6,277
09-Nov-11 C Mitsubishi Corporation Anglo American Sur SA (24.5% Stake) Energy, Mining, Oil & Gas Anglo American Plc 5,390
25-Jan-11 C Portugal Telecom SGPS SA Telemar Participacoes SA (25.28% Stake) TMT 4,963
11-Nov-11 P China Petrochemical Corporation Petrogal Brasil Lda (30% Stake) Energy, Mining, Oil & Gas Galp Energia SGPS SA 4,800
25-Jul-11 C General Atlantic LLC; International Fi-nance Corporation; Grupo de Inversiones Suramericana SA; and Grupo Financiero Bolivar
AFP Integra SA (80% Stake); InVita Seguros de Vida SA (33.7% Stake); and ING Groep NV (Latin American pensions, life insurance and investment management operations)
Financial Services ING Groep NV 3,853
19-Jan-11 C Iberdrola SA Elektro Eletricidade e Servicos SA Energy, Mining, Oil & Gas AEI 2,925
27-Nov-11 C Nippon Steel Corporation; Tenaris SA; and Ternium SA
Usinas Siderurgicas de Minas Gerais (14.63% Stake)
Industrials, Chemicals & Engineering
Votorantim Industrial SA; Caixa dos Empregados da Usiminas; and VBC Energia SA
2,871
02-Aug-11 C Kirin Holdings Co Ltd Primo Schincariol Industria de Cervejas e Refrigerantes (50.45% Stake)
Consumer 2,553
24-Jan-11 C Embotelladoras Arca SA de CV Grupo Continental SAB Consumer 2,099
02-Sep-11 C Shanghai Baosteel Group Corporation; CITIC Group; Shougang Group Corporation; Anshan Iron & Steel Group Corporation; and Taiyuan Iron & Steel Group Company Ltd
Companhia Brasileira de Mineracao e Meta-lurgia (15% Stake)
Energy, Mining, Oil & Gas Brasil Warrant Administracao De Bens E Empresas SA
1,950
04-Mar-11 C Nippon Steel Corporation; POSCO; Sojitz Corporation; Japan Oil, Gas and Metals National Corporation; National Pension Service of Korea; and JFE Holdings Inc
Companhia Brasileira de Mineracao e Meta-lurgia (15% Stake)
Energy, Mining, Oil & Gas Brasil Warrant Administracao De Bens E Empresas SA
1,950
04-Nov-11 C Kirin Holdings Co Ltd Primo Schincariol Industria de Cervejas e Refrigerantes (49.54% Stake)
Consumer 1,897
C= Completed; P= Pending; L= Lapsed
MIx OF DEALS bY INDuSTrY SECTOr
Industrials, Chemicals & Engineering
Financial Services
business Services
Consumer
Energy, Mining, Oil & Gas
TMT
Leisure
Transportation
Life Sciences & Healthcare
Construction
real Estate
Agriculture
Defense
13.5%
26.8%
6.6%
9.8%
3.2%
25.8%
0.3%
8.9%
1.7% 0.1%
1.7%
1.2%
0.5%
11.3%
18.3%
16.3%
7.4%
14.7%
7.8%
2.3%
4.8%
5.2%
2.4%3.1%
0.5%6.0%
VALUE VOLUME
DEAL DRIVERS – LATIN AMERICA
64
LAtin AmericAM&A SpLIT bY DEAL SIzE
VALUE VOLUME
0102030405060708090
100110120130140150160170180190
20112010200920082007200620050.5 0.6 0.9 0.6 0.5 0.6 0.8
4.1 5.4 4.7
20.6
7.05.9
75.4
7.17.0
10.0
55.8
7.55.7
138.0
10.3
100.1
13.5
11.36.4
9.35.7
82.2
10.47.6
49.7
12.5
11.88.6
0
100
200
300
400
500
600
700
2011201020092008200720062005
19
103
38
52
67
332745
67
165
172
342135
139
110
55
58
29
54
129
143
85
53
68
36
233
165
57
2847
123
57
30
108
3734
71
184
145
95
17
Valu
e (U
S$bn
)
Volu
me
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
>$501m
$251m - $500m
$101m - $250m
$15m - $100m
$5m - $14m
Value not disclosed
QuArTErLY M&A ACTIVITY
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
70,000
Q411
Q311
Q211
Q111
Q410
Q310
Q210
Q110
Q409
Q309
Q209
Q1 09
Q408
Q308
Q208
Q108
Q4 07
Q307
Q207
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
Q411
Q3 11
Q211
Q111
Q4 10
Q3 10
Q210
Q110
Q4 09
Q309
Q209
Q109
Q4 08
Q308
Q208
Q108
Q4 07
Q307
Q2 07
Q107
Q406
Q306
Q206
Q106
Q405
Q305
Q205
Q105
Valu
e (U
S$m
)
Volu
me
Quarter EndedQuarter Ended
Moving average trend line
VALUE VOLUME
Based on announced deals, excluding those that lapsed or were withdrawn, where the dominant location of the target is in Latin America.Industry sector is based on dominant industry of target.
