bloomberg 2010 m&a

2010 M&A Outlook

BloombergThe 2010 M&A Outlook report is a compilation of key M&A activity statistics from various perspectives. The report presents in‐depthdata on deal‐making activity across a broad array of deal types, regions, and industry sectors.

Table of Contents

Historical data cited in the report represents publicly disclosed transactions that were announced between January 1, 2002 andDecember 15, 2009. Aggregate M&A data is comprised of mergers, acquisitions, divestitures, spin‐offs, debt‐for‐equity‐swaps, jointventures, private placements of common equity and convertible securities, and the cash injection component of recapitalizationsaccording to Bloomberg standards.

All deals except additional stake purchases are subjected to a minimum threshold of 5% of equity or USD 50 million in total value.The announced total value represents the price paid, and not the value of individual companies or their assets.

Bloomberg M&A delivers real‐time coverage of the M&A market from nine countries around the world. We provide a globalperspective and local insight into unique deal structures in various markets through a network of over 800 financial and legaladvisory firms, ensuring an accurate reflection of key market trends. Our quarterly league table rankings are a leading benchmarkfor legal and financial advisory performance, and our DealSpace newsletter provides daily and weekly summaries of M&A activity.

Visit NI DEALSPACE<GO> or NI LEAG CRL<GO> on the Bloomberg Professional to download copies of the report and a full range ofmarket‐specific league tables.

Edited By: Tom Tidgwell Iyan Adewuya Carol Chuang and Timothy LeungEdited By: Tom Tidgwell, Iyan Adewuya, Carol Chuang, and Timothy Leung

2010 GLOBAL M&A OUTLOOK…………………………………………………………………………………………………………………………….…2

AMERICAS M&A REVIEW……………………………………………………………………………………………………………………………………...10

ASIA PACIFIC M&A REVIEW………………………………………………………………………………………………………………………………..…14

EMEA M&A REVIEW…………………………………………………………………………………………………………………………………………..…18

LEGAL COMMENTARY………………………………………………………………………………………………………………………………………..…22

For queries please contact:

Tom Tidgwell Iyan Adewuya Ukei Chan+212‐617‐[email protected]

+212‐617‐[email protected]

+852‐2977‐[email protected]

Timothy Leung+212‐617‐[email protected]

Ruediger Kloss+44‐20‐7673‐[email protected]

Fernanda Pedreira+55‐11‐4502‐[email protected]

The BLOOMBERG PROFESSIONAL service and data products are owned and distributed by Bloomberg Finance L P and its subsidiaries (BFLP) except in Argentina Bermuda China India Japan and

1MA <GO> LEAG <GO> NI DEALSPACE <GO> MARB <GO>

The BLOOMBERG PROFESSIONAL service and data products are owned and distributed by Bloomberg Finance L.P. and its subsidiaries (BFLP) except in Argentina, Bermuda, China, India, Japan andKorea (where Bloomberg L.P. and its subsidiaries (BLP) distribute these products ). BLP provides BFLP with global marketing and operational support and service for these products. BFLP and BLPbelieve the information herein came from reliable sources, but do not guarantee its accuracy. No information or opinion herein constitutes a solicitation of the purchase or sale of securities orcommodities.

Bloomberg

2010GLOBAL M&A

Inside This Section:

• 2010 M&A Outlook Survey Results • Global M&A Historical TrendsGLOBAL M&A

OUTLOOK

Global M&A Historical Trends• Industry M&A Breakdown• Regional M&A Breakdown• M&A Valuation Trends• Global M&A Capital Flows• M&A Deal Type Trends


BloombergLooking Ahead: M&A Activity in 2010

With the worst of the financial crisis behind us and the economic outlook for various major economies gradually improving, M&A activity isexpected to rebound from the lows it hit in the third quarter of 2009. The presence of a cautious optimism for 2010 and the opportunities that will

2010 Global M&A Outlook

Buyside

Legal13%

be available for participants in the M&A market were uniquely captured in a global survey of a diverse group of over 250 financial marketprofessionals at the end 2009. Aggregate and cross‐tabulated survey responses and key highlights are presented below.

Survey Respondent Market Role? How Long Will the Global Downturn Persist?

20%

15%

24%

20%

24%

47%

24%

12%

8%

6%

Legal

All

29%

Sellside58%

17%

12%

20%

14%

23%

24%

48%

52%

24%

13%

8%

24%

8%

5%

8%

0% 20% 40% 60% 80% 100%

Buy Side

Sell Side

Legal

Over 6 mo 1 yr 2 yrs > 2 yrs

Funding Availability

26%

Risk Pricing18%

Compared to 2009, How Will Global M&A Total Volumes Differ?

What will Drive Changes in the Financial Services Industry in 2010?

30%

42%

32%

60%

50%

60%

2%

1%

3%

4%

2%

5%

4%

5%

Sell Side

Legal

All

State Involvement

27%

Leverage15%

FX Rates8%

Bank Consolidation

6%

h h ll b h

30% 65% 5%

0% 20% 40% 60% 80% 100%

Buy Side

Large Increase Small IncreaseLarge Decrease Small DecreaseSame

In Which Region Will M&A Activity be the Most Active in 2010?

Asia Pacific (34.0%)

North America (31.0%)

Western Europe (13.0%)

South/Central America (10.0%)

Central Asia (7.0%)

Eastern Europe (3.0%)

Africa/Middle East (2.0%)


*All Total Value figures in USD millions.* All 2009 numbers as of December 15, 2009.

BloombergOutlook Survey Highlights


• Survey respondents were optimistic about a resurgence of M&A activity in the Energy and Financials sectors. However, a plurality of respondentsbelieve that distressed companies or assets will be the most frequent acquisition targets in 2010, followed by corporate divestitures.

Which Type of Firm Will be the Most Frequent Acquisition Target in 2010?

In Which Industry Sectors Will There be the Most M&A Activity in 2010?

• A clear majority of respondents expect most 2010 deals to be in the $250 million to $1 billion range, and most expect that stock issuance will bethe prevalent source for deal financing.• Private equity and venture capital activity, which declined sharply in the last two years, is expected to be predominant in the Asia Pacific andNorth America regions.

Energy 20.8% 21.2% 19.5% 25.5%State OwnedMid CapFinancials 17.2% 16.1% 17.2% 19.6%

Industrials 10.8% 11.0% 10.9% 9.8%

Materials 8.5% 9.3% 10.0% 0.0%

Healthcare 8.5% 8.5% 7.7% 11.8%

Consumer Staples 8.2% 6.8% 9.5% 5.9%

Telecom 7.2% 5.1% 7.7% 9.8%

IT 7.2% 9.3% 5.9% 7.8%

Consumer Discretionary 6.2% 6.8% 5.9% 5.9%

Utilities 5.6% 5.9% 5.9% 3.9%

State‐Owned10%

Distressed Co37%

Infrastructure%

Family‐Owned8%

Corporate Divestiture

19%

Mid Cap Public Co.

15%

In Which Deal Value Range Will M&A Fall in 2010?What Will be the Major Source of Capital for M&A Deal

Financing in 2010?

4%

7%

16%

27%

52%

51%

28%

16%

Legal

All

All Buyside Sellside Legal11%

50%

45%

44%

34%

6%

21%

Legal

All

8%

7%

4%

27%

28%

16%

58%

47%

52%

7%

17%

28%

0% 20% 40% 60% 80% 100%

Buy Side

Sell Side

Legal

> 5 Bln 1 Bln‐5 Bln 250 Mln‐1 Bln < 250 Mln

50%

41%

50%

31%

35%

44%

19%

24%

6%

0% 20% 40% 60% 80% 100%

Buy Side

Sell Side

Legal

Equity Financing Debt Issuance Cash Reserves

In Which Region is Private Equity/Venture Capital Activity Going to be the Greatest in 2010?





Central Asia (8.0%)





Bloomberg

• The key drivers that are expected to fuel the resurgence in M&A activity are the return of stability in the financial markets, an increase indomestic competition causing companies to seek growth through M&A, and the availability of deal financing at favorable terms.

Outlook Survey Highlights


• A significant majority of respondents expect cross‐border M&A deals to be more attractive for companies that are looking to do deals in 2010.• With stability in the financial markets largely restored, survey respondents were of the view that 2010 will present a favorable environment forfair valuations of acquisition targets.• The most attractive acquisition targets are expected to be companies or assets based in the Asia Pacific, North America, and Western Europeanregions.

Primary Drivers of M&A Activity in 2010? More Attractive Deal Type in 2010?

Domestic Competitors

15%Shareholder

Financing

Market Stability17%

Foreign Competitors

15%

Target Valuations21%

Less Competition Restrictions

3%

FX Rates4%

33%

30%

38%

32%

67%

70%

62%

68%

Buy Side

Sell Side

Legal

All

What Will be the Obstacles to the Fair Valuation of Acquisition Targets in 2010?

Will 2010 Present a Favorable Environment for the Fair Valuation of Acquisition Targets?

