European Spring Update - Harris Williams · European Spring Update May 2014 63 Brook Street London W1K 4HS United Kingdom Phone: +44 20 7518 8900 Red Norrie ... and boohoo.com raising

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European Spring

Update May 2014

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8900

Red Norrie

Managing Director

[email protected]

Julien Darmon

Managing Director

[email protected]

Thierry Monjauze

Managing Director

[email protected]

Jeffery Perkins

Managing Director

[email protected]

Bockenheimer Landstrasse 33-35

60325 Frankfurt am Main

Germany

Phone: +49 69 3650638 00

25.0% 3.4%

Quarterly Quick Read

European

Economic

Environment1

European M&A

Deal Volume

Activity9

GDP2 Manufacturing

Confidence3 Consumer Confidence3

+4.2 pts

Inbound

M&A Deal Volume

to Europe9

Consumer Prices3

+1.1%

M&A

Environment

• Overall European middle market M&A activity increased by 19.9% in Q1 2014 relative to Q4 2013 with volumes up 7.6%

compared with Q1 2013. Capital raised in Europe in Q1 IPOs increased 63% versus 2013, according to Experian data

• UK & Eire transactions accounted for the largest share of overall European activity by volume (36%) in the quarter. Both

France and the DACH region recorded strong increases in activity (up c. 95% and 66% on Q4 2013, respectively) whilst Italy,

Benelux and Scandinavia experienced a minor slowdown in activity

1

European Equity

Market8

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

(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); Evolution calculation based on the quarter finishing 31 March, 2014

(1) For the countries based in the EU27; (2) Year-on-year GDP growth for Q1 2014; (3) PMI, CCI and CPI quarterly growth shown for December 2013 – January 2014;

(4) Aerospace, Defence & Government Services; (5) Also includes Building Products and Paper & Packaging; (6) Telecom, Media & Technology; (7) Transportation &

Logistics; Also includes Speciality Distribution; (8) For all listed companies based in the countries mentioned above and with a market cap greater than €50m; (9) Change

from Q4 2013 to Q1 2014

TMT6 Consumer Industrials5 T&L7 ADG4 Business

Services

Healthcare &

Life Sciences

Energy &

Power

(0.4%)

Sources: Eurostat, Bloomberg, Markit Economics, S&P Capital IQ

+2.1%

125.0%

0.0% (5.9%)

14.3%

TMT

Consumer

ADG

Energy & Power

Industrials

Business Services

T&L

• Just-Eat raised c.£360m in an IPO valuing the Company at £1.5bn. Shares rose 9% in its first day of trading however, by the

end of April were trading below the issue price. Historic shareholders including SM Trusts, Index Venture and Vitruvian sold

a proportion of their shares in the transaction

• Worldwide IT spending is forecast to grow 3.2% in 2014, reaching $3.8 trillion, and expected to grow at a CAGR of 3.4% to

2018 reaching $4.3 trillion, largely driven by enterprise software

• The IPO market for consumer businesses was active, with Poundland raising £375 million, Pets at Home raising £490 million,

Ao World raising £423 million, and boohoo.com raising £300 million

• Food price inflation in the UK has reached its lowest point in seven years, driven by food-price wars; Morrisons cut the price

of 1,200 products in an attempt to win customers back

• European countries continue to face pressure to increase budget spending and to commit greater resources to develop defense

capabilities, particularly in light of increased political tensions in Eastern Europe

• Boeing took the lead over Airbus in new orders in Q1 2014, following recent Airbus order cancellations. In Q1 2014, Boeing

secured 234 aircraft orders, surpassing 103 orders secured by Airbus

• The European oilfield service and equipment M&A market remained active in Q1 2014 with several acquisitions by major

Northern European companies, such the acquisition of KRG Industries by Proserv Group and Scanmet by Bergen Group

• After limited inbound M&A activity by Non-European buyers in 2013, North American investors in particular have

increasingly re-engaged in European M&A in Q1 2014, with 5 transactions, the highest level since Q1 2012

• In February 2014, industrial production grew by 1.7% year-on-year in the Euro area and by 2.1% in the EU28

• Exova, a leading laboratory testing services company based in the UK, announced the pricing of its IPO at an implied market

capitalisation of approximately £550 million, while Applus, a leading testing inspection and certification company, announced

plans to raise €1.1 billion via an IPO in Madrid

• According to Markit Index, Business Services market growth in the Euro area slowed slightly in March 2014, continuing

expansion of the market for the eighth successive month, driven by high business confidence and recovery in France and Spain

