Insights, Q4 2015 · 25 Telecoms, media and technology 6 In focus 6 Hostile M&A – a notable feature of 2015 ... one standout market is the U.S. where hostile bids remain a common

Insights, Q4 2015

www.allenovery.com/mainsights

M&A Insights | Q4 20152

© Allen & Overy LLP 2015

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Regional insights9 U.S.10 Western Europe11 CEE and CIS12 Middle East and North Africa13 Sub-Saharan Africa14 India15 Latin America 16 AsiaPacific

A global snapshot28 Top 20 global outbound acquirers

and inbound target markets30 Top target markets for the

world’s largest acquiring countries

Sector insights19 Consumer 20 Energy and Infrastructure21 Financial services22 Life sciences23 Mining24 Private equity 25 Telecoms, media and technology

6In focus6 Hostile M&A –

a notable feature of 2015

4Executive summary4 Executive summary 5 Global M&A in numbers

Contents


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Investors have continued to hold their nerve amid signs of growing economic and political uncertainty, with big-ticket M&A deals pushing transactions to record levels.

Executive summary: Investors push deals to record levels

2015 hIghlIghtS IncludE:

RECoRd-bREAkING yEAR FoR GLobAL M&A

With the deal-making environment remaining strong, transactions in 2015 have risen to record levels and we end the year ahead of the previous M&A high of 2007.

CRoSS-boRdER ACTIvITy oN THE RISE

With globalisation continuing to be a major driver of M&A, cross-border deals have accounted for around a third of all total deals this year – a trend that we think will persist in 2016.

MEGA-dEALS To THE FoRE

big-ticket transformational M&A deals have been a dominant theme. 2015 ended with both the USd130bn merger of The dow Chemical Company and E. I. du Pont de Nemours, as well as the proposed USd160bn mergerofPfizerandAllergan,thelargestsingletransaction of 2015 and the biggest pharma deal ever.

PoWERFUL U.S. PERFoRMANCE

The U.S. market continues to power ahead in an extraordinary way, providing the rocket fuel for growth in other key regions.

HAvE THE LIFE SCIENCES REACHEd A PEAk?

With some USd980bn worth of deals done in the life sciences sector in the last two years, the question is: will investors now take a pause for breath while a range of massive deals are digested? The jury is out.

GRoWING boARdRooM CoNFIdENCE

Readyavailabilityofdebtfinance,recordlevelsofcorporate cash, supportive shareholders, and, perhaps, a determination not to be left behind, has given boardroomstheconfidencetopursuesignificantstrategictransactions across a growing number of sectors.

PE RETURNS To THE bUyoUT MARkET

After several years focussing mainly on securing exits, PE funds are now once more returning to the buyout market and contemplating increasingly complex deals, backed by record levels of funding.

TAx STILL A dRIvER

despite growing opposition from across the political spectrum, U.S. companies are still looking to do tax-driven deals – including inversions – with the aim of investing overseas earnings rather than repatriate them and face a high tax bill.

CHINA’S PRIvATE CoMPANIES SEEk oUTboUNd oPPoRTUNITIES

As the deployment of Chinese capital across the world increases, privately-owned companies are increasingly looking for outbound opportunities and are proving morefleetoffootthanbigState-ownedEnterprises.

CoNTINUEd GRoWTH IN 2016?

big ticket M&A looks set to continue. We also expect to see the ripple effect of those mega deals leadtoanincreaseinmid-sizeM&Aasbusinessesreshape their portfolios and dispose of non-core assets. PE will be a major buyer as these divestments come onto the market.



Global M&A in numbers 2015

Note:Thesefiguresrepresentthetotalnumberofdealsannouncedbetween1January2015and11December2015.

deal volumes by region

top 5 sectors by value (uSd)

Activity by deal value (uSd)

Region % of deals by region

Western Europe 33%

U.S. 28%

AsiaPacific 14%

Greater China 13%

CEE and CIS 3%

India 3%

Latin America 3%

MENA 1%

Sub-Saharan Africa 1%

other 1%

Over 25%

Less than 10%

Between 10% and 25%

28%

13%

33%

3%

3%

3%1%

1%

Increase in megadealsUSd5bn +

599bnLife sciences

536bnEnergy

491bnConsumer407bn

Financial Services

735bnTMT

96dEAlS Q1-Q4 2014 131

dEAlS Q1-Q4 2015vs

0-500m

500m-1bn

1-3bn

3-5bn

5bn +

88%

5%

4%

1%

2%

14%


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Hostile M&A – a notable feature of 2015The return of big-ticket M&A has brought with it a notable number of high-profile hostile and semi-hostile public M&A deals.

But just how common are they and in which countries are they occurring? How are they being structured? What factors are influencing deal outcomes? And finally, how do they play out?

t his year, there have been around 56 hostile/semi-hostile deals globally1. This is similar to last year, though the overall proportion of these types of

deals to recommended deals remains low globally. That said, hostiles and semi-hostiles are a notable fixtureofsomemarkets.

one standout market is the U.S. where hostile bids remain a common tactic, despite them rarely being successful. A typical outcome in the U.S. is that as a result of putting a target in play, the target will end up being acquired by a white knight. Giventhesignificantrolethatactivistinvestors have been playing in driving corporate policy, including proposals to dismantle traditional and common defences such as shareholder rights plans, we expect levels of hostile bid activity to remainsignificantinthismarket.

Australia and the Uk have also seen notable numbers of hostile/semi-hostile deals in recent years. In the Uk, in particular, “bear hug” proposals (ie where a potential bidder announces a possible offer for a target conditional on the target board’s recommendation but without the target’s backing) have been more common and have involved potential bidders appealing to target shareholders to put pressure on their boards to engage.

big international players have been eager to elicit co-operation and ultimately secure recommendationswheretheremaybesignificantantitrust issues and where, therefore, co-operation from targets is either desirable or necessary. The Uk ‘put up or shut up’ rules and the prohibition of deal protection arrangements in favour of bidders have given targets considerable leverage in negotiations, so even where they have ended up recommending a deal, in some cases they have been able to extract substantial break fees (or so-called reverse break fees) and other deal protections as a price for their recommendations. For example, in Ab Inbev/SAbMiller, Ab Inbev has agreed to pay a USd3bn reverse break fee in certain circumstances.

In contrast, France, Germany, Singapore and Hong kong have seen low levels of hostile bid activity in recent years and one important influencingfactorforthishasbeenstructural issues. Companies are often closely held in France, Singapore and Hong kong, which makesitdifficulttoexecutehostileofferssuccessfully. While in Germany, it can be difficultforsuccessfulhostilebidderstoobtainmanagement control because of restrictive rules on the appointment and removal of directors.



Reflectingtheuptickincross-borderM&A, foreign bidders have featured in around 40% of hostile and semi-hostile deals this year2. While in the hostile/semi-hostile space this might be expected to prompt protectionist tendencies by individual countries, in practice the overall proportion of cross-border M&A deals that are blocked or hampered as a result of ‘protectionism’ is relatively small.

More recently, some of the bigger hostile/semi-hostile deals have been structured as securities exchange offers, bringing a different bid defence dynamicintoplay.Therulesanduseofprofitforecastsandotherfinancialstatementsbypartiesto support their position vary quite considerably between markets. These rules sometimes apply to forecasts/cost savings statements that the target believes it can achieve if it remains independent. In addition, one approach that has featured in some bids in the Uk and U.S. markets has been for targets to state publicly the price level at which they might entertain an offer.

on a related note, shareholders have been increasingly vocal about what they expect targets to do in response to an offer and have been more willing to make their views known at an early stage. IntheU.S.,activistshaveplayedasignificantroleinshaping the responses of target boards, seen in

the competing bids by dollar General and dollar Tree for Family dollar (2014). Pershing Square’s active participation in valeant’s campaign to take over Allergan (2014) went a step further with Pershing Square pairing up with valeant to make the bid for Allergan.

Activists and proxy advisers are having an important impact on bid outcomes in some markets and are challenging traditional views about which markets offer the most protection to targets. For example, targets in France and the U.S. are quite often unable to take up the full rights or default protections available to them (eg the ability to put in place poison pills) because of pro-shareholder rights campaigns by proxy advisers and activists. As a result, for example, most French companies have opted out of the rule which gives long-term shareholders automatic double voting rights.

Whileinmanymarketstargetsenjoyflexibility ahead of an offer (eg Germany, Hong kong, Singapore and the U.S.), in most markets the freedom of action when a bid is underway is more limited. The Netherlands is an exception, wheretargetsenjoyconsiderableflexibilitynot only ahead of a hostile bid (86% of the biggest companies on Euronext Amsterdam have some form of defensive measure in place3) but also when one is already in progress. Protective preference shares featured as a key part of Mylan’s defence in the bid by Teva earlier this year and as part of kPN’s defence of América Móvil’s bid in 2012.