68% 32% All

Demand9%

Financing16%

Target's Financial i iClarity on

0% 20% 40% 60% 80% 100%

Domestic Deal Cross‐Border Deal

66%

72%

54%

34%

28%

46%

0% 20% 40% 60% 80% 100%

Buy Side

Sell Side

LegalPosition13%

Price Expectations

22%

Dealmaking Capacity

1%Volatility33%

Clarity on Prospects Future

Growth31%

In Which Region Will the Most Attractive Acquisition Targets be Based in 2010?





Yes No

South/Central America ( )

Central Asia (6.0%)





BloombergNotable Highlights

• Over 20,000 M&A deals were announced globally in 2009 with a total transaction volume of $1.6 trillion. This represented 26% and 34% declinesfrom 2008 levels respectively

Global 2009 M&A Review

• During the first three quarters of the year transaction volume declined steadily, hitting a low of $348 billion in the third quarter. The fourthquarter’s activity represented the first uptick in global M&A activity for the year, with a total volume of $421 billion representing an 11% increaseover the comparable period in 2008.• M&A activity was led by transactions involving companies based in North America, which accounted for 41% of global volume. Western Europeand Asia Pacific were the other leading regions.• The year’s largest deal was Pfizer’s $64 billion acquisition of Wyeth, as the acquirer gained access to new revenue streams from a wider slate ofdrugs and pharmaceutical treatments.• Deal’s in the Financial sector were predominant in 2009 with a total of $368 billion in deals announced. The Consumer Non‐cyclical and Energysectors were second and third with $310 billion and $222 billion in deals respectively.

$400 000

$500,000

$600,000

$700,000

$800,000

$900,000

4 000

5,000

6,000

7,000

8,000

9,000 2008 Total Volume 2009 Total Volume

2008 Deal Count 2009 Deal Count

Global M&A (2008‐2009) Top Global Deals (2009)

Total Volum

Deal Cou

nt

Announce Date Target Name Acquirer Name Total Value (mil.)

1/26/2009 WYETH PFIZER INC 64,234.03$ 3/9/2009 SCHERING‐PLOUGH CORP MERCK & CO. INC. 47,147.32$ 6/1/2009 SELECT GM ASSETS GM CREDITORS 46,800.00$ 12/14/2009 XTO ENERGY INC EXXON MOBIL CORP 41,366.82$ 2/26/2009 ROYAL BANK OF SCOTLAND GROUP UNITED KINGDOM 36,498.91$ 11/3/2009 BURLINGTON NORTHERN SANTA FE BERKSHIRE HATHAWAY 35,767.00$ 11/9/2009 CADBURY PLC KRAFT FOODS INC 19,421.15$ 3/23/2009 PETRO‐CANADA SUNCOR ENERGY INC 17,061.24$

$1,200,000 2008 2009

$0

$100,000

$200,000

$300,000

$400,000

0

1,000

2,000

3,000

4,000

Q1 Q2 Q3 Q4

Total Volume by Region (2009) Total Volume by Region (2008‐2009)

meD

Eastern EuropeAfrica / Middle East

%

5/4/2009 LIBERTY ENTERTAINMENT INC DIRECTV 16,778.72$ 1/2/2009 INDYMAC RETAIL/MORTGAGE OPS JC FLOWERS/MSD/PAULSON 13,900.00$ 6/12/2009 BARCLAYS GLOBAL INVESTORS UNIT BLACKROCK INC 12,544.95$ 2/20/2009 ENDESA SA ENEL SPA 12,286.94$ 10/30/2009 NIPPON MINING HOLDINGS INC NIPPON OIL CORP 11,766.05$ 2/26/2009 ROYAL BANK OF SCOTLAND GROUP UNITED KINGDOM 11,450.64$ 4/20/2009 PEPSI BOTTLING GROUP INC PEPSICO INC 10,053.47$ GLOBAL TOTAL 1,623,589.75$

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000 2008 2009

North America41%

Asia Pacific23%

Eastern Europe2%

4%

Diversified1%

Technology4%

Basic Materials5%

$0

Eastern Europe

South & Central America

Africa / Middle East

Asia Pacific Western Europe

North America

Total Volume by Industry (2009) Total Volume by Industry (2008‐2009)

$625,000

$750,000 2008 2009 YTD

South & Central America

4%

Western Europe26%

Utilities6%

Industrial9%

Comm.10%

Consumer, Cyclical10%Energy

14%

Consumer, Non‐cyclical19%

Financial22%

$0

$125,000

$250,000

$375,000

$500,000


14%


Bloomberg

Private equity M&A activity declined significantly in 2009 with $70 billion in announced deals for the year. This represents a 66% decline from2008 levels and a 90% decline from the 2007 peak.

Notable Highlights

Global 2009 M&A Review

The year’s private equity deals were highly concentrated in North America with 57% of announced private equity deals involving companiesbased in this region.With the global economy in a weakened state for much of the year, bankruptcy liquidation transactions surged with $88 billion in announced

deals. Prominent names such as GM, Chrysler, Delphi, Chicago Cubs were involved in forced sales as a result of bankruptcy proceedings

Global Private Equity Volume By Region (2009) Top Private Equity Deals (2009)

Eastern Europe4%

Africa / Middle East1%

Announce Date Target Name Acquirer Name Total Value (mil.) 1/2/2009 INDYMAC RETAIL/MORTGAGE OPS JC FLOWERS/MSD/PAULSON 13,900.00$ 11/5/2009 IMS HEALTH INC TPG / CANADA PENSION PLAN 5 056 85$

North America57%Western Europe

25%

Asia Pacific13%

4% 11/5/2009 IMS HEALTH INC TPG / CANADA PENSION PLAN 5,056.85$ 10/7/2009 BUSCH ENTERTAINMENT CORP THE BLACKSTONE GROUP 2,300.00$ 10/15/2009 ANHEUSER‐BUSCH INBEV C. EURO. OPS. CVC CAPITAL PARTNERS 2,231.00$ 9/1/2009 SKYPE TECHNOLOGIES SA CPP/SILVER LAKE/INDEX VENT 2,025.00$ 5/7/2009 ORIENTAL BREWERY CO LTD KKR & CO LP 1,800.00$ 11/8/2009 TASC INC GENERAL ATLANTIC/KKR 1,650.00$ 5/29/2009 ENEL RETE GAS SPA AXA PRIVATE EQUITY/F2i 1,516.80$ 11/19/2009 BIRDS EYE FOODS INC THE BLACKSTONE GROUP 1,300.00$ 11/15/2009 BELLSYSTEM 24 INC BAIN CAPITAL LLC 1,116.35$ 9/30/2009 INVITEL HOLDINGS MID EUROPA PARTNERS 975.48$ 3/19/2009 USJ CO LTD GOLDMAN SACHS CAPITAL 921.64$ 6/19/2009 WOOD MACKENZIE CONSULTANTS CHARTERHOUSE CAPITAL 910.87$ 7/20/2009 NORTEL ENTERPRISE SOLUTIONS SILVER LAKE/TPG 900.00$ 5/21/2009 BANKUNITED OPERATIONS BLACKSTONE/CARLYLE/WL ROSS 900.00$

Global Private Equity Volume by Industry (2009)Global Private Equity (2008‐2009)

$70 000

$80,000

$90,000

600

700 2009 Total Volume 2008 Total Volume


Energy

Basic Materials4%

Utilities2%

GLOBAL TOTAL 1,623,589.75$

$

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

100

200

300

400

500 Financial29%

Consumer, Non‐cyclical20%Consumer, Cyclical

11%

Technology10%

Comm.9%

Industrial8%

7%

Total VolumeD

eal Cou

nt

Top Bankruptcy/Liquidation Deals (2009) Global Bankruptcy Liquidation Deals (2009)

$00

Q1 Q2 Q3 Q4

$40 000

$50,000

$60,000 2008 2009

me

Announce Date Target Name Acquirer Name Total Value (mil.) 6/1/2009 SELECT GM ASSETS GM CREDITORS 46,800.00$ 1/2/2009 INDYMAC RETAIL/MORTGAGE OPS JC FLOWERS/MSD/PAULSON 13,900.00$ 3/3/2009 SUBSTANTIALLY ALL ASSETS DELPHI CREDITORS 4,350.00$ 5/12/2009 SELECT CHRYSLER ASSETS FIAT/CHRYSLER CREDITORS 2,000.00$ 9/18/2009 NEW CITY RESIDENCE INVEST BLIFE INVESTMENT CORP 1 330 64$

$0

$10,000

$20,000

$30,000

$40,000

Q1 Q2 Q3 Q4

Total V

olum

9/18/2009 NEW CITY RESIDENCE INVEST BLIFE INVESTMENT CORP 1,330.64$ 7/25/2009 NORTEL LTE & CDMA ACCESS ASSETS ERICSSON LM 1,130.00$ 7/20/2009 NORTEL ENTERPRISE SOLUTIONS SILVER LAKE/TPG 900.00$ 8/21/2009 CHICAGO CUBS/WRIGLEY FIELD INVESTOR GROUP 845.00$ 9/16/2009 PILGRIM'S PRIDE CORP JBS SA 800.00$ 10/7/2009 NORTEL ASSETS CIENA CORP 769.00$ 9/25/2009 SIMMONS BEDDING ARES MGMT/ONTARIO PENSION 760.00$ 10/6/2009 CORUS CONSTRUCTION VENTURES PERRY/STARWOOD/TPG/WLR 554.40$ 7/17/2009 EDDIE BAUER HOLDINGS INC GOLDEN GATE CAPITAL CORP 505.44$ 3/25/2009 OILEXCO NORTH SEA LTD PREMIER OIL PLC 500.70$ 3/18/2009 VERASUN ENERGY ETHANOL PLANTS VALERO ENERGY CORP 477.00$ GLOBAL TOTAL 1,623,589.75$


Q1 Q2 Q3 Q4


BloombergAfter reaching a peak in 2007 with over $4 trillion in announced deals, the global M&A market has now declined significantly for the two years.

