Sino-Europe Outbound M&A Review 1H 2013 · M&A Review 1H 2013 The Review was prepared by ING’s Corporate Finance Asia team. ... August 2013 3 Outlook According to ING economic research,

August 2013 0

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Sino-Europe Outbound M&A Review 1H 2013

The Review was prepared by ING’s Corporate Finance Asia team. If you have questions or comments, please contact us directlyat +852 2913 8640 or [email protected]

August 2013

August 2013 1

Strategic17

57%

Financial9

30%

Undisclosed4

13%

According to public information there were about 30 Sino-Europeoutbound M&A transactions announced in the first half of 2013, with atotal consideration of around US$5.1bn. Both the number and value ofdeals decreased compared to those in the same period last year, by48% and 39% respectively.

The industrials sector led the outbound M&A market with a total of 9deals, accounting for 30% of the total deals. Consumer and Energy,Power & Utilities sectors followed with 7 deals each.

The UK was the most popular target country with 8 deals in total.Germany and France followed with 5 and 4 deals, respectively.

Private or public buyers (non SOE controlled) have been more activethan SOEs, accounting for 73% of total number of deals announced.

57% of the sellers were strategic companies and 30% were financialinvestors, with the remaining sellers being undisclosed.

In H1 2013, the largest Chinese outbound transaction in Europe wasthe acquisition of AVR-Afvalverwerking B.V., a Dutch based wasteprocessing service provider and waste energy producer, by aconsortium led by Cheung Kong Infrastructure Holdings Limited.The total consideration was US$1.3bn (€950m).

The second largest transaction announced was the acquisition of UPPGroup Holdings Ltd, a UK based university campus infrastructuredeveloper and operator, by Gingko Tree Investment, a UK basedsubsidiary of China's State Administration of Foreign Exchange(SAFE), for a total consideration of US$869.9m.

The third largest transaction announced was the acquisition ofCopeinca ASA, a Norway based provider of fishmeal and fish oil, byChina Fishery Group, subsidiary of Pacific Andes InternationalHoldings Limited, a Hong Kong based frozen seafood supplier, for atotal consideration of US$778.0m.

Executive Summary

Acquirer type by number of deal

Seller type by number of deal

The most popular sectors and target countries

The main buyers and sellers

The three biggest deals

SINO-EUROPE OUTBOUND M&A REVIEW 1H 2013

Private and public buyers havebeen more active than SOEs.However the average deal sizemade by SOE or SOE controlledbuyers was larger.

Strategic companies wanted todivest assets in certain countriesor exit certain business accordingto their own strategic orrestructuring plans. Severaltargets were bought out ofbankruptcy or administration.

Financial investors were sellingvia auction process or bilateralnegotiation and some foundattractive bids from Asian buyers.

Private10

33%

Public12

40%

Public (SOE controlled)

517%

SOE3

10%

August 2013 2

Target Sector and Country

Target sector - distribution by deal value (US$m)

Target sector - distribution by number of deals

• Industrial sector understandably led China’sM&A activities in Europe by number of deals. AsChina is still a large industrial country, advancedtechnology, reputable brand names, existingcustomer base are very attractive to the emergingcountry buyers with international ambition.

• Energy, Power and Utilities sector ranks top bydeal value. The rationale lies in China’s constantdesire for energy resources, clean energytechnology and market access, as well as stablecash flows generated from infrastructure projectsto diversify risks. Weak European economies alsooffered excellent opportunities for the Chineseinvestors to negotiate reasonable prices.

• With little surprise, Consumer sector stood outas one of the most popular areas to receiveinvestments from the east. The motivation is clear– China’s enormous, fast growing consumersector still lacks the kinds of premium products,legendary brands, and international vision thattheir European counterparts have developed overdecades.


Target country – distribution by deal value (US$m)

Target country – distribution by number of deals

• Germany, France and the UK, three of thelargest economies of Europe led the M&A leaguetable by number of deals, likely due to their well-developed industrial and consumer sectors andrelatively stable political environment, a goodmatch for the Chinese buyers.

• The UK has seen a lot of activities, partially due toits transparent legal system and languageconvenience, which make it an easy playgroundfor foreign companies to operate business.

• The Netherlands came second by deal value andattracted increasing attention from the Chineseinvestors. Sophisticated buyers recognized thecountry’s advanced industrial, clean energy, andlogistics industries and an open, business friendlyenvironment.

• Investment activities in the economically troubledSouthern Europe have been moderate, asinvestors seem to be cautious when entering thesemarkets.

