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CurrentTrendsinU.S.M&As
ABA-SILFNewDelhiConference
February19,2016
©2016JaipatSinghJain&LazarePoNer&GiacovasLLP.SubjecttorightsofexisSngcopyrightholdersincertainslidesonly,asindicatedonthoseslides.
Panelists
2
JaipatSinghJainLazarePoNer&GiacovasLLP,NewYork
• Partnersince2004
– PrivateM&AtransacSons– PrivatesecuriSestransacSons– Choice,organizaSonandgovernanceofbusinessenSSes– DataprotecSonandprivacylawissues– Businesscontracts
» developmentandlicensingofintellectualproperSes,Employment,manufacturinganddistribuSon,asset-basedlending,leasingandconveyanceofcommercialrealestate,internaSonaltradeandtradefinancing
• PGinIntl.Business(IIFT86),LL.B.(Delhi1993),LL.M.(Fordham2000)
• AdmiNedinNewYork,Delhi,England&Wales(non-pracScingSolicitor)
3
JayGaryFinkelsteinDLAPiperLLP(US)
DLAPiper,Partner,CorporateTransac3ons,30+YearsM&AJointVenturesStrategicContractualRelaSonshipsCorporateStructuring
PrincipalIndustryFocus:Defense,Hospitality,FinancialServices,Franchised
Businesses;High-TechandEmergingGrowthAdjunctLawFaculty:Stanford,Berkeley,GeorgetownandAmerican
Teaching:InternaSonalBusinessNegoSaSonsTeachingWorldwide:includingRussia,Israel,China,EastAfrica
FrequentWriter:TopicsrelatedtotransacSonallawandexperienSal
learning.Educa3on:HarvardLawSchool,magnacumlaude,1978
PrincetonUniversity,magnacumlaude,1975 4©2016DLAPiperLLP
KrishnaVeeraraghavanSullivan&CromwellLLP
• Recentlynamed“DealmakeroftheWeek”byTheAmericanLawyerforroleadvising:– Synagevainits$8.4billionacquisiSonbyAlexion– LabCorpinits$6.1billionacquisiSonofCovance– HisworkonM&Amega-dealsbyTheLegal500
• LeadingadviseronM&A,corporategovernanceandprivateequitymaNersworld-wide
• RegularlyrepresentsU.S.andnon-U.S.companies,specialcommiNees,boardsofdirectorsandfinancialadvisersinpubliccompanytransacSons,leveragedbuyoutsandprivatecompanysalesofsubsidiariesanddivisions
• AdjunctprofessoratColumbiaLawSchool
5
VikasVermaLakshmikumaran&Sridharan
Partner,Corporate(Mumbai)• PracScedomainincludesforeigndirect
investments,PE,M&Aandjointventuresandstrategicalliances
• Experiencespansacrosssectorssuchastechnology,e-commerce,financialservicesandmedia&entertainment
• Advisesclientsonexchangecontrollaws,securiSesregulaSon,companiesact,andgeneralcorporate&commercialmaNers.
MBAfromINSEAD;qualifiedasSolicitor,England&Wales(Non-PracScing).GraduateofNaSonalLawSchoolofIndiaUniversity,Bangalore 6
Agenda
• BigPicture• PaneliststoansweraseriesofquesSons• DiscussissuesarisingfromthehypotheScal
• Q&As
7
2007Recession2015
8
Source:InsStuteofMergers,AcquisiSonsandAlliances(IMAA)
Yearstowatch:1999,2007,2014-2015
0
500
1000
1500
2000
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0
2000
4000
6000
8000
10000
12000
14000
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19992000200120022003200420052006200720082009201020112012201320142015
ValueofTransac3o
ns(inbil.USD
)
Num
bero
fTransac3o
ns
Mergers&Acquisi3onsinU.S.,1999-2015 NumberValue
9
In-boundintotheU.S.• 2015wasrecordyear– UnSlDec.10,2015,ofthe$2.3tindeals,$400bwasinbound(previousrecord$300bin2000)
– China$30b(similartoJapaninthe1980s’)• WesternDigitalbyTsinghuaUnisplendour/Krishna• WaldorfAstoriaboughtbyAnbaugInsurance/Jay
– India$3b• LupinbuysGavisPharma,NJfor$880m/Vikas
– BiggestoutboundIndianpharmadeal
• WiproannouncedpurchaseofHealthPlanfor$460m/Vikas
10
HoNestSectorsin2015
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HealthcareSector• Moredealsthenever
– 2,907in2015;2,584in2014
• MorehosSledeal-makingthanever– Cigna-Anthem– Syngenta-Monsanto– TevaPharma-Mylan
Largestdealof2015:Pfizertopay$160btoacquireAllerganplc,Dublin
Spotlighton- Stateofthepharmasector- Inversiondeals
12
HospitalitySector
• WaldorfAstoria• Korea’sLoNebuysNewYorkPalace,$800m+• MarrioNsaiditwillacquireStarwoodfor$12.2bagainstcompeSSonfromChina
• StrongdollarandnewsupplieslikeAirbnb• What’shappening?/Jay– What’sspecialaboutstructuringhospitalitydeals?
