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ANKARA ▪ ISTANBUL ▪ IZMIR
October 2015
TURKISH-ITALIAN COOPERATION MEETING
1ST FDI ATTRACTION ROADSHOW
THE ITALIAN GOVERNMENT
DELOITTE POINT OF VIEW: ECONOMIC FOOTPRINT AND MARKET OPPORTUNITIES
1
CONTENT OF THE DOCUMENT
• KEY ECONOMICS AND RECENT DEVELOPMENTS
• ITALIAN PRODUCTION SYSTEM AND STRUCTURE
• M&A TRENDS AND RECENT CROSSBORDER TRANSACTIONS
• CONCLUSIONS
2
9%
22%
15%
39%
17%
20%
10%
26%
15%
27% 26%
17%
23%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
USA China Japan Germany UK France Brazil Italy India Russia Canada Australia Spain
ITALIAN ECONOMY
Source: Deloitte Elaboration on EIU and ONU-Comtrade data
Italy is the 8th largest economy in the world, but
with a strong export attitude
Export/GDP Benchmarking
3
ECONOMY IS STARTING TO GROW AGAIN
Source: ISTAT (Italian National Statistic Institute)
83,2 84,2 85,287 85,8
83,6 84,3 84,386,1
89,8
108,8111,2
115,4
110,3
114,1
119,4
114,7116,8
113
118,5
70
80
90
100
110
120
130
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Domestic
Foreign
Industrial orders: Domestic and Foreign
4
80
85
90
95
100
105
110
2014 2015 2016 2017 2018 2019
THE ECONOMIST INTELLIGENCE UNIT AGREES
Source: Economist Intelligence Unit
• A decreasing trend of the Italian public debt, compared to the general increase experienced in the
other major countries, will bring new balance to the competitiveness of Italy.
• Italian Government debt in % of GDP is estimated to decrease from 2014 to 2019 by almost 5
percentage points (pp).
Germany
Italy
Poland
France
Spain
UK
Expected YoY Public Debt/GDP variation
(Index, 2014=100)
Italy is going to see its public debt reduced
5
CONTENT OF THE DOCUMENT
• KEY ECONOMICS AND RECENT DEVELOPMENTS
• ITALIAN PRODUCTION SYSTEM AND STRUCTURE
• M&A TRENDS AND RECENT CROSSBORDER TRANSACTIONS
• CONCLUSIONS
6
revenue between 50 and 500 mln €
revenue over 500 mln €
revenue less 50 mln €
ITALIAN INDUSTRIAL STRUCTURE
Definition of Company
size based on
European Union Law
Type of Co’s Employees Turnover (Million €)
Micro Co’s less than 10 ≤ 2
Small Co’s 10-49 ≤ 10
Medium Co’s 50-249 ≤ 50
Large Co’s more than 250 more than 50
• In Italy 28% of the added value is concentrated in Large Co’s.
• Large Co’s represent 0,1% of Italian enterprises but they are able to
generate almost one third of the Italian added value.
• About 40% of the total added value is generated by SME’s (Small
and Medium Enterprises).
N. of
companies Employees
%
employees
Added Value
(mln €)
% added
value
Micro Co’s 4.185.081 7.657.247 46,6% 229.158 34%
Small Co’s 180.464 3.219.483 19,6% 151.116 22%
Medium Co’s 21.385 2.074.730 12,6% 109.756 16%
Large Co’s 3.583 3.475.332 21,2% 187.202 28%
Total 4.390.513 16.426.791 100,00% 677.232 100%
Focus on 4.940 Large Co’s
Mid-Market (According to Deloitte Italy definition)
About 58% of Large Co’s are companies
with revenues between 50 to 500 mln €
29%
(1,456)
58%
(2,882)
Source: Based on Istat data IPI Research Center - Italian Ministry of Economic Development
12%
(602)
Breakdown of Italian companies by size
7
24%
17%
5%25%
29%
5%
38%
7%
29%
22%
MID-MARKET COMPANIES (turnover: 50- 500 million €)
Source: Deloitte elaboration on Bureau Van Dick data
This chart does not take Public Sector and Financial Services into account.
Companies geographical distribution (%) Turnover sector distribution (%)
Outside doughnut: Mid-Market Companies
Inside doughnut: Large Companies
• About 80% of the companies with a turnover included
between 50 and 500 million € are located in only five
Italian regions.
• Italian Mid-Market Companies specialize in
manufacturing. In terms of total revenues, they equal
the large companies of that industry.
Services
Wholesale,
Retail &
Transportation
Real Estate
Manufacturing
Energy & Resources
Geographical and sector distribution
0,6
0,2
0,2
1,5 3,1
0,1
1,2
1,3
0,2
7,6
37,2
2,6 1,9
11,9
4,7
1,6
12,4
1,9
7,7
8
25%
16%14%
12%
5%
10%
8%
5%4,3%
24%
16% 15%
11%
6%
11%9%
4% 4,6%
Machinery &
Automation
Food & Beverage Metal Products Chemical &
Pharmaceutical
Rubber & Plastic Other
Manufacturing
Textile & Apparel Transport
Equipment
Paper, Lumber &
Forestry
Share of total mid-market manufacturing turnover
Share of total number of manufacturing mid-market companies
MANUFACTURING MID-MARKET COMPANIES
Source: Deloitte elaboration on Bureau Van Dick data
Their Specialization
• Machinery and Industrial Automation is the Italian Mid-Market companies’ strongpoint.
