november 2014 - harris williams & co. · 2014. 11. 18. · •cobham, the manufacturer of...

Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th Floor, 6 St. Andrew Street, London EC4A3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors:Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze, authorised and regulated by the Financial Conduct Authority. HarrisWilliams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) ofFrankfurt am Main, Germany, under registration number HRB 96687, having its business address at An der Welle 4, 60322 Frankfurt am Main, Germany. PermanentRepresentative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins.

EUROPEAN AUTUMN UPDATE

November 2014

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8900

Red Norrie

Managing Director

[email protected]

Julien DarmonManaging Director

[email protected]

Thierry Monjauze

Managing Director

[email protected]

Jeffery Perkins

Managing Director

[email protected]

Bockenheimer Landstrasse

33-35

60325 Frankfurt am Main

Germany

Phone: +49 69 3650638 00

www.harriswilliams.com www.harriswilliams.de

QUARTERLY QUICK READ

1

4.8%21.6%

European

Economic

Environment1

European M&A

Deal Volume

Activity9

GDP2 Manufacturing Confidence3 Consumer Confidence3

(3.9 pts)

Inbound

M&A Deal Volume

to Europe9

Consumer Prices3

+1.2%

M&A

Environment

• European middle market M&A activity increased by 25.4% Q-to-Q in Q3 2014, with overall transactionvolumes up 48.8% Y-o-Y

• TMT and Consumer were the two most active sectors, accounting for approximately 57% of total dealvolume, with Q-o-Q growth of 4.8% and 41.2%, respectively

European

Equity

Market8

Notes: For the purposes of this Quarterly Update, Europe is defined as: United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland),

Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); Evolution

calculation based on the quarter finishing 30 September, 2014; (1) For the countries based in the EU28; (2) Year-on-year GDP growth for Q3

2014; (3) PMI, CCI and CPI quarterly growth shown for June 2014 to September 2014; (4) Aerospace, Defence & Government Services; (5)

Also includes Building Products and Paper & Packaging; (6) Telecom, Media & Technology; (7) Transportation & Logistics; Also includes

Speciality Distribution; (8) For all listed companies based in the countries mentioned above and with a market cap greater than €50m; (9)

Change from Q2 2014 to Q3 2014

TMT6Consumer Industrials5 T&L7ADG4 Business

Services

Healthcare

& Life

Sciences

Energy &

Power

(0.2%)

Sources: Eurostat, Bloomberg, Markit Economics, S&P Capital IQ

50.0% 60.0%

TMT

Consumer

ADG

Energy & Power

Business

Services

T&L

• Alibaba, the Chinese online and mobile commerce company, raised over $25 billion through an IPOmaking it the largest offering in history

• London tech firms attracted a record £626 million of venture capital investment in the first nine months of2014 representing a 30 percent increase on the £481 million raised during the whole of 2013

• UK consumer price inflation fell to 1.2%, the lowest rate in 5 years, due to increasing price competitionamong supermarkets and energy providers

• Electrolux, the manufacturer of household appliances, acquired GE’s Home Appliances division for $3.3billion, gaining its brands and leading presence in the US

• Airbus’s new airline forecasts predict that new aircraft spend will be over $4.6 trillion for 31,000 aircraftover the next 20 years to keep up with the forecast 4.7% CAGR of passenger traffic

• Cobham, the manufacturer of aerospace, security and defence systems, has acquired Aeroflex, themanufacturer of microelectronic components, for $1.4 billion, representing a 27.6% 1-month premium

• The European oilfield service and equipment M&A market showed increased activity in Q3 2014 withseveral acquisitions by private equity groups, including KKR’s acquisition of OEG offshore

• The debate on nuclear power resurfaced in the EU. In October, the UK gained approval to build a newnuclear power plant, which should provide 7% of the UK’s electricity by 2023

• According to Markit Index, growth in Business Services in the Euro area continued for the fourteenthconsecutive month, although growth in services activity and new business were both at six-month lows

• The UK services sector saw continued growth in Q3 2014 as the economy maintained its improvement,although the recovery lost some of the momentum seen in Q2 2014

• The European T&L M&A market showed increased volume for the fourth consecutive quarter. Theincrease was driven by European buyers

• Parts Alliance, the UK-based distributor of automotive aftermarket parts, completed three UK-basedtransactions in Q3 by acquiring Policybest, 12 branches from Unipart Automotive, and Garafabia

Healthcare &

Life Sciences

• Merck has agreed to pay $17 billion for Sigma-Aldrich to sharpen its focus on speciality chemicals andlaboratory supplies and reduce dependence on pharmaceuticals