Althoughasignificantnumberofhostileor semi-hostile deals have failed in recent years, with strong drivers in place for public M&A in the short- to medium-term, we expect these dealstoremainafixtureincertainkeymarkets.

If you would like a detailed briefing on our analysis of international trends in hostile public M&A, please speak to your usual A&O contact.

1 Source: dealogic M&A Analytics data available as at 14 december 2015.2 Ibid.3 As at 14 december 2015.


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Regional insights, Q4 2015



Regional insightsNo other region has performed as strongly as the U.S. in a record-breaking year for transactions, but that performance has had a knock-on effect in Western Europe and Asia. Deals may not be as huge, but big-ticket strategic M&A still dominates these markets too.

u.S. Big deals predominate

The 2015 global M&A boom that has lifted global transaction values above their previous 2007 high has been underpinned by continued strong growth in activity in the U.S. market.

And with 2015 drawing to a close with both the USd130bn merger of The dow Chemical Company and E. I. du Pont de Nemours, as well as the proposed USd160bn merger ofPfizerandAllergan,thelargestsingletransactionof2015 and the biggest pharma deal ever – the signs are we will see more of the same in 2016.

An overriding theme of the year has been the predominance of big strategic deals in the U.S. market, a trend that includes notable transactions in the life sciencesandTMTsectorsbutalsoreflectsstrategicconsolidation in other industries, including food, drinks and beverages, retail and energy.

Theboardroomconfidencetodothesemega-deals has been supported by strong economic fundamentals, lowinterestrates,readyavailabilityofdebtfinancingandstrong corporate cash balances. Countervailing trends such as the effects of a slowing Chinese economy and significantgeopoliticalriskshavenotsofarcauseddealmakers to lose their nerve.

A consistent theme for these deals has been securing costsynergies,greaterefficienciesandthebenefitsofeconomies of scale. but they separate out into both offensive and defensive strategies.

In industries challenged by disruptive forces, one of the principal motivations for transformational deals has been defensive. Most companies serving the energy and resources sector face the challenge of coping with sharply lower oil and other commodity prices and are seeking ways to reduce costs including through operational synergies – one of the reasons cited by management for pursuing the USd33bn takeover of pipeline operator Williams by Energy Transfer in the third quarter.

Similarly, in the cable Tv industry, threatened by the growing tendency of customers to cut the cord and opt for streamed, on-demand content, the desire to build scale and compelling programming has never been greater–asignificantfactorbehindtheproposedUSd55bn merger of Time Warner Cable and Charter Communications.

Elsewhere and across sectors, companies have gone on theoffensive,seizingthemomenttosealtransformationaldeals that reinforce their market position and offer the chance to control costs and deliver extra value to shareholders. Having taken his eponymous company private, Michael dell and his partners at Silver Lake agreed to buy EMC for approximately USd67bn, driven in large part by the hope that the combination in private hands of hardware and software will create a formula for success in a rapidly evolving technology sector.

Activists continue to play an important role as a catalyst for M&A. Carl Icahn has argued that American International Group should be split three ways, while JANAPartnersispressuringQualcommtosplitintotwo.

Theboardroomconfidenceto do these mega-deals has been supported by strong economic fundamentals.ThePfizer/Allergantransactiondemonstratesthattaxinversion deals remain achievable, despite growing political opposition and efforts by the authorities to close loopholes, which are likely to increase now. but for U.S. companiesthatearnasignificantproportionoftheirprofitsoverseas and are reluctant to repatriate those earnings only to face a hefty tax bill, the search for mergers that allow them to achieve these tax gains will continue a while longer.Thequestioniscantheyfind‘mergerofequals’candidates outside the U.S. that allow them to meet tighter requirements for inversion transactions.


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DespitehighprofiledealssuchasCarlyle’sacquisitionofveritas from Symantec, less PE fund activity in the U.S. is focused on new buyouts – a contrast to other markets, like Europe, where funds are once more seeking opportunities to deploy their arsenal of dry powder.

Having said that, some of the year’s larger deals have beendriveninpartbyfunds,notleastthegiantHeinz/kraft merger and the USd66bn enterprise IT tie-up between dell and EMC.

The U.S. market enters 2016 on a very strong note thatforthemoment,atleast,showsnosignsofflagging.Commodity deals may be hampered by further declines in commodity prices that could cause a mismatch of buyer and seller expectations, tech deals may be frustrated by overvaluation on the equity markets, and the progress PE funds make will be dependent on the effect of the rise of the interest rates. but overall, the drive for cost synergies and economies of scale, plus activist pressure, appear set to keep transactions moving ahead.

WEStERn EuROpE Will growth peak?

The impetus provided by the powerful U.S. M&A market has certainly had a knock-on effect in Western Europe with transactions growing strongly throughout the year, dominated by big strategic deals.

InGermanythegrowthwasparticularlystronginthefirsthalf of 2015, but reached something of a plateau in the last six months. big-ticket deals here were matched by growing activity in the mid- and small-cap markets, where strong pipelines have built up. PE funds remained active during the year, although they continued to be reluctanttotakeonconfident,well-financedcorporateswiththefirepowertopriceinsynergies.

Hostile M&A, rarely a feature of the German market, also became more apparent as the transactions market grew, as we saw with Potash Corp’s ultimately unsuccessful USd8.8bn bid for k+S. vonovia also intervened in a long-running real estate battle, bidding EUR10bn for its smaller rival, deutsche Wohnen and forcing it eventually to drop its own EUR4.6bn bid for LEG.

Here, as elsewhere in the region, the main motivating factors behind higher activity have been the availability of debt and a surplus of corporate cash needing to be invested, as well as a realisation by boards that M&A offers the fastest way to grow in a relatively low-growth environment. Unlike in the Uk and the Netherlands, German investors showed growing nervousness about the capital markets as the year wore on, however.

by contrast the successful IPo of dutch bank AbN Amro waswidelyseenasamarkofgrowingconfidenceinthewider economy. There had been some doubt about whether this transaction would go ahead successfully, butthefirstofferingofsharesraisedEUR3.3bnasthedutch government began recouping money invested in rescuingthebankduringthefinancialcrisis.Morewidely,we’ve seen more IPo activity here than for a number of years.

Standout big-ticket M&A deals during the year included the proposed GbP47bn Shell/bG transaction and the giant USd120bn brewing merger between Ab Inbev and SAbMiller, alongside transformational cross-border deals such as the strategic tie-up between the main bottlers of Coca-Cola in Europe.

There has been a sharp uptick in activity by inbound investors, notably from the U.S. and from privately owned Chinese companies prepared to bid aggressively for sought after assets. Their interest is across sectors but is particularly focused on distressed assets that can be bought relatively cheaply. A weaker euro has affected valuations, but other factors are at play here for Chinese companies – a desire to diversify into new markets and the search for brands and technologies that can be exploited at home.

There has been a sharp uptick in activity by inbound investors, notably from the U.S. and from privately owned Chinese companies prepared to bid aggressively for sought after assets.AndasthegiantUSD160bnPfizer/Allergandealproved,U.S. companies – particularly those with strong overseas earnings – are still looking for inventive ways to do tax inversions despite growing political disapproval at home, with Ireland and the Uk seen as key jurisdictions in which to redomicile.

TMT was one of the most active sectors in the Italian market during 2015 and the announcement of the acquisition by billionaire xavier Niel of a EUR1.7bn stake in Telecom Italia S.p.A., Italy’s largest phone company, confirmedthistrend.Weexpectfurtherdevelopmentsin2016, including examination of the merger between Hutchison Whampoa’s 3 Italia and vimpelcom’s Wind, and Telecom Italia’s asset sale strategy to reduce a debt load of some EUR27bn.



The fourth quarter of 2015 has followed the general trend of the previous three, with Italian M&A dominated byinvestmentsinmedium-sizedcompanies,especiallyin retail, food and consumer goods, including clothing. Therehavebeenseveralsignificantenergydeals–approval for the integration of Enel Green Power into Enel, for instance, and Fondo Strategico Italiano’s agreement to acquire a 12.5% interest in Saipem S.p.A. from Eni. Real estate has also been busier.

Following the part privatisation of Enel and Poste Italiane’s IPo, we expect state sell-offs will continue in2016.FerroviedelloStatohasofficiallystartedits 40% privatisation process and ENAv’s 49% stake willprobablybelistedinthefirsthalfoftheyear.

by and large, it seems investors seem to have any macro-economic fears under control although the upcoming Uk referendum on EU membership could prove increasingly disruptive if a vote for brexit looks likely. More immediately, emergency measures to counter the terrorthreatcouldhaveabiggerimpactonconfidence.

Against that background the outlook for 2016 looks somewhatmixed.Boardroomconfidencetododealsseemslargelyundiminished,cashandfinancingremainreadily available and the economic environment remains good for transactions. However, with so many big transactions completed in 2015, we could see some investors take time out to digest those deals. In Germany thereisalsoachancethatdiminishedconfidenceinthecapital markets could lead to a growing wariness among M&A investors.

but with globalisation still a main driving factor behind M&A activity,weareconfidentthattheoutlookforsignificantcross-border transactions will remain positive in 2016.

cEE And cIS New signs of life?

