Insights, H1 2016

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M&A Insights | H1 20162

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Regional insights10 Western Europe11 AsiaPacific(InludingGreaterChina)12 U.S. 13 CEEandCIS14 MiddleEastandNorthAfrica15 Sub-SaharanAfrica16 India17 Latin America

A global snapshot28 Top20globaloutboundacquirers

andinboundtargetmarkets30 Toptargetmarketsforthe

world’slargestacquiringcountries

Sector insights19 Privateequity20 Consumer 21 EnergyandInfrastructure22 Financialservices24 Lifesciences24 Mining26 Telecoms,mediaandtechnology

6In focus6 Chinaoutbound–thepaceaccelerates

4Executive summary4 Executivesummary5 GlobalM&Ainnumbers

Contents

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The economic and political uncertainties that have depressed M&A markets for most of the year were dramatically compounded by the unexpected outcome of the UK Referendum in June. Brexit is likely to reduce significantly activity for the rest of the year, although at present investors seem to be pausing for thought and taking stock, rather than abandoning the market altogether.

Executive summary: Taking stock of a changed world

H1 KEY THEMES INCLUDE:

BREXITWILLIMPACTM&A

M&AmarketsusuallyfalterattimesofuncertaintyandwebelievetheUK’sshockvotetoleavetheEuropeanUnion,withalltheeconomicandpoliticalupheavalitwillcause,willsignificantlydepresstransactionactivityinthemonthsahead,atleastuntilinvestorshaveaclearerviewoftheimplicationsofBrexit.

OTHERUNCERTAINTIES CONSTRAINGROWTH

Othersignificantissuesareweighingoninvestors’ mindstoo–notleast,persistentworriesaboutslowereconomicgrowthinChina,theoutcomeofNovember’sU.S.presidentialelections,thedirectionofinterest ratepolicy,unrestintheMiddleEastandcontinued pressureoncommodityandoilprices.

INUNCERTAINTYTHERE COULDBEOPPORTUNITY

WedonotexpectM&Amarketstodryupinthecomingmonths,however.Mostinvestorsappeartobetaking abalancedviewandarebidingtheirtimeuntilclarityreturns.Somefunds(particularlyU.S.dollarbasedones)andstrategicbuyersarelikelytoseethisasatimeto makeopportunisticbidsforcarefullyselectedtargets.

FUNDAMENTALSREMAIN

Manyofthefundamentalsthatdrovetransactionsto recordlevelsin2015remaininplace.Companiesandfundsstillhaveplentyofcashavailableandreadyaccesstoaffordablefinanceinalowinterest-rateenvironment.Dealpipelinescontinuetobestrong,althoughitremains tobeseenhowmanyplannedtransactionswillresurfaceoncetheshapeofapost-Brexitworldismoreclear.

BIGSTRATEGICDEALS REMAINAFEATURE

Despitetheuncertainty,wesawanumberofstrategictransactionsgoingaheadinQ2,astheBayer/Monsantooffer,theproposedMicrosoft/LinkedInmergerand theAbbott/StJudecombinationdemonstrate. However,thereisasensethatmanyofthereally bigtransformationaldealshavebeendone. Instead,insomeregions–notablytheU.S.–weare seeingamoreevenspreadofactivityacrossawider rangeofsectors.

CHINAOUTBOUNDINVESTMENT CONTINUESAPACE

ThesurgeinoutboundinvestmentbyChina’s state-ownedandprivatecompaniescontinuestoaccelerateatarecord-breakingpace.Thisisatrend wethinkwillpersistastheirsearchcontinuesfornewgrowthmarketsandfortechnologiesandbrandsthat canberepatriatedtotheirdomesticmarkettoimprovetheircompetitiveness.

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Region %ofdeals byregion

Western Europe 27%

U.S. 22%

AsiaPacific(excl.China) 20%

GreaterChina 15%

CEEandCIS 8%

Latin America 3%

MENA 2%

Sub-SaharanAfrica 1%

Other 3%

Over 25%

Less than 10%

Between 10% and 25%

3%

8%

2%

1%

27%

22%

20%

15%

214%INCREASE

151bnFinancialservices

167bnRealEstate

316bnTMT

146bnLifesciences

538bnEnergyandinfrastructure

149bnConsumer

H1 20161.5tn 1.9tn

H1 20151.4tnH1 2014

H1 201556bn

H1 2016120bn

vs

Global M&A in numbers H1 2016

Note:Thesefiguresrepresentthetotalnumberofdealsannouncedbetween1January2016and21June2016.

Deal volumes by region

Top 6 sectors by value (USD)

China Outbound M&A (USD)

Global deal values (USD)

Dataprovidedby

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In focus: China outbound – the pace acceleratesWith just six months gone, 2016 is already set to break all records for outbound investment by state-owned and private Chinese businesses and it looks like an irreversible trend. But what are the reasons for this overseas expansion and what hurdles might lie in the way of further investment overseas?

China has progressively increased its share of the global transactions market in recent years and has made its presence felt not only through rapidly accelerating

domestic dealmaking, but also, increasingly, through a surge of outbound investment.

Thestatisticsmakeforveryinterestingreading. Tenyearsago,Chinaaccountedforjust1.7% ofworldwideM&A,afigurethat,fiveyearslater, hadgrownto6.3%.Intheyeartodate,thatsharehasgrowntoastaggering26%,morethaneightpointshigherthanthesameperiodin2015.

Notsurprisingly,astheChineseeconomyhasgrowninsize,transactionshavegrowncommensurately. Agooddealofthatactivitycontinuestobefocusedondomestictransactions,ascompaniesacrosssectorsconsolidatetoshoreuptheircompetitivepositioninamarketnowintransitionandexperiencingaperiodoffalteringgrowth.Inits latestfive-yearplan,theChinesegovernment isforecastingmuchlower,butstillhealthy, GDPgrowthof6.5%upto2020.

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2016

YTD

2015

2014

2013

2012

2011

2010

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2007

2006

2005

2004

2003

2002

2001

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1999

1998

1997

NO. OF DEALS OVER USD1.5BN INVOLVING A CHINESE PARTY

Note:Thesefiguresrepresentthetotalnumberofdealsannouncedbetween1January2016and21June2016.

Dataprovidedby

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© Allen & Overy LLP 2016

Butthemostremarkabletrendistheexplosion ofoutboundinvestmentfromChinesestate–andprivately-ownedbusinesses.

Intheyeartodate,thevalueofoutbounddeals hasalreadyreachedanimpressiveUSD120bn,comparedwithUSD56bnforthesameperiodlastyear.Thatmeansthat2016transactionvalueshavealreadyoutstrippedthetotalfor2015–thepreviousrecordyear–whichreachedUSD112bn.

ChemChina’sacquisitionofSyngenta,thefarmingandseedstechnologygroup,forUSD46.5bnisChina’slargestoutboundacquisitiontodateandaccountsforasignificantportionofthisnumber.However,italsorepresentswhatmaybeviewedasawatershedmomentinChineseoutboundactivityandthe“newnormal”ofChineseinvolvementinglobalM&A.

Whilethetideofmegadealscontinuestorise, asthetableshows,themostnotabledevelopmenthasbeenthedepthanddiversityofstrategicdealsacrossarangeofsectorsandinvolvingamixture ofstate-ownedandanincreasinglylargenumber ofprivately-ownedChinesecompanies.

An evolving story

ThestoryofhowChinahassecuredthispowerfulpositioninglobalM&Amarketsisanintriguing one,reflectingthecountry’srapid,and,attimes,destabilizingtransitionfromaninvestment-led, export-driveneconomytoanincreasingly complexone.

TheelementsdrivingChineseinvestmentarecomplexandreflectahugeeconomywhich, whilebothmarket–andstate-driven,isundergoingsignificantchange.

Intheearlydays,outboundinvestmentwas focusedonenergyandresourceswithstate-owned

enterprises(SOEs)dominatingthesceneasChinascouredglobalmarketstosecuretherawmaterials itneededtofeeditsexportmachineandtoensureenergysecurityandastablesupplyofcommodities.ItwasthatsurgeindemandforresourcesthathelpedfuelAustralia’sminingindustryboomand sawChinastealamarchininvestingacrossmanydevelopingeconomies,notleastinAfrica.

Akeymomentcamewiththeglobalfinancial crisis.Withtherestoftheglobaleconomy frozen,Chinaanditsextensiveforeignexchangereservesbecamethebuyerofchoice.Athome,Chinapump-primeditseconomytokeepitfiringahead.Thatmassivestimulusprogramledto arapidincreaseininfrastructureinvestmentthatfuelledthegrowthofdomesticcapacityacrossawiderangeofsectors.

Itisthatpump-priming,andthecapacitythatitcreated,whichnowalsofuelsadrivefortheacquisitionofhighervalue-addedassetstosecurelong-termgrowth.Thishasseenashiftofemphasisfromsecuringrawmaterialstogainingaccessto newtechnologies,productsandbrandsthatcanbebroughtbacktoChinatobolsterthecompetitivenessofChinesecompaniesathomeandabroad.

Thisprocessofbuyingupthevaluechaincontinuesapace,directlyencouragedandincentivized atdifferentlevelsoftheChinesegovernment, withofficialsrecognizingthatitcanbehard toquicklygrowworld-beatingcapabilities organically–farbettertogooutandbuythosecapabilitiesthroughacquisitions,mergersand jointventures.DependingontheChineseactorsinvolved,cheapfinancinghascomeintheform ofstatepolicylendingtoanactiveChinese capitalmarket.

Thisdrivetosecurenewtechnologieshasbeenglobal,butEuropeisthemarketthathasprovedmostattractive.Forexample,Germany’sso-called“mittelstand”ofpowerfulfamily-ownedenterpriseshasbecomeaprimehuntinggroundforChinesemanufacturersseekingtoboosttheircapabilities.Indeed,ChineseinvestmentinEuropehassoaredsince2009,withthevalueoftransactionslastyearstandingatmorethanthreetimesthevalueof U.S. investments.

Andit’satrendthatisspreadingtomoreand moresectors,includinghospitality,medicaldevices,healthcare,automotive,foodandbeverages, andfinancialservices.

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Growing sophistication

Thepathhasnotbeenentirelyeasyandthe trackrecordforsuccessfulinvestmenthasbeencheckered.Thelearningcurvehasbeensteep asChinesecompaniescontinuetotransform theiroperationstobecomeinternationalyfocussed.ThishasincludeddevelopingdedicatedM&A dealteams,learningtoworkwithadvisers, anddevelopingpost-integrationstrategiesto ensuresynergiesarecaptured.

Carryingthatoffrequiresinvestorstobenimble, tomakequickdecisions,todeploycapitalatrapidspeedandtobepreparedtotakeonhigherlevelsofrisk.Hereprivately-ownedChinesecompaniesareoftenprovingmoresuccessfulthanthebigSOEswhoarenow,tosomeextent,beinghamstrungbylengthierapprovalprocessesandbyconcernsthattheywillgetembroiledintheChinesegovernment’sdeterminedanti-corruptiondrive.

Hurdles and barriers

Whilethecurrentburstofoutboundactivity lookslikeit’sheretostay,thereareanumber ofincreasinglytrickyhurdlesthatChinese investorsneedtonegotiate,bothinternationally anddomestically.

Regulationisplayinganincreasinglypivotalrole intransactions.Atatimeofgrowingtensionin U.S./Chinarelations,bothsidesaremakingovertmovestoprotecttheirnationalsecurityinterests.OverseastechcompanieslookingtopartnerwithChinesecompaniestomakeinvestmentsinChinaarefacingmuchstricterrequirements.

TheU.S.isusingreviewsbyitsCommitteeonForeignInvestmentintheU.S.(CFIUS)topoliceacquisitionsbyforeigninvestorsinassetswithabearingonnationalsecurityand,astimegoes on,theseprobesarebecomingbroaderintheirjurisdiction.WhereoncetheywouldhavefocusedondirectinvestmentsinU.S.companies,CFIUSisnowlookingathowatransactionmayimpactU.S.nationalsecuritymorebroadly.SoaChinesefirmbuyingaEuropeanbusinesswhichhascontractswiththeU.SgovernmentmightnowfinditselfthesubjectofaCFIUSreview.

Thereisalsoparticularsensitivityaroundkeytechnologies,likesemi-conductors.InJanuary thisyear,thecommitteeblockedtheproposedUSD2.8bnsaleoftheDutchgiantPhilips’Lumileds LEDlightingdivisiontoGoScaleCapital, reportedlybecausethedealwouldgivethe Chinesecompanyaccesstochiptechnology thathadmilitarysignificance.

ConsumerStaples–6%EnergyandPower–11%Financials–11%Healthcare–2%HighTech–23%Industrials–14%Materials–14%MediaandEnt.–3%RealEstate–6%Retail–9%

ConsumerStaples–7%EnergyandPower–39%Financials–9%Healthcare–1%HighTech–12%Industrials–9%Materials–13%MediaandEnt.–3%RealEstate–3%Retail–4%

Indeed as our charts below show, the pattern of sectors targeted for investment globally has also been in rapid transition. Energy and power deals remain important, but no longer dominate as they once did, looking back over the last five years versus the last two years. Of the 35 deals worth more than USD1.5bn announced between 2014 and 2016 year to date, there have been more deals in high tech (8), industrials (5) and materials (5) than in energy and power (4).