• The UK services sector growth slowed in Q1 2014, representing the slowest growth since June 2013, although the UK services

sector remains firmly in the growth territory

• Germany, for the second time since 2007, leads the World Bank’s 2014 “World Logistics Performance Index”, with the

Netherlands, Belgium and the UK in positions 2, 3, and 4, respectively

• The European Transport & Logistics M&A market showed an increase in Q1 2014, from a low level. North American buyers

exhibited particular interest in European T&L in Q1 2014, with 8 transactions, the highest level since Q3 2012

Healthcare & Life

Sciences

• Montagu Private Equity acquired the Healthcare Devices and Prescription Retail divisions of Rexam PLC in an MBO for $805

million

• Cambian Group, a behavioural healthcare services provider backed by GI Partners, announced its intention to float on the LSE

Last Quarter 1.5% 6.2% 3.4% 4.6% (0.4%) 5.3% 4.7% 5.6%

Last Year 20.9% 24.6% 15.4% 25.8% (3.0%) 20.8% 26.7% 27.0%

Last 3 Years 44.9% 30.2% 16.6% 18.7% (19.9%) 5.3% 23.3% 21.4%

24.3% 30.8% 12.3% 15.0%

(26.3%) (42.1%) 400% 90.0% 16.7% (50.0%)

European Economic Climate

2

Key Countries % Y-o-Y Growth

Q4 14E Q4 13A

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

(40)

(30)

(20)

(10)

0

10

20

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Co

nsu

mer

Pri

ce I

nd

ex (

%)

Co

nsu

mer

Co

nfi

den

ce I

nd

ica

tor

CCI CPI Y-o-Y %

40

45

50

55

60

(10%)

(5%)

0%

5%

10%

Mar-13 Jun-13 Sep-13 Dec-13 Mar-14

PM

I In

dex

Va

lue

Ch

an

ge in

PM

I (M

-o-M

)

Change (M-o-M %) Eurozone PMI

(6%)

(4%)

(2%)

0%

2%

4%

6%

Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14E Q3 14E Q1 15E Q3 15E Q1 16E Q3 16E

Source: Eurostat, latest available data as of April 14th, 2014

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

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

Confidence Index Eurozone; (3) Consumer Price Index

Quarterly Real GDP Growth (% Y-o-Y for EU-28)

European Manufacturing Confidence European Consumer Confidence

• EU-28 GDP grew by 0.4% Q-o-Q in Q4 2013 and by 1.1% on a Y-o-Y basis, according to the latest figures

available from Eurostat

• The UK economy experienced relatively broad based growth in Q1 2014, expanding by 0.9% over the period,

according to the latest estimates from the National Institute of Economic and Social Research

• The Eurozone recovery is expected to gather pace in 2014, with GDP forecast to grow by 1.0% in the year,

followed by 1.4% in 2015, as exports and domestic demand strengthens

• Latest estimates indicate that the Eurozone Composite Purchasing Managers Index increased to 53.2 in

March from 52.1 in December, maintaining levels indicating growth (>50)

• Industrial production in the Eurozone grew by 0.2% in February compared to January, driven by growth in

intermediate goods, non-durable consumer goods and electronic component manufacturing

• Consumer confidence continued to improve in March with the Eurozone Consumer Confidence Indicator

increasing by 4.2 points relative to December 2013

• The European Central Bank kept interest rates at the record low of 0.25% in March and hinted that further

rate cuts could take place in order to counter further strengthening of the Euro

• Eurozone inflation fell to 0.5% in March 2014, its lowest level since November 2009, raising expectations of

intervention by the European Central Bank

• The Eurozone unemployment rate remained stable at 11.9% in February, with youth unemployment of

22.9%, a decrease of 0.7% compared to November 2013

(1) (2) (3)