In early 2015, the political instability generated by the Ukraine crisis had an impact well beyond Russia’s borders, depressing investor enthusiasm and dampening M&A activity across the CEE region as well. but as 2015 progressed, that changed, with a number of markets in Central and Southern Eastern Europe showing new signs of life.

We expect that decoupling to continue in 2016, with activity in Russia continuing at a relatively low ebb, but with the CEE region experiencing faster growth amid increasingly strong economic fundamentals in some key economies. We saw transaction activity across C&SEE in 2015 being dominated by the TMT sector, with other transactionsintraditionalsectorsofenergyandfinancialservices still playing a big part, though less so than in previous years. Consumer/retail and healthcare are also strong alongside a resurgent real estate sector. We would expect these trends to continue.

NowhereisthatmoretruethanintheCzechRepublic,currently enjoying strong GdP growth and low unemploymentandseeingaresurgenceofsignificantM&A activity in key sectors. Standout deals in recent months have included the EUR1.25bn acquisition of CzechtyremakerCGSbySwedishindustrialconglomerate Trelleborg and Rockway Capital’s EUR200macquisitionoftheCzechRepublic’ssecondbiggest e-commerce operator, Mall, and the price comparison service, Heureka.

The main motivating factors behind higher activity have been the

of debt and a surplus of corporate cashneeding to be invested.”

availability


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Events in Hungary continue to be dominated by the government’s strategic ambitions, including in particular the renationalisation of key assets, notably in the energy and utilities sectors. There has also been a slew of acquistionsinthefinancialinstitutionssector,aswellastheexertionofincreasinginfluenceoverthemediasectorincluding, indirectly, media M&A. Its stance on energy and utilities is unlikely to change much in 2016 – it remains convinced that it needs to exercise greater control over these key assets.

but we could see some sort of shift where banking is concerned. Some believe the government’s plan to work alongside the European bank of Reconstruction and development to buy stakes in Erste bank Hungary could mark a turning point and that 2016 could see it once again opening the door to private investment in the sector, rolling back some of its acquisitions (a process which has to some extent already started). otherwise, we see a lot of activity being considered through an increasing number of joint ventures and private equity starting to look at Hungary again, after a hiatus.

Elsewhere in the region the trend for governments to sell assets to raise much needed funding continues although the process is not always smooth, as we have seen with the failed sales of both Telekom Slovenia and Telekom Srbija. PE funds are once again circling the market, many looking for new investment opportunities outside well-mined economies such as Poland. Sales of non-performing loan portfolios are also a feature with processes already started in Slovenia and expected soon to go ahead in Serbia and Croatia.

Sanctions, poor economic growth, depressed oil prices and political interference continues to depress activity in Russia, although it’s fair to say that there is sufficientstabilityinthisnewenvironmenttoencouragesome investors to seek out opportunities.

A number of markets in Central and Southern Eastern Europe are showing new signs of life.WithaccesstoWesternfinancingeffectivelyblocked off by sanctions, Russia is increasingly looking to other regions for funding, not least China, India and the Middle East. Some outbound investment continues – as we’ve seen with Rosneft’s continued investment in the German refiningsector,alongsideitsexistingjointventurewithBPthere. Inbound European and U.S. investment is subject tosignificantdelayandevencancellation,however.

Privatisation remains on the cards, but we do not expect to see much progress on this in the near-term particularly at a time when assets are likely to be considerably undervalued. Any such moves in 2016 are likely to be one-off transactions, rather than part of a wider programme of state sell-offs.

MIddlE EASt And nORth AfRIcA Consolidation continues

Thefinalquarterof2015openedwithadropindealvolume while values inched higher, albeit down against the same period in 2014. The majority of deals were smaller in scale, with the trend of consolidation and strategic transactions seen in earlier quarters continuing, through acquisitions of minority stakes and increases in existing shareholdings.

Economic growth in the region, together with positive demographic trends and proximity to expanding markets in Africa, are all likely to be instrumental in continuing to attract international investors.Global market volatility and continuing regional political turmoil inevitably have had an effect on investors, but they are for the most part holding their nerve. Cash and liquidity levels in the region, particularly in the Gulf Corporation Community (GCC), remain high, largely as a result of years of high oil prices. on the whole, governments in the GCC havesufficientreservestoremaincommittedtokeyprojects. GCC-based corporates appear to be eyeing the wider MENA region for opportunities not only to increase returns and get a foothold in less developed markets within MENA, but also to reduce their reliance on domestic markets. The region’s sovereign wealth funds are also engaging in deals which are more strategic, investing money with the aim of providing income for future generationsaspartofageneraldiversificationstrategy.

Thereisimprovingconfidenceamongstmarketparticipants, both globally and regionally. There is a feeling that those regional economies dependent on the hydrocarbon industry are weathering the storm and that a



good pipeline is developing, particularly in the UAE. There are also signs in the market that valuation expectations are becoming more reasonable, which, when coupled with the availabilityofcashandfinancing,shouldhelpcreateanenvironment where more deals are done.

Economic growth in the region, together with positive demographic trends and proximity to expanding markets in Africa, are all likely to be instrumental in continuing to attract international investors, particularly in the face of fewer opportunities in the U.S. and in Europe. Saudi Arabia, the UAE and Egypt were among the most active countries during Q4, with Egypt continuing to emerge as an attractive destination for overseas investment. Whilst regulatory complexities in some parts of the region can act as a deterrent for investors, Egypt has recently introduced policies friendly to business. It is currently enjoying increased political stability and as a net oil importer is believed to be benefittingfromthecontinuingloweroilprices. Elsewhere in the region, the opening of the Saudi Stock Exchange to foreign investors may also lead to an increase in cross-border activity.

International PE investors’ interest in the region continued in Q4. In one of the stand-out deals of the quarter, U.S.-based PE houses Warburg Pincus and General Atlantic announced a deal to acquire 49% of Network International (NI) from a consortium led by the Abraaj Group. NI is the largest payment processor intheregion.ItisbelievedtobethefirstinvestmentbyGeneral Atlantic in the region, whilst Warburg Pincus has already shown its interest in the region with its acquisition of a majority stake in dubai-based Mercator last year.

In one of several deals in the healthcare sector during the quarter, UAE-based Aster dM Healthcare increased its 40% holding in Saudi Arabia-based Sanad Hospital to 97%, for a consideration of USd245m. The healthcare sectorhasledSaudiM&Aactivitythisyear,areflection of the increased demand for services in this sector that local population growth is creating. Activity in the telecoms sector is expected to continue and, in another Saudi-related deal, Saudi Telecom announced its intention to make an offer to increase its 26% shareholding in kuwaiti mobile operator viva to 100%. The deal would be worth approximately USd1.1bn and is subject to consent from the kuwait Capital Markets Authority. viva is kuwait’s second largest telecoms operator and was listed on the kuwait Stock Exchange in december 2014.

With the ease of doing business in many countries intheregionincreasingandagoodflowofdealsin the pipeline, the outlook is positive and, despite the challenges, there are certainly opportunities to be had.

Sub-SAhARAn AfRIcA Preparing for future growth

dealmaking activity in the region has been relatively muted throughout 2015, but as the year draws to a close there are signs of increased activity in key markets and sectors. With increased levels of capital being built up to invest across the continent, 2016 should be a livelier period for transactions.

A disappointing performance in 2015 is, however, understandable. Investment into Africa has traditionally been primarily focused on the resources sector and so the fall in oil and other commodity prices and a slackening of demand from key markets, notably China, has hit Africa particularly hard.

In certain markets the global decline in commodity priceshasbeenexacerbatedbylocaldifficulties. South Africa, for instance, remains a tricky market for resources investment, thanks to government interference, labour problems and regular power outages, all of which continue to be problematic for the mining and energy sectors.

other traditionally strong sectors are faring better, however, notably telecoms where we continue to see a good stream of both infrastructure deals and the sort of consolidation between operators that has become such a feature in European markets.

Investment in power and transport infrastructure remains a pressing need across the region and a potential key focus for inbound investment.This year we’ve seen Sweden’s Millicom become thesecondlargestoperatorinTanzania,havingacquiredan 85% stake in Zantel from the UAE telecom operator, Etisalat. PE Fund Helios has also acquired a 70% stake in Telkom kenya from orange for an undisclosed sum. Further deals are on the cards in the year ahead.

Investment in power and transport infrastructure remains a pressing need across the region and a potential key focus for inbound investment.


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Such investment can act as a real spur to economic growth but requires governments to create the right legal and commercial frameworks for projects to proceed. In South Africa we expect the government to clarify its approach to inward investment in a number of crucial areas, not least foreign ownership of land, whichshould,hopefully,boostinvestorconfidence.