% OF MEGADEALS 2014-2016 YTD % OF MEGADEALS 2011-2016 YTD

Note:Thesefiguresrepresentthetotalnumberofdealsannouncedbetween1January2016and21June2016.

Dataprovidedby

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Somedealshavefallenthroughonthestrength ofathreatofaCFIUSreviewalone.InFebruary,TsinghuaabandoneditsplannedUSD3.8bnacquisitionofa15%stakeintheWesternDigitaldatastoragegroupafteritwassuggestedthedealmightgiverisetoaCFIUSinquiryandeventhoughtherehadbeennosuggestionthatthedealwouldactuallybeblocked.

ThelatestpublisheddataonCFIUSinvestigationsshowsthattherewere52%moreCFIUSinvestigationsin2014thanintheprecedingyear.ThetopthreeinvestingcountriesputunderscrutinywereChina,theUKandCanada.

IncreasinglyweareseeingChineseinvestors takethisthreatintoaccountinstructuringdeals.Somearevoluntarilysubmittingdealsforinvestigation(asisthoughttobethecasewithChinaChem/Syngenta).Othersarestartingtousereverseterminationfeeclausesindealsthatwouldbetriggeredintheeventofthedealbeingblocked. Suchaclauseisthoughttohavebeenincludedinthisyear’sproposedUSD6bntakeoverofIngramMicrosbyChina’sHNAGroup,thelargestChinesetakeoverofaU.S.informationtechnologybusiness.

ThetopthreeinvestingcountriesputunderscrutinybyCFIUSinvestigationswereChina,theUKandCanada.

Continued growth despite domestic concerns

Chineseregulationisalsoplayingamoreimportantroleindeterminingthesuccessofthisdealactivity.

China’santitrustregimehasbeenconsiderablystrengthenedinrecentyearstothepointthatBeijingisnowthethirdcapitalofcompetitionregulationafterWashingtonandBrussels,itsreachstretchingwaybeyondnationalborders.Whilesanctioneddealsstillenjoygoodaccesstofinanceandforeigncurrency,therehavebeengrowingsignsofnervousnessonthepartoftheChinesegovernmentthisyearabouttheamountofcapitalpouringoutofChina.Thegovernment’songoinganti-corruptioncampaignisalsohavinganimpactonsomeoutbounddealmakingactivity,aswehavenoted.

Despiteallthatweseenosignofoutbound activityslowing.

Dealmakingintheremainderof2016mightnot quitematchtheextraordinaryactivityofthefirsthalf,butthere’slittlereasontobelievethefootwillcompletelycomeofftheacceleratorpedal.

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Regional insightsMost markets saw lower levels of growth during Q2, compared with record activity in 2015. But large strategic deals, across a number of regions and a bigger spread of sectors, were still a feature and Chinese outbound investment continues apace.

WESTERN EUROPE Brexit could significantly depress dealflow

TheshockwavesfromtheUK’sunexpectedvotetoleavetheEuropeanUnionarelikelytohaveasignificantimpactonM&Aactivityinthecomingmonthsandwewouldnotbesurprisedtoseetransactionvolumesfallsignificantlyduringtheremainderoftheyear.

M&Athrivesoncertaintyandit’sclearwiththelevelofeconomicuncertaintycreatedbythe“leave”votethemarketwilltakesometimetorecoveranythinglikeasenseofequilibrium.Therearetoomanyunknowns –asituationmadealltheworsebythevacuumthat hasbeencreatedinBritishpolitics.

Havingsaidthat,wedonotexpecttransactionsto dryupcompletely.Dollarandothernon-sterlingdenominatedfundsandU.S.investorscouldwellseethisasahighlyopportunetimetododeals.Butthey willbeselectingtheirtargetswithextremecare.

UKcompanies,orbusinessesheadquarteredintheUK,whosecostsarepaidforinsterlingbutwhoseearningsarepredominantlynon-sterlingwouldbeobvious targets.It’snotablethatsuchbusinesses–notleastpharmaceuticalcompanieswithbigdollarearnings–werenotasadverselyaffectedintheequitymarketimmediatelyfollowingthevote.

Soweexpecttoseeinvestorstakeamoresophisticatedviewofthecurrentsituationratherthansimplyconcludingthat:“Brexitisabadthing,perse.”Alotofinvestorswilltakethesummertore-evaluatethemarket–aperiodwhenthecapitalmarketsaretraditionallyquietanyway.

ItwouldnotbesurprisingtoseeplannedIPOsandsecondarydeals,ofwhichtherewereasurprisingnumberaheadofthereferendum,beingpushed backintoQ12017orfurtherstill;tolaunchdealsin Q42016wouldmeanincurringcostsnow,atatimewhenthere’snocertaintythemarketwillbeopenin thatplannedwindow.

WeexpecttherestofWesternEuropewillfeelasimilarbacklashfromthevote.OutsideinvestorsaretendingtoseeBrexitasaEuropeanissueratherthanonejustfortheUK,aviewsharedbytheequitymarkets,whichsaw bigsell-offsacrossEuropeintheimmediateaftermath.ThisreflectslingeringworriesaboutthecontinuedlowgrowthofmostEurozonecountriesandfears,now, thatthisperiodofrelativestagnationwillcontinue. Longerterm,thereareconcernsthatothercountriesmaynowfacepressuretoleavetheEUandaboutthebalanceofeconomicpowerwithintheblocswingingevenmoreheavilytowardsGermanyaftertheUKleaves.

Ontopofthat,otheroutsideuncertaintiesareimpingingtoo,notleastthecontinuedworryaboutslowerChinesegrowthandabouttheoutcomeoftheU.SpresidentialelectionsinNovember.

Givenallthat,it’sperhapssurprisingwedidn’tsee moretransactionspulledintheimmediatewakeofthevote.Thatwedidn’t,wethink,indicatesthatinvestorsareoptingforaperiodofreflectionratherthanhurrying toabandonpotentialdealsaltogether.Betterright nowtowaitandsee,ratherthantorushintothe marketoroutofit.

Activityacrosstheregionaheadofthereferendum givesanindicationoftheamountofpotentialactivity wemighthaveseenhadthevotegonetheotherway.Butitalsospeakstoapipelineofdeals,someofwhichmighteventuallyresurfacewhenthereisgreaterclarity.

TheGermanmarketremainedstrongerthanmost, notleastasitwasboostedbyBayer’sgiantUSD62bnofferforMonsanto.ChineseinterestininvestinginGermanycontinues,butsomeofitisprovingcontroversial.ChineseMidea’spublicoffertotakeoverrobotmakerKukaforEUR4.5bn,forinstance,hasraisedgovernmentconcernsaboutthefutureofasensitivetechnology.Therewerealsoasignificantnumberofmid-andsmall-capdealsinGermanyandconsiderablePEactivityinQ2,withastringofacquisitionsanddisposalsintheEUR1bntoEUR1.6bnrange.

BoththeDutchandUKmarketsshowedasignificantuptickinotherM&AplanningactivitytowardstheendofQ2.OnestandoutprivateequitydealinthequarterwasGlencore’ssaleofstakesinitsagriculturalunittotwoCanadianpensionfunds.TheCanadianPensionPlan

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InvestmentBoardisbuyinga40%stakeforUSD2.5bn,whileBritishColombiaInvestmentManagementhasagreedtobuyafurther10%stakeforUSD625m.

TherewerealsosevenIPOsintheNetherlandstowardstheendofthequarter,anunusualspikeinactivity. ThemostsignificantofthesewastheEUR750m flotationofPhilipsLighting,whichfollowedtheabandonmentoftalkswithavarietyofprospectivestrategicandPEtradebuyers.

AsteadystreamoftransactionsintheBelgianmarketincludedTotal’sacquisitionofLampiris,Belgium’sthirdlargesthouseholdsupplierofgasandrenewableenergy,andthemergerofAllfinandImmobeltoformBelgium’slargestpropertydevelopmentgroup,withcombinedassetsinexcessofEUR850m.

AlthoughdealvolumeinItalywasdownby23%onthesameperiodlastyear,financialservicesactivitywasbeingdrivenbytheneedforbankstosellassetsandnon-performingloanportfoliostoimprovetheirbalancesheets.Q2alsosawAtlante,thegovernment-sponsoredbankrescuefund,acquireBanchePopolarediVicenzaforEUR1.7bn.TMTwasbusiertoo,withanumberofdealsincludingCVC’sEUR1bnacquisitionofSisalGroup,thegamingandpaymentsoperator,fromApax,PermiraandClessidra.

ASIA PACIFIC (INCLUDING GREATER CHINA) Outbound push continues apace

TherapidaccelerationofoutboundM&Aactivityby bothstate-ownedandprivateChinesecompanies, atrendfirmlyestablishedinthefirstthreemonthsof theyear,continuedapaceinQ2,withChinadominatingglobalcross-borderactivityinthequarter.

That’satrendweexpecttoseecontinuingeveniftheoutboundstoryisbecomingalittlemorenuanced, notleastasinvestorsreacttoslowingdomesticgrowthandtheneed,inkeysectors,toconsolidateathometopreserve competitiveness.

Thetideofoutbounddealsisbeingdrivenbytheneed tomovecapitalabroadtoseekbetterreturnsthanthoseavailableinanowmoresluggishdomesticeconomy. Theefforttofindnewwaystocompeteathomebyaddingnewbrandsandbusinesslinesisanother prime motivation.

Inthemonthsaheadthepaceofconsolidationinkeyindustrieswillundoubtedlydictatejusthowmuchcross-borderactivityweseeintheremainderoftheyear,butallthesignsarethatitwillbeprettyconsiderable. It’salsonotablethatservicecompaniesinanumber

ofsectors,liketechnology,arefollowingtheirclients intooverseasmarketstobetterservicetheirneedsthere,withbothEuropeandtheU.S.keytargetmarkets.

Chinesecompaniesarealsobeingmoreaggressiveandmorecannyinoverseasauctions,oftenbiddinginathighmultiplestosecurevaluedassetsandthensyndicating thefinancingofthedealwithotherpartnerslateonin theprocess.

TheoutboundstoryisnotaChineseonealone,however.Thelast12monthshavealsoseenanaccelerationofoutboundinvestmentbyJapanesecompanies,withthevalueofoutbounddealsactuallyoutstrippingdomestictransactionsin2015.Facedwithweakdomesticdemand,Japan’scompaniesandtradinghousesarealsoseekingnewgrowthopportunitiesabroadbothwithintheregionandfurtherafield.

Overalllevelsofactivityacrosstheregionappeartobeholdinguprelativelywellalthoughtherehasbeensomesofteninginkeymarkets.HongKong,however,hasseenanunusualspikeinthenumberofpublicdealsincludingLetv’sHKD2.28bninvestmentinTCLMultimediaand theacquisitionbyJiangsuHongtuofa50.5%stakein IDTInternational.

Twosectorsareprovingparticularlybuoyant–insurance,whereanumberofdealsacrosstheregionareinthepipeline,andrealestate,withthelogisticsaparticularfocusforconsolidation,aswesawearlierintheyear withthestrategicmergerbetweenChina’se-Shang,backedbyPEfirmWarburgPincus,andSingapore’sRedwoodGrouptocreateapan-Asianwarehousegiant.

ActivityinSouth-EastAsiaremainsrelativelymutedalthough,again,insuranceandrealestateremainbusy,andthetrendforEuropeanbankstowithdrawfrom theregioncontinues.Buyersfortheseassetstend tobeChineseandJapaneseinstitutionsandweareseeingstronglevelsofactivityinfinancialservicesin keyeconomies,includingthePhilippinesandIndonesia, astheforeigninvestmentenvironmentbecomes morewelcoming.

Theretailsectorisalsoseeingsomemovement, oftendrivenbyforeigninvestors’needstostrengthen theirdomesticbalancesheets.Thatwascertainlythe casewiththedisposalbyFrance’sCasinoofsupermarketbusinessesinbothThailandandVietnaminthefirsthalf oftheyear,transactionswithacombinedvalueofmorethanEUR4bn.

Globalandlocalpoliticalissuescontinuetohaveanimpactonactivity,addingtoalreadywidespread concernsaboutChina’sslowdowningrowth.

InAustralia,withtheAustraliangovernmentin “caretakermode”intherun-uptofederalelectionsin earlyJuly,Q2wasarelativelyquietquarterforM&Adeals.

Howeverthereweresomenotableexceptions,includingthelaunchofthetradesaleprocessforKKR’sstakeinradiationoncologyproviderGenesisCare,whichis

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reportedtobeattractingwidespreadinterest.Wealso sawAllnexjoinforceswithAdventinaUSD1.05bnbidforNuplex,theresinsandcoatingsgroup,andCaissededépôtetplacementduQuébec’sacquisitionofa44%stakeinlocalinsurancedistributorGreenstone.