UK +2.7% +2.6%

Germany +1.4% +2.3%

France +0.8% +0.6%

Spain (0.1)% +0.7%

Italy (0.9)% +0.6%

Netherlands +0.8% +1.2%

Sweden +3.1% +2.2%

0

300

600

900

1,200

1,500

Q1-12 Q3-12 Q1-13 Q3-13 Q1-14

Nu

mb

er o

f T

ra

nsa

cti

on

s

ADG

Energy & Power

Transportation & Logistics

Healthcare

Business Services

Industrials

Consumer

TMT

41%36%

15%21%

14%

12%

10%16%

8%6%

8%7%

5% 3%

0%

20%

40%

60%

80%

100%

Q4-13 Q1-14

Italy

Benelux

Spain

Scandinavia

France

DACH

UK & Eire

89%

11%

Strategics Financials

European M&A Environment

Market Observations

• European middle market M&A activity increased by c. 20% in Q1 2014, compared to Q4 2013 with overall

transaction volumes up 7.6% Y-o-Y

• TMT and Consumer were the two most active sectors, accounting for approximately 55% of total deal volume,

with Q-o-Q growth of 25.0% and 24.3%, respectively

• Senior loan volume for European LBOs in Q1 2014 increased to circa €8.1 billion, up from €7.9 billion during

the same period in 2013

• The average purchase price multiple in the first quarter (TTM EBITDA basis) for European LBOs with an

Enterprise Value of €250m or less was 7.7x EBITDA, an increase of 10.1% on the average for 2013

• Equity contribution1 in European LBOs averaged 54% during Q1 2014, compared to 44%, during the full year

2013

Transactions by Target Country2 Buyer Segmentation Q1 20141

939

Middle Market

Transactions

Source: S&P Capital IQ

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

Luxembourg; (4) Scandinavia defined as Denmark, Norway, Sweden and Finland; (5) DACH defined as Germany, Austria, Switzerland


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

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

Q1 - 14

Sector

Breakdown

0.5%

1.7%

4.9%

8.7%

16.3%

13.0%

Change of

Q1 - 14 over

Q1 - 13

22.9%

Middle Market M&A Activity – By Sector

3

31.9%

100.0% Total

Source: S&P Leveraged Commentary & Data

Notes: (1) Equity contribution including retained equity/vendor financing and contributed equity

5

3

4

150.0%

(5.9%)

(14.8%)

6.5%

12.5%

5.9%

3.4%

12.8%

7.6%

0

2,000

4,000

6,000

8,000

10,000

0

50

100

150

200

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

Dea

l V

alu

e (

€m

)

Nu

mb

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cti

on

s

International Activity by Number International Activity by Value

North America85%

South America1%

China2%

India2%

Asia (excl. China & India)8%

Africa & Middle East2%

European

Inbound M&A Environment

Acquisitions by Non-European Buyers1,2

Non-European Buyers by Country Q1 141,2

Non-European Buyers as a Percentage of Sector Deal Volume1,2,3

4

Market Observations

• International inbound M&A volume into Europe increased by 30% Y-o-Y with 139 closed transactions,

reaching the highest level since Q2 2012

• The ADG and Energy & Power sectors attracted the highest relative level of international inbound M&A

investment, with international acquirers accounting for 60% and 31% of completed transactions in the

quarter, respectively

• The Healthcare and Transportation & Logistics sectors recorded the greatest Q-o-Q increases in inbound

M&A volume

• North American groups accounted for 85% of transactions completed with non-European buyers, closing

111 transactions in the quarter. Asian groups, excluding China and India, were the second most active

buyers, closing 11 transactions in the quarter


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

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

Finland); (2) International buyer defined as from outside Europe; (3) By volume

% of Total Deal Volume Q 1-12 Q 2-12 Q3-12 Q 4-12 Q 1-13 Q2-13 Q 3-13 Q 4-13 Q 1-14

ADG 0% 29% 25% 67% 50% 13% 30% 40% 60%

Business Services 10% 8% 5% 10% 10% 15% 11% 18% 16%

Consumer 9% 9% 6% 8% 8% 8% 8% 11% 5%

Industrials 8% 11% 10% 9% 11% 12% 10% 12% 10%

Energy & Power 19% 8% 7% 13% 18% 36% 16% 6% 31%

Healthcare 15% 16% 14% 6% 9% 11% 20% 14% 23%

TMT 16% 18% 21% 18% 20% 17% 24% 20% 19%

Transportation & Logistics 5% 5% 10% 3% 0% 9% 6% 10% 20%

Aerospace, Defence & Government

Services

5

European ADG Equity Markets1

European ADG Middle Market M&A Activity

0

1

2

3

4

5

Q1-12 Q3-12 Q1-13 Q3-13 Q1-14

Nu

mb

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North America Asia (excl. China & India) China

India South America Africa & Middle East

0

2

4

6

8

10

12

14

16

Q1-12 Q3-12 Q1-13 Q3-13 Q1-14

Nu

mb

er o

f T

ran

sact

ion

s

UK & Eire Scandinavia DACH France Benelux Spain Italy

Source: S&P CapitalIQ

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

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

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

CFO or Chairman

M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2

Selected European ADG M&A

Market Observations

• Boeing took the lead over Airbus in new orders in Q1 2014, following recent Airbus order cancellations.