Transaction volume in 2009 was down 34% from 2008 and was 60% less than 2007.P i i i ff d h i h l d li i 66% f 2008 l l d 90% f 2007 l l

Global Historical M&A ReviewNotable Highlights

$

Private equity transactions suffered the most, with aggregate volumes declining 66% from 2008 levels and 90% from 2007 levels.Not surprisingly, bankruptcy liquidation transactions rose in 2009 to an eight year high. Over 440 liquidation deals with a total volume of $88

billion were announced.Companies in the North America and Asia Pacific regions were net buyers in 2009. These regions had net transaction outflows of $35 billion and

$6 billion respectively, with companies in these regions buying more targets in other regions.Over 1,000 publicly traded companies were wholly acquired in 2009 with an aggregate transaction volume of $560 billion, while only 15 “mega

deals” of over $10 billion dollars were announced.

Global M&A Overview Global M&A Capital Flows (2009 Total Volume)Outflows Inflows

$1 000 000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

10,000

15,000

20,000

25,000

30,000

35,000 Total Volume Deal Count

Total VolumeD

eal Cou

nt

$ 3 289

$68,719

$76,216

$5,724

$55,650

$7,381

$ 8 036

$102,371

$120,417

$13,378

$49,221

$17,107

N A i

EMEA

W. Europe

E. Europe

Asia Pac.

Latin America

$0

$500,000

$1,000,000

0

5,000

2002 2003 2004 2005 2006 2007 2008 2009

Global M&A Volume by RegionAmericas $584,882 $683,375 $1,062,421 $1,455,101 $2,070,895 $2,272,064 $1,282,429 $910,217

N. America $568,794 $663,368 $1,027,579 $1,422,762 $1,970,171 $2,205,362 $1,187,046 $836,946

EMEA $566,721 $533,978 $874,408 $1,118,851 $1,637,725 $2,123,522 $1,252,011 $585,026

$111,920

$113,289

$86,394

$78,036

0% 25% 50% 75% 100%

Americas

N. America

W. Europe $545,854 $484,026 $827,330 $1,036,459 $1,480,007 $1,876,399 $1,121,719 $523,769

Asia Pac. $201,080 $224,430 $323,644 $462,101 $657,749 $767,819 $633,560 $463,272

LatAm $32,126 $27,355 $59,778 $44,309 $148,933 $98,490 $121,051 $89,153

E. Europe $24,425 $30,422 $41,926 $99,257 $146,866 $200,488 $120,616 $44,6562002 2003 2004 2005 2006 2007 2008 2009

Global M&A Volume by Deal Size RangeMega Deals (> $5Bln) $203,951 $295,871 $605,460 $932,910 $1,378,508 $1,451,283 $870,215 $559,519

$2 000 000

$2,500,000

12,000

14,000 Total Dollar Volume Number of Deals

Global Private Equity Deals

$600,000

$700,000

2,500

3,000 Total Volume Deal Count

Global Cross Border Deals

T T

Large‐Cap Deals($1Bln‐$5Bln) $346,768 $329,626 $545,813 $718,536 $986,978 $1,200,467 $667,568 $461,331

Mid‐Cap Deals ($250Mln‐$1Bln) $299,699 $297,623 $396,925 $481,696 $653,868 $803,812 $495,182 $314,209

Small‐Cap Deals (< $250Mln) $273,519 $304,375 $371,135 $438,641 $515,181 $596,889 $440,887 $292,3302002 2003 2004 2005 2006 2007 2008 2009

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

0

2,000

4,000

6,000

8,000

10,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

0

500

1,000

1,500

2,000

Total VolumeD

eal Cou

ntTotal Volum

eDeal Cou

nt


2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009


BloombergGlobal Asset Sales

Global Historical M&A Review

$800,000 9,000 Total Dollar Volume Number of Deals $1,800,000 1,800 Total Dollar Volume Number of Deals

Global Public Company Takeovers

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

1 000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Total VolumeD

eal Cou

nt

$200 000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

200

400

600

800

1,000

1,200

1,400

1,600

Total VolumeD

eal Cou

nt

$0

$ ,

0

1,000

2002 2003 2004 2005 2006 2007 2008 2009

$0

$200,000

0

200

2002 2003 2004 2005 2006 2007 2008 2009

Financial $261,323 $349,132 $522,776 $584,674 $942,051 $1,030,237 $700,129 $367,789

Consumer, Non‐cyclical $218,383 $202,357 $311,583 $423,060 $487,232 $627,509 $493,415 $310,120

Energy $73,534 $73,701 $187,902 $214,553 $253,032 $279,900 $217,690 $221,743

Global M&A Volume by Industry

Energy $73,534 $73,701 $187,902 $214,553 $253,032 $279,900 $217,690 $221,743

Consumer, Cyclical $97,185 $139,329 $185,350 $279,708 $331,944 $463,648 $166,592 $171,091

Communications $154,046 $167,746 $300,997 $443,759 $478,162 $419,350 $283,352 $157,671

Industrial $127,527 $116,912 $130,609 $215,551 $323,314 $379,778 $199,208 $139,388

Utilities $95,342 $46,953 $71,481 $123,973 $249,701 $306,391 $124,099 $101,922

Basic Materials $51,273 $63,997 $105,582 $150,547 $285,621 $297,918 $187,677 $85,266

Technology $32,376 $43,068 $66,914 $82,422 $102,969 $164,867 $64,544 $71,772

Diversified $6,026 $10,550 $26,109 $26,412 $27,986 $70,895 $33,329 $12,5802002 2003 2004 2005 2006 2007 2008 20092002 2003 2004 2005 2006 2007 2008 2009

Global M&A Volume by Deal Type

Cross Border $423,659 $355,299 $580,787 $952,265 $1,371,967 $2,026,807 $1,107,983 $634,232

Public Co Takeover $356,787 $447,396 $823,704 $1,044,624 $1,536,790 $1,576,910 $819,229 $560,308

Asset Sale $311,549 $248,686 $392,403 $406,673 $637,563 $710,623 $417,320 $325,542

Bankruptcy Liquidation $31,286 $27,306 $32,662 $41,300 $18,350 $40,503 $13,727 $87,929

Private Equity $97,629 $111,483 $192,438 $247,370 $666,029 $661,557 $204,466 $69,601

Spin‐off $21,619 $56,742 $41,487 $113,571 $172,273 $251,199 $84,428 $9,127

Management Buyout $15,182 $27,404 $21,776 $38,288 $104,173 $73,352 $15,650 $6,2892002 2003 2004 2005 2006 2007 2008 2009

Global Bankruptcy Liquidation Deals

$

$80,000

$90,000

$100,000

400

450

500 Total Dollar Volume Number of Deals

$200

$250

40%

50% Average Deal Size Average Premium

Global M&A Average Premium and Deal Size

Avm

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007 2008 2009

Total VolumeD

eal Cou

nt

$0

$50

$100

$150

0%

10%

20%

30%

verage Deal SizeA

verage Premiu


2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009


Bloomberg


• 2009 Americas M&A ReviewA i M&A Hi t i l T dAMERICAS • Americas M&A Historical Trends

• Americas M&A Capital Flows• Industry M&A Breakdown• Intra‐Regional M&A Breakdown• M&A Valuation Trends

AMERICAS M&A REVIEW


BloombergOver 9,000 M&A deals were announced in the Americas region in 2009 with a total transaction volume of $910 billion. This represented 29% and

60% declines from 2008 and 2007 levels respectively.Th d l i f i i h i f 2009 $245 illi d b id 12 8 EBITDA f bli l d d

Notable Highlights

Americas 2009 M&A Review

$350

The average deal size for transactions in the region for 2009 was $245 million, and buyers paid 12.8x EBITDA on average for publicly tradedtargets.Deals in the region were predominantly in the Consumer Non‐cyclical and Energy sectors, with an aggregate volume of $207 billion and $139

billion respectively. The most prominent deals in these sectors included target companies such as Wyeth, Schering‐Plough, XTO Energy, PepsiBottling Group, and Addax Petroleum.Among the largest economies within the region, only Canada had more buyers than sellers with a net transaction outflow of $51 billion. Brazil

and the U.S. had net transaction inflows of $4 billion and $11 billion respectively.