65
DEAL DRIVERS – LATIN AMERICA
LAtin AmericA FINANCIAL ADVISOrS
LEGAL ADVISOrS
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
TOp 20 - RANkED By VALUE TOp 20 - RANkED By VOLUME
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
6 1 BTG Pactual 41,029 38
1 2 Credit Suisse 29,696 33
7 3 Banco Itau BBA 28,801 35
20 4 Banco Bradesco BBI 26,327 21
11 5 Goldman Sachs 26,299 22
14 6 UBS Investment Bank 23,942 14
9 7 Rothschild 20,933 13
2 8 Citigroup 18,081 18
8 9 JPMorgan 16,873 10
5 10 Morgan Stanley 16,602 17
4 11 Bank of America Merrill Lynch 15,107 9
57 12 BNP Paribas 15,019 11
22 13 Barclays Capital 14,880 6
3 14 Santander Global Banking and Markets 14,170 14
13 15 Caixa Banco de Investimento 10,343 5
24 16 HSBC 8,916 5
33 17 Lazard 8,491 8
19 18 Deutsche Bank 7,603 7
15 19 Banco Espirito Santo de Investimento 7,292 11
23 20 Banco Bilbao Vizcaya Argentaria 7,090 6
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
1 1 BTG Pactual 41,029 38
4 2 Banco Itau BBA 28,801 35
2 3 Credit Suisse 29,696 33
7 4 Goldman Sachs 26,299 22
22 5 Banco Bradesco BBI 26,327 21
8 6 Citigroup 18,081 18
9 7 BR Partners 971 18
10 8 Morgan Stanley 16,602 17
19 9 PwC 1,252 15
14 10 UBS Investment Bank 23,942 14
3 11 Santander Global Banking and Markets 14,170 14
11 12 Rothschild 20,933 13
29 13 BNP Paribas 15,019 11
13 14 Banco Espirito Santo de Investimento 7,292 11
5 15 JPMorgan 16,873 10
31 16 Vinci Partners 801 10
6 17 Bank of America Merrill Lynch 15,107 9
12 18 Lazard 8,491 8
16 19 Deutsche Bank 7,603 7
- 20 Araujo Fontes 170 7
y/E2010
y/E2011
Company Name Value (M) USD
Number of Deals
33 1 Pinheiro Neto Advogados 26,241 49
9 2 Machado Meyer Sendacz e Opice 22,250 47
44 3 Clifford Chance 20,573 17
5 4 Skadden Arps Slate Meagher & Flom 20,275 13
30 5 Sullivan & Cromwell 19,983 12
20 6 Barbosa, Mussnich & Aragao 16,341 28
212 7 Bulhoes Pedreira, Bulhoes Carvalho, Piva, Rosman e Souza Leao Advogados
13,488 2
39 8 Shearman & Sterling 13,277 8
27 9 Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados
12,368 41
7 10 Souza, Cescon, Barrieu & Flesch Advogados 11,337 26
1 11 Cleary Gottlieb Steen & Hamilton 11,243 14
23 12 Garrigues 11,018 6
19 13 Davis Polk & Wardwell 9,010 9
84 14 Cariola Diez Perez-Cotapos Abogados 7,947 6
107 15 Lefosse Advogados 7,456 14
100 16 Claro y Cia 7,407 4
11 17 Tozzini Freire Teixeira e Silva Advogados 7,406 29
- 18 Turci Advogados Associados 7,189 1
75 19 Prieto & Carrizosa 6,759 15
22 20 Cravath Swaine & Moore 6,535 2
y/E2010
y/E 2011
Company Name Value (M) USD
Number of Deals
2 1 Pinheiro Neto Advogados 26,241 49
5 2 Machado Meyer Sendacz e Opice 22,250 47
1 3 Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados
12,368 41
8 4 Tozzini Freire Teixeira e Silva Advogados 7,406 29
4 5 Barbosa, Mussnich & Aragao 16,341 28
7 6 Souza, Cescon, Barrieu & Flesch Advogados 11,337 26
6 7 Baker & McKenzie 5,371 20
61 8 Lobo & de Rizzo Advogados 1,258 20
27 9 Clifford Chance 20,573 17
3 10 Demarest e Almeida 943 16
10 11 Estudio Muniz, Ramirez, Perez-Taiman & Olaya Abogados
770 16
13 12 Prieto & Carrizosa S.A. 6,759 15
20 13 Rodrigo Elias & Medrano 5,395 15
9 14 Cleary Gottlieb Steen & Hamilton 11,243 14
138 15 Lefosse Advogados 7,456 14
11 16 Skadden Arps Slate Meagher & Flom 20,275 13
15 17 Latham & Watkins 6,163 13
26 18 Gomez-Pinzon Zuleta 3,201 13
44 19 Brigard & Urrutia 2,714 13
19 20 Sullivan & Cromwell 19,983 12