Boeing secured 234 aircraft orders, surpassing 103 orders secured by Airbus. Airbus led the way in 2013,

having secured 1,619 jet orders compared to Boeing’s 1,355

• The global air travel market expanded by 6.9% in the first two months of 2014 compared to the same period in

2013, while European air travel grew by 6.4% over the same period, supported by an improving economic

environment

• The global commercial airline industry is forecast to generate net profit of $18.7bn in 2014, up from $12.9bn

in 2013, representing an increase of 45%

• The European Parliament voted to exempt international flights from paying for their carbon emissions

following intense pressure from national governments not to extend current rules beyond domestic air travel

• European countries continue to face pressure to increase budget spending on defence in light of increased

political tensions in Eastern Europe. The US has encouraged its European NATO allies to commit greater

resources to develop defence capabilities

• Safran entered into an agreement to acquire Aerospace Power Distribution Management Solutions and

Integrated Cockpit Solutions Business of Eaton Corporation for $270 million

UK and Eire France DACH Spain Italy Benelux Scandinavia

Price Change since last quarter 0.1% 2.8% 4.8% NA 30.2% (1.9%) (10.9%)

Cash on Balance Sheet (€ bn) 8.7 5.9 0.2 NA 1.5 8.0 0.1

Net Debt / LTM EBITDA Multiple 1.0x 0.7x 0.8x NA NM NM NM

LTM EBITDA Multiple 8.5x 13.5x 9.3x NA 9.3x 16.9x 14.2x

Change since last quarter (1.0x) (0.6x) 0.8x NA 1.3x (0.2x) 3.8x

LTM EBITDA Margin 14.7% 9.7% 9.4% NA 6.0% 7.0% 9.1%

Consensus 2Yr Fwd Revenue Growth (p.a.) 3.8% 5.0% 6.0% NA (3.2%) 3.7% 3.2%

Target Country Acquirer Country Sub Sector EV (€m)

APPH Wichita Heroux-Devtek Aerospace Components 89

Elektro-Metall Export TransDigm Group Aerospace Components 34

Race Completions Specialist Technologies Aerospace Components NA

Alkan TCR Capital; Groupe IDI Defense Components NA

DutchAero K.M.W.E. Precisie Eindhoven Aerospace Components NA

Business Services

6

European Business Services Equity Markets1

European Business Services Middle Market M&A Activity

0

5

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15

20

Q1-12 Q3-12 Q1-13 Q3-13 Q1-14

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Selected European Business Services M&A

Market Observations

• Business services market growth in the Euro area slowed slightly in March 2014. The Markit Services

Business Activity Index fell to 52.2 in March, compared to 52.6 in February but still represented continuing

expansion of the market for the eighth successive month, driven by high business confidence and recovery in

France and Spain

• UK services sector growth also slowed in Q1 2014 with the Markit Index falling to 57.6 in March, compared to

58.2 in February. This was the fifth month in a row the index had fallen and represented the slowest growth

since June 2013, although the UK services sector remains firmly in growth territory

• In its report, the European Commission identified the business services sector as crucial for growth in Europe's

economy. As part of the Europe 2020 Strategy, the proposed action plan includes the completion of the single

market for services, seizing international opportunities and developing the right skills and technological

infrastructure needed by European companies

• Management moves3: Aggreko, De La Rue, Domestic & General, Johnson Service, Serco Group, Telegate