Investment in less traditional areas – consumer goods, retailandfinancialservices–isalsofullofpotential, as economies grow and the middle-class expands. A number of PE Houses have established specialist Africa funds to pursue opportunities, including Carlyle, kkR, blackstone, Helios and dubai-based Abraaj. The appetite to invest is certainly there but a scarcity of good assets remains an obstacle, albeit probably a relatively short-term one.

Investors within the region are also looking for opportunities across the continent and overseas. South African investment house, brait, for instance, completed two important Uk deals during the year, acquiring fashion retailer, New Look, and a controlling interest in virgin Active, the health and leisure business. A further deal involving brait was its sale, together with the Titan Group, of 92.34% of Pepkor, to Steinhoff International Holdings.

Wecontinuetoseecapitalflowingmorefreelywithin the region. Nigeria’s ambitious industrial conglomerate, dangote Group, has announced plans to expand its operations, particularly cement making, into a number of African countries.

As the year ended we also saw South Africa’s Sanlam spend USd375m to acquire a 30% stake in Morocco’s SahamFinancesaspartofanefforttofindnewNorthand West African markets for its insurance products to offset slower growth at home.

With key African economies forecast to see some of the highest growth in GdP in the coming years, we continue to believe that the current dip in transactions activity will be short-lived, with activity beginning to grow again, both in terms of M&A deals and IPo activity, starting in 2016.

IndIA Growth slowly builds

High expectations that the 2014 election of a majority government, led by Narendra Modi, would lead to a period of rapid economic reform and a return to strong growth were, perhaps, always a little overblown and the months since have proved that to be the case.

The government continues to make progress with its reform agenda, but it has proved harder to push through measures than many had expected and that has

translated into some investor uncertainty and fairly sluggish growth in the M&A market.

2015 saw the volume of M&A deals climb to 442, with energy and natural resources, life sciences, IT and IT enabled services being the busiest sectors for transactions. With deal values at USd37.1bn this is a robust performance compared with many other emerging markets.

ActivitybyPEfirms,however,hasbeenmuchstrongerthis year with funds deploying capital across a wide range of sectors. Indeed there were an estimated 462 PE deals in 2015 worth some USd13.6bn, a 40% increase in value on the same period last year.

PE deals done so far in 2015 have included some of a verygoodsize,includingCarlyle’sUSD500minvestmentin Magna Energy, the upstream oil and gas company, and dST Global’s USd400m investment in olacabs, the online cab and car rental group owned by Mumbai-based ANI Technologies.

We expect the overall position to improve in 2016. We expect the overall position to improve in 2016, with PE continuing to make a strong showing and corporate transactions picking up too.

but progress is likely to be relatively slow and much will depend on the government’s success in making further progress with important reforms to attract foreign investment.

That effort has not been helped by recent regional elections in bihar, India’s third most populous state, whichsawMrModi’sBJPpartysufferanunexpectedand fairly convincing defeat. While some believe that has taken some of the momentum out of the reform agenda, there is little sign of the government changing course and the expectation remains that crucial new legislation will still make it through Parliament.

one measure is particularly important – the introduction of a national goods and services tax to replace a complex system of regional taxes. A bill to introduce the tax is pending.

The government’s Make In India campaign – smoothing the way for foreign manufacturers to invest in ventures inIndia–shouldalsohaveanimportantandbeneficialimpact on direct investment and feed through to higher levels of transactions. Mr Modi’s commitment to making a success of this campaign has been underpinned by an almost non-stop round of foreign missions to attract investmentandopennewtradingroutesduringhisfirst 18 months in power.



lAtIn AMERIcA Awaiting a turnaround

2015wasadifficultyearfortransactionsacrossLatinAmerica, as a range of economic and political issues conspiredtodampeninvestorconfidenceintheregion.

despite the Presidential elections later in 2015 and MsDilma’sre-election,Brazilfounditselfwrestling with a growing political crisis as the year unfolded, compounded by sharply declining GdP growth, increasinginflation,growingunemployment, slow progress on much needed economic reforms and a Petrobras corruption crackdown (the so-called Car Wash scandal). Investors continue to look for political certainty.

Activity in Argentina also slowed ahead of elections there, although with the new Macri government – which is clearly determined to turn round economic performance – in place we expect to see activity pick up now. Peru too has elections in 2016, and activity has been quieter while investors anticipate the outcome.

Add to all this a number of external factors – not least the downturn in commodity prices, reduced demand from China for natural resources and the effect of the rise in U.S. interest rates – and it’s not hard to see why investors have been increasingly nervous about buying assets in the region.

Neverthelesswe’veseensomesignificanttransactions.Some of these have involved local players buying out foreigninvestors,withthemostsignificantdealbeing theUSD5.2bnacquisitionofHSBC’sBrazilianbankingoperations by banco bradesco. There has also been a good spread of domestic deals, including the USd710m sale by Camargo Correa of Alpargatas, the public company that includes Havaianas, the iconic Brazilianshoemakerfamousforitsfashionflip-flops,amongitsinterest.ThebuyerisJ&F,theBrazilianconglomeratethatalsocontrolsJBS,theworld’s biggest beef producer.

Investors continue to look for political certainty.despite devaluation of the real and lower asset prices, Brazilisstillnotseeingtheexpectedupsurgeininboundinvestment,althoughwedidseeCotybuytheBraziliancosmetic division of Hypermarcas for USd1bn and China’s HNA invest USd450m in a 23.7% stake in theairlineAzul.Thetobaccogiant,BAT,alsospentUSd2.45bn to buy out the shares it did not already owninSouzaCruztocarryoutitsplanstodelistthecompany and take it private.

Mexico–benefitingfromfasterprogressoneconomicreforms, notably in the power and energy sector, and its close ties with the U.S. economy – has been more successful in attracting investment across a

Economic and political issues

to dampen investor

conspired confidence in the region.”


15

number of sectors, including oil and gas, telecoms and manufacturing. U.S. investment is, for obvious reasons, in the lead here, but we are beginning to see growing interest from Western Europe, especially Spain and Portugal.

That’s true too in Peru, Colombia and Chile, if on a smaller scale. While these countries are no longer benefitingfromtherapidgrowthinGDPofrecent years, forecast economic growth remains resilient and in a range of 2% to 3%. With that growth founded on a pretty stable base, it should bode well for increased activity in the year ahead.

While interest from Chinese and other Asian investors in doing commodity deals in the region is likely to be much lower while commodity prices remain at a global low, we do expect to see more transactions from this source in other sectors, notably from Chinese, JapaneseandSouthKoreancompanies.

Chinese and South korean investors have been seeking out opportunities in the region for some time, but so far we have not seen interest translate into many completed deals. That could well change in the months ahead.

ASIA pAcIfIc (IncludIng gREAtER chInA) Growth continues despite challenges

The values of transactions in the region may not be quite of the magnitude of some of the massive deals seen in othermarkets,notablytheU.S.,butsignificantbig-ticketdeals continue to be a theme here too and transaction volumes have continued to rise in 2015, a trend we expect to continue next year.

AcrosstheregionJapanese,ChineseandotherAsianinvestors continue to dominate the deal landscape. WithJapan’seconomyoncemoreteeteringontheedgeofrecession,Japanesecompaniesandtradinghousesare continuing to look for opportunities in more vibrant economies,bothwithintheregionandfurtherafield, and are a visible force in cross-border activity.

Increasing amounts of Chinese capital are being deployed outside China’s borders, but there is a perceptible shift in the balance of that investment. While the big state-owned enterprises (SoE) continue to be distracted by and preoccupied with the government’s ongoing anti-corruption crackdown, this is hampering decision-making.

by contrast, private Chinese investors are proving increasinglyfleetoffootandacquiringevenifthetargetsthey are focusing on are smaller in terms of value. That’s an important change at a time when there is more money in the global economy generally and competition for assets across the world is growing. It would not be surprising to see these private companies continuing to play an increasingly active role in the ongoing wave of outbound investment from China.

As the Chinese economy continues to rebalance, onesignificantdriverwillcontinuetobeChinesecompanies seeking out brands and technologies that can be developed afresh and exploited at home. The planned sale of osram, the lighting division spun off by Siemens two years ago, is said to have attracted several potential bidders, the majority of which are reputed to be Chinese. In a number of sectors, the effort to build scale for Chinese manufacturers is now being superseded by the challenge to modernise and increase productivity and innovation to address over-capacity and high costs in China.

China remains a challenging market for inbound investors, and all the more so since the government has strengthened its antitrust regime, taken a much tougher line on corruption and imposed new controls on foreign ownership in key sectors such as IT. but the opportunities in this market make it one that overseas investors can scarcely ignore and we expect to see continued investment, with a growing accent on teaming up with local partners who can help them navigate a complex and often opaque market.

South East Asia remains relatively quiet in terms of completed transactions, with key markets such as Indonesia, Malaysia and even Singapore remaining fairly inactive. but a number of major transactions are going ahead as we saw with the recent USd2.3bn acquisitionofpowerassetsinfivecountriesbyChinaGeneral Nuclear, bought from the struggling Malaysian government investment fund, 1Mdb. behind the scenes too there is growing activity from corporate buyers and PE funds are once again scouting for deals, particularly U.S. dollar denominated ones, who see an opportunity to acquire assets relatively cheaply at a time when local currencies have declined in value.