• Venture capital funding for healthcare IT companies in the third quarter reached its second-highestlevel since 2010

41.2% 3.6%

23.0% 33.3% 8.0%

(8.3%) 42.6%

100.0% 64.7% 118.7%160.0% 0.0%

(0.9%)

Last Quarter (3.0%) (6.2%) (4.4%) (0.4%) (1.4%) (8.5%) (2.6%) (3.9%)

Last Year 4.8% 0.6% 3.8% (8.7%) 17.7% 2.8% 10.8% 5.4%

Last 3 Years 61.2% 52.5% 34.2% (7.3%) (1.4%) 41.9% 40.1% 47.2%

Industrials

• Siemens agreed to acquire Dresser-Rand for $7.6 billion in an effort to expand its US oil & gas equipmentbusiness

• The annual European Competitiveness Report stated that the EU economy is not on track to reach its2020 reindustrialisation targets of 20% of Gross Domestic Product for manufacturing, research anddevelopment expenditure of 3% of GDP and gross fixed capital formation of 23% of GDP

EUROPEAN ECONOMIC CLIMATE

2

Quarterly Real GDP Growth (% Y-o-Y for EU-28)

European Manufacturing Confidence

• GDP remained stable in the euro area (EA-18) and rose by 0.2 % in the EU-28 during the second quarter of 2014,

compared with the previous quarter

• During the second quarter of 2014, household final consumption expenditure (Non Profit Institutions Serving

Households included) rose by 0.3 % in the euro area and by 0.4% in the EU-28 (after +0.2% and +0.4%, respectively,

in the previous quarter)

• Eurostat expects real GDP in the euro area to grow by 1.2% in 2014, on the back of strengthening domestic

demand, benefitting from higher confidence and real disposable income growth, as well as a more favourable

external environment

European Consumer Confidence

• In August 2014, seasonally adjusted industrial production decreased by 1.8% M-o-M in the euro area (EA18) and by

1.4% in the EU28, according to Eurostat, following 1.9% and 0.8% decreases in respective areas a year earlier

• July 2014 showed Y-o-Y growth in industrial production of 0.9% in the euro area and 0.7% in the EU28

• In September 2014, the Economic Sentiment Indicator fell by 0.7 points in the euro area (to 99.9) and by 1.0 point

in the EU to 103.6. The Markit Eurozone PMI Manufacturing Index fell to 52.0, up slightly from June 2014

• The national balances for the euro area employment and future hiring intentions rose 32% and 28%, for both

manufacturing and services, and all are still higher than their 2007 pre-recession levels

• In September 2014, the DG ECFIN flash estimate of the consumer confidence indicator continued to decline in

both the EU (by 1.6 points to (-8.0)) and the euro area (by 1.4 points to (11.4)) compared to August

• Euro area annual inflation was 0.3% in September 2014, down from 0.4% in August. A year earlier the rate was 1.1%.

The Eurozone unemployment rate remained stable at 11.6% in May, with youth unemployment remaining high at

23.3%

Sources: Bloomberg, Markit Economics, S&P Capital IQ

Notes: (1) Purchasing Managers’ Index – A figure above 50 indicates economic growth, and below 50 indicates decline; (2) European

Commission Consumer Confidence Index Eurozone; (3) Consumer Price Index

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

(40)

(30)

(20)

(10)

0

10

20

Sep-10 Sep-11 Sep-12 Sep-13 Sep-14

Co

nsu

me

r P

ric

e I

nd

ex

(%

)

Co

nsu

me

r C

onfid

enc

e I

nd

ica

tor

CCI CPI Y-o-Y %

(6%)

(4%)

(2%)

0%

2%

4%

6%

Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14E Q4 14E Q2 15E Q4 15E Q2 16E Q4 16E

Key Countries% Y-o-Y Growth

Q1 15EQ1 14A

Germany +1.3% +1.6%

Sweden +1.4% +1.2%

Spain +1.1% +1.5%

Netherlands +1.1% +1.1%

Italy (0.3)% +0.2%

France +0.1% +0.7%

UK +3.2% +2.8%

40

45

50

55

60

(10%)

(5%)

0%

5%

10%

Sep-13 Dec-13 Mar-14 Jun-14 Sep-14

PM

I In

de

x V

alu

e

Ch

an

ge

in

PM

I (M

-o-M

)

Change (M-o-M %) Eurozone PMI1 2 3

EUROPEAN M&A ENVIRONMENT

3

Market Observations

Middle Market M&A Activity – By Sector

• European middle market M&A activity increased by 25.4% in Q3 2014, compared to Q2 2014 with overall

transaction volumes up 48.8% Y-o-Y

• TMT and Consumer were the two most active sectors, accounting for approximately 57% of total deal volume,

with Q-o-Q growth of 4.8% and 41.2%, respectively

• Strategic buyers continued to be active and represented 88% of the buyers in Q3 2014, compared to 89% in Q2