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

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

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


Price Change since last quarter 5.6% 11.0% 6.8% NM 48.3% 1.4% 3.7%

Cash on Balance Sheet (€ bn) 4.9 8.4 4.6 0.3 0.0 1.2 NM

Net Debt / LTM EBITDA Multiple 1.3x 1.0x 1.4x 9.2x 14.9x 2.2x 2.3x

LTM EBITDA Multiple 10.5x 8.1x 10.2x NM 4.2x 13.3x 11.5x

Change since last quarter (0.8x) 1.1x (0.6x) NM NM 1.7x 0.9x

LTM EBITDA Margin 10.7% 8.7% 5.3% 8.3% 2.0% 5.0% 10.5%

Consensus 2Yr Fwd Revenue Growth (p.a.) 5.4% 4.6% 4.4% 6.7% 15.4% 8.7% 6.1%


Aktiv Kapital Portfolio Recovery Associates Financial Services 950

Marlin Financial Group Cabot Credit Management Group Financial Services 380

Rentokil Initial, Facilities Business Interserve Facility Management 304

ISS Espaces Verts Chequers Capital Facility Management 130

BRFkredit Jyske Bank Financial Services 45

LAS Claims Management Innovation Group Facility Management 43

Zenith Vehicle Contracts HgCapital Fleet Management NA

Chaucer Group Growth Capital Partners Professional Services NA

Alfakonsult Sweco Professional Services NA

Gout International Landmark Global Distribution NA

Desplat Paprec Waste Management NA

0

5

10

15

20

25

30

35

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100

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Consumer

European Consumer Equity Markets1

European Consumer Middle Market M&A Activity


7

Sources: S&P CapitalIQ, Bloomberg, Retail Gazette, Food and Drink Europe, Kantar Worldpanel, Company Press Releases

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

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

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

Selected European Consumer M&A Deals

• The IPO market for consumer businesses was active, with Poundland raising £375 million in an IPO valuing the

Company at £750 million, Pets at Home raising £490 million at a valuation of £1.2 billion, Ao World raising

£423 million at a valuation of £1.6 billion, and boohoo.com raising £300 million at a valuation of £560 million

• Mars acquired Procter & Gamble’s pet food brands, including Iams, Eukanuba and Natura, for $2.9 billion

• Despite the Europe-wide trend towards lower spend in grocery shopping, private label and discount stores have

lost market share in France, which dropped 0.8 and 0.6 percentage points in 2013, respectively, while private

label products have continued to gain market share

• Food price inflation in the UK has reached its lowest point in seven years, as food-price wars continue to drive

more promotions and lower prices in efforts to gain market share; Morrisons cut the price of 1,200 products in

an attempt to win customers back

• The number of UK consumers using “Click and Collect” services is expected to increase from 35% of online

shoppers to 76% in 2017, as customers look to avoid delivery costs and inconvenient delivery times

• Management moves3: AG Barr, Burberry, Co-Operative Group, Creston, Kuoni, Mulberry, Tesco, The

Restaurant Group

Market Observations


Price Change since last quarter 3.4% 3.1% 1.9% -% 11.0% 3.1% 4.2%

Cash on Balance Sheet (€ bn) 25.1 37.9 28.0 5.4 4.4 NM NM


LTM EBITDA Multiple 10.4x 7.9x 9.5x 11.0x 9.5x 9.2x 9.9x

Change since last quarter (0.0x) (0.3x) 0.7x 0.8x 0.5x (0.1x) 0.1x




Nidera COFCO Corporation Agri Products c.2,900

Kurt Geiger Sycamore Partners Apparel c.1,600

Diana Group Symrise Processed Food c.1,300

Nuova Castelli Charterhouse Processed Food 300

Mr. Bricolage Kingfisher Retail 275

Premier Foods (Hovis) The Gores Group Processed Food 106

Izico Bocholt Egeria Processed Food 68

Loch Lomond Distillery Exponent Private Equity Beverage NA

Lutosa Retail Findus Group Processed Food NA

MEC3 The Riverside Company Processed Food NA

The Gym Pure Gym Leisure NA

8

Industrials

European Industrials Equity Markets1

European Industrials Middle Market M&A Activity


Selected European Industrials M&A

Market Observations

• In February, seasonally adjusted industrial production rose by 0.2% month-on-month in the euro area (EA18)

and by 0.4% in the EU28 according to according to estimates from Eurostat

− February 2014 showed year-on-year growth in industrial production of 1.7% in the euro area and 2.1% in

the EU28

• In March, the Economic Sentiment Indicator (ESI) increased by 1.2 points in the euro area (to 102.4), while

remaining broadly flat in the EU (a marginal increase of 0.3 points to 105.3)

• According to Eurostat’s April estimate, real GDP in the euro area will grow by 0.6% in the first quarter of

2014 and 0.4% in the second quarter

• Two of the major European testing services companies, Exova (UK) and Applus (Spain) announced the pricing

of their planned initial public offerings at market capitalisations of £550 million and €1.1 billion, respectively.