-

65

539

750

889

1,397

1,488

Financial

TMT

Transportation

Industrials

Real Estate

Consumer

Energy, Power and Utilities

1

1

2

3

7

7

9

Transportation

Financial

Real Estate

TMT


Consumer

Industrials

1,737 1,259

778 578

307 131 123 91 75 49 - - -

8

54

32

1 1 1 1 1 1 1 1

August 2013 3

Outlook

According to ING economic research, the Eurozone economy has just come out of a recession. Butthe market is still fragile as the sovereign debt and banking crisis are far from over. The Germaneconomy has more problems than expected to leave contractionary territory, even if stable domesticdemand and the gradual pick-up in global growth should lead to a moderate recovery. The UKmarket is looking encouraging, with a broadening recovery story taking hold. In France andBelgium the combination of domestic problems and a gradual loss of international competitivenesshave pushed the countries away from the healthy core. The Netherlands is still struggling toovercome its housing market problems and to restore growth. At the same time, Italy and Spainremain as the keys for the future of the Eurozone.

Chinese companies had decreased M&A activities in Europe in 1H 2013 compared to the periodlast year, seemingly reserved and waiting to see how the European market will resolve its economicissues. On the other hand, several announced landmark transactions indicate that the right assetscontinue to be targeted by Chinese buyers. We expect that, as the Chinese economy experiencesonly a slight decrease in growth and the European economy climbs out of a recession, China’soutbound M&A in Europe will remain active and possibly show moderate growth in the coming sixmonths.

For the European market, we expect industrial sector, especially highly-engineered manufacturingand technologies, to remain a hotspot. Chinese buyers are looking for not only expertise but alsomarket access to become truly global players. Consumer sector should also be active due to theever growing demand from China’s domestic market. Finally but not lastly, the energy, power andutilities sector will remain attractive due to its stable and cash generative natures.

On the seller side, we see an increasing number of financial sellers - private equity firms, which facenumerous maturing investment portfolios and the pressure on exiting through capital markets. Saleopportunities from strategic players will be opportunistic and depend on the specific strategic plansof these companies.

ING’s GDP Growth Forecast for Selected European Countries and China

(0.6%)

0.9%1.4%

1.0%

2.1%2.6%

0.6%1.5% 1.2%

(1.4%)

0.1%1.0%

(1.8%)

0.6%1.0%

(0.2%)

0.8%1.2%

7.5% 7.5% 7.5%

(4.0%)

(2.0%)

-

2.0%

4.0%

6.0%

8.0%

2013F 2014F 2015F

Eurozone UK Germany Netherlands Italy France China


August 2013 4

ING has in-depth sector knowledge within its core sectors

AustriaBelgiumBulgariaCzech RepublicFranceGermanyGreeceHungaryIrelandItalyKazakhstanLuxembourgNetherlandsNorwayPolandPortugalRomaniaRussiaSlovakiaSpainSwitzerlandTurkeyUkraineUK

Europe

CanadaMexicoUS

North America

ArgentinaArubaBrazilChileNetherlands AntillesPeruVenezuela

Latin America

AustraliaChinaHong KongIndiaIndonesiaJapanMalaysiaMongoliaNew ZealandPhilippinesSingaporeSouth KoreaTaiwanThailandVietnam

Asia

Dubai

Middle East

ING’s Global Presence with Local Intimacy


Financial Institutions

Natural Resources

ConsumerUtilities &

InfrastructureIndustrials

Telecommunications, Media & Technology

Transport

ING Corporate Finance Asia

ING’s Corporate Finance Asia practice offers mergers & acquisitions advisory services to its corporate and institutional clients.ING serves clients across a broad range of industry sectors and offers a strong combination of deep local market knowledgeand extensive cross-border expertise.

Corporate Finance Asia operates through its Asia Pacific network with a focus on China and South East Asia markets. Wework closely with ING’s extensive offices across Europe and the Americas.