Regional M&A Activity Overview Regional Average Deal Size

$200 000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

2 000

4,000

6,000

8,000

10,000

12,000

14,0002008 Total Volume

2009 Total Volume

2008 Deal Count

2009 Deal Count

$

$100

$150

$200

$250

$300

$350 2008 Ave. Deal Size 2009 Ave. Deal Size

Total VolumeD

eal Cou

nt

$‐

$200,000

0

2,000

Brazil LatAm Canada U.S. N. America Americas$0

$50

Canada LatAm Americas N. America U.S. Brazil

Basic Materials6%

Technology5%

Utilities3%

Regional Industry Breakdown by VolumeAverage EBITDA Equity Value Deal Multiples

25 0x

30.0x 2008 2009

Comm.10%

Consumer, Cyclical12%

Consumer, Non‐cyclical

Energy18%

Financial10%

Industrial9%

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

27%

Regional Top Announced Deals Regional Capital Flows (2009 Total Volume)

$433

$640

$2,479

$900

Argentina

Mexico

Outflow Inflow

Announce Date Target Name Acquirer Name Total Value (mil.) 1/26/2009 WYETH PFIZER INC 64,234.03$ 3/9/2009 SCHERING‐PLOUGH CORP MERCK & CO. INC. 47,147.32$ 6/1/2009 SELECT GM ASSETS GM CREDITORS 46,800.00$ 12/14/2009 XTO ENERGY INC EXXON MOBIL CORP 41 366 82$

$111,920

$113,289

$7,381

$102,313

$82,237

$6,289

$86,394

$78,036

$17,107

$113,034

$31,970

$10,306

Americas

N. America

LatAm

US

Canada

Brazil12/14/2009 XTO ENERGY INC EXXON MOBIL CORP 41,366.82$ 11/3/2009 BURLINGTON NORTHERN SANTA FE BERKSHIRE HATHAWAY 35,767.00$ 11/9/2009 CADBURY PLC KRAFT FOODS INC 19,421.15$ 3/23/2009 PETRO‐CANADA SUNCOR ENERGY INC 17,061.24$ 5/4/2009 LIBERTY ENTERTAINMENT INC DIRECTV 16,778.72$ 1/2/2009 INDYMAC RETAIL/MORTGAGE OPS JC FLOWERS/MSD/PAULSON 13,900.00$ 6/12/2009 BARCLAYS GLOBAL INVESTORS UNIT BLACKROCK INC 12,544.95$ 4/20/2009 PEPSI BOTTLING GROUP INC PEPSICO INC 10,053.47$ 6/24/2009 ADDAX PETROLEUM CORP CHINA PETROCHEMICAL SINOPEC 8,826.97$ 5/13/2009 VERIZON ACCESS LINES FRONTIER COMMUNICATIONS 8,261.73$ 9/28/2009 AFFILIATED COMPUTER SVCS XEROX CORP 7,890.96$ 5/21/2009 GMAC INC UNITED STATES (GOVT OF) 7,500.00$ AMERICAS REGIONAL TOTAL 910,216.69$


0% 25% 50% 75% 100%*All Total Value figures in USD millions.* All 2009 numbers as of December 15, 2009.


Americas Historical M&A Review

Over the past nine years, M&A activity in the Americas region has been dominated by deals in the Financial sector with a aggregate deal volumeof $2.1 trillion.

$1,600,000

$1,800,000

$2,000,000 Utilities

Technologies

Americas Industry Breakdown

While U.S. and Canadian mergers have captured a significant portion of deal activity, the Latin America region has seen a surge as well. In the lasteight years, deal volume in Brazil has surged 500% to $65 billion in total volume for 2009.Measured by the average EBITDA deal multiple, valuations for deals involving publicly traded targets in the Americas region surged from 2002

through 2006 by almost 200%. Regional valuations subsequently declined by 65% through the end of 2009.

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000 Industrials

Financial

Energy

Diversified

Consumer Non‐Cyclical

Consumer Cyclical

Communications

B i M ti l

Total V

olum

e

$‐

$200,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

Basic Matierals

Latin America Deal VolumeNorth America Deal Volume

$

$140,000

$160,000 BRAZIL

COLOMBIA$2,000,000

$2,500,000

US

CANADA

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000 MEXICO

CHILE

ARGENTINA

$0

$500,000

$1,000,000

$1,500,000

Average Equity Value Deal Multiples Average Deal Premium

$0

2002 2003 2004 2005 2006 2007 2008 2009

$0

2002 2003 2004 2005 2006 2007 2008 2009

60.0x

70.0x

80.0x Revenue Net Income EBITDA

50.0%

60.0%

70.0% Americas N. America LatAm

‐

10.0x

20.0x

30.0x

40.0x

50.0x

0.0%

10.0%

20.0%

30.0%

40.0%

2002 2003 2004 2005 2006 2007 2008 2009


2002 2003 2004 2005 2006 2007 2008 2009


BloombergFrom 2002 through 2009, companies in the Americas region were net buyers in four out of the eight years. The region’s net transaction outflow

was highest in 2003 when the difference between deals in which Americas‐based companies were buyers rather than sellers was $56 billion. The$

Notable Highlights

Americas Capital Flows Analysis

region’s net transaction inflow was highest in 2008 at $168 billion.During this period, the U.S. was a net buyer in four out of the eight years as companies sought to expand into international markets. The net

transaction outflow was greatest in 2003 at $44 billion.On the other hand, Brazil was a net seller in seven out of the eight years with foreign acquirers snapping up viable targets in the country as they

sought to gain market share in Latin America’s leading economy.

$68,079 $77,7632002

Outflows Inflows

$62,626 $76,2552002

Outflows Inflows

Americas United States

$176,263

$346,292

$254,936

$179,397

$125,016

$95,981

$296,784

$375,951

$251,176

$139,009

$105,604

$51,025

2008

2007

2006

2005

2004

2003

$162,418

$327,649

$263,379

$170,389

$118,343

$96,023

$330,778

$461,510

$271,754

$155,818

$101,897

$40,215

2008

2007

2006

2005

2004

2003

$102,313 $113,034

0% 25% 50% 75% 100%

2009$111,920 $86,394

0% 25% 50% 75% 100%

2009

$30 258

$13,475

$7 664

$7,241

2003

2002

Outflows Inflows

$100 009

$70,153

$33 024

$73,094

2003

2002

Outflows Inflows

North America Canada

$82 237

$24,878

$113,598

$89,577

$33,334

$38,634

$30,258

$31 970

$33,731

$138,903

$91,088

$42,058

$18,151

$7,664

2009

2008

2007

2006

2005

2004

2003

$113 289

$168,811

$343,893

$273,883

$173,307

$126,656

$100,009

$17 107

$302,979

$444,547

$267,917

$141,728

$85,697

$33,024

2009

2008

2007

2006

2005

2004

2003

$82,237 $31,970

0% 25% 50% 75% 100%

2009

$7 846

$135

$1,714

$11 874

$5,406

$2,070

2004

2003

2002

Outflows Inflows

$113,289 $17,107

0% 25% 50% 75% 100%

2009

$13 749

$754

$4,680

$37 751

$11,931

$15,343

2004

2003

2002

Outflows Inflows

Latin America Brazil

$6,289

$4,451

$7,855

$19,791

$2,415

$7,846

$10,306

$18,798

$17,399

$16,172

$4,117

$11,874

2009

2008

2007

2006

2005

2004

$7,381

$7,883

$7,589

$39,103

$2,248

$13,749

$17,107

$41,132

$40,497

$37,751

$19,255

$37,751

2009

2008

2007

2006

2005

2004


0% 25% 50% 75% 100%0% 25% 50% 75% 100%


Bloomberg


• 2009 APAC M&A ReviewASIA PACIFIC M&A REVIEW • APAC M&A Historical Trends

• APAC M&A Capital Flows• Industry M&A Breakdown• Regional M&A Valuation Trends

M&A REVIEW



Asia Pacific 2009 M&A Review

Over 8,800 M&A deals were announced in the Asia Pacific region in 2009 with a total transaction volume of $463 billion. This represented 16%and 27% declines from 2008 levels.


Within the region, only Hong Kong managed to surpass 2008 transaction volume figures with a 20% increase. M&A markets in Japan and Chinasuffered 21% and 22% declines respectively.The average deal size for transactions involving companies in the region for 2009 was $72 million and buyers paid an average premium of 37%

over current stock prices.Deals in the region were predominantly in the Financial and Industrial sectors with aggregate volumes of $123 billion and $51 billion,

respectively. Prominent deals in the region involved targets such as Nippon Mining, Chi Mei Optoelectronics, and Mitsubishi Rayon.Among the key economies within the region, companies in South Korea, Japan, and China were net buyers while companies in India, Singapore,

Australia and Hong Kong were net sellers.