2014

Source: S&P Capital IQ

Note: Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m – €650m, within United Kingdom, Eire, France, DACH

(Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland)

Buyer Segmentation Q3 20141 Transactions by Target Country2


Notes: (1) Strategic buyers may include portfolio companies of private equity groups; (2) By volume; (3) Benelux defined as Belgium, the

Netherlands and Luxembourg; (4) Scandinavia defined as Denmark, Norway, Sweden and Finland; (5) DACH defined as Germany,

Austria, Switzerland

0

300

600

900

1,200

1,500

Q3-12 Q1-13 Q3-13 Q1-14 Q3-14

Num

be

r o

f Tr

ansa

ctio

ns

ADG

Energy & Power

Transportation & Logistics

Healthcare

Business Services

Industrials

Consumer

TMT

88%

12%

Strategics Financials

39% 40%

17% 18%

17% 15%

11% 11%

6% 6%

6% 7%

4% 4%

0%

20%

40%

60%

80%

100%

Q2-14 Q3-14

Italy

Benelux

Spain

Scandinavia

France

DACH

UK & Eire

Q3 - 14

Sector

Breakdown

Change of

Q3 - 14 over

Q3- 13

100.0%Total 48.8%

0.9%

2.0%

4.7%

9.9%

15.1%

12.5%

28.5%

28.5%

10.0%

26.3%

14.0%

62.2%

46.0%

61.8%

42.1%

48.9%

3

4

5

EUROPEANINBOUND M&A ENVIRONMENT

4

Market Observations

Acquisitions by Non-European Buyers1,2

Non-European Buyers by Country Q2 141,2

• International inbound M&A volume into Europe increased by 26.9% Y-o-Y with 202 closed transactions

• The ADG and TMT sectors attracted the highest relative level of international inbound M&A investment, with

international acquirers accounting for 72.7% and 23.3% of completed transactions in the quarter, respectively

• The Consumer and TMT sectors recorded the greatest Q-o-Q increases in inbound M&A volume

• North American groups accounted for 81% of transactions completed with non-European buyers, closing 154

transactions in the quarter. Asian groups, excluding China and India, were the second most active buyers, closing

20 transactions in the quarter

Non-European Buyers as a Percentage of Sector Deal Volume1,2,3


Notes: (1) Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m – €650m, within

United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and

Scandinavia (Denmark, Norway, Sweden and Finland); (2) International buyer defined as from outside Europe; (3) By volume

0

2,000

4,000

6,000

8,000

10,000

0

50

100

150

200

Q3-12 Q4-12 Q1-13 Q2-13 Q4-13 Q1-14 Q2-14 Q3-14

De

al V

alu

e (

€m

)

Nu

mb

er o

f Tr

an

sac

tio

ns

International Activity by Number International Activity by Value

North America81%

South America2%

China2%

India1%

Asia (excl. China & India)11%

Africa & Middle East3%

% of Total Deal Volume Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14

ADG 67% 50% 13% 30% 40% 60% 33% 73%

Business Services 10% 10% 15% 11% 18% 16% 12% 13%

Consumer 8% 8% 8% 8% 11% 5% 7% 9%

Industrials 9% 11% 12% 10% 12% 10% 12% 16%

Energy & Power 13% 18% 36% 16% 6% 31% 19% 17%

Healthcare 6% 9% 11% 20% 14% 23% 13% 22%

TMT 18% 20% 17% 24% 20% 19% 23% 23%

Transportation & Logistics 3% 0% 9% 6% 10% 20% 9% 9%

AEROSPACE, DEFENCE & GOVERNMENTSERVICES

5

European ADG Equity Markets1

European ADG Middle Market M&A Activity

Source: S&P CapitalIQ, BBC, Aviation Week, defense-aerospace.com, Reuters, MRO Network

Notes: (1) Based on HW&Co. indices including the most relevant Aerospace, Defence, & Government Services companies for each country; (2)

Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France,

DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway,

Sweden and Finland)

M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2

Selected Middle Market European ADG M&A

Market Observations

• Cobham, the manufacturer of aerospace, security and defence systems, has acquired Aeroflex, the

manufacturer of microelectronic components, for $1.4 billion, representing a 27.6% 1-month premium

• Monarch Airlines, the UK airline operator, has secured £125m in permanent capital and liquidity facilities from