• Alstom has accepted General Electric's €12.4bn offer to buy its energy division despite a government outcry

over the deal. However, the group is prepared to consider a counter-bid from Siemens

• Onex Corporation and CPPIB announce the sale of Gates Corporation, a division of Tomkins, to the

Blackstone Group for US$5.4 billion

• Management moves3: Aggreko, Augean, Ballast Nedam, BE Group, CRH, De La Rue, DMG Mori Seiki,

FLSmidth, Geberit, Indutrade, ITM Power, Johnson Service Group, Kier Group, KONE, Koninklijke Philips,

Manitou Group, Orkla, Sensata Technologies, Serco Group, Speedy Hire, Systemair, Vossloh


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

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

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


Price Change since last quarter 0.7% 10.4% 2.1% 5.0% 19.7% 7.1% 6.1%




Change since last quarter 0.2x 0.4x (0.3x) (1.2x) (0.1x) (1.0x) 0.9x



0

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100

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200

250

Q1-12 Q3-12 Q1-13 Q3-13 Q1-14

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Rautaruukki SSAB Steel 16,227

Foster Wheeler AMEC Construction & Engineering 2,752

Avincis Mission Critical Services Babcock International Diversified Services 1,625

Sulzer Metco Management Oerlikon Balzers Coating Industrial Machinery 1,000

Fandstan Electric Wabtec Electrical Equipment 215

Energy & Power

European Energy & Power Equity Markets1

9

European Energy & Power Equity Markets1

European Energy & Power Middle Market M&A Activity


Price Change since last quarter (6.8%) 12.6% 3.8% 11.3% 20.6% 1.3% (4.2%)

Cash on Balance Sheet (€ bn) 27.5 33.8 10.8 19.6 15.1 12.9 16.7



Change since last quarter (0.6x) (0.2x) (0.6x) 1.2x (0.4x) 0.2x 0.0x


Consensus 2Yr Fwd Revenue Growth (p.a.) 9.5% 1.9% 2.9% 3.8% (0.5%) 0.5% 8.5%


Selected European Energy & Power M&A3

Market Observations

• The European oilfield service and equipment M&A market remained active in Q1 2014 with several

acquisitions by major Northern European construction, service, and oil & gas companies. Proserv Group

acquired KRG Industries, a precision engineering company for oil & gas while Bergen Group acquired the

Norwegian oil & gas decommissioning specialist Scanmet

• After limited inbound M&A activity by Non-European buyers in Q4 2013, North American investors in

particular increasingly re-engaged in European M&A activity in 2014, with 5 transactions

• European and US-based private equity demonstrated strong interest in the sector with Triton Partners acquiring

Cubility, HitecVision acquiring Reef Subsea and Sun Capital Partners acquiring Applied Drilling Technology

International

• The largest transaction during Q1 2014 was LetterOne Group, a Luxembourg-based investment company's

acquisition of RWE Dea, a crude oil and natural gas exploration & production company, from RWE AG

• Management moves4: Pacific Drilling, Rockhopper Exploration, comScore, Fortum Oyj, Premier Oil, Xcite

Energy, Centralschweizerische Kraftwerke, Centrica, BowLeven


Notes: (1) Based on HW&Co. indices including the most relevant Energy & Power companies for each country

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

Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Includes

acquisitions of majority stakes only (4) Resignation or appointment of CEO or CFO

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RWE Dea AG LetterOne Group Exploration and Production 5,100

Shelton Petroleum Petrogrand Exploration and Production 51

Reef Subsea HitecVision Subsea Services 22

Cubility Triton Partners Oilfield Equipment NA

Applied Drilling Technology International Sun Capital Partners Offshore Services NA

Scanmet Bergen Group Offshore Services NA

KRG Industries Proserv Group Oilfield Equipment NA

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Healthcare & Life Sciences

10

European Healthcare & Life Sciences Equity Markets1

European Healthcare & Life Sciences Middle Market M&A Activity






Change since last quarter (0.1x) (0.5x) (0.0x) (1.7x) 0.2x 1.7x (2.8x)