Australia continues to experience strong levels of activity. Newly appointed Prime Minister, Malcolm Turnbull, continues to impress the Australian business community in the early stages of his leadership. With the Australian dollar having weakened considerably since the start of the year, the climate for foreign investment in Australia remains very positive, and the outlook for 2016 equally so.



Japanesecompanies and trading houses are continuing to look for opportunities in more vibrant economies, both within the region andfurtherafield,and are a visible force in cross-border activity.The largest Australian IPo of the year completed successfully in November, with Link Group joining the officiallistoftheASXwithamarketcapitalisationofapproximately AUd2.5bn. The IPo raised approximately AUd950m and was oversubscribed many times over.

All four bidders in the auction for the privatisation of the New South Wales electricity assets received foreign investment approval. A consortium led by Hastings Funds

Management, dominated by Canada’s Caisse de dépôt et placement du Québec and sovereign wealth funds from Abu dhabi and kuwait, was appointed the successful bidder with a reported bid price of approximately AUd10.3bn.

Interest from Middle Eastern sovereign wealth funds and Canadian pension funds is being seen more widely across the region. While their main investment targets are infrastructure and real estate, interest is spreading to a wider number of sectors and we expect to see further activity from them in 2016. Competition from these funds is also forcing traditional PE operators to emulate their investment strategies, taking a longer-term “asset management” rather than “asset churn” approach to transactions.

The overall outlook for 2016 looks positive, particularly as we see further growth in outbound investment from China.

While China’s growth is slowing and last summer’s wild stockmarketfluctuationscontinuetohaveanimpact on sentiment domestically, the amount of money being generated by the Chinese economy remains mind-boggling, and increasingly that money is being deployed overseas with active government encouragement. That should mean that the growth in transactions we have witnessed in 2015 will be sustained next year.

The opportunities in this market make it one that overseas investors can

ignore and we expect to see continued investment.”

scarcely


17

Sector insights, Q4 2015



Sector insightsAs the year unfolded, transformational deals spread across all sectors and we even saw a resurgence in financial services. There are signs too that PE funds are once again on the front foot.

cOnSuMER Consolidation set to continue

2015 has involved consumer groups making bold moves towards the expansion of their global footprint and product coverage, completing deals that may have been considered too risky even only a year or two ago, whether from a commercial,financialorantitrustperspective.

This has been seen across multiple market segments including: food, with the giant USd100bn merger of HeinzandKraft;brewing,withtheABInBev/SABMillerUSd120bn, largely debt-funded, move to create a truly globalbeergroup;non-alcoholicbeverages,withtheallianceforgedbetweenCoca-Cola’sEuropeanbottlers;and pharmacy, as Walgreens/boots Alliance extended their venture by bidding USd17.2bn for Rite Aid.

The Ab Inbev/SAbMiller deal – involving more than USD70bnofdebtfinancing–isagoodexample ofthenewmoodofconfidenceinboardrooms, where macro-economic conditions are encouraging executives to complete transformational deals.

The attractiveness of the transaction overrides any concerns around regulatory scrutiny and, where possible, such concerns are proactively addressed – for instance, through the proposed sale of SAbMiller’s majority stake in its North American MillerCoors joint venture to its partner, Molson Coors. This continues a trend started last year, most notably in the tobacco industry with the three-way Reynolds/Lorillard/Imperial Tobacco transaction.

It is not exclusively about expansion and consolidation, however. The tie-up between the dutch and belgian supermarketgroups,AholdandDelhaize,alsoexemplifiesthemovementingroceryretailtowardsfocused localisation, rather than broad-brush globalisation, as retailers struggle to balance the local needs of their customers with the demands of a global business to ensure purchasing power and cost management through volume. Similarly, Tesco’s disposal of its korean business is principally drivenbythegroup’sneedtomenditsfinances, but there is also a strong desire to focus more on its domestic business.

We expect to see the tide of transformational deals continue to rise in 2016.TheUSD28bnAhold/Delhaizedealis,inlargepart, aboutpoolingsignificantresourcestotacklelocalcompetition in an important overseas market, namely the East Coast of the U.S. (the new group will have over 2,000 stores in the U.S.), resulting in a combined business with much greater scale. The hope is likely to be that greater scale will allow local customer needs and global business demands to be balanced successfully. A number of incoming retailers have struggled to crack the U.S. market, so progress here will be watched very closely by other players in the sector.

We expect to see the tide of transformational deals continue to rise in 2016, with a determination to get deals off the ground that have not been lacking funds or appetite but might have been dependent on completion of the larger consolidative deals and the resulting availability of attractive targets which do not fitwithinthatbiggerpicturebusinessplan.Thishascertainly been the case in emerging markets such as sub-Saharan Africa and particularly pertinent global world.

If macro-economic tailwinds strengthen, conditions may also be ripe for an increase in the volume of deals. We could well see the coming of age of a number of consumer businesses that launched in the aftermath of thefinancialcrisisandarenowgrowingrapidly.Astheylooktobuildonorbenefitfromthatgrowth,wecouldseeanumberattemptingtoraisenewfinanceandpartialexit through IPos or sales to strategic or private equity purchasers. That’s certainly a growing trend already in the FinTech sector, not least with the rise of peer-to-peer lending, but we expect it to manifest itself more widely, particularly in online retailing and related payment systems and the consumer world as a whole will feeltheramifications.


19

EnERgy And InfRAStRuctuRE Uncertainty returns

After a long period of slower activity, 2015 saw the return of strategic mega-deals to the oil and gas sector, as major players looked for ways to consolidate their market positions and take advantage of a downturn in oil prices.

Shell’s proposed GbP47bn strategic takeover of bG and ENoC’s USd6bn acquisition of dragon oil are bothcasesinpoint.Theoilfieldservicessectorhasalsoseen a spike in activity during the year, notably with Halliburton’s proposed USd35bn merger with baker Hughes and Schlumberger’s USd12.7bn takeover of the oil toolmaker Cameron.

In the second half of the year investors have, however, become noticeably more cautious. The summer gyrations in Chinese stock prices, the continuing fall in commodity prices and the now generally accepted view that oil prices are unlikely to recover for some time, have all fed this sense of unease.

Notwithstanding this scenario, the market is expecting themajorstoseektodisposeofassetswithsignificantcapex requirements. This may provide an opportunity for those investors that are able to take a longer-term view on the oil price, such as the NoCs, to acquire assets that, in normal markets, would not be available to them.

The impact of lower oil prices has also been felt among the smaller players in the sector, with companies either unable to continue funding developments on their own accountortoattractalternativebankfinancingtoseeprojects through. Similarly, in the oil services sector, the reduction in capex budgets and focus on cost reductions within E&P companies is beginning to have an impact on a number of the service sector participants who are now

having to look at restructuring options.

To date, this has not led to the expected pick-up in transaction activity. It seems that investors looking to snap up either individual assets or whole businesses areholdingfirewhilethemarketremainssovolatile and the outlook on the oil price is so hard to predict. Given current concerns over the levels of commercial oilstocksandthepossibleriskofanothersignificantdropin oil prices, investors may well sit on the sidelines far longer than had originally been predicted.

2015 saw the return of strategic mega-deals to the oil and gas sector. M&A activity in Russia continues to be curtailed by EU and U.S. sanctions imposed in the wake of the Ukraine situation, a factor that has seen Russian companies look for alternative sources of investment, notably from China and India. Some transactions are still going ahead in Europe, however, as we saw with Rosneft’s decision to extenditsinvestmentsintheGermanrefiningsectorinaddition to its existing joint venture with bP.

by contrast, the U.S. continues to be a powerful engine for new deals, on the back of the shale boom. We are seeingincreaseddomesticactivityintherefiningandchemicals sector as producers redirect investment from emerging markets back onshore to take advantage of cheap and plentiful shale gas.

That trend will last only so long. If the market becomes saturated,wecouldwellseeinvestmentflowingoutbound again into European and Asian markets.

This may provide an opportunity for thoseinvestors that are able to take a

view on the oil price.”

longer-term



other shale-related infrastructure deals – notably pipelines – are to the fore too in the U.S., as we saw with the USd33bn acquisition of Williams by rival pipeline giant Energy Transfer Equity. And we expect to see other opportunities arise here, which should attract more mainstream infrastructure investors.

That’s a trend in some other markets too. The Uk’s National Grid has, for instance, announced plans to sell a majority stake in its gas transportation business in 2016. The deal is likely to attract interest from sovereign wealth funds, pension funds and dedicated infrastructure investors and is consistent with continued trading of electricity and gas transmission and distribution assets across Europe.