Grenville ThynneManaging Director – Head of Corporate Finance, [email protected]

Thiam Kit Lee Managing [email protected]

David WuManaging Director – Head of Corporate Finance, [email protected]

Andrew [email protected]

Cecilia HuaVice [email protected]

ING Corporate Finance China Team

The Review was prepared by ING’s Corporate Finance Asia team. If you have questions or comments, please contact us directlyat +852 2913 8640 or [email protected]

August 2013 5

Appendix: Transaction Details

August 2013 6

Conglomerate active in real estate, tourism, hotels and entertainment (private)

Manufacturer of luxury motor yachts

Country: UKStake sought: 91.81%Deal value: US$488.3mEV: US$587.7mEV/Revenues: 1.3x (2012)EV/EBITDA: 12.3x (2012)Announcement date: 19/06/2013

四川国栋建设股份有限公司Manufacturer and distributer of boards for construction sector (600321 CH)

Manufacturer of raw and melamine chipboard

SEO controlled manufacturer of automobile bearings and related parts (000678 CH)

Manufacturer of bearings for the automobile, trucking, agriculture and mining industries, among others

Country: ItalyStake sought: 67%Deal value: US$131.3mEV: US$196.0mEV/Revenues: 3.5x (2012)EV/EBITDA: n/aAnnouncement date: 23/05/2013Remark: deal was suspended on 18/07/2013 as both parties could not reach agreement on terms

Country: PolandStake sought: 89.15%Deal value: US$49.0mEV: US$52.9mEV/Revenues: 0.6x (2012)EV/EBITDA: 11.6x (2012)Announcement date: 20/05/2013

Country: GermanyStake sought: 100%Deal value: US$44.5mEV: US$44.5mEV/Revenues: 0.4x (2012)EV/EBITDA: 4.4x (2012)Announcement date: 26/04/2013

宁波华翔电子股份有限公司Manufacturer of non-metallic automobile parts (002048 CH)

Third largest real wood interior supplier for the automobile industry worldwide

Industrials

TargetAcquirer Details

Transaction Details


Country: FranceStake sought: 75%Deal value: US$19.8mEV: US$19.8mValuation undisclosedAnnouncement date: 26/02/2013

乐山黑马Miner and phosphate trader (private)

Developer, manufacturer and distributor of leisure aircrafts for tourism and entertainment purposes

Leshan Heima

August 2013 7

Manufacturer of the iconic London black cab

Country: SwitzerlandStake sought: 10%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 22/03/2013Remark: deal includes commercial contracts for raw materials worth around US$1.2bn

唐山钢铁集团有限责任公司Steel manufacturer(SOE)

International iron and steel trader

Country: UKStake sought: 80.03%Deal value: US$17.3mEV: US$21.6mValuation undisclosedAnnouncement date: 01/02/2013Remark: acquisition out of administration

浙江吉利控股集团Manufacturer of automobiles (175 HK)

Country: LuxembourgStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 08/01/2013Remark: HiWing is a subsidiary of CASIC; SAIC invested via its Luxembourg subsidiary

Consortium comprised of HiWing, SAIC and Ascend Capital

Manufacturer of sensing systems for automotive, infrastructure, etc


Industrials TargetAcquirer Details


Country GermanyStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 03/05/2013

SOE controlled manufactures of bearings, ball screws (200706 CH)

Manufacturer of bearings for heavy industry, railway & transportation and power plants

Technology, Media and Telecommunications

Country: UKStake sought: 19.80%Deal value: US$56.4mEV: US$388.0mEV/Revenues: 1.4x (2012)EV/EBITDA: 8.2x (2012)Announcement date: 25/04/2013

Provider of professional public relations services (300058 CH)

Provider of public relations and consulting services

Country: UKStake sought: 100%Deal value: US$9.0mEV: US$9.0mValuation undisclosedAnnouncement date: 16/05/2013

Manufacturer and service provider for printed circuit boards (002436 CH)

Provider of printed circuit boards

August 2013 8

Producer of oil and gas (632 HK)

Producer of oil and gas

Country: UK/RussiaStake sought: 23.79%Deal value: US$105.6mEV: US$500.6mValuation undisclosedAnnouncement date: 28/06/2013Remark: staged deal with a 63.05% equity stake to be acquired

Country: NetherlandsStake sought: 100%Deal value: US$1,259.1mEV: US$1,259.1mEV/Revenues: 3.7x (2012)EV/EBITDA: 8.7x (2012)Announcement date: 17/06/2013

Consortium: Cheung Kong Holdings (35%) , CKI (35%), Power Assets Holding (20%), Li Ka Shing Foundation (10%)

Waste processor and renewable energy producer

Country: PortugalStake sought: 100%Deal value: US$122.8mEV: US$122.8mEV/Revenues: 2.2x (2012)EV/EBITDA: 11.4x (2012)Announcement date: 21/03/2013

SEO controlled constructor of sewage and water plants (371 HK)

Veolia’s water treatment business in Portugal

Researcher and developer of power electronics (private)