TroubledsteelmakerArriumwasplacedintovoluntaryadministrationinApril.Arriumisoneofthemorehighprofilevictimsofthecommoditiesdownturnandareminderthatthispartofthecyclebringscasualties aswellasopportunities.

Meanwhile,localbankscontinuetotightenlending criteriaintheresidentialmortgagespaceandtoseek tostrengthenbalancesheets.InJune,WestpacsolddownitsmajorityinterestinBTInvestmentManagement,reportedlyadding10to15basispointstoitscommonequitytieroneratioasaconsequence.

U.S. Return to first principles

TheU.S.transactionsmarketcontinuestoshowrealsignsofresilienceinthefaceofanumberofchallengesthatmight,inlessconfidenttimes,actasamajordeterrenttodealmaking.

Althoughthereappearstohavebeensomeslighttailingoffinactivity,it’sencouragingthatweareseeingagoodmixofsubstantialtransactionsspanningmultiplesectorsandthereturnofmoretraditionaldriversfordeals– theneedtobuildscale,reducecostsandboosttop linegrowth.Atatimeofgenerallyloweconomicgrowth,M&Astillrepresentsoneofthebestwaysforcompaniestogrowfasterthanthemarket.

ThereturntothesetraditionalM&Agoalsisincontrasttorecentquarterswhereanumberofmoreartificialdrivers

havebeeninplay,includingtaxinversiondeals andthedealsdrivenbyactivistshareholders.

Thetaxinversiontrendseemsnowlargelytobe overafternewTreasuryruleswereannounced. Pfizer’sabandonmentofitsUSD160bnacquisition ofAllerganwasonecasualtyofthis.

Dealsdrivenbyshareholderactivism–ofthesort wewitnessedwiththetieupbetweenValeantandPershingSquareinconnectionwiththeirbidforAllergan–alsoseemstobeonthewaneforthetimebeing.

Onegoodmeasureofthestrengthofthemarketis thecontinuedflowofverysizeabledealsacross sectorsinthefaceofsomesignificantthreats– includinguncertaintysurroundingtheoutcome oftheU.S.presidentialelection,andthecontinuingconcernsabouttheglobalimpactofaslowdown inChina.

Inmorefragiletimes,thesemightbeanexcuseforinvestorstokeeptheirpowderdry.Addtothatincreasinglyaggressiveactionbyantitrustregulators ofthesortthatforcedtheofficeequipmentsuppliersStaplesandOfficeDepottoabandontheirplannedUSD6.3bnmerger,andthecontinuingweightofregulationbearingdownonthefinancialservicessector,anditwouldbeeasytoseewhyM&Amightsuffer.

Butitreallyhasn’t,asthestandoutdealsofthequarterillustrate.TheproposedUSD62bnacquisitionofMonsantobyBayer–whichwouldbeGermany’sbiggestevercross-bordertransaction–standsasasignificantstrategicdeal.Inaddition,themergerofthespunoffITservicesbusinessfromHPEnterpriseswithComputerSciencesCorpisasignificantdealcreatingagroupwithcombinedrevenuesofUSD26bn.

Thelifesciencessectorcontinuestoseearaftofdeals,includingthemassiveUSD25bnAbbott/StJudemedicaldevicestie-upandtheUSD9.3bnhostilebidforMedivationbyFrance’sSanofi.Takentogether, theseandotherdealsreflectamarketthatisnow activeacrosstheboardratherthansector-driven.

The outbound story is not a Chinese one alone, however. The last 12 months have also seen an acceleration of outbound investment by Japanese companies.”

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Atatimeofgenerallyloweconomicgrowth,M&Astillrepresentsoneofthebestwaysforcompaniestogrowfasterthanthemarket.AnalysisofthebiggestdealsseemstosuggestthatU.S.acquirersaremorefocusedondoingdomesticdealsatthemoment,perhapsreflectinguncertaintyabouteconomicgrowthinEuropeand,asQ2unfolded, theoverhangingissueoftheUK’sEUreferendum.

TherelativestrengthoftheU.S.economycontinues toattractagoodtideofinboundinvestmenttoo,althoughChineseinboundinvestmentintotheU.S.continuestofacehurdles,includingregulatoryscrutinyandmarketconcernsabouttheabilityofChineseacquirerstogetacrossthefinishingline.

Investorsseemtoberelaxedabouttheexpected riseininterestratesnowthattheFederalReserve hasmadeitclearthatitwillraiserateswithcaution.UnexpectedlypoorjobfiguresinJuneledmanytopredictthatrateswereunlikelytogoupuntilthe autumnratherthanattheheightofsummer, aspreviouslyexpected.

Givenallthat,wethinkthattheU.S.M&Amarketremainsinprettyrobusthealthandthatitwillcontinue toperformsteadilyastheyearprogresses.

CEE AND CIS Some signs of life

Transactionsacrosstheregioncontinuetorunatalowlevel,althoughwearebeginningtoseesignsoflifeinanumberofcountriesandsectorsandexpectactivitytoincreaseastheyearprogresses.

Withinflationnowunderbettercontrol,theroublesteadierandoilpricesrisingslightly,confidenceamonginvestorsinRussiaseemstobegrowing.Anumberofinvestmentbankshavenowraisedtheirforecastforeconomicgrowthnextyear,althoughthere’snosuggestionthatgrowthwillpickupquickly.

WithinboundinvestmentfromEuropeandtheU.S.stillchokedoffbysanctionsimposedfollowingtheUkrainecrisis,weareseeingasignificantincreaseininvestmentbyAsianandMiddleEasterninvestors,particularlyfocusedonenergy,mining,andoilandgas.

ThefirsthalfsawastringofinvestmentsbyIndianstate-ownedoilcompanies,thefruitoflastDecember’svisittoRussiabytheIndianPrimeMinisterNarendra

Modi.ONGChastakenafurther11%stakeinRosneft’sVankorneftfieldinWesternSiberiaforareportedUSD900m,addingtothe15%stakeitboughtlastyear. AfurtherthreeIndiancompanieshavealsotakena23.9%stakeinthefield,liftingIndia’stotalinterestinoneofthebiggestfieldsintheregiontojustunder50%.Inadditionthelatterthreecompanieshavealsotakena29.9% stakeintheTass-YuriakhNeftegazodobychaproject.

TalkshavealsobeenheldbetweentwoofChina’sstate-ownedoilandgasgiants,CNPCandCNOOC,aboutpossiblejointventureswithGazprom, whilsttheChinaInvestmentCorporationandthe RussianDirectInvestmentfundcontinuetoexplore possibleinvestments.

Indeed,withthevisitofChina’sPresidentXiJinpingtoWarsawinJuneaspartofthe“OneBelt,OneRoad”initiative,weexpectaspikeinChineseinterestintheCEEregionaswell,forexamplewithSerbiaacceptingHebeiIronandSteel’sofferforstatesteelmill ZelezaraSmederevo,andwithmorethan20 agreementswithSerbiaconcerningfinanceandinfrastructurealreadysigned.

PrivatisationisonceagainfullyontheagendainRussiaalthoughthereisabigdebateaboutwhatstateassets toselloff.InparticularthereisuncertaintyaboutsellingoffstakesinRosnefttoforeigninvestors,giventhefactthatBPalreadycontrolssome20%ofthisstrategicallyimportantcompany.

IntheCEE,thelargesttransactionwillbetheupcomingsaleofSABMiller’sCEEoperations,adirectresultofthetakeoverofSABMillerbyABInBevandthetwogroups’effortstowinantitrustapprovalforthedeal.Thevalue ofthistransactionmaybeintheregionofEUR5bn,whichwouldmakeitthelargestM&AdealintheCEE inrecentyears,withdisposalsinPoland,theCzechRepublic,Romania,HungaryandSlovakiaplanned.

Polandisstartingtoshowstrongsignsofrecoveryand2016mayeventuallyturnouttobeoneofitsbusieryears.Q2sawthesalebyfundsmanagedbyInnovaCapitalofMarmiteS.A.,themanufacturerofcastmarble,toafundmanagedbyCranemere(thefirstCranemereinvestmentinEurope)andthesuccessfulclosingbyItaly’sBancaFarmafactoringofitstenderofferforthesharesofMagellanS.A.,theleadingprovideroffinancialsolutionstothehealthcaresector.Inthebankingsector,AliorBankanditsstrategicpartnerPZUagreedtobuyBankBPHfromGE.

Thesecondhalfof2016shouldseesomelargetransactions.Afteragreeingthetermsofitsexitfrom thePolishmarketwiththeregulator,RaiffeisenBankInternationalhasputitsPolishsubsidiaryRaiffeisen BankPolskabackonthemarket.FundsmanagedbyMidEuropahaveappointedafinancialadvisertorunanauctionforthesaleofŻabka,thechainofconveniencestores,inwhatthemarketexpectstobeaEUR1bndeal.Meanwhile,theFrenchenergygiants,EDFandEngie,continuetopursueasaleoftheirPolishoperations.

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IntheCzechRepublic,thelargestQ2transactionwastheacquisitionofaminorityparticipationinLOTTOITALIA,winnerofthenewItalianLottoconcession, byCzechinvestorsKKCGthroughSAZKAGROUP andEmmaCapital.Otherwise,thesecondquarterof2016hasbeendominatedbymid-sizedealsinthee-commerce,publishing,healthcareandmanufacturingsectors,althoughthesecondhalfshouldseesomebiggertransactions,alongsideSABMiller’ssaleof PilsnerUrquell(PlzenskyPrazdroj),intheenergyandmanufacturingsectors.

Thelong-awaitedinvestmentbytheHungarianGovernmentandEBRDintoErsteBankHungary wasfinallysignedon20June.Thisisintendedto provideaplatformforErstetoboostlendingtosupporttheeconomy,andtoserveasa‘resetbutton’fortheHungariangovernment’sapproachtothebankingsector.OthersignificantHungariandealsincludedthesaleofMKBBanktoasyndicatecomprisedofBlueRobinInvestments,METISPrivateCapitalFundandPannóniaPensionFund,andthesaleofDiatronbyRiversidetoStratecBiomedicalofGermany.

Romaniasawdealsinvarioussectorsincludinghealthcare,insurance,websitesandmineralwater, withEnterpriseInvestors’acquisitionofNorielGroup(toysandgames)toppingoffareasonablybusyquarter.TherehasbeensomeincreasedactivityinBulgariaand asteadytrickleofsmallerdealsannouncedacrossSlovenia,SerbiaandCroatia.

MIDDLE EAST AND NORTH AFRICA Confidence remains despite lower oil price

Overalldealactivityintheregionremainsslow, withvaluesandvolumedownasloweroilprices andongoingpoliticaluncertaintyinpartsofthe regioncontinuetohaveanimpact.

Currencyvolatilityandthestrongdollarhavealsoaffecteddealmakers’confidencewheninvestinginassetsoverseas,andlocalcompaniesareconcentratingonregionaldealsratherthanlookingfurtherafield.

Moredistressedsalesaretakingplaceandsmallercompaniesarereviewingtheirpositionwithaview torestructuringandconsolidating,leadingsomecompaniestoselloffnon-coreassets.Therealsoappearstobemoreofagapbetweentheexpectationsofbuyersandsellers,withpotentialbuyerskeentoensurethatthesentimentofthemarketisproperly pricedintoanyacquisition.

IntheGulfparticularly,businessconditionsare beingaffectedbyreducedgovernmentspending, asgovernmentstrytoadjusttothedropinoilincome.Despitetherecentslightrallyinoilprices,thereisno

evidencetosuggestareturntohighpricesisonthehorizon,meaninggovernmentswillhavetocontinue theirreformsaimedatreducingtheirdependenceonoilexports.Evenagainstthisbackgroundhowever,theGulfregionsawmoreM&AactivitythantherestofMENA,particularlytheUAE,SaudiArabiaandKuwait. Iranalsosawincreasedactivity,bothintermsof valueandvolume.

Despiteatestingenvironment,MENAmarketplayersremainconfident.Recentsurveyssuggestthatconfidenceremainsrelativelystrong,withbusinessesbelievingthatlocaleconomiesareeitherstableorimproving.Thereisstillanappetitetododeals, andbehindthescenesactivitysuggeststheremay beanupturninthelatterpartof2016.

Notwithstandingthemoremeasuredapproach, theregionhasseensomebigdealsinthefirsthalfof theyear.Oneofthelargestwastheannouncement inJuneoftheagreementbyAdeptioInvestments, aUAEinvestmentcompanyultimatelycontrolledbyMohammedAlabbar,toacquire,forapproximatelyUSD2.4bn,a69%stakeintheKuwaitFoodCo(Americana),apubliccompanylistedontheKuwaitStockExchange,fromAlKhairNationalforStocks andRealEstate.AmericanaisthelargestoperatorofrestaurantchainsintheMENAregion,andaleadingfranchiseoperator,whosefranchisenetworkincludesCostaCoffee,KrispyKremeandHardee’s.