Such opportunities are becoming highly competitive, as the infrastructure market more widely continues to struggle with a now familiar problem – an excess of capital chasing a scarcity of assets, compounded by the hunt for predictable and risk-free yield.

fInAncIAl SERvIcES Fortunes turn

2015 saw a sudden and somewhat surprising return oftransactionsactivityinthefinancialservicessector –thefirsttimewehaveseenaspikeinFSdealssince thefinancialcrisis.

Muchofthatactivityhasbeendrivenbysignificant,big-ticket consolidation deals in the insurance sector and by a good level of activity in asset management. but banking M&A continues to be driven mostly by the regulatory agenda set since the crisis, with banks continuing to slim down portfolios, dispose of risk-weighted assets, and focus on their core operations to meet tough new capital requirements.

banks have several ways to complete this work and not all of it involves M&A. Citi, for example, has disposed of poorly performing or risky assets but it has reduced its exposure in some markets, such as Russia, in other ways, reducing headcount or closing down operations, for example.

Wedidseesomesignificantdisposalsduringtheyear,notleastHSBC’sUSD5.2bnsaleofitsBrazilianbankingoperationstoBancoBradesco.Itsongoingeffortstofinda buyer for its Turkish business, and the Portuguese government’sstruggletofindabuyerforNovoBanco,bothclearlyillustratetheongoingdifficultiesofsellingmajor European banking assets.

Bycontrast,theU.S.hasseenasignificantspike in banking transactions among mid-tier banks. Indeed, there were 29 such transactions in the year’s busiest quarter, Q3, with all but two being domestic rather than cross-border deals.

2015 saw a sudden and somewhat surprising return of transactions activityinthefinancialservicessector–thefirsttime we have seen a spike in FS deals since thefinancialcrisis.one noticeable trend in banking is the continuing refocusing of bank operations, particularly in global investment banking where many of the big European players are retrenching, leaving the big U.S. banks –suchasCiti,JPMorgan,BankofAmerica, Goldmans and Morgan Stanley – in an increasingly dominant position in the global market.

Separately, banks continue to sell whole loan portfolios, reallysignificantmultibilliondealsthatareincreasinglyattracting the interest of PE funds.

UkAR, the Uk state-owned holding company, sold shares and assets in Northern Rock and related disposals from UkAR are expected to continue in the next few years. GE also disposed of several portfolios of Uk loan assets to various funds. Elsewhere in Europe we are seeing continued activity in Spain and from the middle of next year further loan portfolio sales are expected to begin in Greece.

This is also part of the continued effort to sort out legacy issuesfromthefinancialcrisis,asbankscleartheirbooksof unwanted and/or poorly performing assets, such as consumer loans, credit card portfolios and mortgages. banks are unlikely to buy these assets from each other as they would have to hold capital against them – PE funds have no such capital requirements to meet.

The dominant trend in the insurance market is for a two-way split, with large general insurers on one side, and niche players on the other. That inevitably means the mid-sizedoperatorsarebecomingincreasinglysqueezedand we expect them to remain takeover targets for their larger rivals, with plenty more scope for consolidation of this kind.

Japaneseinsurersandtradinghouseshavebeenadominant force in this activity, said to account for around a third of all activity in a year that has been busier than any other period since 2006. Mitsui Sumitomo’s GbP3.5bn acquisition of Lloyd’s insurer, Amlin, was a standout deal in this regard and one that could spark further bids for independent Lloyd’s insurers.


21

Meanwhile, reform of the U.S. healthcare system following the so-called obamacare Act is driving consolidation on an even grander scale, with several mega-mergers during the year, including the giant USd48.4bn Anthem/Cigna merger.

We see considerable scope for further consolidation in insurance and expect asset management deals to continue also. While banking transactions and more general restructuring will continue to be driven by the new, post-crisis regulatory environment for some years to come, we expect pure banking M&A – more strategic and adventurous in nature – to continue to return the furtherwegetfromtheheightofthefinancialcrisis.

lIfE ScIEncES Time to draw breath?

The extraordinary M&A boom in the life sciences sector continuedrighttotheendof2015,withPfizerchoosingNovember to launch its giant USd160bn bid for Allergan in what promises to be not only the largest ever deal in pharmaceuticals, but also the biggest M&A deal of 2015 and the largest tax inversion on record.

Even before the move was announced, the life sciences sector had already established itself as the powerhouse of the M&A market and the main foundation stone of now record levels of transactions in 2015. With the Pfizer/Allergandealtakenin,thesectorhasseen an astonishing USd630bn worth of deals in the last 24 months.

Another growing area of activity in 2015 has been in the digital health space, with pharma companies starting to buy in technology and talent to help them deliver all the promises of digital medicine.The generics market has been at the centre of this activity – and Allergan is a prime example of merger fever with the current entity being the product of a string

of mergers, starting with the Actavis takeover of Watson. Teva, on the other hand, bought out Allergan’s generics business earlier this year in a USd40.5bn deal. Ahead of that, Teva had abandoned its pursuit of Mylan, which itself was tilting for Perrigo – a battle finallylostintheautumnwhenitsofferwasrejected by Perrigo shareholders.

The bigger question for next year is whether the life sciences M&A boom will continue. There are two forces at play in M&A in the generics market – “generic plus generic” mergers are all about economies of scale, while innovator and generic mergers may achieve different results, likely linked todiversificationofportfolioandrisk.

ThePfizer/AllergandealcomesonlyninemonthsafterPfizeracquiredbiosimilarmaker,Hospira,forUSD16bnand a little over a year after it was forced to abandon its much bigger bid for the Uk’s AstraZeneca in the face of objections from the target company, shareholders and Uk politicians.

The latest deal is controversially driven by the tax efficienciesPfizerwillrealisebymovingitsHQoutof the U.S. and adopting Allergan’s dublin domicile, reducing its effective tax rate from 35% to 18%. It comes despite efforts by the U.S. authorities to close so-called tax inversion loopholes and has only been possiblebecausePfizerhasfoundamergerequalwiththe right proportion of U.S. and overseas shareholders to meet current restrictions. With political pressure building on companies seeking to redomicile out of the U.S., it is likely further action will be taken on tax inversion deals.

Butthedealhasindustriallogictoo,providingPfizer with a cushion from the peaks and troughs of creating innovative drugs with all the inherent risks of R&d and perils of the patent cliff. Now the move raises the questionofwhetherPfizer,havingbulkedupitsgenerics,innovation and consumer interests is moving towards the widely expected eventual break-up of the company into three self-standing businesses.

Thedealfitsapatternofactivityinthemarketinrecentyears with big pharma companies consolidating to cut costs,toprotectthemselvesfromthepatentcliffandfindnew ways to create shareholder value. but not all players are following the same path. GSk and Novartis have both cast doubt on whether mega-mergers really create value, preferring instead to pursue targeted so-called “precision” M&A.



Meanwhile, failed deals in the market (for example Mylan and Perrigo) show just how important it is to demonstrate real shareholder value from proposed transactions – shareholders are not always as tractable as boards might hope.

Another growing area of activity in 2015 has been in the digital health space, with pharma companies starting to buy in technology and talent to help them deliver all the promises of digital medicine. That has led to a spate of cross-sector transactions, and we expect this to be a continuing trend in 2016.

The bigger question for next year is whether the life sciences M&A boom will continue. Some commentators confidentlypredictitwill.Butitwouldnotbesurprisingtosee the industry take a pause for breath, not least while recent deals are absorbed and bedded in, as pipelines are restocked and, perhaps, mothballed projects are brought back on stream in important areas like antibiotic development.

overall volumes of deals could remain healthy, but it would not be surprising to see values decline significantlyfromtheircurrentphenomenalheights.

MInIng Outlook remains gloomy

With commodity prices continuing to fall, demand – not least from China – also on a downward trend and with a global market increasingly dogged by oversupply, the mining sector has ended an already very gloomy year by deteriorating still further.

The recent dramatic fall in share prices for the major resources groups illustrates that position clearly. Glencore has suffered more than most, its shares losing a third of their value in September amid fears that the slump in commodity prices may have further to run and will prove to be prolonged. but its rivals have fared only marginally better, with the market values of Anglo American, bHP billiton and Rio Tinto also all suffering steep declines.

The industry is feeling the effects of a glut of new capacity brought on stream in the boom years when commodity prices were rocketing ahead and when the global market was being bolstered by seemingly unending demand, notably from a fast expanding Chinese economy.

All that’s changed now. demand from China has fallen steeply as growth slows. Copper and platinum are at a 10 year low, iron ore continues to fall, and other bulk commodities are following a similar track. Although some capacity has been taken out of the market, the supply and demand situation remains badly out of balance and will probably require further cuts.

What little M&A activity we have seen has involved moves to raise cash to shore up balance sheets – Glencore, for instance, has made a number of disposals. Elsewhere bHP billiton has taken action to sort out its sprawling commodities interests, spinning off certain interests from South32 to add greater focus.