Pierre
13
HOSPITALITY/LEISURE/Jay– Oneoftop2015sectors– BrandaggregaSon–consolidaSon[MarrioN/Starwood]– BuildingbrandloyaltyacrossmulSplebrands– Cross-borderacSve(brandexpansion/acquisiSon)– Recordlowenergypricesimprovesprofitprofile– Strongcurrentandprojecteddemand– OpportuniSesaboundinemergingmarkets– MillennialsaregrowingSegment
• ExploraSon,interacSon,andemoSonalexperiences(includingfood)[IHGacquisiSonofKimptonHotels]
• NotthetradiSonalhotelexperience– Medicaltourismisgrowingsegment– Strongdollar–makesoutboundtransacSonsaNracSve– TopIndiabrandscouldbepotenSaltargetsasentretomarket– ManydealswillbethroughaucSoncompeSSton
14©2016DLAPiperLLP
LegalTech-Talk1Analysisof1993publicly-filedprivatemergertransac3onsbetween2012-2016
15
LegalTech-Talk2Analysisof1993publicly-filedprivatemergertransac3onsbetween2012-2016
16
LegalTech-Talk3Analysisof1993publicly-filedprivatemergertransac3onsbetween2012-2016
17
MarchoftheTechnologySector
• WiprotoacquireHealthPlanServicesfor$460m– Tech.overlayintoothersectors–UberizaSon?/Krishna
18
Tech-SectorIssueSpotng
• ElephantsintheRoom/Krishna– VCs
• 86%uproundsin2015• 10%flatrounds
– M&AasexitrouteratherthanIPOs?– Techsector:2014(55);2015(24);2016(none?)
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InboundUSPrivateEquityPrivateEquityasProporSonofM&A
Source:USM&AH12015:RidingHigh©2016DLAPiperLLP
ElephantsintheRoom2• AcSvistInvestors/Krishna– JPMorgan:acSvisthedgefundsAUMgrownfrom$46bin2010to$137bin2015
– FactSet:Ofthe51techacquisiSons>$1binlastfiveyears,15weredrivenbyacSvistprivateequity
• EndofEasyFinancing?
21
DEFENSE/Jay– NegaSveimpactofsequestraSon/budgetcuts– Budgetuncertaintyv.worldwideissues– Splitngpublicsectorandcommercialunits– DivesStures/spin-offsofnon-core(lowermargin)businesses;focusoncorecapabiliSesandgrowingmarkets–opportuniSesforacquisiSons
– StrategicacquisiSons(e.g.,Lockheed/Sikorsky)• broadeningleadingposiSonsandplayormsandnegoSaSngpower
– Cross-borderacSve(CFIUSreviewissues–strategictechnology)
– IndiastrategicrelaSonshipwithUScouldbeleveraged
22©2016DLAPiperLLP
Franchise/Jay• AcquisiSonoffranchisorsystemsandlargefranchisee
systemsaNracSve• Cashrevenuestream–appealingtoPEinvestors• Economiesofscaleandacrossbrands(e.g.,Roark,
Argonne;SenSnel)• OutboundfromUSmorelikelytobeJV• SalesofIPrightsandcountry-widedevelopment
agreementsininternaSonalmarketsareoccurringasmeansofexpansion
• SomeinternaSonalbrand,cross-borderM&Ahappening,butnotnecessarilyatsizethatismajorfocus
• IndiaisanaNracSvemarket;Chinahasbeenamajorfocus
23©2016DLAPiperLLP
Oil&Gas
Krishna• What’sdrivingit?Lowprices?Whatelse?• HowisitgoingtoaffectIndia?• ShouldweexpectthissectortobecomeacSvein
Indiaaswell?24
Drivers/Jay
• USstableeconomy• Lowinterest(movingup)• UScompanieshavelargecashbalances• Stockvaluesfavorableforstockdeals• Uncertaintyinotherareas(ME,Russia,EU)pointstofocusonUS
25©2016DLAPiperLLP
26
2015H1–InboundUSIndia-#10involume
Source:USM&AH12015:RidingHigh©2016DLAPiperLLP
2015H1-InboundUSIndianotonValueList
Source:USM&AH12015:RidingHigh©2016DLAPiperLLP
0
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ValueofTransac3o
ns(inbil.USD
)
Num
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ns
Mergers&Acquisi3onsIndia1999-2015Number
Value
Source:InsStuteofMergers,AcquisiSonsandAlliances(IMAA)
29
OutboundUp
– ThomsonReuters:• Cross-borderM&Aup73.1%to$23.2bfrom2014• OutboundM&Aup112.3%invaluefrom2014
– 3bintotheU.S.in2015
30
IndiaInc.ontheProwl
– MarketsdidnotcheertheWiprodeal;earlieracquisiSonofInfocrossingfor$600mwasapparentlynotagreatsuccess
– Lupin$880mdealforGaviswasalsonotcheeredbythemarket
– Yet,IndiaInc.seemstobeontheprowl• Whatisdrivingit?• Isinorganicgrowththewaytogo?• WhatareIndiancompanieslookingfor?Vikas
31
2015–AsiaM&AAcSvity
Source:MergerMarket:M&AInsider,Jan.2016©2016DLAPiperLLP
LegalTechTalk4
33
U.S.InboundIssuesforIndiaInc.
• Cyber-securitydeal/Vikas• AnStrustenvironment/Krishna
34
“Ifthelawsupposesthat,”saidMr.Bumble,…“THELAWISANASS…hiseyemaybeopenedbyexperience,byexperience!”
-CharlesDickens,OliverTwist,chapter51,p.489(1970).Firstpublishedserially1837–1839.
35
QuesSons?
©2016JaipatSinghJain&LazarePoNer&GiacovasLLP.SubjecttorightsofexisSngcopyrightholdersincertainslidesonly,asindicatedonthoseslides.