Followingcompletionofthesale,whichissubjecttocertainconditions,AdeptiowillberequiredtolaunchamandatorytakeoverofferfortheremainderofthesharesinAmericana.ThiswillbethefirstevermandatorytakeoveroffertobeundertakeninKuwaitand,interms ofprofile,complexityandnoveltyisoneofthemostsignificantM&Adealsevertotakeplaceintheregion.

FurtherinterestinthefoodandbeveragesectorintheGCCwasevidencedbytheacquisitionbyFajrCapital, aDubai-basedPEhouse,ofamajoritystakeinCraviaGroup.CraviaoperatesF&BfranchisessuchasZaatar wZeit,CinnabonandSeattle’sBestCoffeeandthedealshouldhelpittobuilditspresenceinlocalmarketsandaccelerategrowthplans.

InApril,DubaiParksandResortsPJSClauncheditsAED1.68bnrightsissue.Investorsupportforthecapitalraisingwasstrong–therightsissuewasoversubscribedwhenitclosedinMay,withatotalsubscriptionofAED2.1bn.Thefundingwillbeusedlargelytofinance anextensionofthecurrentDubaiParksandResortsoffering,whichlookssettobecometheregion’slargestintegratedthemeparkdestination,comprisingseveralseparatethemeparks:motiongate™Dubai, BollywoodParks™Dubai,LEGOLAND®Dubai andLEGOLAND®WaterPark.

FrenchcarmanufacturerRenault,togetherwith itscomponentsuppliers,hasagreedaEUR900minvestmentwiththeMoroccanstatetobuildanindustryecosysteminthecountry.Theprojectisexpectedto

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transformMorocco’sautomotiveindustryandaimstotriplejobopportunitiesthroughthecreationof50,000newpermanentpositions.Thedealwillincrease Renault’sproductioncapacitylocallyandreduce itsrelianceonimportsbyenablingittosourceanincreasingproportionofitscarcomponentsinMorocco.Moroccohasattractednumerousautoandaerospaceinvestorsinrecentyears,includingDelphi,BombardierandEatonCorp.Lastyear,thePSAPeugeotCitroënGroupalsosignedanagreementtobuildamanufacturingplantinthecountry.

InanotherMoroccandeal,MarchsawtheannouncementbyLafargeCiments,acompanylistedontheCasablancaStockExchange,ofitsmergerwithcementmanufacturerHolcimMaroc,tocreateLafargeHolcimMaroc.

Themerger,whichissubjecttothesatisfactionofcertainconditionsandregulatoryandshareholderapproval, isexpectedtocloseinJuly2016.Oncompletion,LafargeHolcimanditsstrategicpartner,SNI,theMoroccan-basedinvestmentcompany,willowna 64.7%stakeinLafargeHolcimMaroc,whichisexpectedtobecometheleadingcompanyintheMoroccanbuildingmaterialssector.Buildingontheirlong-termpartnershipinMoroccoandtheircomplementarybusinesseselsewhereinAfrica,LafargeHolcimandSNIhavealsoagreedtocreateacommonplatformfortheiractivitiesinFrench-speakingsub-SaharanAfrica.

SUB-SAHARAN AFRICA Pipeline shows signs of promise

Transactionvolumescontinuedtodeclineacrosstheregioninthefirstsixmonthsoftheyearwithdealvaluesalsosignificantlydownonthealreadyrelativelylowlevelsseeninthesameperiodlastyear.But,despitethat, wearestillseeinggoodlevelsofactivitybehindthescenes,withabusiersecondhalfexpected.

AnumberofquitesizeabletransactionsareinthepipelineinSouthAfrica,notleastasBarclayscontinuestoplotaretreatfromitsAfricaninterestsfollowingastrategicreviewofthebank’spriorities.Q2saw10%ofBarclays’interestssoldonthemarkettoinvestors,butspeculationremainsrifethatadirectbuyerorbuyerswillbesoughtfortheremainderofthebusiness.

AmongstthoserumouredtobeinterestedortohavehelddiscussionswithBarclaysareSouthAfrica’s PublicInvestmentCorporation,variouspensionfunds,theDubai-basedPEhouse,Abraaj,andAtlasMara, thespecialistAfricanfinancialservicesinvestmentvehiclesetupbyformerBarclayschiefexecutive,BobDiamond.However,somedoubtshavebeenraisedoverwhethertheSouthAfricangovernmentwouldwelcomea majornationalbankingoperationbeingcontrolled byaforeignentity.

ThetrendforSouth Africaninvestorstoseekopportunitiesoverseas, andparticularlyin Europe,continues.Intheenergysector,Chevronhasalsoannounceditsdecisiontosell75%ofitsbusinessinSouthAfricaaswellasinterestsinBotswana.TheU.S.oilgianthasmadeitclearthatthisispartofaglobalbusinessreorganisationratherthanaparticularreflectionofitsattitudetowardstheregion.Disposalselsewhere,includingtheGulfofMexicoandMyanmar,arealsoplanned.

Sectorswhereweexpecttoseeincreasedlevelsofactivityastheyeargoesonincludemanufacturing,miningandtelecoms.Butthehighestlevelofactivitycouldbefocusedonrenewableenergywhere,fiveyearsintothegovernment’sdevelopmentprogrammeinthisareaandtwofundingroundslater,weexpectsomeoftheinitialbackerstoselltheirstakestonewinvestors.

Q2didseesomeimportantsmallerandmedium-sizeddealsintheregion,includingthemovebyCDCtobuya42%stakeinARMCement.ARMhasoperationsinKenya,Rwanda,TanzaniaandSouthAfrica,andisestablishingitselfassomethingofaneastAfricanrivaltoNigeria’sdominantcementandindustrialconglomerateDangotewhichcontinuestoexpandaggressivelyacrosstheregion.ThetransactionwasworthUSD139m.

Thetechnologyandtelecomssectorssawsomeactivitytoo.TheInternationalFinanceCorporation,partoftheWorldBank,investedUSD108mtoacquirean18%stakeintheSouthAfricanfintechbusiness,Net1, whichistryingtobringaffordablebankingand cardservicestoarangeofdevelopingcountries.Meanwhile,ZainconsolidateditspositionintheSudanesemobilemarketbybuyinga92%stakeinCanarTelecomsfromEtisalatforUSD95.2m.

ThetrendforSouthAfricaninvestorstoseekopportunitiesoverseas,andparticularlyinEurope,continuesafteraraftofdealsin2015andearlierthisyear.Realestateandretailremainthemosttargetedareasforinvestment.SparSouthAfricabecamethelatestretailertotrytocounteractweakdomesticdemandbyinvestingabroad,payingUSD45mfor a60%stakeinSparSwitzerland.

Attheotherendofthecontinent,Moroccocontinues tobeahubforinvestmentinotherpartsoftheregion,especiallywestAfrica.FinancialservicesremainsanimportantareaofactivityhereandweexpecttoseeanumberofdealsledbyMoroccaninstitutionscometofruitioninNigeriaandeastAfricainthemonthsahead.

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AstandoutdealinQ2sawAPMTerminalsinvestEUR758mtowina30-yearconcessiontodesign, buildandoperateanewcontainerterminalwithintheTangierMedseaportcomplexinMorocco.Theterminalissettoopenin2019andwillbethelargestofitskindontheAfricancontinent.

INDIA Reforms and hard sell begin to work

India’ssignificantpickupininboundinvestmentinthe firsthalfoftheyear,despiteaslightdeclineindealvolumes,isevidencethatthegovernment’seconomicreformprogrammeandPrimeMinisterNarendraModi’salmostnon-stoptrademissionsaroundtheworldarebeginningtopayoff.

Foreignbusinessesandfinancialinstitutionsfeatureprominentlyonthelistofleadinginvestorsinrecentmonths,aperiodthathasseendealvaluesclimbsignificantly,despiteaslightdropinoveralldealvolumes.Althoughvaluesarenotatalevelseenintheinvestmentboomofafewyearsago,thisisagrowingtrendandweexpecttoseeastreamofincreasinglyvaluabledealsin thesecondhalfof2016.

Commentatorsremaindividedbetween“glass-half-full”and“glass-half-empty”camps,withcriticsstillarguingthatMrModihasoverpromisedandunder-deliveredontheeconomicreformprogrammehestartedonenteringgovernmenttwoyearsago.

Moresupportiveonlookerscontinuetogivehimthebenefitofthedoubt,andarguethatcomplexchangetakestime.

HiseffortstochipawayatthereformsandtopromoteIndiaasaleadinginvestmentdestinationdoappeartobehavinganeffect.Investorsaredefinitelyencouragedbythe

economicfundamentals,whichmakeIndiaagoodplacetododealsatthemoment,andthefactthatthecountryisenjoyingaperiodofstablemajoritygovernment.

Insomesectors,reformsthathavebeenpassedarehavingadirectimpact.Insuranceisacaseinpoint, withinboundinvestorstakingadvantageofarelaxationofforeignownershiprules.BUPA,forexample,hasraiseditsstakeinitsIndianventure,MaxBUPA,from26%to49%,thenewupperlimit,andweexpectotherstofollowsuit.

TherehavebeensimilarrelaxationsinnumerousothersectorsandthegovernmentannouncedinlateJunethatitwastoeaseFDIcontrolsstillfurtherinsomekeyareas,includingdefence,broadcastandcablesystems,pharmaceuticalsandairports.

Wearecurrentlyseeingtransactionsofvaryingsizesacrossagoodspreadofsectorsincludingconsumer,financialservices,healthcare,technology,manufacturingandenergy.

Commentatorsremaindividedbetween “glass-half-full”and “glass-half-empty”camps.Q2sawU.S.PEfundBlackstonemakeitsbiggestinvestmentinIndiatodate,spendingUSD1.1bntoacquirea60.5%stakeinITservicescompanyMphasis.PowerandEnergyInternational,ownedbyMalaysia’sTenagaNasionalBerhadpowergroup,acquired a30%stakeinGMREnergyforUSD300m, whileCanadian-ownedinvestmentgroupFairfaxIndiaHoldingsboughta30%stakeinTheSanmarGroup, thelatestinastringofinvestments.WealsosawotherdealsinvolvinginvestorsfromSweden,theU.S. andHongKong.

The government’s economic reform programme and Prime Minister Narendra Modi’s almost non-stop trade missions around the world are beginning to pay off.”

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Inthemonthsaheadweexpecthealthcare,defenceequipment,andenergy,particularlyrenewables,tobebusy.JunesawtheannouncementofadealbetweenWestinghouseoftheU.S.andtheNationalNuclearCorporationofIndiatobuildsixnewnuclearreactors,whilereportssuggestadealwillsoonbeagreedfor Indiatobuy36RafalefighterjetsfromFrance. BothdealsfollowModitrademissionsandshould, overtime,stimulatefurthersupplychainactivityin bothenergyanddefenceequipment.

AnotherpotentialdriverforbothdomesticandinbounddealsinthemonthsaheadisthegrowingpressureonIndia’sindustrialconglomeratestodivestofnon-core anddistressedassets.TheBankofIndiaisanxiousfordomesticbankstostrengthentheircapitalbasesbygettingridofnon-performingloansandotherexposures,andthispressureis,inturn,beingtransferredtothecorporate sector.

Outboundinvestmentremainsatalowebb,asithas beenforseveralyearsnow.Therupeetradingatahugediscounttootherleadingcurrenciesmakesoverseasdealsveryexpensive.Manyinvestorswhodidventureabroadattimeswhenthecurrencywasstrongerhavelostmoneyandareretrenchinginkeymarkets, aswehaveseenwithTata’smovetodisposeofsteelassetsintheUK.

Theexceptionstotherulearethecash-richstate-ownedenergycompanieswhocontinuetoinvestabroad,aswehaveseenwithrecentsignificantdealsinRussiabyONGCandothergovernment-ownedoilandgasgroups.

LATIN AMERICA Political and economic problems dominate

TransactionsacrossLatinAmericaremainsubduedastheregionwrestleswiththeeffectsofdeeprecession,thecontinuedimpactoflowcommodityandoilprices,anddeeppoliticaluncertainty,nowheremoresothaninBrazilwherefalloutfromtheOperationCarWashbriberyprobecontinuesunabated.

Againstthatbleakbackdrop,it’snotsurprisingtoseethatthevolumeofdealsinthefirsthalfoftheyearhascontinuedtofall,althoughvaluesremainedatroughlythesamelevelasthesameperiodlastyearthankstooneortwosizeabletransactions.

WithBrazil’sPresidentDilmaRousseffoustedfrompowerandfacingimpeachmentproceedingssettobeheardinAugust,thecountryremainsmiredinscandalandhighlyvolatile.OperationCarWash–thecorruptionprobeintobribespaidbyconstructionandother

companiestosecurecontractswithPetrobras–continuestoimplicatebusinesspeople,publicofficialsandpoliticiansandislikelytorumbleonlongaftertheimpeachmentproceedingshavebeencompleted.