The question for players at all levels of the sector, however, is how long they can limp on before we see a spate of distressed assets coming on to the market. banks are giving the industry some breathing space. They seem loath to withdraw their backing from projects, clearly recognising that, with the market in its present parlous state, it’s better to hang on in the hope that

Mining-focused private equity funds and new

backed by funds, remain prepared to do deals.”

corporates


23

pRIvAtE EquIty Swing year

While levels of activity by PE funds are still not at the levelseeninthefrenziedyearsbeforethefinancialcrisis,2015 was undoubtedly a swing year for PE investment, withfundsonceagaingoingconfidentlyonthefrontfootto complete new acquisitions having focused largely on exits in recent years.

Despitehugeamountsoffirepowertodeployand readyaccesstodebtfinancing,fundsremainedinapretty defensive mood in the wake of the crisis and right up to this year. They were reluctant to compete withwell-financedstrategicbuyers,oftenprepared to pay a premium to secure cherished synergies. Auctions remained something of a no-go area for funds, as a result.

That began to change in early 2015 and there has been a progressive uptick in primary buyout activity as the year has progressed, which not only indicates growing confidencebutalsomountingpressuretodeploytherecord levels of dry powder that funds have accumulated in the relatively quiet years.

Some sectors have been particularly buoyant in recent months, not least retail and consumer where we’ve seen a raft of deals including R&R Ice Cream and PAI Partners’ proposed joint venture with Nestlé to combine their global ice cream businesses, and Exponent’s proposed GbP400m acquisition of Photobox Group, the digital personalised gifts and products business.

Significantdisposalscontinuetoointhissector,notleastthe GbP550m sale by Exponent and Intermediate Capital Group of Quorn Foods, the international maker of meat alternatives, to Monde Nissin of the Philippines. And we’ve seen a good spread of secondary deals between funds, not least two deals by PAI Partners – the acquisition of A/S Adventure from Lion Capital and the specialist outdoor sports retailer, Snow and Rock Group, from LGv Capital.

business services also remains a busy area for transactions, including the acquisition by oMERS Capital and AIMCo of Environmental Resources Management, the international sustainability consultancy, from Charterhouse.

This shift in activity towards a better spread of both acquisitions and exits is mirrored in many north European markets, with activity in France picking up particularly at the top end of the mid-market, and with Germany and the benelux countries busy too. Italy and Spain are also getting more active, although activity is focused on smaller deals, but Scandinavia remains relatively quiet.

commodity prices will recover. The deals that are being done tend to include structures where the current owners may be able to protect themselves against the risk of selling at the bottom of the cycle.

We have seen a number of distressed deals in recent months but they still remain relatively few and far between. Those that have occurred are focused at the junior end (where companies lack the resources to wait for an uptick in prices).

Otherplayerslookingtoraisefinancearemanagingtomake some headway. After months of seeing its share price plummet, Lonmin, for instance, successfully got its emergency USd400m rights issue away in November.

The commodities slump has hit Africa particularly hard, and in some cases that has been compounded by local factors. South Africa continues to be an uncertain market, thanks to government intervention, continued labour problems and frequent power disruptions, all of which have hit the sector hard.

IntheAsiaPacificregionthesentimentisinlinewith the global position. Mining companies have remained focused on reducing both capital and operating costs, conserving cash and resisting doing deals.

Mining companies have remained focused on reducing both capital and operating costs, conserving cash and resisting doing deals.Mining-focused private equity funds and new corporates backed by funds, remain prepared to do deals, but at values based on current commodity prices. To date there have only been a limited number of deals where the gap between the mining companies’ and the funds’ view of value has been bridged. However, there are signs of a slight increase in activity, such as the recently announced acquisition by EMR Capital from Hong kong listed G-Resources of a 95% stake in the Martabe gold and silver mine in Indonesia for USd1.05bn.

deals are also being structured with deferred or contingent payments, ‘clawback’ rights and similar features to provide the vendor with some potential for future returns as a sweetener to get the deal done at the current values.

overall, however, there is little sign of a let-up in the months ahead and we expect conditions in the industry to remain depressed well into 2016.



The big funds are once again partaking in auctions, and it’s no longer uncommon to see potential buyers seeing the whole process through.We expect this to continue into 2016. After a year of heightened activity, it’s hard to see any particular economic issue that could halt it in its tracks, although geopolitical events may cause disruption and the summer’s volatility in Chinese stock prices did cause a brief, delayed slowdown in PE activity in the Autumn.

The big funds are once again partaking in auctions, and it’s no longer uncommon to see potential buyers seeing the whole process through. Even if ultimately unsuccessful, it shows that funds are once again prepared to make that investment to explore new opportunities.

Asconfidencegrows,dealsarelikelytobecome more ambitious and, probably, more complex. It’s becoming increasingly common, for instance, to see a PE Fund joining forces with a strategic buyer to pursue a buyout, with the fund able to bring more innovativefinancingtosupportthestrategicbuyerinsecuringmuchprizedsynergies.

tElEcOMS, MEdIA And tEchnOlOgy The regulatory challenge

No other sector, apart from life sciences, has driven the M&A boom of the last 18 months like TMT, and continued activity is on the cards as both regulation and innovation drive players to re-examine their business models and look for new avenues to growth.

With merger authorities having cleared a number offixed-to-mobileconvergencedealsrelatively swiftly compared with mobile-to-mobile consolidation deals, M&A dealmakers may focus efforts on convergence deals.

Underlying the continued M&A activity in the telecoms sector, and indeed M&A activity in the broader media market, is a shift to platform-agnostic strategies based on a “quadplay” offering. These models increase customer “stickiness” for the operator, but also respond to consumer demand for anytime/anywhere access to content.

And there’s a knock-on effect – the value of content providers is rising as operators seek access to the kind of valuable content that will allow them to attract and hang on to customers. bT’s investment in sports rights andNetflix’sinvestmentinprogrammingarepartofthistrend, and we are likely to see more content providers consolidating and being bought by operators.

Further, more profound regulatory change is on the way in Europe thanks to the Commission’s digital Single Market initiative. Although this may not have an impact on the M&A market in the coming year, it promises to do so in the

Some sectors have been particularly

in recent months, not least retail and consumer.”

buoyant


25

Nokia’s announced China joint venture with Huaxin and Chinese clearance of its merger with Alcatel-Lucent was another, and Western digital’s invitation to take on a Chinese investor was yet another. on the internet space, the Chinese internet behemoths are expected to continue to diversify their portfolio of businesses even as they continue to expand internationally.

In the year ahead, we expect to see a growing number of outbound content – or technology-based deals by Chinese companies eager to exploit opportunities both internationally and domestically.

That’sacontinuationofanothersignificanttrend in2015whereChina’sgrowinginfluenceinthetechnology M&A market became increasingly evident, through outbound acquisitions, as an increasingly powerful presence in antitrust regulation and as a direct result of government policy to ensure Chinese companies maintain control of strategic IT joint ventures with inbound investors, as the HP/Tsinghua deal demonstrated this year.

longertermbypotentiallyredefiningsuchissuesasaccess to copyrighted content across borders which could disrupt the way rights are sold on a national basis. The power of bigindividualplatforms,suchasGoogleandAmazon,toconcentrate the delivery of services could also be challenged.

Another driver of activity in the tech sector is the growing trend towards cross-sector acquisitions, with,forinstance,financialinstitutionsandpharmacompanies buying tech companies to enter the FinTech and digital health sectors. We are already seeing activity in these areas as established players look at acquiring, collaborating with or investing in innovative digital companies to inject technology and skills into their businesses. FinTech has already seen plenty of activity in 2015, and 2016 looks to be even busier – particularly in the booming payments and peer-to-peer lending segments.

China’s impact on the technology landscape continues to grow including with increased complexity and nuance. China’s push for increased cybersecurity has meant that its imposition of indigenous, cyber-reliable requirements has created an additional complex element that is coupled with beijing’s increased role on global merger control clearance as well as the very nascent beginnings of a Chinese-like CFIUS regime. Cross-border joint venture arrangementsofdifferentshapesandsizesareexpectedto grow. The HP/Tsinghua deal was one form of market leading response, Microsoft and IbM’s willingness to share some form of source code was a recent development,

China’s push for increased cybersecurity hasmeant that its imposition of

cyber-reliable requirements has created an additional complex element.”

indigenous



A global snapshot


27

A global snapshotTop 20 global outbound acquirers and inbound target markets

Number of outbound acquisitions

Number of inbound acquisitions

Note:thesefiguresrepresentthetotal number of deals announced between 1January2015and11December2015.

KEy

U.S.