Greybull Capital, who have acquired 90% of the Company

• B/E Aerospace has filed for the spin off of its consumables management division, KLX, with Amin Khoury set to

serve as Chairman and CEO

• GA Telesis, the provider of support services to the aerospace industry, announced a deal with Boeing to supply

their PART portal with repaired and overhauled components

• Boeing has announced that it will increase 737 production rates in 2018 to 52 per month, up from previously

projected 47 per month in 2017

• Pratt & Whitney has signed $6 billion of additional agreements with suppliers to help increase its production

capacity, raising it to 135 agreements with a projected $16 billion

• Airbus’s new forecasts predict that new aircraft spend will be over $4.6 trillion for 31,000 aircraft over the next 20

years to keep up with the forecast 4.7% CAGR of passenger traffic, up from 29,000 new deliveries in previous

forecasts

• The global market for seats for commercial aircraft is expected to grow by 33% over the next 5 years from $6.0

billion in 2014, to $7.9 billion in 2019, driven by demand for passenger comfort and passenger numbers

Target Country Acquirer Country Sub Sector EV (€m)

All Metal Serv ices Reliance Steel & Aluminium Aerospace Serv ices NA

Carl Zeiss Optronics Airbus Aerospace Components NA

Eirtech Av iation Leading Edge Av iation Aerospace Serv ices NA

Hydrep Safran Aerospace Components NA

0

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4

6

8

10

12

14

Q3-12 Q1-13 Q3-13 Q1-14 Q3-14

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UK & Eire Scandinavia DACH France Benelux Spain Italy

0

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6

8

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North America Asia (excl. China & India) China

India South America Africa & Middle East

UK and Eire France DACH Spain Italy Benelux Scandinavia

Price Change since last quarter (2.7%) (3.4%) (6.6%) NA 10.9% (9.1%) 2.1%

Cash on Balance Sheet (€ bn) 7.4 3.9 0.2 NA 0.7 7.5 0.1

Net Debt / LTM EBITDA Multiple 1.1x 1.1x 1.1x NA NM NM NM

LTM EBITDA Multiple 9.7x 11.9x 8.8x NA 11.6x 9.0x 9.3x

Change since last quarter 0.8x 0.3x (0.6x) NA 0.4x 2.1x (1.8x)

LTM EBITDA Margin 13.2% 10.1% 9.2% NA 5.8% 7.5% 4.1%

Consensus 2Yr Fwd Revenue Growth (p.a.) 2.9% 3.3% 2.6% NA (7.8%) 2.5% 10.1%


Banco de Sabadell, Debt Coll. Bus. Lindorff Financial Serv ices 162

Gruppo DAC; PCL 24/7 Bidv est Group Support and Distribution 119

OfficeTeam Better Capital Support Serv ices 100

Clifford Thames LDC Professional Serv ices 62

Southwestern Business Process Serv ices Capita Professional Serv ices 35

Fiduciaire De Distribution Webhelp Professional Serv ices 32

MatthewsDaniel Bureau Veritas Professional Serv ices NA

ACE International Consultants AECOM Technology Professional Serv ices NA

Hytracc consulting Accenture Professional Serv ices NA

VPS PAI Partners Facility Management NA

0

5

10

15

20

Q3-12 Q1-13 Q3-13 Q1-14 Q3-14

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BUSINESS SERVICES

6

European Business Services Equity Markets1

European Business Services Middle Market M&A Activity

Source: S&P CapitalIQ

Notes: (1) Based on HW&Co. indices including the most relevant Business Services companies for each country; (2) Includes transactions with a

deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria,

Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3)

Resignation or appointment of CEO, CFO or Chairman


Selected Middle Market European Business Services M&A

Market Observations

• Business Services in the Euro area grew for the fourteenth consecutive month. The Markit Services Business Activity

Index fell to 52.4 in September, compared to 53.1 in August. The rate of increase in services activity and new

business were both at six-month lows, with declines in France and Italy partly offset by strong activity in Germany,

Ireland and Spain

• The UK services sector grew at the slowest pace in three months in September 2014 with the Markit Index falling to

58.7 in September, compared to 60.5 in August. However, overall Q3 2014 saw strong growth in the sector as the

economy continued to improve, although the recovery lost some of the momentum seen in Q2 2014

• According to a recent Frost & Sullivan report, integrated facility management represents the fastest growing

segment of the European facility management industry, driven by cost savings, single contact solutions and

service quality, with providers, such as Sodexo, significantly expanding their service offering

• Management moves3: AA, Adecco, Bilfinger, CPP Group, De La Rue, Experian, gategroup, Intertek, MITIE, Rejlers,