OutsideofBrazil,electionsinPeruhavealsohadanimpactonactivity,withinvestorsholdingbackeventhoughtheconsensusisthateconomicpolicywill remainlargelyunchangedwiththeelectionof Mr.PedroPabloKuczynski.

Bycontrast,Argentinaisenjoyingaperiodofpoliticalstabilityandgreatexcitement,withthenewgovernmentsuccessfullywinninginterestfrominboundinvestorsinanumberofsectors,notleastindevelopingrenewableenergyresources,realestateandmining.Newrules andregulationshavebeenpublishedtosupport auctionsforrenewableenergydevelopmentsinAugust, withinvestorsfromtheU.S.,EuropeandAsiacircling.

OnArgentina,it’sfairtosaythatinvestorsremaincautiousandactualM&Aactivitywillpickupgradually.Wewouldalsoexpectthemultilateralsandexportcreditagenciestoplayaleadroleinanyinfrastructurefinancingthatdoesoccur,amovethatshouldencouragecommercialbankstoalsograduallybecomemore activeinthemarket.DevaluationoftheArgentine Pesomeansthatassetpricesarenowdownto morereasonablelevels,anotherfactorbehind growinginboundinvestorinterest.

Thereremainsasignificantmismatchbetweenbuyerandsellerpriceexpectations,creatingafurtherbarriertocompletionoftransactions.ThelocalcurrencydevaluationadvantageshouldalsoeventuallybeavailabletoBrazil,wheretherealhasalsodevaluedsharply.However,thereremainsasignificantmismatchbetweenbuyerandsellerpriceexpectations,creatingafurtherbarriertocompletionoftransactions.

Manyofthebigdealsinrecentmonthshavefocused ondisposalofassets,especiallyintheenergyandresourcessector.PetrobrashassuccessfullysolditsArgentinianintereststoPampaEnergiaanddistributionassetsinChiletoPEfirm,SouthernCross,indealstogetherworthnearlyUSD1.4bn.

Disposalactivityintheminingsectorisgatheringpace,butremainsfraught,althoughAngloAmericanhassolditsniobiumandphosphatesbusinessinBraziltoChinaMolybdenumforUSD1.5bn,adisposalreportedtohaveattractedinterestfromtheU.S.fertilisercompanyMosaic,amongothers.

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Overseasbankscontinuetoretreatfromtheregion. CitiisthelatesttoputitsretailbankingandcreditcardinterestsontheblockinBrazil,ArgentinaandColombiawithlocalbanksseenasthemostlikelybuyers.Santander,SofraandItauUnibanco,Brazil’slargest privatebank,arerumouredtobeinterested. BancoBradescowillnotbeacontenderhavingtakenoverHSBC’soperationsinBrazilforUSD5.2bnlastyear, agiantdealonlyjustfinallygivenantitrustclearance.

BrazilianconstructioncompaniesmiredinOperation CarWasharealsoseekingtoselloffbusinesses, oftentoraisemoneyforliquidityandalsotopaylargefines.Thequestioniswhowillbuytheseassets, whichmaywellberegardedastainted.Itmighttakebothanaggressiveinvestorandacceptanceofaverykeenprice.

Despitethisdomesticturmoil,someBraziliancompaniescontinuetobeadventurousoutboundinvestorsseekingnewgrowthmarketsorwaystosecuretheirfinancing.

BRF,oneofBrazil’sbiggestmeatproducers,continuestolookforinternationaltransactions,havingcompletedastringofdealsinEurope,AsiaandtheMiddleEastinthelasteightmonths.Meanwhiletheworld’sbiggestpoultryandbeefproducer,JBS,hasannouncedplanstospin offitsinternationalbusinesses,seekaNYSElisting andestablishanewheadquartersfortheminIreland,wheretaxeswillbelowerandfinancingcostsshould beconsiderablycheaper.

AsBrazilpreparestohosttheOlympics,themonthsaheadlooksettoremainverytesting.Hereandacrosstheregionweexpectrecoveryintransactionstobeamarathonratherthanasprint.

significant mismatch between buyer and seller price expectations creating a further barrier to completion of transactions.”

There remains a

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Sector insightsDeal activity, although slowing, was more widely spread across a variety of sectors in Q2 with even the most troubled, like mining, showing some signs of green shoots.

PRIVATE EQUITY Riding the risks

TheBrexitvotehasclearlysentPEfunds,likestrategicbuyers,intoaperiodofdeepreflectionandwearelikelytoseedealvolumesfallquitedramaticallyoverthecomingmonths.

EvenintheearlydaysaftertheshockUKreferendumresultitwasclearthatasubstantialnumberofdealswerebeingputonimmediatehold–althoughtheywerenotbeingabandoned.Fundswereclearlyanxioustotakestockandtotryandworkoutthefullimplicationsoftheleavevote.

Theimpactwill,ofcourse,befeltmostacutelybysterling-denominatedfunds.Withthepoundinsharpdecline,dealsforthemhavesuddenlybecomealotmore expensive.

Theotherwayround,however,therecouldbeopportunitiestododealsatveryfavourablepricesas thedustbeginstosettle.That’sparticularlytruefordollar-denominatedfundslookingtoinvestinBritishassetswhichaweekortwoafterthevoteweresuddenly10-20%cheaper.TruetooforEuro-denominatedtransactions–althoughpressureonthesinglecurrencymeanstheadvantageherewillnotbeasgreat.

Havingsaidthat,it’snotallaboutthepricetag.Anassetisonlygoodvalueifunderlyingearningsremainstrong.Soinvestorswillbeverykeentoseeif,andtowhatextent,theBritisheconomyfallsintorecessionandtogaugewhateffectthatwillhaveonthetarget’stop line.Alreadywehaveseendealsintherealestate sectorbeingre-assessedasprospectivetenantsforpropertydevelopmentsarepullingoutofnegotiationsin lightoftheuncertainty.

Lowersharepricescouldalsoopenopportunitiesfortakeprivatedeals.AlthoughthefallintheFTSE100 hasnotbeenasacuteasmighthavebeenexpected, thelikelihoodisthatsharepriceswillcontinuetodriftdownwardsoverthesummer.

Butoverallweexpectfundstotaketheirtime. Theyareundernoparticularpressuretodeploytheirstillconsiderabledrypowderandanydealswedoseeinthecomingweeksarelikelytobeextremelyopportunistic.

Aheadofthevote,2016hadbeenamixedyearfor PEinvestment,startingveryquietlyinQ1butgettingincreasinglybusyastheyearprogressed.That’sareflectionofthefactthataccesstocashandfinanceremainsgood,notleastashigh-yieldmarketswereonceagainopenforbusiness,afterdisruptionearlierthisyear.

Againstthatbackdrop,wesawasignificantbuildup inactivityasQ2progressed,particularlyintheUK, theNetherlandsandGermany,andthereisnowasignificantpipelineofdealswhich,aswe’venoted, havebeenpostponedratherthanditchedwhile investorstrytounderstandthenewlayoftheland.

IntheUKretailandbusinessserviceswereareas ofgrowinginterest,aswashealthcare,withbothpharmaceuticalsandclinicsandhospitals–anareaofhugeinterestforfundsaheadoftheglobalfinancialcrisis,butlesssoinrecentyears.

Oneofthemostsignificantdealsofthefirsthalfoftheyear–the50/50internationalicecreamandfrozen foodsjointventurebetweenNestleandtheUK’sR&R,ownedbyPAIPartners–formspartofagrowingtrendamongbigfoodproducerstofinetunetheirbrandstrategiesandmanufacturingoperations.GeneralMills intheU.S.isalsoactiveinthisfieldsincesettingupits301venturecapitalfundtohelpsmallproducersdevelop,manufactureanddistributenewbrands. WearealsoseeinggreaterPEinvolvementinhelpingthesesmallerproducerstogrowandraisefinance.

Mid-marketPEfundsintheNetherlandswerenoticeablymuchbusierastheyearprogressed.InGermanyautomotiveremainedanareaofgoodactivity,aswesawwiththeEUR820msaleofFTEAutomotivetoValeobyBainCapital.Thehospitalsectoralsoshowedsignsofheatingup,withfundslookingforwaystocircumventregulatoryhurdlestoinvestment,forinstancelookingtodo“grandfather”deals.

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ButacquisitionsanddisposalsinGermanycoveredagoodvarietyofsectorsandthereweresomesizeabletransactions,includingCVC’sEUR1.5bnacquisitionofthesportsgamingbusiness,Tipico,andthepurchase ofTui’sonlinereservationplatform,Holidaybeds, byCinvenandCanadaPensionPlanInvestment BoardforEUR1.2bn.KKRalsosoldWMFappliances toSEBofFranceforaroundEUR1.6bn.

PEactivityintheAsiaPacificregioncontinuestogrow.BlackstonemadeitsbiggesteverinvestmentinIndiainQ2,spendingUSD1.1bntoacquirea60.5%stakein theIndianITservicesgroup,Mphasis.InAustralia, KKRlaunchedthesaleprocessforGenesisCare, aradiationoncologyprovider.Whileactivityin SouthEastAsiaispickingup,interestcontinues torevolvemostlyaroundrelativelysmalldeals.

CONSUMER Uncertainties bite

Afterlastyear’sfreneticdealmakingbyconsumercompanies,manyfocusingonmegadeals,itwasalwayslikelythatactivitywoulddecreaseinthefirst halfof2016.Infactthevolumeofdealshasheldupreasonablywell,althoughthevalueshavefallenquitesteeplyintheopeningsixmonthsoftheyear.

Thatreflectsthefactthatmanyofthereallysignificanttransformationaldealswerecompletedin2015andthatthefocushasnowturnedtodoingsmallertransactions,manyofthem“tidyup”dealsstemmingfromlastyear’sspateofgiantmergersandtakeovers.

Buttheslowdownalsoindicatestheextenttowhichmacro-economicuncertainties–theUK’sreferendumonitsEUmembership,November’sU.S.presidentialelection,continuedworriesaboutgrowthinChina andthelikelihoodofhigherinterestrates–havebeendepressinginvestorsentimentinthesectoramidfearsthatthesefactorsmayhaveadisproportionateeffectonconsumerconfidence.

Nevertheless,wedidseethecontinuationofanumberoftrendsinQ2,someofwhichareadirectafter-effectofsomeofthemassivedealslaunchedlastyear.

ThedisposalofassetsbyABInBevandSABMiller towinantitrustsupportfortheirUSD108bnmerger isacaseinpointandillustratesthesortofmovesdealmakersarehavingtomaketogetthebigdealsdone.TheEUhassignalleditswillingnesstoclearthemerger,ontheconditionthatthepartnerssellmostofSABMiller’sEuropeanbrands.

HavingannouncedthesaleofthePeroni,GrolschandMeantimebrandstoAsahiofJapanearlierintheyear,SABMiller’sCentralandEasternEuropeanbeerbrandshavenowbeenputonthemarketwithaputativepricetagofsomeEUR5bn.ThiswillseebrandsinHungary,theCzechRepublic,Slovakia,RomaniaandPoland putupforsaleinanexerciselikelytoendupraisingsignificantlymorethantheWesternEuropeandisposals.

ConsumergroupscontinuetouseM&Aasanimportanttoolinmeetingchangingconsumertastesandneeds,alongsidemovestooverhaulhistoricproductlines.Johnson&Johnson’sUSD3.3bnacquisitionofthehairproductsgroupVogueInternationalisaclearexampleofthegroup’scontinuingdeterminationtorevitaliseitsconsumerdivision.SotooisitsdecisiontorelaunchitsfamousJohnsonBabyrange,tomeetdemandfrommillennialmumsformorewholesome,organicproducts.

Thefocusoncorebusinesslinesisalsoacontinuingtrendinanumberofsegments.Tui’sdecisiontosellHotelbeds,itsonlineroom-bookingplatform,toCinvenandtheCanadaPensionPlanInvestmentBoardforUSD1.3bnandnewsthatitmightalsosellitsSpecialistGroupactivities,comprisingsome50travelbrands, tofocusonmainstreamtourism,illustratesthistrend.

Elsewhere,theneedtoshoreupdomesticbalancesheetshasseensomeinvestorsretreatfromoverseasmarkets.FrenchretailerCasinohasthisyearsolditsinterestinThailand’sBigCsupermarketbusinessandsolditsVietnamoperationstoCentralofThailandintwodealswithacombinedvalueofmorethanEUR4bn.

Funds are under no particular pressure to deploy their still considerable dry powder and any deals we do see in the coming weeks are likely to be extremely opportunistic.”

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ForJapanesecompaniesandinvestmentgroups thetrendisgoingintheoppositedirection,however. Aspartofanacceleratingoutboundinvestmentstoryacrossmanysectors,Japaneseconsumergroupsareactivelyseekingopportunitiesfornewgrowthoverseasortoconsolidatetheirpositionsinnewmarkets.