Manufacturer of solar modules and roof integrated systems

Country: GermanyStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 10/04/2013Remark: the company will be turned into a European development centre to develop energy storage, management and charging systems




Country: NetherlandsStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 16/01/2013Remark: the deal will form a major maritime satellite communications services provider in the world

Provider of satellite communication services (private)

Provider of maritime satellite communications services

Provider of design, engineering consultation, and contracting services (private)

Consultant in electric power facility design

Country: LithuaniaStake sought: >50%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 09/04/2013Remark: ETI expects the change in shareholders will open up opportunities in Lithuania and abroad

August 2013 9

汉能控股集团有限公司Clean-energy power generation company (private)

Installer and provider of financing for solar panel systems

Country: UKStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 14/05/2013Remark: Hanergy acquired Engensa to expand operations into the UK residential solar market

Producer and supplier of oil and gas (SOE)

JV of Novatek and France Total, producer of natural gas

Country: RussiaStake sought: 20%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 21/06/2013Remark: deal allows Russia’s second-biggest LNG producer to tap the Asian market

Consumer

Processor and distributor of seafood products (1174 HK)

Producer and seller of fishmeal and fish oil

Country: Norway/PeruStake sought: 100%Deal value: US$778.0mEV: US$778.0mEV/Revenues: 2.5x (2012)EV/EBITDA: 7.5x (2012)Announcement date: 26/02/2013



Manufacturer and distributor of watches and copper wires (256 HK)

Manufacturer of luxury watches

Conglomerate active in air transportation services, tourism and real estate (Private)

Hotel business operator

Country: SwitzerlandStake sought: 100%Deal value: US$90.8mEV: US$90.8mEV/Revenues: 1.1x (2012)EV/EBITDA: n/aAnnouncement date: 24/04/2013

Country: SpainStake sought: 20%Deal value: US$307.0EV: US$1,534.5mEV/Revenues: 0.9x (2012)EV/EBITDA: 9.8x (2012)Announcement date: 27/02/2013Remark: agreement involves the creation of a joint venture allowing NH to enter China

Provider of supply chain management services for consumer goods (494 HK)

Manufacturer and marketer of personal care products; owner of over 20 brands

Country: UKStake sought: 100%Deal value: US$191.0mEV: US$191.0mValuation undisclosedAnnouncement date: 13/01/2013

August 2013 10

SOE controlled manufacturer of spirits (600519 CH)

Vineyards operator and wine manufacturer

Country: FranceStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 30/04/2013Remark: Besides the acquisition, KCMG also invested US$6.6m in the vineyard

Conglomerate active in hotels, real estate, and the building material industry (private)

Hotel business operator

Country: GermanyStake sought: 100%Deal value: US$13.5mEV: US$13.5mValuation undisclosedRemark: The acquisition is New Century’s first overseas property investmentAnnouncement date: 04/04/2013

Real Estate

Country: FranceStake sought: 100%Deal value: US$19.6mEV: US$19.6mValuation undisclosedAnnouncement date: 27/06/2013

Investment fund (227 HK)

Operator of a country club and resort in the suburbs of Paris

Gold SAS

Country: UKStake sought: 40%Deal value: US$869.9mEV: US$2,300.0mValuation undisclosedAnnouncement date: 25/01/2013

银杏树投资/中国外汇管理局Investment fund (SOE)

Developer and operator of university campus infrastructure

Ginko Tree Investment/SAFE



Country: NetherlandsStake sought: 100%Deal value: n/aEV: n/aValuation undisclosedAnnouncement date: 24/06/2013

Conglomerate active in air transportation services, tourism and real estate (Private)

European market leading provider of transport equipment leasing, rental and service solutions

Consortium led by Pacific Andes (1174 HK)

Processor of seafood products

Country: GermanyStake sought: 100%Deal value: US$16.6mEV: US$16.6mEV/Revenues: 0.6x (2012)EV/EBITDA: n/a (2012)Announcement date: 03/06/2013

Leuchtturm

Financial

August 2013 11

SOE controlled investor and operator of ports (144 HK)

Developer and operator of shipping terminals

Country: FranceStake sought: 49%Deal value: US$539.0mEV: US$1,092.8mValuation undisclosedAnnouncement date: 25/01/2013

Terminal link


Transport


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Documents

Sino-Europe Outbound M&A Review 1H 2013 · M&A Review 1H 2013 The Review was prepared by ING’s Corporate Finance Asia team. ... August 2013 3 Outlook According to ING economic research,