Serco, SGS, St Ives


Price Change since last quarter (3.7%) (4.8%) (12.0%) NM (11.3%) (8.1%) (4.2%)

Cash on Balance Sheet (€ bn) 4.6 6.9 3.6 0.3 0.0 1.0 NM

Net Debt / LTM EBITDA Multiple 1.6x 2.4x 1.1x 1.6x 20.4x 2.1x 2.3x

LTM EBITDA Multiple 10.2x 7.7x 9.1x NM 6.5x 10.6x 10.6x

Change since last quarter (0.0x) (0.1x) (0.7x) NM 2.9x (2.2x) (0.2x)

LTM EBITDA Margin 9.7% 9.2% 5.1% 12.5% 10.2% 5.7% 9.3%

Consensus 2Yr Fwd Revenue Growth (p.a.) 5.0% 3.1% 2.0% 4.3% 13.8% 5.4% 6.4%

CONSUMER

7

European Consumer Equity Markets1

Sources: S&P CapitalIQ, Bloomberg, Retail Gazette, Food and Drink Europe, Kantar Worldpanel, Company Press Releases

Notes: (1) Based on HW&Co. indices including the most relevant Consumer companies for each country; (2) Includes transactions with a deal

value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria,



European Consumer Middle Market M&A Activity


Selected Middle Market European Consumer M&A Deals

Market Observations

• Robert Bosch, the manufacturer of automotive, industrial, energy, building and consumer goods systems, has

acquired Siemens’ 50% stake in BSH, the manufacturer of home appliances, for €3.0 billion

• Electrolux, the manufacturer of household appliances, has acquired GE’s Home Appliances division for $3.3

billion, gaining its brands and leading presence in the US

• Mitsubishi Corporation, the Japanese conglomerate, has acquired Cermaq, the international fish farming group,

for NOK 8.9 billion, representing a 18.5% one-month premium

• Walgreens, operator of drug stores in the US, has acquired the remaining 55% in Alliance Boots, the European

drug retailer, for c.$15 billion in cash and stock

• Zalando, the online fashion retailer, raised €605 million in its IPO, valuing the Company at €5.3 billion. Shares were

priced near the top of the range at €21.50

• Jimmy Choo has narrowed its IPO offering price range from 140p–180p to 140p–160p due to weakening appetite

for listings, valuing the Company at up to £620 million

• UK consumer price inflation fell to 1.2%, the lowest rate in 5 years, due to increasing price competition among

supermarkets and energy providers

• UK menswear revenue has beaten womenswear, growing by 4.8% in 2013 to reach £12.9 billion, led by

consumers in the 25-34 age range

• Management moves3: Danone, Dunelm Group, Kingfisher, Luxottica, Mothercare, J. Sainsbury and Tesco

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Price Change since last quarter (2.8%) (5.1%) (6.0%) (3.9%) (6.5%) (2.2%) (4.8%)

Cash on Balance Sheet (€ bn) 27.0 38.5 23.2 4.1 5.0 NM NM


LTM EBITDA Multiple 10.4x 8.4x 9.0x 10.3x 9.1x 9.0x 10.1x

Change since last quarter (0.4x) 0.2x 0.2x (1.1x) (0.8x) (0.5x) (0.2x)




The Co-operativ e Pharmacy Bestway Group Drug Retail 781

Roberto Cav alli VTB Capital Apparel c.400

Cath Kidston Baring Asia Home Furnishings 315

ICA Norway Coop Norway Supermarket 303

Grupo Zena Alsea Restaurants c.260

The Original Bowling Co. Electra Partners Leisure 115

T.M. Lewin Itochu Apparel NA

Scholl - Footwear Div ision Aurelius Apparel NA

ARC International H.I.G. Capital Homewares NA

ENERGY & POWER

8

European Energy & Power Equity Markets1

European Energy & Power Middle Market M&A Activity


Notes: (1) Based on HW&Co. indices including the most relevant Energy & Power companies for each country

(2) Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France,


Sweden and Finland); (3) Includes acquisitions of majority stakes only (4) Resignation or appointment of CEO or CFO


Selected Middle Market European Energy & Power M&A3

Market Observations

• The European oilfield service and equipment M&A market showed increased activity in Q3 2014 with several

acquisitions by private equity groups. Silverfleet Capital Partners acquired AGR Petroleum Service Holding, the

Norway-based oil well management services provider and Kohlberg Kravis Roberts acquired OEG Offshore, the

UK-based manufacturer and supplier of offshore cargo carrying units and cabins

• The ongoing political tension between Russia and the Ukraine, provoked increased fears of a winter gas shortage

in Europe. Trilateral discussions between the EU, Ukraine, and Russia are planned for the end of October