Suntoryhas,forinstance,completedthelastpartof thejigsawinitstakeoveroftheRibenaandLucozadebrandsfromGSKbyacquiringrightstomakeand selltheproductsinNigeria.NoodlemakerNissinhassignedarelationshipagreementwithPremierFoods,theUKmakerofMrKiplingcakesandBistogravy– anagreementreachedshortlyafterPremierrejectedabidfromtheU.S.foodproducer,McCormick.Ayearaftertakinga20%stakeintheSingapore-basedgraintrader,Olam,MitsubishihasnowsignedajointventureagreementwithOlamtosupplysustainablefoodandagriculturalproductstoJapan.

WeexpectthattheUKvotetoleavetheEUwilllikelyimpactconsumerconfidenceanddealmakinginthissector. Somedealswhichmayhavebeenpursued hadtherebeenavotetoremainwilllikelybeputonholdwhilethetermsofBrexitareworkedout– whichcouldresultinaslowdowninM&Aactivity. However,forotherinvestors,thefluctuationsinthecurrencymarketsmaywellpresentopportunities,especiallywheretargetshaveasterlingcostsbase butsignificantnon-sterlingrevenues.

ENERGY AND INFRASTRUCTURE Oil price uncertainty persists

Uncertaintyoverthefuturedirectionofoilpricescontinuestobethebiggestinfluenceontransactionsintheenergysector,bothintermsofshort-termM&Adealsandlonger-termfundamentalrestructuringintheindustry.

Althoughpriceshavefirmedalittle–andseem,fornow,tobeholdingatjustaboveUSD50abarrel–theyremainwellbelowthehighsofaroundUSD115abarrelwewereseeingonly24monthsagoandthereremainsastronglikelihoodoffurthervolatility.

Transactionactivityhas,notsurprisingly,stutteredasaresult,althoughdealvaluesacrosstheenergysectorhaveheldtheirgroundinthefirsthalf,thankstooneortwosubstantialdeals.

Increasinglyweareseeingoilmajorstrytoplotanewcoursetocontendwithwhatmightremainalowoilpriceenvironmentforsometimetocome.

That’snowheremoretruethaninSaudiArabia, whereaspartofanewlyunveilednationalplan toreducetheKingdom’sdependencyonoil, SaudiAramco,controllingtheworld’slargestproven oilreserves,isnowexploringwaystotransformitselfinto

agiantdiversifiedindustrialconglomerate,balancingitshugeoilinterestswithotherstreamsofbusiness.

AnIPOofthebusinessisinprospectintheyearstocome,but,moreimmediately,thecompanyhasbeenexploringanumberofdealsandventuresinandoutsidetheKingdomtobeginthisprocessofdiversification, allpartofitsadvancedtransformationprogramme. Thisincludeslookingatinvestinginbusinessesinboththeupstreamanddownstreamsectors,renewables, and,recently,maritime.

Elsewhere,2016hasseensomesubstantialdeals,despiteoilpricevolatility,andtheseshouldinturnstimulatedealactivity.

Shell’sgiantGBP35bntakeoverofBGgroupclosed inQ1anditisonlyamatteroftimebeforeitbeginsaprocessofpromiseddisposalstofine-tuneitsexpandedportfolioandtoreducedebt.There’saclearexpectationthattherewillbebothupstreamanddownstreamdisposals,althoughthetimingofanytransactionsremainsunclear,andtherehasevenbeenspeculationthatitwillmakeacompleteexitfromtheNorthSea.

WeexpecttoseeanincreaseinactivityintheU.S.oilservicesmarketfollowingtheDepartmentofJustice’sdecisiontoblocktheproposedUSD34bnmergerbetweenHalliburtonandBakerHughes,respectively thesecondandthirdlargestplayersinthesectorafterSchlumberger.WhileBakerHughesissettoreceiveaUSD3.5bnbreakupfee,partofwhichislikelytobereturnedtoshareholders,thegroupisnowexpectedtorestructureitsinterests,withanumberoftransactionslikelytoflowoutofthatprocess.

ActivityintheAsianenergysectorhasbeenshowingincreasedsignsoflifeinrecentmonths.OilandgasM&AactivityisstillbriskintheregionwithtransactionsinthePhilippines,Malaysia,Indonesia,VietnamandPapuaNewGuineawithmuchofitfocusingondownstreamassets.AsianclientsarealsolookingatAfrica,especiallySouthAfrica.

Meanwhile,RussiacontinuestoseeactivityinitsoilandgassectorasitseekstoattractinvestmentfromChina,IndiaandtheMiddleEast,inparttocounteracttheimpactofU.SandEUsanctionsimposedinthewakeoftheUkrainesituation.ONGCisoneoffourstate-ownedIndianoilandgasgroupsthathaveagreedtotakesignificantstakesintwosubstantialRosneftfieldsinWesternSiberia,whileincreasedChineseinvestmentisalsoonthecards.

Acrosstheglobethereisagrowingemphasisonproducingoilinplaceswhereitischeapertogetitoutoftheground,anobviousbi-productofmuchlowerprices.Insomeinstancesthatisencouragingcompaniestoexploredealsinplacesofhigherrisk.Despitecontinuinginstability,Iraqisacaseinpoint.IrantooisattractingconsiderableinterestfromEuropeancompaniessincethewarmingofdiplomaticrelations.

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Thefuturedirectionofoilpricesremainshardtopredict.Lowerpricesarepredominantlybeingdrivenbyoversupplyandwhentheexcesseasespricestend torise,ifonlyslightly.However,itisclearthatothersuppliers,notablysomeU.S.shaleproducers, haveturnedthetapsoffinresponsetolowerprices, anditwouldnotbesurprisingtoseethemrestartproductionifpricesremainatahigherlevel.Thatposestheobviousthreatofpricesdippingonceagain, makingtheoutlookfortransactionsuncertain.

Movingawayfromoilandgas,wecontinuetoseeawiderangeofactivityinthebroaderinfrastructureandenergytransmissionanddistributionsectors,withsignificanttransactionsexpectedtocloselaterin2016.

Forexample,majorprocessesunderwayincludeNationalGrid’sdisposalofitsgasdistributionnetworks. ItremainstobeseenwhethertheportsprivatisationprogrammewillcontinuetoattractbiddersinAustralia.

NorthAmericaisseeingsignificanttransaction activityfromfirstgenerationinfrastructurefundexits,distressedassetsalesandstrategicinvestorsdivestingnon-coreinfrastructureassets.Weexpectthistrendtocontinueatleastthroughtotheendof2016andfirstquarterof2017.

Weexpectthattherecentreferenduminfavourofthe UKleavingtheEuropeanUnionwillhaveashort-termimpactonUKtransactions,thisisdrivenbytheuncertaintythishascreatedinthefinancialmarkets. Inthemediumterm,ourviewisthatthefundamentals –includingthestabilityoftheUKregulatoryenvironment–whichcontinuestoattractinvestorstotheinfrastructuresector,willremainunaffected.

Moregenerally,weseeinfrastructurefundscontinuing tobroadentheirhorizonsandincreasinglytargeting “coreplus”assetsastheyarepricedoutoftraditionalinfrastructurebypensionfunds(whohavealowercost ofcapitalandlessaggressiveIRRexpectations).Asaresult,weanticipatetherebeingafurtherconvergencebetweenwhatisconsideredtobe“pure”privateequityandinfrastructure–aninterestingdynamicshowinghowrapidlythesectoranditsinvestorsareevolving.

FINANCIAL SERVICES Asia leading the way

AdistinctglobaldivideisemerginginthelevelsofM&Aactivityweareseeinginfinancialservices,withactivitybecomingincreasinglylivelyinAsiawhileinstitutionsinEuropeandtheU.S.appeartobeplayingawaitinggame.

OfthetoptendealsinQ2,sixwereintheAsiaPacificregion,withfourlargedomesticdealsinChinaandtwodomesticdealsinSouthKorea.Andthatdominanceisalsoreflectedfurtherdownthedealvaluechaininamorecross-bordermanner.

BycontrasttheU.S.inparticular–andNorthAmericaingeneral–remainedunusuallyquiet,perhapsreflectinginvestoruneasinessaheadofexpectedinterestraterisesandNovember’spresidentialelection.Europealsoremainsinsomethingofatrough,withothermacro-economicworriescompoundedbytheUKreferendumonEUmembership.Herethesectorislargelyagreedthat Brexitwillbeabadthingfortheindustry,introducinganothertierofregulationtoanalreadyburdensomemix fortheindustry,leavinguncertaintyaroundkeyregulatoryissues.It’shardtosayatthispointwhatmaychange, butquestionmarkssurroundthepotentiallossofpassportingrightsforUKfinancialinstitutions, thepossibilityoftherepatriationofcertainactivities, suchaseuroclearing,aswellaspotentialretaliatorylegislativemeasuresbyEUauthoritiestowardstheUK.TimewilltellwhattheimpactwillbeonM&Ainthesector,butit’sdifficulttoseeBrexitleadingtoanyup-tickinFIGM&AacrossEuropeasawhole.

Thisyearhas,though,definitelyseenAsian marketsbucktheglobal trendandwearecontinuingtoseereasonablyhealthyvolumesofdealshere.Overall,M&Aactivityinthesectorremainsrelativelymuted–certainlycomparedwiththesortofactivitywewereseeingaheadofthefinancialcrisis.Butit’sworthnotingthat,attheircurrentlevel,transactionvolumesstandonaparwiththelastthreeyearsafterrecoveringfromasignificantdipin2013.Thatmakesforarelativelysteadypictureratherthanadynamicone.

Thisyearhas,though,definitelyseenAsianmarketsbucktheglobaltrendandwearecontinuingtoseereasonablyhealthyvolumesofdealshere.WhilethebiggestAsiandealshavebeendomestic,weareseeingmuchmorecross-borderactivityinsmallerandmedium-sizedtransactions,withkeymarketsshowingmoresignsofvibrancy,notleastthePhilippines,VietnamandIndonesia.

ThePhilippinesisalreadyreapingthebenefitofmorerelaxedcontrolsonforeigndirectinvestmentinthebankingsector,andJapanese,TaiwaneseandChinesebanksaremovingtotakeadvantage.TheBankofTokyoMitsubishi,forexample,paidUSD773mfora20%stakeinSecurityBank,thebiggestFDIinthePhilippinesfinancialservicessectortodate.ThedealcomestwoyearsafterittookacontrollingstakeinThailand’sBankofAyudhaandisanotherillustrationofitsdeterminedexpansionacrosstheregion.

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InthePhilippinesandIndonesiaalike,growthinthemiddleclasses,theneedforconsolidationandanefforttoimprovegovernancestandardsarepressingconcernsandthisisopeningupopportunitiesforinboundinvestors.

Elsewhere,EuropeanandNorthAmericanbankscontinuetoretreatfromtheregion–withChinese,Japanese,SingaporeanandSouthKoreaninstitutionsthemostlikelypotentialbuyers.Barclayshas,forinstance,justagreedtosellitswealthmanagementbusinessinHongKongandSingapore,totheBankofSingapore(theprivatebankingarmofOCBC).

“Riskoff”remainstheprevailingmoodamongEuropeanbanksandU.SbanksoperatingintheEU.Thoughthe fulleffectsofaBrexitarealittlehardtopredict,someinstitutions–HSBC,CitiandJPMorganincluded– hadalreadyindicatedaheadofthevotethattheywouldmovepartsoftheiroperationsorshedUKjobsintheeventofanoutvote.Assetmanagementcontinuestoattractinternationalinvestorinterest,however.

Inthismorerisk-averseenvironment,weareseeingtheinsurersfollowtheleadofbanksandrestructuretheiroperations,forexampleAegoninrelationtoitssubsidiaryScottishEquitable.Insurancecompaniesnotablyhavetheoptionof‘shadowM&A’wherebytheystructuretheirM&Atransactionsasinsurance/re-insurancecontracts.Weareseeingincreasingamountsofthisinthesector.

UKbankshavelargelycompletedthebusinessofriddingthemselvesofbaddebtsandnon-performingloans, butelsewhereinEuropemuchworkremainstobe done,evenamongsomeofthebiggestinstitutions, likeDeutscheBankandCreditSuisse,whichhave bothannouncedrestructuringprogrammes.

InsouthernEurope,particularlyGreece,theissueismoreprofound,althoughanumberofplayersareemergingwho

arewillingtotakeonthesedebts.BrexithadasignificantnegativeimpactonsharepricesofItalianbanksinthedaysfollowingtheBrexitvote. Thepresshasreported thattheItaliangovernmentisseekingtoobtainpermissiontoinjectequityintotheItalianbankingsectorwithoutcomplyingwithBRRDorEUstateaidrulesinrespectofburdensharingalthoughapparentlythereisresistanceinBrusselstothisinitiative.

Italy’snewlycreatedEUR5bnAtlantebankrescuefundhasmeanwhilebeenrolledintoactionasabuyeroflastresortforbanksstrugglingtoraiseequityfinancingorsaddledwithbaddebts.Ithasrecentlygonetotheaid ofBancaPopolarediVicenzaandVenetoBanca, leavingfewerresourcestoaddressbaddebtsituations.