The financial advisor league tables by value and volume have been run from 01/01/2011 to the 06/30/2011, excluding lapsed and withdrawn deals. The tables are based on advice to a Central and South American bidder, target or vendor. Excludes: Bahamas, Belize, Dominica, French Guyana, Haiti, Puerto Rico, Saint Kitts, Surinam, Turks & Caicos, US Virgin Islands
The legal advisor league tables by value and volume have been run from 01/01/2011 to the 06/30/2011, including lapsed and withdrawn deals. The tables are based on advice to a Central and South American bidder, target or vendor. Excludes: Bahamas, Belize, Dominica, French Guyana, Puerto Rico, Saint Kitts, Surinam, Turks & Caicos, US Virgin Islands
DEAL DRIVERS – AMERICAS
66
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Revolutionizing the due diligence processMerrill DataSite is designed for rapid deployment and can be up and running within two hours of a client’s need. Our team can scan, upload and organize thousands of pages of content from any source in 24 hours or less. Every aspect of the process, from document scanning to VDR hosting and project management is delivered by Merrill’s multilingual team, available around the clock worldwide.
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founded in 1968 and headquartered in st. paul, minnesota, merrill corporation is a leading provider of outsourced solutions for complex business communication and information management. merrill’s services include document and data management, litigation support, language translation services, fulfillment, imaging and printing. merrill serves the corporate, legal, financial services, insurance and real estate markets. with more than 5,000 people in over 40 domestic and 22 international locations, merrill empowers the communications of the world’s leading organizations.
67
DEAL DRIVERS – AMERCIAS
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Merrill DataSite – built with the client in mindMerrill DataSite was created to meet its clients’ needs and built to their specifications. Since 2002 we have consistently leveraged the experiences of our clients to add leading-edge functionality to the available toolset. Merrill DataSite allows its users and administrators to:
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Designate user permissions. Team administrators can control which users will be able to view, print or download specific documents, folders or projects – simply and quickly.
Search every word in every document. With large document collections, sophisticated search features are key to finding critical information and accelerating the due diligence process. Merrill DataSite performs Optical Character Recognition (OCR) on each and every letter in each and every document. Our search capabilities allow users to search tens – if not hundreds – of thousands of pages to find what’s relevant to them. Merrill DataSite’s search capabilities ensure nothing is missed in any of the posted documents - regardless of where they may be organized within the index (e.g. find every instance of “contract” and “termination” within 5 words of each other, etc.). Search results are returned much faster and are unlimited in terms of document results and hits within a document. Using wildcard, fuzzy, proximity, boosting, Boolean and grouping modifiers, you can search and find exact matches and near-matches, including misspelled words. Potential buyers will enjoy increased confidence knowing they’ve received and seen all materials and documents that are relevant to their decision-making.