$80,000

$120,000

$160,000

$200,000 2008 TV 2009 TV

$40

$60

$80

$100

$120 2008 Ave. Deal Size 2009 Ave. Deal Size


$0

$40,000

$0

$20

$40

Singapore Hong Kong

S. Korea Asia Pac. Australia Japan China

Regional Industry Breakdown by VolumeRegional M&A Deal Count OverviewBasic Materials

%

Utilities3%

3,000 2008 Deal Count 2009 Deal Count 7%Communications

7%

Consumer, Cyclical9%


Fi i l

Industrial13%

Technology7%

3%

500

1,000

1,500

2,000

2,500


Regional Top Deals 2009 Regional Capital Flows

Diversified2%

Energy11%

Financial30%

Announce Date Target Name Acquirer Name Total Value (mil.) 10/30/2009 NIPPON MINING HOLDINGS INC NIPPON OIL CORP 11,766.05$ 11/14/2009 CHI MEI OPTOELECTRONICS CORP INNOLUX DISPLAY CORP 9,877.25$ 6/24/2009 ADDAX PETROLEUM CORP CHINA PETROCHEMICAL SINOPEC 8,826.97$ / / / $

$7,304

$1,275

$4,489

$5,319

S. Korea

India

Outflow Inflow

0

5/14/2009 CHINA CONSTRUCTION BANK BANK OF CHINA/CHINA LIFE INS. 7,320.94$ 3/30/2009 MACQUARIE COMMUNICATIONS CANADA PENSION PLAN INVST 6,336.97$ 5/1/2009 NIKKO BUSINESS SUMITOMO MITSUI FINANCIAL 5,482.02$ 11/19/2009 MITSUBISHI RAYON CO LTD MITSUBISHI CHEMICAL HOLDINGS 5,359.49$ 7/29/2009 NIPPONKOA INSURANCE CO LTD SOMPO JAPAN INSURANCE INC 4,651.16$ 11/27/2009 KU6 HOLDING LTD HURRAY! HOLDING CO LTD 4,118.84$ 9/30/2009 AIOI INSURANCE CO LTD MITSUI SUMITOMO INSURANCE 4,112.65$ 10/21/2009 HARVEST ENERGY TRUST KOREA NATIONAL OIL CORP 3,956.02$ 9/16/2009 RENESAS TECHNOLOGY CORP NEC ELECTRONICS CORP 3,947.85$ 9/28/2009 NUFARM LTD SINOCHEM CORP 3,845.44$ 4/27/2009 LION NATHAN LIMITED KIRIN HOLDINGS CO LTD 3,441.77$ 4/17/2009 MANGISTAUMUNAIGAS MANGISTAU INVESTMENTS BV 3,300.00$ REGIONAL TOTAL 463,272.25$ $55,650

$47,439

$12,373

$10,303

$18,256

$7,134

$49,221

$15,526

$12,970

$33,298

$7,941

$10,338

Asia Pac.

China

Hong Kong

Australia

Japan

Singapore


0% 25% 50% 75% 100%*All Total Value figures in USD millions.* All 2009 numbers as of December 15, 2009.


Asia Pacific Historical M&A Review

Over the past nine years, M&A activity in the Asia Pacific region has been dominated by deals in the Financial sector with an aggregate dealvolume of $933 billion in deals announced.

$

$500 000 00

$600,000.00 Utilities

Technologies

Asia Pacific M&A Industry Breakdown

Within the region, the rise of deal‐making in China led the region with $144 billion in total volume for 2009. This represents a 380% increasefrom 2001 levels. Japanese M&A activity which previously dominated regional volume, came second with an aggregate volume of $126 billion.Measured by the average EBITDA deal multiple , valuations for deals involving publicly traded targets in the region surged from 2003 through

2009 by 94%.

$200,000.00

$300,000.00

$400,000.00

$500,000.00 g

Industrials

Financial

Energy


Consumer Cyclical

Total V

olum

e

$‐

$100,000.00

2001 2002 2003 2004 2005 2006 2007 2008 2009

Communications

Basic Materials

Intra‐Regional M&A Breakdown

China $30,120 $28,461 $58,011 $63,748 $93,302 $131,653 $183,573 $144,020

Japan $48,709 $81,112 $87,279 $149,150 $161,729 $140,901 $160,321 $126,276

Australia $40,952 $53,246 $98,613 $112,049 $173,489 $214,582 $106,939 $65,457

Hong Kong $32,311 $14,517 $35,793 $42,003 $65,736 $84,929 $42,672 $51,033

S. Korea $19,231 $19,957 $17,198 $22,508 $42,774 $53,855 $49,421 $41,291

Taiwan $17,496 $6,282 $4,788 $12,127 $19,253 $19,457 $10,072 $30,722

Singapore $7,594 $8,951 $22,954 $29,643 $72,703 $79,274 $55,051 $24,501

India $8,073 $4,644 $9,580 $36,608 $38,904 $67,404 $49,222 $18,228

Average Equity Value Deal Multiples Regional Average Deal Premium

50.0x


30%

35%

40% Asia Pac.

India $8,073 $4,644 $9,580 $36,608 $38,904 $67,404 $49,222 $18,228

New Zealand $3,878 $7,697 $8,276 $14,222 $10,909 $9,232 $3,869 $1,2452002 2003 2004 2005 2006 2007 2008 2009

0.0x

10.0x

20.0x

30.0x

40.0x

0%

5%

10%

15%

20%

25%


2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009


Bloomberg

From 2002 through 2009, companies in the Asia Pacific region were net buyers in six out of the eight years. The region’s net transaction outflowwas highest in 2006 when the difference in the volume of deals in which Asia Pacific‐based companies were buyers rather than sellers was $106

Asia Pacific Capital Flows AnalysisNotable Highlights

billion. The region’s net transaction inflow was highest in 2003when it stood at $17 billion.As its government ramped up its foreign currency reserves, China moved from being a net seller in M&A transactions between 2002 through

2007, to being a net buyer in the last two straight years. In 2002 China’s net transaction inflow was $17 billion, but by 2009 this had been reversedinto a net outflow of $32 billion.India was a net seller in seven out of the eight years with foreign acquirers expanding into one of the world’s fastest growing economies by

acquiring established targets in the country.

Outflows Inflows Outflows Inflows

Asia Pacific China

$196,096

$191,786

$79,037

$42,553

$17,035

$20,508

$140,404

$86,293

$63,101

$34,240

$34,129

$22,650

2007

2006

2005

2004

2003

2002

$25,616

$16,451

$7,766

$3,016

$1,175

$980

$26,634

$27,575

$35,033

$16,499

$4,703

$17,889

2007

2006

2005

2004

2003

2002

$55,650.5

$123,530

$49,221

$91,902

0% 25% 50% 75% 100%

2009

2008

$3 787

$19,486

$1 771

$2,270

2003

2002

Outflows Inflows

$47,439

$43,373

$15,526

$16,027

0% 25% 50% 75% 100%

2009

2008

$6 154

$7,818

$12 484

$6,333

2003

2002

Outflows Inflows

Hong Kong Japan

$12 373

$11,211

$26,421

$27,081

$23,137

$16,441

$3,787

$12 970

$13,969

$12,744

$16,163

$8,589

$4,925

$1,771

2009

2008

2007

2006

2005

2004

2003

$18 256

$67,359

$22,924

$57,084

$15,907

$12,025

$6,154

$7 941

$12,902

$32,404

$9,290

$8,901

$9,683

$12,484

2009

2008

2007

2006

2005

2004

2003

$12,373 $12,970

0% 25% 50% 75% 100%

2009 $18,256 $7,941

0% 25% 50% 75% 100%

2009

$1 326

$647

$94

$2 656

$1,401

$1,383

2004

2003

2002

Outflows Inflows

$11 946

$2,770

$3,624

$1 902

$523

$1,742

2004

2003

2002

Outflows Inflows

Singapore India

$1,275

$15,157

$24,773

$19,763

$5,068

$1,326

$5,319

$21,746

$30,026

$10,294

$8,590

$2,656

2009

2008

2007

2006

2005

2004

$7,134

$17,142

$51,837

$48,138

$13,486

$11,946

$10,338

$26,594

$14,005

$11,347

$6,496

$1,902

2009

2008

2007

2006

2005

2004


0% 25% 50% 75% 100%0% 25% 50% 75% 100%


Bloomberg


• 2009 EMEA M&A ReviewEMEA M&A • EMEA M&A Historical Trends• EMEA M&A Capital Flows• Industry M&A Breakdown• Regional M&A Breakdown• M&A Valuation Trends

REVIEW


BloombergMore than 6,300 M&A deals were announced in the EMEA region in 2009 with a total transaction volume of $585 billion. This represented 43%

and 53% declines from 2008 levels respectively.h d l f l h f $ ll d b d f

Notable Highlights

EMEA 2009 M&A Review

The average deal size for transactions involving companies in the region for 2009 was $206 million and buyers paid an average premium of 31%over current stock prices.Deals in the region were predominantly in the Financial and Utilities sectors with aggregate volumes of $169 billion and $70 billion respectively.

Prominent deals in the EMEA region involved targets such as Cadbury, Barclays Global Investors, and Porsche.In 2009 companies based in the region were net sellers, posting a net transaction inflow of $33 billion. Among the region’s major economies,

companies based in the U.K. and Germany were net sellers, while companies in France were net buyers.

Regional M&A Activity Overview Regional M&A Average Deal Size

$1,200,00010,0002008 TV $350 2008 Ave Deal Size 2009 Ave Deal Size

$200,000

$400,000

$600,000

$800,000

$1,000,000

1 000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,0002008 TV

2009 TV

2008 Deal Count

2009 Deal Count

Total VolumeD

eal Cou

nt

$50

$100

$150

$200

$250

$300

2008 Ave. Deal Size 2009 Ave. Deal Size

Regional Industry Breakdown by VolumeAverage EBITDA Equity Value Deal Multiples

$00

1,000

E. Europe France Africa / M.E.

Germany U.K. W. Europe

Basic Materials3% Communications

10%Technology Utilities35x

40x

45x2008

2009

$0

E. Europe U.K. Africa / ME

EMEA W. Europe France Germany

Consumer Cyclical10%


Energy8%

Financial35%

Industrial5%

1%Utilities15%

0x

5x

10x

15x

20x

25x

30x

35x

Regional Top Announced Deals 2009 Regional Capital Flows

$31,099

$35,452

$9,383

$60,482

France

U.K.