• Norway granted final permits to build a new 623km long subsea power cable “Nord.Link” from Norway to

Germany by 2018/19. “Nord.Link” will enable both countries to exchange electricity produced from renewable

energies, in particular from wind and water. The project will be jointly executed by the Norwegian group Statnett

and DC Nordseekabel from Germany

• The debate on nuclear power resurfaced in the EU. In October, the UK gained approval to build a new nuclear

power plant, which should provide 7% of the UK’s electricity by 2023. This is the first time that the European

Commission has approved significant state aid for the construction of a nuclear power plant

• Management moves4: Eland Oil & Gas, Iofina, Ophir Energy, AFC Energy, Trap Oil Group, Afren, comScore,

Centrica, Premier Oil

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Petrofac FPSO Holding First Reserv e Corporation Oilfield Serv ices 390

AGR Petroleum Serv ices Holdings Silv erfleet Capital Partners Oilfield Serv ices 200

OEG Offshore Kohlberg Krav is Roberts & Co. Oilfield Equipment 126

Summit Petroleum Ithaca Energy Exploration and Production 125

Adler and Allan LDC Oilfield Serv ices NA

Boldbrink NDE Global Technical Serv ices Sub Sea Oilfield Serv ices NA

PD&MS Energy Inflexion Priv ate Equity Oilfield Serv ices NA

Willteco and Majority Stake in Willtech Asia ESI Energy Serv ices Oilfield Serv ices NA

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-


Price Change since last quarter (9.0%) (3.5%) (4.2%) 1.1% (6.5%) (2.5%) (16.0%)

Cash on Balance Sheet (€ bn) 34.0 37.8 11.0 19.4 18.2 17.0 16.0



Change since last quarter (0.3x) (0.3x) 1.1x 0.3x 0.8x (0.8x) (0.5x)


Consensus 2Yr Fwd Revenue Growth (p.a.) 5.8% 1.3% (0.3%) 0.7% (0.3%) (0.5%) 6.8%

HEALTHCARE & LIFE SCIENCES

9

European Healthcare & Life Sciences Equity Markets1

European Healthcare & Life Sciences Middle Market M&A Activity


Notes: (1) Based on HW&Co. indices including the most relevant Healthcare & Life Sciences companies for each country; (2) Includes

transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH

(Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and

Finland); (3) Resignation or appointment of CEO, CFO or Chairman


Selected Middle Market European Healthcare & Life Sciences M&A

Market Observations

• The European healthcare market saw a significant increase in M&A activity during Q3 as large healthcare

companies sought to acquire and integrate smaller healthcare companies to expand into new markets and

technologies

• Venture capital funding for health IT companies in the third quarter reached its second-highest level since 2010,

according to a new report by Mercom Capital Group

• Over the next five years, 84 percent of global healthcare executives surveyed will invest in new technologies, 78

percent will enter new global markets and 70 percent will implement new distribution channels such as going

direct to providers, retailers and even end-patients, according to a survey published by UPS in September

• Germany’s Merck KGaA has agreed to pay $17bn for Sigma-Aldrich of the US in a deal that will sharpen its focus

on speciality chemicals and laboratory supplies while reducing its dependence on pharmaceuticals

• U.S. healthcare businesses continue to seek acquisition and merger targets in tax-friendly European countries, but

U.S. law makers have recently stepped up tax reforms to block such attempts, as evidenced by the failed

AbbVie merger with Shire

• Management moves3: Biotest, Galenica, General Healthcare Group, Mehilainen

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Price Change since last quarter (1.5%) (1.8%) 1.5% (10.4%) (1.3%) (4.3%) (3.7%)




Change since last quarter 0.6x 1.3x (0.0x) (2.4x) 0.6x (0.6x) (1.0x)



Partnerships in Care Acadia Healthcare Company Healthcare Facilities 409

Voyage Healthcare Group Duke Street Partners Group Healthcare Facilities 375

N.G.C. Medical Medtronic Healthcare Supplies 211

Cygnet Health Care Univ ersal Health Serv ices Healthcare Facilities 208

TRUMPF Medical Systems Hill-Rom Healthcare Equipment 185

Sapiens Steering Brain Stimulation Medtronic Healthcare Equipment 124

Apica Cardiov ascular HR Europe Healthcare Equipment 46

IBL International Tecan Group Biotechnology 23

Vedici CVC Capital Partners Healthcare Facilities NA

Target Country Acquirer Country CountrySub Sector EV (€m)