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DEAL DRIVERS – AMERICAS
68
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Matthew Mezzancello Regional Director, NY, NJ & PA Tel: +1 212 229 6618
Steve picconeVice President, New York Tel: +1 212 229 6883
William poleseRegional Director, New York Tel: +1 212 229 6612
paul kleinkaufRegional Director, Southeast Tel: +1 404 602 3251
Scott HaugenRegional Director, Minnesota & Wisconsin Tel: +1 651 632 4375
Anthony CrosbyRegional Director, Chicago Tel: +1 312 674 6511
Mark plaehnRegional Director, Chicago Tel: +1 312 674 6527
Brian GilbreathVice President, Midwest and Latin America Tel: +1 404 934 8085
Nicholas RenterRegional Director, Texas Tel: +1 214 754 2100
Andrew Buonincontro Regional Director, Bay Area Tel: +1 650 493 1400
Erik SandieRegional Director, Bay Area Tel: +1 650 493 1400
Dan phelanRegional Director, Los Angeles Tel: +1 213 253 2139
Jay LoyolaRegional Director, Bay Area Tel: +1 949 622 0663
Hans SchumannRegional Director, San Diego Tel: +1 760 635 0830
David yearyVice President, DataSite Life Sciences Tel: +1 415 307 4414
James SnazaDirector of Life Sciences Tel: +1 651 632 4585
Jon Blue Vice President, Clean Tech Tel: +1 206-696-9169
69
DEAL DRIVERS – AMERCIAS
Jon LenihanRegional Director, Boston Tel: +1 617-535-1618
kelly-Leigh keefe,Regional Director, Chicago Tel: +1 312-386-2229
Michail SidorovRegional Director, Ohio & Michigan Tel: +1 216-333-1274
Jessie SainiRegional Director, Midwest Tel: +1 312-386-2293
Scott RedikerRegional Director, Mid Atlantic Tel: +1 443-690-3122
Jason HedgesRegional Director, Canada Tel: +1 416-878-3260
Adam pangAccount Manager, Europe Tel: +44 20 7422 6268
Carlos NogueiraRegional Director, Brazil Tel: +55 11-3895-8572
DEAL DRIVERS – AMERICAS
70
notes
The following notes pertain to data contained in this publication:
•Dealsareincludedwherethedealvalueisgreaterthanorequal to US$5m.
•Wherenodealvaluehasbeendisclosed,dealsareincludedifthe turnover of the target is greater than or equal to US$10m.
•NorthAmerica=USAandCanada.
•ActivityTablesandleaguetablesundereachindustrysectionare based on the dominant geography of either target, bidder or seller being North America.
•TopDealstablesundereachgeographicsectionarebasedonthe dominant geography of the target only.
•Leaguetablesundereachgeographicsectionarebasedonthe dominant geography of either target, bidder or seller.
•Industrysectionchartsandgraphsarebasedonthedominanttarget geography being North America.
•Geographicsectionchartsandgraphsarebasedonthedominant target geography.
•Transactionsexcludedincludepropertytransactionsandrestructurings where the ultimate shareholders’ interests are not changed.
Note to Heat Chart: Breakdown of constituent states within US regions
State Abbr. Region
New Jersey NJ Mid-Atlantic
New York NY Mid-Atlantic
Pennsylvania PA Mid-Atlantic
Illinois IL Midwest
Indiana IN Midwest
Iowa IA Midwest
Kansas KS Midwest
Michigan MI Midwest
Minnesota MN Midwest
Missouri MO Midwest
Nebraska NE Midwest
North Dakota ND Midwest
Ohio OH Midwest
South Dakota SD Midwest
Wisconsin WI Midwest
Connecticut CT New England
Maine ME New England
State Abbr. Region
Massachusetts MA New England
New Hampshire NH New England
Rhode Island RI New England
Vermont VT New England
Alabama AL South
Arkansas AR South
Delaware DE South
District of Columbia DC South
Florida FL South
Georgia GA South
Louisiana ND South
Maryland MD South
Mississippi MS South
North Carolina NC South
Oklahoma OK South
South Carolina SC South
Texas TX South
State Abbr. Region
Virginia VA South
West Virginia WV South
Kentucky NE South
Tennessee TN South
Alaska AK West
Arizona AZ West
California CA West
Colorado CO West
Hawaii HI West
Idaho ID West
Montana MT West
Nevada NV West
New Mexico NM West
Oregon OR West
Utah UT West
Washington WA West
Wyoming WY West
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