Outflow InflowAnnounce Date Target Name Acquirer Name Total Value (mil.) 2/26/2009 ROYAL BANK OF SCOTLAND GROUP UNITED KINGDOM 36,498.91$ 11/9/2009 CADBURY PLC KRAFT FOODS INC 19,421.15$ 6/12/2009 BARCLAYS GLOBAL INVESTORS BLACKROCK INC 12,544.95$ 2/20/2009 ENDESA SA ENEL SPA 12,286.94$ 2/26/2009 ROYAL BANK OF SCOTLAND GROUP UNITED KINGDOM 11 450 64$

$68,719

$76,216

$5,724

$30,744

$27,640

$102,371

$120,417

$13,378

$13,090

$30,150

0% 25% 50% 75% 100%

EMEA

W. Europe

E. Europe

Africa / ME

Germany2/26/2009 ROYAL BANK OF SCOTLAND GROUP UNITED KINGDOM 11,450.64$ 8/14/2009 PORSCHE/VOLKSWAGEN QATAR INVESTMENT AUTHORITY 9,960.30$ 1/12/2009 ESSENT NV RWE AG 9,791.09$ 4/24/2009 HYPO REAL ESTATE HOLDING AG FEDERAL REPUBLIC OF GERMANY 7,485.78$ 9/28/2009 SOLVAY PHARMA. BUSINESS ABBOTT LABORATORIES 6,577.38$ 2/23/2009 NUON ENERGY NV VATTENFALL AB 6,156.98$ 12/3/2009 VIVENDI NBC STAKE GENERAL ELECTRIC CO 5,800.00$ 8/13/2009 PORSCHE AUTOMOBIL HLDG VOLKSWAGEN AG 5,568.11$ 2/23/2009 NUON ENERGY NV VATTENFALL AB 5,522.55$ 11/13/2009 UNITYMEDIA GMBH LIBERTY GLOBAL INC 5,224.80$ 11/30/2009 AREVA T&D SA ALSTOM/SCHNEIDER ELECTRIC 5,001.98$ REGIONAL TOTAL 585,026.38$




EMEA Historical M&A Review

Over the past nine years, M&A activity in the EMEA region has been dominated by deals in the Financial sector with a aggregate transactionvolume of $2.1 trillion in deals announced.

h h h d d l d h $ b ll d l d h ’ d l l h

$1,600,000

$1,800,000 Utilities

Technologies

Regional Industry Breakdown

Within the region the United Kingdom led with $190 billion in deals announced in 2009. However, the country’s aggregate deal volume hasplummeted 75% since its peak in 2007.Measured by the average EBITDA deal multiple, valuations for deals involving publicly traded targets in the region increased from 2002 through

2006 by 13%. Following the 2006 peak, deal valuations subsequently declined by 21% through the end of 2009.

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000 Industrials

Financial

Energy

Diversified


Consumer Cyclical

Communications

Total V

olum

e

$‐

$200,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

Basic Materials

Intra‐Regional Total VolumeIntra‐Regional Total Volume

$350 000

$400,000

$450,000 Africa / ME

E. Europe$1,400,000

$1,600,000 U.K.

Germany

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000 France

Average Equity Value Deal Multiples Regional Average Premium

$0

2002 2003 2004 2005 2006 2007 2008 2009

60.0x

70.0x


40%

50% Africa / ME W. Europe E. Europe

$0

2002 2003 2004 2005 2006 2007 2008 2009

0.0x

10.0x

20.0x

30.0x

40.0x

50.0x

2002 2003 2004 2005 2006 2007 2008 2009

0%

10%

20%

30%

2002 2003 2004 2005 2006 2007 2008 2009


2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009


Bloomberg

From 2002 through 2009, companies in the EMEA region were net buyers in four out of the eight years. The region’s net transaction outflow washighest in 2003 on a relative basis when more EMEA‐based companies were buyers rather than sellers .

EMEA Capital Flows AnalysisNotable Highlights

After a four‐year buying spree from 2004 through 2006, EMEA‐based companies became net sellers from 2007 through 2009. On a relative basis,the region’s net transaction inflow was at its highest in 2008.Companies in Western Europe were net buyers in three out of the eight years, while Eastern Europe were net sellers during the entire period.Africa and Middle East‐based firms were net buyers in all but two years as companies and sovereign wealth funds in the region took advantage

of increasing revenues that were generated by relatively high oil prices .

$89,926 $61,2042002

Outbound Inbound

$61,744 $77,4912002

Outbound Inbound

EMEA Western Europe

$349,503

$448,584

$263,013

$185,899

$112,180

$48,765

$190,797

$316,445

$296,860

$202,953

$121,481

$77,743

2008

2007

2006

2005

2004

2003

$171,506

$318,795

$300,816

$176,046

$125,975

$82,604

$333,493

$435,276

$235,199

$148,689

$100,545

$43,899

2008

2007

2006

2005

2004

2003

$5 235

$4,647

$9 026

$5,481

2003

2002

Outbound Inbound

$76,216 $120,417

0% 25% 50% 75% 100%

2009$68,719 $102,371

0% 25% 50% 75% 100%

2009

Eastern Europe Africa/Middle East

$661

$775

$6 596

$12,916

2003

2002

Outbound Inbound

$30 744

$68,906

$78,884

$40,622

$56,370

$6,972

$5,235

$13 090

$17,919

$42,082

$24,347

$17,455

$6,393

$9,026

2009

2008

2007

2006

2005

2004

2003

$5 724

$17,975

$17,742

$11,876

$6,365

$2,596

$661

$13 378

$49,790

$65,193

$54,596

$54,436

$19,304

$6,596

2009

2008

2007

2006

2005

2004

2003

$61 394

$40,816

$72,701

$82 141

$36,860

$36,385

2004

2003

2002

Outbound Inbound

$19 802

$15,980

$24,806

$35 452

$28,472

$34,574

2004

2003

2002

Outbound Inbound

$30,744 $13,090

0% 25% 50% 75% 100%

2009

United Kingdom Germany

$5,724 $13,378

0% 25% 50% 75% 100%

2009

$35,452

$144,451

$393,012

$147,672

$119,803

$61,394

$60,482

$142,153

$241,170

$208,468

$151,332

$82,141

2009

2008

2007

2006

2005

2004

$27,640

$64,611

$147,388

$47,894

$41,979

$19,802

$30,150

$45,353

$97,730

$87,269

$55,180

$35,452

2009

2008

2007

2006

2005

2004


0% 25% 50% 75% 100% 0% 25% 50% 75% 100%


Bloomberg

Inside This Section

• Activist Investing: A Fresh Look at LEGAL Takeovers• Merger Enforcement: Are the

Antitrust Agencies on a Collision Course with Wall Street?

LEGAL COMMENTARY


BloombergBloomberg Law Reports

Legal Commentary

Activist Investing: A Fresh Look at Takeovers publication) in a national newspaper,2 as well as paying related filingg

Contributed by: Stephen P. Wink and Louis Gambino, Cahill/Wink LLP

The rise of hedge funds to preeminence during this decade led toincreased shareholder activism and, in turn, to a new focus on thetools shareholders may use to increase their leverage with companymanagement. Moreover, with the dramatic changes in valuationsover the last year or so, activist investors are seeing newopportunities to seize value. In some cases opportunities arise where

fees and engaging an information agent and a depositary to handlethe various information requests and exchange of cash for securities.Recently, however, our firm was able to obtain no‐action relief fromthe SEC staff in connection with a number of tender offers thatallowed us to reduce some of these costs primarily by utilizingelectronic means of delivery to satisfy the publication anddissemination requirements of Rules 14d‐4 and 14d‐6 of theExchange Act.3 This relief allowed our client to publish a widelydisseminated press release through an Internet‐based news service(such as Business Wire) in lieu of purchasing an expensive print ad inthe investor already has a stake in a company whose valuation

plunged and may yet be substantially below the investor's targetprice. In other cases, the investor may merely have identified a valueproposition. In both cases the valuations may be at a price thatcauses the investor to consider taking a substantial stake in thecompany, if not acquiring it altogether, in anticipation of valuationsramping back up in the new business cycle. These new circumstanceshave led us and a number of our clients to take a fresh look at thetools that we may bring to bear in this environment. We focus hereon three such tools: a tender offer a proxy contest and a private

(such as Business Wire) in lieu of purchasing an expensive print ad ina national newspaper. In each tender offer, the press releasecontained the same information that would have been included in asummary publication, but at a small fraction of the cost. Additionally,the client made the tender offer documents available to.shareholders on a dedicated website rather than incur the cost ofinitially mailing them to each shareholder. Our client even decided toforego the use of an agent and handled all inquiries and tendershimself with the help of the Depository Trust Company, whichsubstantially eliminated the costs of the information agent and theon three such tools: a tender offer, a proxy contest, and a private

placement.