INDUSTRIALS

10

European Industrials Equity Markets1

European Industrials Middle Market M&A Activity


Notes: (1) Based on HW&Co. indices including the most relevant Industrials companies for each country; (2) Includes transactions with a deal

value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria,



M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2

Selected Middle Market European Industrials M&A

Market Observations

• The annual European Competitiveness Report stated that the EU economy is not on track to reach its 2020

reindustrialisation targets: 20% of Gross Domestic Product for manufacturing, research and development

expenditure of 3% of GDP and gross fixed capital formation of 23% of GDP

• Against a backdrop of acute political uncertainty at home with the Scottish independence vote, exports orders

for UK manufacturers were down significantly in September

• According to Markit's chief economist Chris Williamson: “The euro area’s manufacturing economy has lost the

growth momentum seen earlier in the year, lurching closer to stagnation,” believing that weakening reports in the

manufacturing sector would intensify pressure on the ECB to implement full-scale quantitative easing

• Siemens (SIE) agreed to acquire Dresser-Rand Group (DRC) for $7.6 billion in an effort to expand its U.S. oil-and-

gas equipment business

• Argan Capital Advisors announced that it had agreed to sell Faster S.p.A. to Capvis Equity Partners AG for ~€210

million

• Danfoss announced the acquisition of Vacon (HLSE:VAC1V), a manufacturer of AC drive technology products,

for €962 million

• Management moves3: ARCADIS, Balfour Beatty, Keller Group, Morgan Advanced Materials, TRUMPF

Ferguson Group Brambles Industrial Machinery 320

M+W Process Automation and ProFocus ATS Automation Tooling Systems Construction and Engineering 202

DeltaTech Controls Sensata Technologies Electrical Components 118

Agility Projects John Wood Group Construction and Engineering 102

TONDACH Gleinstätten Wienerberger Construction Materials 65







Change since last quarter (0.9x) (0.7x) (0.2x) (0.2x) (0.7x) (0.9x) (0.7x)



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TECHNOLOGY, MEDIA & TELECOM

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European Technology, Media & Telecom Equity Markets1






Change since last quarter 0.3x (0.3x) 0.0x (2.2x) (0.4x) (0.6x) 0.1x



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European Technology, Media & Telecom Middle Market M&A Activity

Sources: S&P CapitalIQ, Company Press Releases

Notes: (1) Based on HW&Co. indices including the most relevant Technology, Media & Telecom companies for each country; (2) Includes

transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH

(Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and

Finland); (3) Resignation or appointment of CEO, CFO or Chairman


Selected Middle Market European Technology, Media & Telecom M&A

Market Observations

• Alibaba, the Chinese online and mobile commerce company, raised over $25bn through an IPO making it the

largest offering in history

• Hewlett-Packard has announced it will split into two listed companies, separating its computer and printer

businesses from its faster-growing corporate hardware and services operations

• Ebay has decided to split its business into two listed entities, separating its payment processing division Paypal in a

deal that values it at c.$45bn

• Microsoft has agreed to acquire Mojang, the Swedish game developer, for $2.5bn

• TDC has acquired Get, the Norwegian cable TV and broadband provider, from Goldman Sachs Capital Partners

and Quadrangle Capital Partners for NKr13.8bn

• British mainframe computer specialist Micro Focus has agreed to merge with US-based enterprise software

company The Attachmate Group in a $1.2bn deal

• London tech firms attracted a record £626m of venture capital investment in the first nine months of 2014

representing a 30 percent increase on the £481m raised during the whole of 2013

• European social media marketing spend will reach €4.3bn by 2019, up from €2.6bn this year, representing a 10.5%

CAGR. This is according to Forrester's latest five-year social media marketing forecast for Western European

• By 2018, on-premises maintenance revenue as a percentage of company revenue will decrease by more than

40%, as the software market moves to SaaS, according to Gartner

• Management moves3: Allocate Software, Colt, Telecity and Sage

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Clear2Pay Fidelity National Information Serv ices Payment Software 478

Quintiq Holding Dassault Systèmes SCM Software 334

Fyber RNTS Media Software 162

Agencyport Software Xchanging Software 103

FeedHenry Red Hat Software 81

Mov ea Inv enSense International Software 75

XLN Telecom GSO Capital Partners Teleco Serv ices NA

Figlo Adv icent Solutions Fintech NA

TRANSPORTATION & LOGISTICS

12

European Transportation & Logistics Equity Markets1

European Transport & Logistics Middle Market M&A Activity


Notes: (1) Based on HW&Co. indices including the most relevant Transport & Logistics companies for each country