ElsewheretherehasbeenlittleactivityinItaly’sbankingsector,althoughwiththesharepricesoflistedbankscontinuingtofallthatsituationcouldchangeinthe monthsahead.However,thereformofthebanchepopolari(knownas“mutual”or“regional”banks) enactedin2015isdrivingsomedomesticconsolidation,withtheproposedmergerbetweenBancoPopolareandBancaPopolarediMilano.

Onesignificantgeneraltrendthathassurfacedthisyearisthereshapingoftheglobalinvestmentbankingindustry.AftersomereallydireresultsinQ1thisyear,Europeanplayersarerestructuringtheiroperationsandfocusing onspecialistinvestmentbankingactivities–aprocessthat,intheabsenceofbuyers,islikelytoinvolvenaturalshrinkage,ratherthanM&Adeals.

ThatwillleavethefieldclearforthebigU.S.banks. Theyhavegonemuchfurtherinsortingtheirhouses outandhavethescaleandresourcestodominatetheglobalscene.

A distinct global divide is emerging in the levels of M&A activity we are seeing in financial services.”

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Moregenerallythepriceofinnovatorandgeneric drugscontinuestobeacontentioustopic.IntheU.S.,companieslikeTuringandValeanthavebeenatthecentreofaverynegativepoliticalstormoverpricingtactics.Thishasflowedthroughintoplungingstockmarketpricesandissueswithdebtservice,whichmayspellthedeclineofthe“specialtypharma”M&Amodel.

Butthepricingissueisbroaderthanthisandisincreasinglybecomingamajorboardroomconcern, notleastinthedebateaboutdevelopingnew, much-neededantibioticswherecurrentpricing structuresareseenasdeterringrequiredresearch anddevelopment.Asfocusintensifiesonantibioticdevelopmentsandalternativepricingstructuresareconsidered,wearelikelytoseemoreM&Ainthis space over time.

Aswe’venotedbefore,theBiotechsectorremainsahotbedofdealactivityandnowheremoresothanin theareaofcancertreatments.Twoongoingdealsreflectthatcontinuedinterestinoncologydrugs–FrenchgroupSanofi’shostileUSD9.2bnbidforMedivation, nowfocusedonSanofi’sattemptstoousttheexistingMedivationboard,andAbbVie’sbidforStemcentrix,which,includingcashearn-outs,couldbeworth someUSD10.2bn.

Sanofi’smovefollowsitssuccessfulcollaborationwithRegeneronintheemergingfieldofimmuno-oncologylastyear,showingonceagainthevalueofcommercialpartnershipsaswellasM&Ainpipelinebuilding. OnequestionforSanofiwillbehowtostructurethetransactiontodealwithMedivation’slong-standingtie-upwithAstellasforthecommercialisationofEnzalutamide.

ForAbbVie,successinthislatestbidwouldfurtherstrengthenitsoncologypipelinefollowingrecent dealswithCytomXTherapeutics,theBelgian biotechfirm,argenx,andlastyear’sUSD21bn buyoutofPharmacyclics.

MINING Green shoots raise hopes

Theminingsectorremainsinatransactionsquagmire,withdealvaluescontinuingtodeclinequitesteeplyalthoughdealvolumeshaveheldupreasonablywellthisyear,albeitagainstanequallydifficultperiodin2015.

Butthereare,finally,someencouragingsignsandwearecautiouslyoptimisticthatthepicturecouldimproveinthemonthsahead.There’snoquestionofreturningtoabullmarketanytimesoon,butwedoexpecttransactionlevelstopickup.

LIFE SCIENCES As one door closes…

Thequarterthatsawthebiggestpharmaceuticalsdealofalltime–theUSD160bntakeoverofAllerganbyPfizer–abandonedinthefaceoftoughnewU.S.Treasurycontrolsontaxinversiondeals,ought,byrights,tobeafairlydismaloneforasectorthathasbeenanengineroomofglobalM&Aactivityinthelasttwoyears.

ButQ2actuallysawtransactionsinthelifesciencessectorsparkintolifeagaindespitethedoorbeingallbutclosedonthetypeoftax-drivendealsthathavebeensuchafeatureofthesectorinrecenttimes.

Anumberofhighvaluetransactions–notleastAbbott’sUSD25bnbidforStJudeMedical–sawdealvaluesgrowtotheirhighestlevelfortwoquarters,eventhoughdealvolumeswereconsiderablylower–proofthatbigticketdealsarestilltheorderoftheday.

Whilewestillbelievethat2016willbeaquieteryearfortransactionsoverall,there’sstillplentyoflifeinthesectoratthecurrenttime.Allthemoresoifyoustretchthedefinitionoflifesciencestoincludeagri-biotechandincludetheproposed,butsofarrejected,USD62bnbidforMonsantobyBayerintotheequation–whichwouldbethebiggestcross-borderGermanacquisitionever.

Thereasonsforthiscontinuedactivityarevaried. Lowerstockmarketvaluationsmayhaveencouragedcash-richbiddersbackintothemarket.Despitethethreatofhigherinterestrates,financingstillremainsrelativelycheap.Aboveall,theperpetualneedto stockpipelineswithnewtreatmentsandfast-trackexpensiveR&Dprogrammesremainsthebiggest driverofM&Aactivity.

Medicaltechnologycontinuestobevibrantasboth theAbbott/StJudedealandthemuchsmaller,butstillsubstantial,USD4.2bnagreedtakeoverofFEIbyThermoFisherScientificprove.ThissectorhasbeengettingsteadilybusierinthelasttwoyearsfollowingthemergerbetweenMedtronicandCovidienandthefirst sixmonthsof2016havealreadyseenastringofdealsincludingStryker’spurchaseofbothSageand Physio-Control.Abbott’sproposedUSD5.8bnbid forAlere,however,hasrunintocontroversyafterallegationsofbriberysurfacedatthetargetcompany.

Activityinthissegmentisoftenaboutbuyingmarketshareandextendinggeographicreach,aswellasbringinginnewproductsandtechnologies.Inafurthertwist,somedrugmakersaretryingtocombinewithmedtechbusinessestohelpthemmonitortheefficacy oftreatments.Theideaistousetheresultingdata toincreasetheirbargainingpowerwithpayers (healthauthorities,insurersetc),whoare increasinglylookingtopayfordrugsonthe basisoftheirprovenperformance.

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Theoverridingproblemforthesectorisacontinuingdisconnectbetweenbuyersandsellersonthevalue ofassets,atatimewhenmanyofthemajorshaveembarkedonmulti-billiondollardisposalprogrammestopaydowndebt.GlencoreandAngloAmericanhavemajorprogrammesinplaceandareunderthegreatestpressuretomakedisposals.

Thetroubleisthatthemajorityareunwillingtosellassetsatthesortofpricesthatwouldbringbuyersbackintothemarket,sosalesprocessesaremovingaheadwithmixedsuccess.Thatsaid,AngloAmericandidsellitsniobiumandphosphateminingoperationsinBraziltoChinaMolybdenuminaUSD1.5bndealthatattractedbiddinginterestfromotherparties.

Coalremainsanareainwhichmanyofthemajormininggroupsaretryingtomakedisposals.OnAustralia’seastcoast,forexample,RioTintohassuccessfullysoldoffinterests,whilePeabody,AngloAmericanandValearealllookingtomakeexits.DisposalorrestructuringofcoalassetsisathemeinAfrica.

It’safamiliarscenebut,inouropinion,therearesignsofsomegreenshoots.

Thosemininggroupswithstrongerbalancesheets–BHPBilliton,South32andRioTinto,forexample–seemtobebeginningtoexploreopportunitiesagain.Theyarenolongerfocusedsolelyoncostcuttingandreturningvaluetoshareholders,butareonceagainbeginningtoscoutfortransactionopportunities.Mostoftheprospectivedealsarefocusedonindividualassets,ratherthangrandermergersandacquisitions.

Theoverridingproblemforthesectorisacontinuingdisconnectbetween buyersandsellerson thevalueofassets.Chinesebuyersarealsomoreactivethantheyhavebeenforsometimeas,toalesserextent,areIndianinvestors.ThetwobiggestdealsofQ2involvedChinaMolybdenum,which,ontopoftheAngloAmericandeal,alsoacquiredFreeport-McMoran’sTFHoldingscoppermininginterestsintheDemocraticRepublicofCongo forUSD2.65bn.

TherewereanumberofdomesticChinesedealsinthereasonablybuoyantgoldminingsector,areflectionofawiderconsolidationtrendinthispartoftheindustryasgoldpricesfirmup,althoughtransactionsheretendtobefocusedonsmallandmedium-sizeddeals.

Finally,PEhousesandspecialistminingfunds arealsomakingtheirpresencefeltinprocesses,presumablydecidingthat,aspriceexpectations becomeincreasinglyaligned,theywillsoonhaveopportunitiestodeploysizeableaccumulatedfunds. Oneparticularareaofinterestiscopper–oftenseenasastrongindicatorofthedirectionofcommodityprices.

Aftertwoyearsofextremevolatility,it’shardtopredictwithanyrealcertaintywherethosepriceswillgointhemonthsahead.

Q2 saw transactions in the life sciences sector spark into life again despite the door being all but closed on the type of tax-driven deals that have been such a feature of the sector in recent times.”

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andentertainmentassets,includingmediarightscompaniesaswellasEuropeanfootballteams.

Q2sawMP&Silva,theItalian-basedsportsmediarightsgroup,formastrategicpartnershipwithEverbright,aChinesefinancialservicescompany, andBeijingBaofengTechnology,alistedinternetentertainmentandtechcompanysaidtocontrol China’slargestonlinevideo-playingplatform. TheChinesepartnersaretakinga65%stake, inadealreportedtobeworthsomeUSD1bn.

TheComputerSciencesCorp/HPEnterprisesmerger,creatinganITservicesgroupwithcombined revenuesofsomeUSD29bn,isinterestingfora numberofreasons–asidefromitssheerscale.

Cross-sectortechdealshavebecomeanincreasinglyinterestingfeatureofthemarket,particularlyinthetie-upbetweenhealthcareanddatacompanies, so-calledconnectedhealth.ThisisthelatestinastringofacquisitionsbyCSC,followingtheUSD6bnspin-offofCSRA,theUSD2.3bnmergerofCSRAandSRAInternationalanditsacquisitionofXchanging,andeffectivelyunravelsHewlettPackard’stroubledacquisitionofEDSin 2008.EDSbecamestrandedintheoldtechworld,overtakenbytheadventofnewtechadvances, notablycloudcomputing.Thedealisalsoacomplexso-called“ReverseMorrisTrust”transaction–ataxefficientspin-offandmergedeal,whichmeansHP canavoidtaxonthedeal.

Cross-sectortechdealshavebecomeanincreasinglyinterestingfeatureofthemarket,particularlyinthetie-upbetweenhealthcareanddatacompanies,so-calledconnectedhealth.TheUSD9bnQ2mergerbetweentheclinicaltrialsgroupQuintilesandthedataandanalyticsbusinessIMSHealthcontinuesthattrend.

Thecombinedgroupwillhaveaccesstoamassofpatient,prescriptionandotherhealthdatawhichitcanmakeavailabletodrugmakers,offeringthepotentialtoaddrealvaluetotheR&Dprocess.Itwillalsopositionthegroupwellatatimewhenthewayinwhichdrugdevelopersarepaidandreimbursedisintransition, withpublichealthbodiesandhealthinsurers lookingtopayfordrugsbasedontheirproven clinicalperformance.

Transactionsinthetelecomssectorcontinueto belargelytiedupwithregulatoryandcompetitionissues,nowheremoresothaninEurope’s consolidatingmobilephonesector.

Whileironorepriceshavestrengthenedinrecent months,andshownsignsofholdingthosegains, manycommentatorssuggestthatthisisadirectresult ofshort-termrestockingbyChinaandthatrecoverycouldbeshort-lived.Giventhevolatilityofrecentyears,that’sanunderstandablepredictiontomake.

Butwebelievetherearesomecautioussignsthatpricesmayfinallyhavebottomedoutandthatasmalldegreeofcertaintyisreturningtothemarket–thesortofcertaintythatcouldbegintostimulateagradualpickupintransactionactivity.

TELECOMS, MEDIA AND TECHNOLOGY Tech and China still driving activity

Telecoms,mediaandtechnologydealshavesettledtoamuchlessfreneticpacethisyearcomparedwith2015,withdealvolumesandvaluesdowndespitethelateQ2announcementofthebiggesteversocialmediadealonrecordandacontinuedspikeinactivitybyChineseinvestors,bothathomeandabroad.

Microsoft’sannouncementthatitistopayUSD26.5bntotakecontroloftheprofessionalsocialnetworkLinkedInnotonlyexceedsallpreviousdealsinsocialmediabutisthethirdlargestacquisitioninthehistoryofthetechsector.