Of course, before considering the appropriate method with which toapproach the target company one must carefully review the targetcompany's antitakeover mechanisms as well as other corporateimpediments that may hinder or delay a transaction. These rangefrom poison pills and antitakeover statutes to the rights ofshareholders to remove directors with or without cause and theability to call special shareholder meetings. Antitakeover measures,

substantially eliminated the costs of the information agent and thedepositary.

Tender offers can also be made for less than all the shares of thecompany. In many cases, other than where one is intent on buyingthe entire company, an activist shareholder's goals can be met byowning far less than all of the company's shares, and even less than asimple majority. The fact of initiating the tender alone can put a greatdeal of pressure on the board of directors, as the board mustrespond to the tender by giving to all shareholders within 10 days ay p g

such as poison pills, have declined in use somewhat over the last fewyears, but they can still cause significant complications. Nonetheless,even when a company is considered practically immune to atakeover, there are options available to bring substantial pressure onthe target board of directors to give due consideration to a takeoverproposal. It should be noted, however, that stalking a target in thismanner can take substantially more time and may have to beaccomplished in several different steps. The focus of this briefdiscussion, however, is on the specified acquisition techniques ratherh h i d k d f d h i

statement disclosing its recommendation (for, against, neutral, orunable to take a position) and reasons for its position.4 While theoffer must not be illusory and the offeror must be ready, willing, andable to purchase the tendered shares pursuant to the terms of theoffer,5 there may also be a number of opportunities along the way tocome to terms with the board and voluntarily withdraw the tender.

Proxy Contests

Sometimes it is necessary to first gain some control of the board ofthan on the myriad takeover defenses and their countermeasures.

Tender Offers

A tender offer is one of the most direct ways to take ownership of acompany. In a tender offer, the offeror makes an offer to allshareholders of the target at a specified price. Shareholders wishingto accept the offer must tender their shares prior to the terminationdate of the offer. Of course, to induce offerees to accept the offer,the tender offer price is set at a premium to the market price of

Sometimes it is necessary to first gain some control of the board ofthe target company in order to remove antitakeover obstacles ortake greater ownership of the company. In that case, a proxy contestmay be in order. The simplest form of proxy contest seeks control ofthe board by offering a competing slate of directors at the company'sannual meeting of shareholders. Like the tender offer, the ordinarycourse proxy contest requires the drafting of a competing proxystatement that is filed with the SEC and the hiring of a proxy solicitorto attempt to gather the votes.6 Many filers take advantage of therelatively recent e‐Proxy options that are available,7 which canthe tender offer price is set at a premium to the market price of

company's stock.

The ordinary tender offer can be a somewhat expensive and timeconsuming undertaking. It requires the drafting of tender offerdocuments,1 filing the documents with the Securities and ExchangeCommission, and the placement of an advertisement (i.e. summary

y y prepresent significant savings over traditional "print and mail" proxycontests due to the reduced printing and mailing costs. In any event,to the extent extraordinary efforts are required to get out the vote,costs can correspondingly increase.

Because shareholder apathy can be a significant obstacle to successin a proxy contest, one way the activist investor can help ensure thatshareholders pay greater attention is to hold the proxy contest in



conjunction with a partial tender offer that is contingent upon the be former shareholders. As a result the activist investor has gained

Legal Commentary

success of the proposed slate of directors. That way, otherwiseapathetic shareholders who might have ignored the proxy will beincentivized to vote for the activist investor's slate if they wish tocapture the offered premium on the tender of their shares. Theperceived shareholder incentive can be further increased at relativelylow cost by offering a large premium while only seeking to purchasea relatively small percentage of the company. Although shareholderswho tender their shares will be cut back ratably such that theofferor's overall premium exposure is limited to the total amount ofthe tender offer shareholders may not wish to take the chance of

control of a company that is far better capitalized. This capital willfurther enhance the company's ability to survive economicchallenges, and there remains a ready exit (as the company remainspublic) when the time is ripe.

These are just a few of the tools that can be brought to bear in theservice of activist investors. Nevertheless, they are only tools. Thereal key is the investor's confidence in the viability of the targetcompany. If the overall investment thesis looks compelling, thesetools can be quite useful in maximizing investment returnsthe tender offer, shareholders may not wish to take the chance of

losing out on that premium even if it would likely represent a smallportion of their holdings. Accordingly, adding a partial tender offer toa proxy contest can improve the odds of success of the proxy contest.

The proxy/partial tender can also be useful in applying pressure tocompanies with antitakeover measures in place. By necessity, tenderoffers are frequently conditioned on the waiver or removal of suchmeasures, as the success of the tender offer may be otherwiseprohibited or limited. Again, because of the incentive provided by the

tools can be quite useful in maximizing investment returns.

Stephen P. Wink and Louis Gambino are partners at Cahill/Wink LLP,a boutique law firm located in New York City and Saratoga Springs.Mr. Wink's practice focus includes securities regulatory and corporatematters, while Mr. Gambino's practice focus is on mergers andacquisitions and general corporate matters.

The views expressed herein are the author's own and do notrepresent those of Bloomberg Finance L.P. The article was firstprohibited or limited. Again, because of the incentive provided by the

premium in the tender offer for non‐interested shareholders, anofferor may increase the likelihood of prevailing in the proxy contestwhile correspondingly increasing the pressure on incumbentdirectors to negotiate with the activist investor in advance of theshareholders meeting to seek a resolution.

Private Placements

Private placements are not usually discussed in the context of

represent those of loomberg Finance .P. The article was firstpublished in the Bloomberg Law Reports‐ Negotiated Transactions,December 9, 2009.

1 The initial filing typically includes the following documents: (i)Schedule TO, (ii) Offer to Purchase, (iii) Letter of Transmittal, (iv)Notice of Guaranteed Delivery, (v) Letter to Brokers, Dealers,Commercial Banks, Trust Companies, and other Nominees, (vi) Letterto Clients for Use by Brokers, Dealers, Commercial Banks, Trust

takeovers, as they are generally thought of in the context ofcorporate finance. However, there are some distinct advantages forthe activist investor who purchases control of a company through alarge private placement of shares directly from the company ratherthan from the public shareholders. This alternative allows theinvestor to infuse cash into the company while obtaining controlthrough the issuance of a large block of freshly minted shares. Ofcourse, this approach adds the hurdle of requiring the company'scooperation, but it can also be accomplished as a second stepfollowing the proxy or proxy/tender offer alternatives described

Companies, and Nominees, (vii) Guidelines for Certification ofTaxpayer Identification Number on Substitute Form W‐9, and (viii)press release announcing commencement of the tender offer.2 See Rules 14d‐2, 14d‐3, 14d‐4, and 14d‐6 of the Securities ExchangeAct of 1934, as amended (Exchange Act).3 In our no‐action request, we argued that electronic publication anddissemination should be permitted because (i) Rule 14d‐4 providesofferors with discretion in determining whether a method ofdissemination is adequate, (ii) it is consistent with the SEC's recentlystated beliefs initiatives and guidance (e g the e Proxy rules andfollowing the proxy or proxy/tender offer alternatives described

above. In many cases such a private placement will involve paying acontrol premium for the shares, but it may well be less than that paidin the tender offer context. This is generally because the investor willpurchase unregistered shares and is able to negotiate the premiumamount directly with the company. In any event, the investor will bedeemed to hold affiliate or restricted stock because of the controlnature of the relationship the investor gains with the companythrough any of the options we have described.8 Thus, the investorwill likely be indifferent as to whether the stock is registered or not.

stated beliefs, initiatives, and guidance (e.g., the e‐Proxy rules andthe stated support of the access‐equals‐delivery paradigm), and (iii) itprovides far greater distribution than that of a summaryadvertisement in a newspaper and does so at a significantly lowercost. While the SEC staff did not respond in writing or publish ourrequest, we received verbal confirmation before proceeding with thetender offers. See, e.g., MFS Government Markets Income Trust,Tender Offer Statement (Schedule TO) (Sept. 12, 2007).4 Rule 14e‐2 of the Exchange Act.5 Regulation 14E of the Exchange Act.y g

In addition, the issuance of a large block of shares will almost alwaysrequire the approval of shareholders and will be highly dilutive.9

However, given the potentially significant infusion of capital into thecompany in these financially challenging times, shareholders mayview the proposed private placement positively despite thesignificant dilution that would result.

The distinct advantage of purchasing a control block in a privateplacement over market purchases is that the invested capital remainsi h h h i h k f h ld h i

g g6 Regulation 14A of the Exchange Act.7 Rule 14a‐16 of the Exchange Act.8 Rule 144 of the Securities Act of 1933, as amended.9 NYSE Listed Company Manual Section 312.03(c) and NASDAQ ListingRule 5635(d).


in the company rather than in the pockets of what would otherwise


Merger Enforcement: Are The Antitrust Agencies on a Can the antitrust laws effectively take this situation into account?

Legal Commentary

g gCollision Course with Wall Street?

Contributed by: Wm. Randolph Smith and Shawn R. Johnson, Crowell& Moring LLP

The issue of antitrust enforcement in today’s economic crisiscontinues to percolate, though it has not yet come to a boil. Pressreports and opinion pieces commenting on the nomination ofChristine Varney as Assistant Attorney General for Antitrust and the

And if so, how will our current economic woes affect the mergerreview process? The answers to these questions lie in theprosecutorial discretion of the enforcement agencies.