(2) Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France,


Sweden and Finland); (3) Includes acquisitions of majority stakes only


Selected Middle Market European Transport & Logistics M&A3

Market Observations

• The European T&L M&A market showed an increase in volume in Q3 2014 for the fourth consecutive quarter. The

increase was driven by European buyers while the number of transactions completed by non-European buyers

remained flat compared to Q2 2014

• Parts Alliance, the UK-based distributor of automotive aftermarket parts, completed three UK-based transactions in

Q3 by acquiring the automotive aftermarket suppliers Policybest, 12 branches from Unipart Automotive, and

Garafabia

• DHL continues its research on parcel delivery via drones. The Company has started a pilot project on delivering

time-critical products such as medication to the North Sea island Juist. The project is the first of its kind in Europe

• The European Union announced new funding for almost €12bn for projects to improve European transport

connections. Member states are invited to propose projects until February 2015

• Roland Berger forecasts the logistics market to increase by 3% until 2020, according to their latest study.

Particularly strong growth stems from local markets in South East Asia, especially in the automotive, consumer

goods, and industrials sectors

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Bridgehouse Marine HC2 Holdings Maritime Logistics 193

Transpac International Brambles Limited Container Serv ices 42

Dan Cargo Leman International System Transport Transport Logistics NA

CTE Container Terminal Enns DB Mobility Logistics & M. Kaindl Port Logistics NA

Huisman Stukgoed Gebr. Versteijnen Transport Logistics NA

Av iapartner Holding H.I.G. Europe Av iation Serv ices NA

Container H Lines Deditrans Agency Serv ices Freight Forwarding NA

Letchworth Couriers and Sky Blue Couriers Citysprint Parcel Distribution NA

Schneider Transports Rhenus Transport Logistics NA

SEUR, certain franchises GEOPOST Parcel Distribution NA

Identity Parade DFDS Transport Logistics NA

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Cash on Balance Sheet (€ bn) 8.2 32.5 52.5 9.2 4.2 1.5 4.9



Change since last quarter 0.7x 0.2x 0.6x 0.8x 1.2x 0.7x 0.8x



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Europe Rest of World

FEATURED THEME

13

Overview of Business Services Sector M&A

Business Services M&A Deals by Region of Target1 Eurozone Services PMI Activity Index

• The European mid-market Business Services sector is demonstrating strong momentum, with M&A volumes

growing for the fourth consecutive quarter in Q3 2014

• 152 transactions closed during the quarter, reaching a level not seen since Q2 2012. The trend shows growing

investor confidence, following declining M&A volumes in 2011-2013

• European Business Services M&A has been predominantly led by strategic buyers, which have accounted for c.

90% of total buyers since 2011

• European Business Services M&A has outperformed the global sector M&A since Q4 2013. Global Business

Services M&A volume has declined since Q3 2013 (with the exception of Q1 2014, which saw 2% M&A volume

growth outside Europe1)

• The Markit Eurozone Services PMI Activity Index has remained in positive territory (index above 50) since Q3 2013,

driven by increasing market confidence due to economic recovery in Europe. However, August and September

2014 saw declining growth due to uneven service sector performance across Europe. Strong growth in Germany,

Spain and Ireland was partly offset by a deeper downturn in Italy and a contraction in France. The UK continued

strong service sector growth with the index at around 60 during Q3 2014

• HW&Co. experienced exceptional transaction deal flow in Business Services sector, closing 10 transactions in the

last twelve months, at an average EV / EBITDA multiple of c.10.0x

Recent HW&Co. Business Services Transactions

Source: S&P CapitalIQ, Markit

Notes: (1) Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target. Europe includes

targets based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and

Scandinavia (Denmark, Norway, Sweden and Finland)

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CONTACTS AND DISCLOSURES

14

Thierry MonjauzeManaging Director63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 [email protected]

Julien DarmonManaging Director63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 [email protected]

Red NorrieManaging Director63 Brook StreetLondon W1K 4HSUnited KingdomPhone: +44 20 7518 [email protected]

Jeffery PerkinsManaging DirectorBockenheimer Landstr. 33-3560325 FrankfurtGermanyPhone: +49 69 3550638 [email protected]

www.harriswilliams.comwww.harriswilliams.de

Harris Williams & Co. is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firmhas deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co.provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital marketsadvisory services.

Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5th floor , 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze, authorised and regulated by the Financial Conduct Authority.

Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins.

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Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in andeffect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek toprovide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respectiveofficers, directors and employees may hold long or short positions in the securities, options thereon or other related financialproducts of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgmentand are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investorsand investors must make their own investment decisions using their own independent advisors as they believe necessary andbased upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative offuture results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without HarrisWilliams’ prior written consent.

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