Yetthetransactionhasleftcommentatorssomewhatperplexedaboutwhatitwilldowiththesite,notleast givenMicrosoft’sratherchequeredM&Arecordinthisarea.ItboughtSkypeonlytoseeiteclipsedbyotherfreechatserviceslikeWhatsApp,andacquiredYammerbutfailed,itiswidelybelieved,toturnittoadvantage.NorhasthetakeoverofNokia’smobilephonesbusinessdeliveredtheanticipatedbenefits.

Thedealisclearlyallaboutdata,butwhatMicrosoftplanstodowiththedataofLinkedIn’shundredsofmillionsofusersisunclear.ThestrongesthintsarethatMicrosoft willminethedata(andthetalentsofLinkedIn’smany datascientists)tohelpitdevelopnewtargetedfeatures orservicesinitscurrentoffering.

FourofthebiggestdealsofthequarterweredomesticdealsinChina,furtherevidenceoftheconsolidationgoingon,inthissectorasinothers,asChina’sgrowthslows.OneinterestingfeaturehereishowsomeoftheTMTtrendswe’vebeenseeinginothermoredevelopedmarkets,liketheU.S.,arenowbeingreplicatedinChina.

That’scertainlythecasewiththetie-upbetweenLeVisionPictures,aChinesefilmproductionanddistributioncompany,andLeshiInternetInfo&Tech–aChineseversionofNetflix,whichcontinuesatrendseenelsewhereofcontentmakersteamingupwithplatformoperators

TMTisalsoamajortargetsectorforoutboundChineseinvestors,withanoticeablefocusonbuyingintosports

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Insights, H1 2016

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Switzerland

Netherlands

Luxembourg

Spain

France

Ireland (Republic)

UKCanada

Mexico

U.S.

Note:thesefiguresrepresentthetotal numberofdealsannouncedbetween 1January2016and21June2016.

KEY

Numberof inboundacquisitions

Numberofoutbound acquisitions

482 448

259 272

205

13573

114

45

108

25

67

310

87

154

22

Dataprovidedby

741 986

146

Brazil

20Bermuda

A global snapshotTop 20 global inbound target markets and outbound acquirers

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Israel

Germany

Japan

India

Italy

Sweden

China

Hong Kong

Singapore

Australia

Finland

Taiwan

Top 20 global inbound target markets – H1 2016

Rank Country Volume of deals

Value of deals USDm

1 U.S. 741 215,892.8

2 Switzerland 73 56,726.8

3 UK 482 44,065.8

4 Germany 332 19,920.5

5 China 310 17,566.3

6 Italy 166 14,617.8

7 Canada 205 13,677.2

8 Spain 108 12,345.4

9 Netherlands 154 12,227.3

10 Sweden 99 11,601.0

11 France 259 11,149.5

12 Finland 69 10,899.0

13 HongKong 146 9,657.0

14 Australia 158 8,816.8

15 Singapore 98 8,435.7

16 Israel 35 8,114.7

17 Japan 82 7,795.5

18 India 138 5,135.5

19 Brazil 114 3,953.4

20 Luxembourg 25 3,489.4

Top 20 global outbound acquirers – H1 2016

Rank Country Volume of deals

Value of deals USDm

1 China 371 120,268.4

2 Germany 204 88,924.0

3 U.S. 986 63,442.3

4 Canada 310 58,030.1

5 Ireland(Rep) 45 29,490.4

6 UK 448 20,129.1

7 France 272 18,985.1

8 HongKong 330 18,593.0

9 Japan 313 17,138.8

10 Mexico 22 10,641.1

11 Luxembourg 87 10,106.3

12 Singapore 150 8,667.2

13 Australia 136 7,509.0

14 Netherlands 146 7,271.8

15 Bermuda 20 7,150.2

16 Taiwan 65 6,981.7

17 Switzerland 135 6,956.3

18 Sweden 164 6,615.7

19 Spain 67 5,051.7

20 UnitedArabEmirates 55 4,056.3

371310 313

332 204

146 330

82

69

99 164

150158 136

166

13865

35

98

55 UAE

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A global snapshotA global snapshot – top markets for the world’s largest acquiring countries

0 220

Bermuda

Norway

Brazil

Finland

Switzerland

Singapore

United Kingdom

Germany

United States of America

Hong Kong

0 220

Papua New Guinea

Republic of Ireland

Luxembourg

Belgium

Sweden

India

Switzerland

Netherlands

United Kingdom

United States of America

0 220

Dem Rep of the Congo

Papua New Guinea

Switzerland

Spain

Netherlands

Brazil

Italy

United Kingdom

Germany

United States of America

0 220

Belgium

Malaysia

Canada

Germany

United Kingdom

South Korea

Australia

Singapore

United States of America

China

0 220

Denmark

Canada

Switzerland

China

Brazil

Japan

Italy

Germany

United States of America

United Kingdom

0 220

Japan

Guernsey

Poland

Canada

South Africa

Denmark

Netherlands

Italy

France

United States of America

0 220

Israel

Hong Kong

Philippines

Netherlands

Vietnam

Italy

Germany

France

United Kingdom

United States of America

0 220

Nicaragua

Ecuador

Canada

Colombia

Panama

Chile

United States of America

Spain

Peru

Argentina

0 220

Sweden

Republic of Ireland

Japan

India

Italy

Australia

Germany

France

Canada

United Kingdom

0 220

Costa Rica

India

Spain

Switzerland

Mexico

France

Germany

Colombia

Australia

United States of America

7861

241716

9544

1

118

33

222111

9341

191616

12119

42

190131

5757

524039

2420

14

1531110107655

21

8321

1514

88

553

1

44333

11111

2918

109

543221

3929

2618

1512118

11

18214

131212

9544

1

0 220

Bermuda

Norway

Brazil

Finland

Switzerland

Singapore

United Kingdom

Germany

United States of America

Hong Kong

0 220

Papua New Guinea

Republic of Ireland

Luxembourg

Belgium

Sweden

India

Switzerland

Netherlands

United Kingdom

United States of America

0 220

Dem Rep of the Congo

Papua New Guinea

Switzerland

Spain

Netherlands

Brazil

Italy

United Kingdom

Germany

United States of America

0 220

Belgium

Malaysia

Canada

Germany

United Kingdom

South Korea

Australia

Singapore

United States of America

China

0 220

Denmark

Canada

Switzerland

China

Brazil

Japan

Italy

Germany

United States of America

United Kingdom

0 220

Japan

Guernsey

Poland

Canada

South Africa

Denmark

Netherlands

Italy

France

United States of America

0 220

Israel

Hong Kong

Philippines

Netherlands

Vietnam

Italy

Germany

France

United Kingdom

United States of America

0 220

Nicaragua

Ecuador

Canada

Colombia

Panama

Chile

United States of America

Spain

Peru

Argentina

0 220

Sweden

Republic of Ireland

Japan

India

Italy

Australia

Germany

France

Canada

United Kingdom

0 220

Costa Rica

India

Spain

Switzerland

Mexico

France

Germany

Colombia

Australia

United States of America

7861

241716

9544

1

118

33

222111

9341

191616

12119

42

190131

5757

524039

2420

14

1531110107655

21

8321

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553

1

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2918

109

543221

3929

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China Germany

Hong Kong 7,145.9U.S. 28,862.2Germany 8,233.4UK 2,301.2Singapore 1,748.3

Switzerland 48,438.9Finland 8,955.0Brazil 1,700.0Norway 1,364.1Bermuda 2,770.0

Value of deals (USDm)

U.S. 68,382.7UK 14,748.0Netherlands 233.4Switzerland 882.5India 551.1

Sweden 339.0Belgium 544.4Luxembourg 2,100.0Ireland (Rep) 200.0Papua New Guinea

241.1

Value of deals (USDm)

CanadaU.S.

UK 16,191.2Canada 8,254.1France 6,021.0Germany 1,595.0Australia 5,259.5

Italy 2,666.0India 1,495.2Japan 1,732.1Ireland (Rep) 1,301.1Sweden 9,919.1

Value of deals (USDm)

UK 46,215.3U.S. 144.2Germany 3,179.7Italy 207.4Japan 365.9

Brazil 1,162.6China 3,658.6Switzerland 1,672.2Canada 621.6Denmark 360.0

Value of deals (USDm)

*Thesefiguresrepresentthetotalnumberofdealsannouncedbetween1January2016and21June2016.

M&A Insights | H1 201630

© Allen & Overy LLP 2016

0 220

Bermuda

Norway

Brazil

Finland

Switzerland

Singapore

United Kingdom

Germany

United States of America

Hong Kong

0 220

Papua New Guinea

Republic of Ireland

Luxembourg

Belgium

Sweden

India

Switzerland

Netherlands

United Kingdom

United States of America

0 220

Dem Rep of the Congo

Papua New Guinea

Switzerland

Spain

Netherlands

Brazil

Italy

United Kingdom

Germany

United States of America

0 220

Belgium

Malaysia

Canada

Germany

United Kingdom

South Korea

Australia

Singapore

United States of America

China

0 220

Denmark

Canada

Switzerland

China

Brazil

Japan

Italy

Germany

United States of America

United Kingdom

0 220

Japan

Guernsey

Poland

Canada

South Africa

Denmark

Netherlands

Italy

France

United States of America

0 220

Israel

Hong Kong

Philippines

Netherlands

Vietnam

Italy

Germany

France

United Kingdom

United States of America

0 220

Nicaragua

Ecuador

Canada

Colombia

Panama

Chile

United States of America

Spain

Peru

Argentina

0 220

Sweden

Republic of Ireland

Japan

India

Italy

Australia

Germany

France

Canada

United Kingdom

0 220

Costa Rica

India

Spain

Switzerland

Mexico

France

Germany

Colombia

Australia

United States of America

7861

241716

9544

1

118

33

222111

9341

191616

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190131

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1512118

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0 220

Bermuda

Norway

Brazil

Finland

Switzerland

Singapore

United Kingdom

Germany

United States of America

Hong Kong

0 220

Papua New Guinea

Republic of Ireland

Luxembourg

Belgium

Sweden

India

Switzerland

Netherlands

United Kingdom

United States of America

0 220

Dem Rep of the Congo

Papua New Guinea

Switzerland

Spain

Netherlands

Brazil

Italy

United Kingdom

Germany

United States of America

0 220

Belgium

Malaysia

Canada

Germany

United Kingdom

South Korea

Australia

Singapore

United States of America

China

0 220

Denmark

Canada

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China

Brazil

Japan

Italy

Germany

United States of America

United Kingdom

0 220

Japan

Guernsey

Poland

Canada

South Africa

Denmark

Netherlands

Italy

France

United States of America

0 220

Israel

Hong Kong

Philippines

Netherlands

Vietnam

Italy

Germany

France

United Kingdom

United States of America

0 220

Nicaragua

Ecuador

Canada

Colombia

Panama

Chile

United States of America

Spain

Peru

Argentina

0 220

Sweden

Republic of Ireland

Japan

India

Italy

Australia

Germany

France

Canada

United Kingdom

0 220

Costa Rica

India

Spain

Switzerland

Mexico

France

Germany

Colombia

Australia

United States of America

7861

241716

9544

1

118

33

222111

9341

191616

12119

42

190131

5757

524039

2420

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1531110107655

21

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1

44333

11111

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109

543221

3929

2618

1512118

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18214

131212

9544

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France Hong Kong

UKIreland

UK 377.7U.S. 28,060.7Germany 28.1Italy 20.5Japan 349.3

Brazil 203.3China 5.5Switzerland 287.3Canada 111.6Denmark 45.1

Value of deals (USDm)

U.S. 3,901.6France 962.7Italy 2,835.5Netherlands 6,786.3Denmark 702.4

South Africa 402.8Canada 1,663.3Poland 348.1Guernsey 222.0Japan 335.9

Value of deals (USDm)

U.S. 9,598.7Germany 4,212.1UK 324.6Italy 1,279.5Brazil 205.1

Netherlands 272.2Spain 236.9Switzerland 385.0Papua New Guinea 1,571.6

Dem Rep of the Congo 160.0

Value of deals (USDm)

China 10,831.9U.S. 2,579.5Singapore 495.5Australia 451.3South Korea 273.0

UK 490.6Germany 250.6Canada 976.9Malaysia 219.8Belgium 1,100.2

Value of deals (USDm)

U.S. 7,930.4UK 521.7France 734.6Germany 1,212.7Italy 3,100.1

Vietnam 304.8Netherlands 1,179.0Philippines 785.1Hong Kong 223.7Israel 212.0

Value of deals (USDm)

Argentina 610.8Peru 76.1Spain 9,172.1U.S. 646.0Chile 50.9

Panama 70.0Colombia 15.3Canada 0Ecuador 0Nicaragua 0

Value of deals (USDm)

Japan Mexico

About the research TheunderlyingdataforthisresearchcomesfromThomsonReuters.–Thedatacontainedinthispublicationspans1January2016and21June2016inclusive.

Dataprovidedby

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