The Justice Department and the FTC enforce the Clayton Act, whichprohibits transactions that may “substantially lessen competition, ortend to create a monopoly.”2 There is comparatively little case lawinterpreting this broad language, because few transactions cansurvive the delay and uncertainty caused by litigation. While aninteresting drama the FTC’s seemingly endless battle against Whole

y yselection of Jon Leibowitz as the new Chairman of the Federal TradeCommission would have you believe these appointments will usherin a new era of more aggressive enforcement. But let’s put plauditsand politics aside: this economic crisis will force them to balance theadministration’s enforcement goals against the benefits ofconsolidation on a faltering economy.

As our new chief antitrust regulators assume their respective roles,their colleagues at the agencies have begun to wade into theseh ll i i B h F d l T d C i i T

interesting drama, the FTC’s seemingly endless battle against WholeFoods’ acquisition of Wild Oats was certainly the exception, not therule.

In this environment, the FTC and DOJ are not just enforcers, butpolicymakers. Through the issuance of Horizontal Merger Guidelines,commentaries, and policy statements, these agencies have filled outthe regulatory framework. What they created is a flexible structurethat can readily adapt to different markets and changing conditions.

challenging waters in earnest. Both Federal Trade Commissioner TomRosch and Dr. Ken Heyer, the most senior career economist at theDOJ Antitrust Division, recently offered their thoughts on the issue.1

While these initial offerings rightly (if unsurprisingly) maintain thateven this historic economic crisis should not repeal the antitrustlaws, they do begin to reflect on how antitrust analysis can and willtake account of the searing reality many businesses face today. It isclear that this is the most critical issue the antitrust agencies will facein the near term

At one extreme, antitrust law has long recognized the “failing firm”defense. This doctrine is based on the proposition that a merger –even an anticompetitive one – may be preferable to a company’stotal demise. As the Supreme Court has stated, “the effect oncompetition and the loss to stockholders and injury to thecommunities where its plants were operated will be less if a companycontinues to exist even as a party to a merger than if it disappearsentirely from the market.”3

in the near term.

Because damage has already been done. The current economic crisishas drastically (in some cases, catastrophically) decreased demand innumerous industries, resulting in excess capacity, idled factories, andwidespread layoffs. For example, as part of its latest plea forgovernment help, GM announced that it would eliminate theHummer and Saturn brands, close additional plants, and terminatethousands of dealerships. These cuts would reverberate throughoutthe automotive supply chain.

Historically, the agencies accepted that view only in a very narrow setof circumstances. The Guidelines require that to qualify as failing, acompany must not only be unable to meet financial obligations butmust also be incapable of successfully reorganizing in bankruptcy.4

Moreover, the seller must show that it shopped the business andcould find no less anticompetitive buyer (at any price), and that if thedeal does not go through the assets will exit the market.5 It’s nowonder this defense is rarely tried and even more rarely accepted,because the burden of proof is a significant one.

With long‐term demand forecasts bleak, and the world economyshowing no sign of improvement, business leaders are facing ever‐increasing pressure to reduce costs and increase efficiency. Onefocus is mergers and acquisitions. Strategic transactions often resultin significant efficiencies, facilitate the optimization of plants andproduction, eliminate duplicative functions, and generate othersynergies that bolster the bottom line. We already have seen thecombination of Bank of America and Merrill Lynch, as well as WellsFargo and Wachovia And this is likely just the beginning

But the FTC and DOJ have applied analogous principles to weakenedand struggling firms as well. Even if not literally failing, a company’sfinancial weakness or other difficulties may well mean that itscompetitive significance in the future is far less than it was in thepast. That would reduce the level of competitive concerns atransaction would otherwise raise.

As both Commissioner Rosch and Dr. Heyer recognize, “if the firm isnot likely to be an effective competitor absent the merger, then the

Fargo and Wachovia. And this is likely just the beginning.

Mergers between existing competitors – typically referred to as“horizontal” mergers – often generate the greatest efficiencies. Butthey may also raise antitrust concerns by reducing the number ofcurrent competitors and increasing market concentration. And theyare often politically unpopular, as they can result in job losses andplant closures. Our new antitrust regulators will have to assess thesetransactions through the prism of today’s economic reality.

y p gmerger is unlikely to produce an adverse effect on competition.”6 Ofcourse there is much room for debate over what is an “effectivecompetitor,” as the issue can be one of degree, not kind. But thisissue nevertheless will be a critical one for consolidation ofcompetitors in industries being transformed by the meltdown.


Bloomberg

industry. They will also have to show that the transaction will result

Bloomberg Law Reports

And examples abound. In several industries the demand has

Legal Commentary

in meaningful cost savings, greater savings than either companycould generate alone. Those savings that will be shared withcustomers will gain the most credit.

And, finally, parties will have to show that there will continue to beeffective competition in the future. At some point, we all hope andassume, this crisis will subside and the U.S. economy will return tohistoric levels. Consumer demand will increase and companies willrespond by ramping up production. Where entry barriers are low, orwhere existing customers can move significant volumes of business

contracted by as much as one‐third. That level of reduced demandsimply cannot support the current supply base in anything like itscurrent configuration. Even if suppliers do not face extinction, theywill have to close plants to eliminate excess capacity and reduce cost.And they will face pressure to exit underperforming product lines aswell.

This situation is one good example of why consolidation may be thebest solution. Individual suppliers can only maneuver within theirexisting footprint and may have to cut more deeply than is ideal to where existing customers can move significant volumes of business

that would enable new entrants, the agencies should be lessconcerned regarding future competition and more receptive to thearguments discussed above.

Contrary to press reports, the antitrust agencies are unlikely to go towar with Wall Street. Their goal is to foster effective competitionnow and in the future. Look for the agencies to play an active – andpractical – role in the coming months. While their long‐term goal is tohave a track record of effective antitrust enforcement, they, along

existing footprint, and may have to cut more deeply than is ideal tomake their current product line (and demand) fit with their assetbase. But combining with a competitor provides a broader set ofassets to work with and a good fit may well produce a more efficientresult than either could acting alone. As Commissioner Roschrecognized, the “merger of two weak and financially struggling firms(though not necessarily on the brink of failure) could result in astronger competitor,” or could “create unique synergies thatenhance efficiency.”7

have a track record of effective antitrust enforcement, they, alongwith the rest of the administration, must focus first on how they canbe part of the solution to the economic crisis we are all facing.

Randy Smith is a partner and co‐chair of Crowell & Moring LLP’sAntitrust Group in the firm’s Washington, D.C. office. Shawn R.Johnson is a counsel in the firm’s Antitrust Group.

The views expressed herein are the author's own and do notrepresent those of Bloomberg Finance L.P. The article was first

While these issues typically arise in the context of discretetransactions, there is precedent for their broader application to theconsolidation of entire industries. The most recent example is thesharp decline in defense spending in the late 1980s, which triggereda wave of mergers and acquisitions in the military’s industrial base.As the defense budget shrank, the Department of Defense (DOD)encouraged (and the FTC and DOJ allowed) many suppliers toconsolidate facilities and eliminate excess capacity in order to remainfinancially viable.

published in the Bloomberg Law Reports‐ Mergers & Acquisitons,May 26, 2009.

1 See Remarks of J. Thomas Rosch, Implications of the FinancialMeltdown for the FTC (Jan. 29, 2009), available athttp://www.ftc.gov/speeches/rosch/090129financialcrisisnybarspeech.pdf; Ken Heyer and Sheldon Kimmel, Merger Review of Firms inFinancial Distress (March 1, 2009), available athttp://www usdoj gov/atr/public/eag/244098 pdf

In some sectors, this resulted in levels of concentration thatotherwise would certainly have been challenged. For example, thenumber of fixed wing aircraft manufacturers was reduced from 8 to2, and the number of tactical missile manufacturers from 13 to 3. Thisprocess, which was closely managed by both the DOD and theantitrust agencies, did not approve every proposed transaction, butultimately resulted in a supply base that reflected the reduceddemand.

http://www.usdoj.gov/atr/public/eag/244098.pdf.2 15 U.S.C. § 18.3 United States v. General Dynamics Corp., 415 U.S. 486, 507 (1974).4 See Guidelines, Sec. 5.1.5 Id.6 Heyer at 4; see also Rosch at 6‐7.7 Rosch at 9.

The obvious parallels between this historic example and today’sfinancial services and automotive industries, among others, providesomething of a roadmap. It is of course naïve to think that every dealwill be automatically approved. Certainly, no one expects PresidentObama to suspend the federal antitrust laws (as Roosevelt did duringthe Great Depression). And the FTC and DOJ will continue to play anactive role.

What is clear is that the agencies will take into account the impact ofg preal world economic circumstances on the current and futurecompetitiveness of the merging parties. Where firms can show thattheir combination would result in a stronger firm that is better ableto weather the current crisis, such evidence should be credited.

So what are the key points for parties presenting their case to the FTCor DOJ? First, they should be prepared to demonstrate how theeconomic crisis has affected, and will continue to affect, their


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