Brazil

Canada

France

Switzerland

UK

Netherlands

Spain

Ireland (Republic)

Belgium

1231 816

516 549

326 200

279 248

166 75

137

152

105 74

73 87

17068

175



Norway

Germany

Japan

India

Italy

top 20 global Outbound Acquirers, fy 2015

Rank country volume of deals

value of deals uSdm

1 U.S. 1,231 416,057

2 Uk 516 129,484

3 France 326 44,254

4 China 312 84,231

5 Japan 296 84,141

6 Germany 285 23,453

7 Canada 279 146,177

8 Hong kong 245 53,197

9 Switzerland 166 42,036

10 Sweden 161 9,775

11 Netherlands 152 151,655

12 Singapore 126 11,008

13 Australia 115 21,333

14 Ireland (Republic) 105 50,373

15 Italy 89 12,719

16 belgium 73 128,198

17 Norway 69 4,155

18 Spain 68 19,852

19 India 63 4,869

20 denmark 52 5,457

top 20 global Inbound target Markets, fy 2015

Rank country volume of deals

value of deals uSdm

1 U.S. 816 409,659

2 Uk 549 357,507

3 Germany 339 44,105

4 China 266 37,123

5 Canada 248 19,935

6 India 232 21,862

7 France 200 52,401

8 Italy 190 42,417

9 Australia 183 46,015

10 Netherlands 175 28,902

11 Spain 170 27,365

12 Brazil 137 16,411

13 Sweden 116 20,122

14 denmark 108 8,023

15 Hong kong 107 31,334

16 belgium 87 17,577

17 Norway 82 7,860

18 Switzerland 75 12,812

19 Ireland (Republic) 74 235,862

20 Singapore 71 14,077

Sweden

China

Hong Kong

Singapore

Australia

Denmark

266312 296

285 339

107245

161 116

126 71115 183

89 190

69 82

63 232

52 108


29

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Spain

Italy

Netherlands

Brazil

Australia

France

Germany

India

Canada

United Kingdom

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Canada

Spain

Italy

India

Ireland (Republic)

Australia

France

Netherlands

Germany

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Netherlands

Portugal

Spain

Sweden

France

Australia

Germany

India

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Japan

Germany

India

Canada

South Korea

Australia

Singapore

United Kingdom

USA

China

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

South Korea

Vietnam

Canada

Brazil

Singapore

Germany

Australia

United Kingdom

India

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Belgium

Sweden

Switzerland

Austria

France

Spain

Netherlands

Italy

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Austria

Brazil

Canada

Spain

Netherlands

France

Italy

United Kingdom

USA

Germany

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Poland

Australia

China

United Kingdom

Netherlands

Germany

Denmark

USA

Finland

Norway

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Switzerland

Canada

Brazil

Netherlands

Spain

Belgium

Italy

Germany

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Taiwan

India

Canada

Germany

United Kingdom

Singapore

South Korea

Australia

USA

Hong Kong

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Spain

Italy

Netherlands

Brazil

Australia

France

Germany

India

Canada

United Kingdom

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Canada

Spain

Italy

India

Ireland (Republic)

Australia

France

Netherlands

Germany

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Netherlands

Portugal

Spain

Sweden

France

Australia

Germany

India

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Japan

Germany

India

Canada

South Korea

Australia

Singapore

United Kingdom

USA

China

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

South Korea

Vietnam

Canada

Brazil

Singapore

Germany

Australia

United Kingdom

India

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Belgium

Sweden

Switzerland

Austria

France

Spain

Netherlands

Italy

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Austria

Brazil

Canada

Spain

Netherlands

France

Italy

United Kingdom

USA

Germany

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Poland

Australia

China

United Kingdom

Netherlands

Germany

Denmark

USA

Finland

Norway

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Switzerland

Canada

Brazil

Netherlands

Spain

Belgium

Italy

Germany

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Taiwan

India

Canada

Germany

United Kingdom

Singapore

South Korea

Australia

USA

Hong Kong

229 130161 37

90 2888 25

57 2451 23

47 2043 2043 19

37 19

A global snapshotTop target markets for the world’s largest acquiring countries

u.S. – the world’s largest acquiring country uK

UK 60,755Canada 13,087India 12,482Germany 18,275France 12,952

Australia 9,142Brazil 5,140Netherlands 17,061Italy 10,230Spain 11,733

Value of deals (USDm)

U.S. 42,789Germany 7,756Netherlands 3,752France 6,043Australia 1,108

Ireland (Rep) 36,420India 1,670Italy 938Spain 2,396Canada 531


chinafrance

U.S. 23,677UK 2,636Germany 587Italy 2,072Belgium 2,405

Spain 2,110Netherlands 1,221Brazil 126Canada 22Switzerland 6


523535

242222

12977

Hong Kong 13,204U.S. 17,414Australia 4,722South Korea 1,385Singapore 2,539

UK 1,906Germany 359Canada 498India 1,384Taiwan 1,003


6457

2320

161210988

*Thesefiguresrepresentthetotalnumberofdealsannouncedbetween1January2015and11December2015.



0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Spain

Italy

Netherlands

Brazil

Australia

France

Germany

India

Canada

United Kingdom

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Canada

Spain

Italy

India

Ireland (Republic)

Australia

France

Netherlands

Germany

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Netherlands

Portugal

Spain

Sweden

France

Australia

Germany

India

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Japan

Germany

India

Canada

South Korea

Australia

Singapore

United Kingdom

USA

China

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

South Korea

Vietnam

Canada

Brazil

Singapore

Germany

Australia

United Kingdom

India

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Belgium

Sweden

Switzerland

Austria

France

Spain

Netherlands

Italy

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Austria

Brazil

Canada

Spain

Netherlands

France

Italy

United Kingdom

USA

Germany

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Poland

Australia

China

United Kingdom

Netherlands

Germany

Denmark

USA

Finland

Norway

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Switzerland

Canada

Brazil

Netherlands

Spain

Belgium

Italy

Germany

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Taiwan

India

Canada

Germany

United Kingdom

Singapore

South Korea

Australia

USA

Hong Kong

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Spain

Italy

Netherlands

Brazil

Australia

France

Germany

India

Canada

United Kingdom

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Canada

Spain

Italy

India

Ireland (Republic)

Australia

France

Netherlands

Germany

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Netherlands

Portugal

Spain

Sweden

France

Australia

Germany

India

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Japan

Germany

India

Canada

South Korea

Australia

Singapore

United Kingdom

USA

China

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

South Korea

Vietnam

Canada

Brazil

Singapore

Germany

Australia

United Kingdom

India

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Belgium

Sweden

Switzerland

Austria

France

Spain

Netherlands

Italy

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Austria

Brazil

Canada

Spain

Netherlands

France

Italy

United Kingdom

USA

Germany

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Poland

Australia

China

United Kingdom

Netherlands

Germany

Denmark

USA

Finland

Norway

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Switzerland

Canada

Brazil

Netherlands

Spain

Belgium

Italy

Germany

United Kingdom

USA

0.0000003.2857146.5714299.85714313.14285716.42857119.71428623.00000026.28571429.57142932.85714336.14285739.42857142.71428646.00000049.28571452.57142955.85714359.14285762.42857165.71428669.00000072.28571475.57142978.85714382.14285785.42857188.71428692.00000095.28571498.571429101.857143105.142857108.428571111.714286115.000000118.285714121.571429124.857143128.142857131.428571134.714286138.000000141.285714144.571429147.857143151.142857154.428571157.714286161.000000164.285714167.571429170.857143174.142857177.428571180.714286184.000000187.285714190.571429193.857143197.142857200.428571203.714286207.000000210.285714213.571429216.857143220.142857223.428571226.714286230.000000

Taiwan

India

Canada

Germany

United Kingdom

Singapore

South Korea

Australia

USA

Hong Kong

canada hong Kong

germanyJapan

642421

1515131211109

U.S. 30,465India 1,064UK 11,537Australia 8,867Germany 1,905

Singapore 2,607Brazil 1,203Canada 169Vietnam 266South Korea 2,185


U.S. 7,020UK 561Italy 7,588Netherlands 700Spain 1,085

France 14Austria 1,243Switzerland 719Sweden 390Belgium 95


4131

251918181714

108

17529

108643333

U.S. 82,467UK 23,511India 838Germany 7,925Australia 18,185

France 1,349Sweden 7,108Spain 114Portugal 74Netherlands 14


China 23,154U.S. 1,565UK 20,196Singapore 955Australia 629

South Korea 548Canada 2,123India 450Germany 156Japan 50


14416

1310776664

2823

141312

88554

Germany 377U.S. 30,031UK 3,334Italy 3,896France 645

Netherlands 1,417Spain 215Canada 252Brazil 220Austria


Norway 893Finland 300U.S. 1,585Denmark 4,100Germany 642

Netherlands 509UK 142ChinaAustraliaPoland


29191816

111010

333

Switzerland Sweden

About the research The underlying data for this research comes from The Mergermarket Group.–Thedatacontainedinthispublicationspans1January2015and11December2015inclusive.


31

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Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee

or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP’s affiliated undertakings.

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© Allen & Overy LLP 2015 | CS1511_CDD-43738_ADD-56740_UK_V2

Documents

Insights, Q4 2015 · 25 Telecoms, media and technology 6 In focus 6 Hostile M&A – a notable feature of 2015 ... one standout market is the U.S. where hostile bids remain a common