Selected European Healthcare & Life Sciences M&A

Market Observations

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

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

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

• Pfizer, the American pharmaceutical group, has made a tentative approach to AstraZeneca, the UK

pharmaceutical group, about a possible takeover valuing the Company at more than £60 billion

• GI Partners-backed Cambian Group, a behavioural healthcare services provider, announced its intention to float

on the LSE. The listing is expected to value the Company at around £400 million and will raise gross proceeds of

approximately £200 million

• Nestlé acquired the remaining 50% stake in Galderma Pharma, a medical dermatology solutions and therapeutic

skin care products manufacturer, which had previously been structured as a JV with L'Oreal SA, for €2.7 billion

• Vidara Therapeutics, a specialty pharmaceutical company, was acquired by Horizon Pharma for $660 million

• Management moves3: bioMérieux SA, Curanum AG, Merck, Nicox SA, Shire Plc, Stallergenes and UCB

Target Country Acquirer Country CountrySub Sector EV (€m)

Rexam (Devices and Packaging Divisions) Montagu Private Equity Pharmaceuticals 580

ARKOPHARMA Laboratories Montagu Private Equity Pharmaceuticals 300

Activaero Vectura Group Healthcare Equipment 134

BioFocus DPI / Argenta Charles River Laboratories Biotechnology 134

BERCHTOLD Stryker Corporation Healthcare Equipment 124

Benson Group Graphic Packaging Healthcare Equipment 119

Arseus NV (Five Businesses) Henry Schein Healthcare Technology 50

AQTIS Medical Sinclair IS Pharma Healthcare Equipment 47

Vitalitec International Peters Surgical SAS Healthcare Equipment 40

4-Antibody Agenus Biotechnology 37

DORC Montagu Private Equity Healthcare Equipment NA

Technology, Media & Telecom

11

European Technology, Media & Telecom Equity Markets1

European Technology, Media & Telecom Middle Market M&A Activity


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Selected European Technology, Media & Telecom M&A

Market Observations

• Time Warner Cable has been acquired by Comcast for $45.2 billion, representing a 1-month premium of 16.8%

• Facebook acquired Whatsapp for c.$19 billion in order to expand their presence and user base in mobile

• Rakuten acquired Viber for $900 million in order to expand the distribution channel for its digital products

• Just-Eat raised c.£360m in an IPO valuing the Company at £1.5bn. Shares rose 9% in its first day of trading

however by the end of April were trading below the issue price. Historic shareholders including SM Trusts,

Index Venture and Vitruvian sold a proportion of their shares in the transaction

• Worldwide IT spending is forecast to grow 3.2% in 2014, reaching $3.8 trillion, and is expected to grow at a

CAGR of 3.4% to 2018, reaching $4.3 trillion in annual spend largely driven by enterprise software

• Mobile services revenue in Europe is expected to be $454 billion in 2014 and grow at a 1.4% CAGR to reach

$480 billion in 2018, driven by data services. Growth is offset by declines in legacy voice services

• LTE connections in the UK are expected to grow from 4.3 million registered lines in 2013 to 33.1 million in

2017, as the UK and Germany work together to develop 5G technology and other M2M solutions

• Management moves3: Atea, Cable & Wireless Communications, Cineworld, Millicom, Nokia and UBM

Sources: S&P CapitalIQ, Gartner, Yankee Group, Company Press Releases

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

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

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






Change since last quarter 0.2x 0.8x (0.0x) (1.5x) 1.4x 0.6x (0.3x)




Ziggo Liberty Global Telecoms c.10,000

ONO Vodafone Telecoms c.7,200

Nets Holding Advent International / Bain Capital IT Services c.2,280

Groupe Steria Sopra Group IT Services 730

Callcredit GTCR IT Services 583

CarTrawler BC Partners / Insight Ventures Digital Media 450

Octo Telematics Renova Group IT Services 405

NaturalMotion Zynga Software 389

Avantia ECI Partners Fintech 70

Performance Interactive Alliance Equistone Parters Media NA

Trader Media Group Apax Partners Media NA

Transportation & Logistics

European Transportation & Logistics Equity Markets1

12

European Transportation & Logistics Middle Market M&A Activity


Price Change since last quarter 4.3% 12.9% 5.6% 2.6% 14.3% (0.5%) 1.6%




Change since last quarter (0.7x) 0.8x (1.4x) 0.7x (0.6x) (1.8x) (0.6x)




Selected European Transport & Logistics M&A3

Market Observations

• Germany, for the second time since 2007, leads the World Bank’s 2014 “World Logistics Performance Index”.

The World Bank ranks logistics markets by parameters among others such as infrastructure, customs, logistics

competence, and timeliness. The Netherlands, Belgium, and the UK gained positions 2, 3, and 4, respectively

• The EU Parliament voted against cross-border traffic of 25m-plus road trains. The Parliament calls on the

Commission to research safety, congestion, and infrastructure issues beforehand

• The European Transport & Logistics (“T&L”) M&A market showed an increase in Q1 2014, albeit from a low

level

• North American buyers demonstrated significant interest in the sector in Europe, with 8 in-bound transactions,

the highest since Q3 2012. Significant examples included the acquisition of France-based railcar lessor NACCO

by the NYSE listed CIT Group and the acquisition of pharmaceuticals distributor Polar Speed Distribution by

United Parcel Service (UPS)


Notes: (1) Based on HW&Co. indices including the most relevant Transport & Logistics companies for each country

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

Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Includes

acquisitions of majority stakes only

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Norwegian Car Carriers J.P. Morgan Asset Management & Klaveness Invest Transport Logisitics 56

Kerpen & Kerpen HeidelbergCement Transport Logisitics 35

Wallaces of Ayr C&C Group Beverage Distribution NA

European Food Transport Bakker Logistiek Groep Transport Logisitics NA

Pocketstället CapTech Distribution Media Distribution NA

Lehtipiste Sponsor Capital Media Distribution NA

Polar Speed Distribution United Parcel Service Pharmaceuticals Distribution NA

NACCO CIT Group Railcar Lessor NA

Stef, Logistics Activities in Scotland DFDS Logistics Logistics Services NA

EDT SDV Logistique Internationale Transport Logisitics NA

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Featured Theme

Key Trends in Technology, Media & Telecom

European TMT M&A activity rose 25% in Q1 2014, with 300 closed transactions, the highest level since Q3

2012. Notable trends in the industry include:

− Global mobile advertising spending is forecast to reach $18.0bn in 2014, growing c.7%

over 2013, while mobile value added services revenues are expected to grow at a CAGR

of 10% from 2013 to 2018

− During the quarter, Brandstone, an Ireland-based mobile marketing company focusing

on developing and emerging markets, received €14m funding from Syngenta Ventures,

Unilever Ventures and Verlinvest; Pozitron Yazilim, a Turkey-based mobile banking,

payments and commerce solutions provider, was acquired by Monitise for £60m

− HW&Co. advised on the sale of Upstream, a leading emerging markets mobile

monetisation company, to Actis Capital

− IT Operations Management software spending is forecast to grow at c.7% annually

through 2016, driven by increasing demand for comprehensive solutions and emergence

of cloud and virtualisation

− During the quarter, Axway Software acquired 66% stake in Systar, a publicly listed

performance management software provider, for €34m; Network Automation, a

business process automation software solutions provider, was acquired by Help/Systems

− HW&Co. is advising on the planned sale of ORSYP, a global IT automation and

optimisation software solutions provider, to EQT

− Enterprise software revenue is forecast to increase by 6.9% to $320bn in 2014, driven

by increased interest in social software, database technologies and data management

technologies

− During the quarter, Court Square Capital Partners and management acquired a majority

stake in AFS Technologies, a provider of integrated business enterprise and on-demand

software solutions; WABCO Europe acquired Transics International, a provider of fleet

management solutions for the transport and logistics sectors, for €100m

− HW&Co. advised on the sale of ECi Software Solutions, leading ERP business

management and e-commerce systems software provider, to Carlyle Group

European TMT M&A Deals

HW&Co. Selected Recent Technology, Media & Telecom Transactions


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

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

Finland)

25%

and

a portfolio company of

and

has been acquired by





(46%)

has received a

significant strategic

investment from

13

25%

Mobile

Marketing

Infrastructure

Software

Enterprise

Software


is in exclusive

discussions with

Contacts and Disclosures

Thierry Monjauze

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8901

[email protected]

Julien Darmon

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8905

[email protected]

Red Norrie

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8906

[email protected]

Jeffery Perkins

Managing Director

Bockenheimer Landstr. 33-35

60325 Frankfurt

Germany

Phone: +49 69 3550638 00

[email protected]

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