Our companies make the difference with their unparalleled flexibility and customization capabilities.
• Other historical Italian leaderships: Food & Beverage, Metal products.
• Industry to watch: pharmaceutical products and textile.
(turnover: 50-500 million €)
9
Italian specialties
Food
Automotive Furniture
Ships,
Railcars, Planes
Fashion
0%
5%
10%
15%
20%
25%
0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000
Export in 2014 (Million €)
WHERE TO INVEST?
Source: Deloitte elaboration on Istat data
Please note: this chart doesn’t show sectors with negative export growth
To
tal
ex
po
rt g
row
th b
etw
ee
n 2
01
2 a
nd
20
14
Pharmaceutical
Products
Pharmaceuticals industry is growing at stunning rates, machinery
and industrial automation is a long-time Italian leadership.
Machinery and
Industrial Automation
Mature Italian Export Leaders
Great M&A opportunities …
Consumer Business
Industrial
Deloitte main industries:
Up & Coming Exporters
Construction
Materials
10
WHERE TO INVEST? Italian Specialties (1/2)
Source: Deloitte analysis on Istat (ICE) and Amadeus data
Fashion
17,2
17,8
18,5
32972
32376
30662
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
Food
19,8
20,8
21,5
55203 55100
54691
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
Automotive
25,1 26,5
27,6
2403
2326 2326
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
11
WHERE TO INVEST? Italian Specialties (2/2)
Source: Deloitte analysis on Istat (ICE) and Amadeus data
Furniture
8,2
8,4
8,6
18883
19332
18773
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
Construction materials
8,9
9,3 9,5
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
Ships, Railcars & Planes
11,2 10,7
12,3
2764
2638
2486
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
12
WHERE TO INVEST? Up&Coming Exporters
Source: Deloitte analysis on Istat (ICE), Eurostat and Amadeus data
Pharmaceutical Products
Top Italian export brands
Machinery and Industrial
Automation
70,4
71,6
74,2
24684
23685 23617
2012 2013 2014
Export (€Bn)
N° of companies
Top Italian export brands
Smigroup
17,2
19,6
20,7
513
464 464
2012 2013 2014
Export (€Bn)
N° of companies
Mature Export Leaders
13
CONTENT OF THE DOCUMENT
• KEY ECONOMICS AND RECENT DEVELOPMENTS
• ITALIAN PRODUCTION SYSTEM AND STRUCTURE
• M&A TRENDS AND RECENT CROSSBORDER TRANSACTIONS
• CONCLUSIONS
14
M&A IN ITALY
Source: Mergermarket and Deloitte analysis
Note: 6m 2015 data not yet closed and therefore fully comparable with the previous full year results
Italian M&A trends (volume and value)
In 2014 the M&A activity in Italy has recorded 543 deals closed, with an increase of about 43% on
previous year (2013 – 381 deals).
2015 seems to be a promising year: in the first 6 months, 215 deals were closed 2015 seems to be a promising year: in the first 6 months, 215 deals were closed
417
457 467 459
495
197
279
329 340
381
543
215
29
120
100
148
56
34
20
28
26 31
50
29
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6m2015
Number of Deals Deal value € billion
417
457 467 459
495
197
279
329 340
381
543
215
29
120
100
148
56
34
20
28
26 31
50
29
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6m2015
Number of Deals Deal value € billion
417
457 467 459
495
197
279
329 340
381
543
215
29
120
100
148
56
34
20
28
26 31
50
29
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6m2015
Number of Deals Deal value € billion
15
M&A IN ITALY
Source: Mergermarket and Deloitte analysis
• The overall trend 2011-2014 underlines that, excluding deals with undisclosed value, the average
size of the investments (deal value) is positioned in the range below €100m (small size).
• Large deals (deal value >1.000m) represent a small portion of the M&A activity: in 2014 they
accounted for about 2% of total deals.
280 302
331
478
4534
41
54
44
9
11
0
100
200
300
400
500
600
2011 2012 2013 2014
Num
ber
of D
eals
> €1.000m
€100m - €1.000m
< €100m
Deal volume trend split by size Number
of deals
280 302
331
478
4534
41
54
44
9
11
0
100
200
300
400
500
600
2011 2012 2013 2014
Nu
mb
er
of D
eals
> €1.000m
€100m - €1.000m
< €100m
16
M&A IN ITALY
Source: Deloitte analysis
Italian M&A sector volume (2014)
• 543 deals closed in 2014,
investment value of about €50
billion.
• Consumer markets represents the
most targeted industry (32% of total
deals by volume) accounting for
about €10 billion.
Energy & Utilities 9%
Financial Services 10%
Consumer Markets 32%
Industrial Markets 27%
Technology Media &
Telecomm 15%
Support Services &
Infrastructure7%
Domestic and cross border deal
volume (2014)
• 290 cross border deals closed in
2014, representing 53% of the total.
• In 2014 the number of inbound
deals increased by a strong 90%,
compared to 2013.
Cross border -
Outbound16%
Cross border -Inbound
37%
Domestic47%
Investor type volume (2014)
• PE deals closed in 2014 are 83
(+26% compared to 2013), with a
total investment value of about
€1,8 billion.
PE 15%
Financial 8%
Stock market 6%
Private 3%
Industrial67%
Deals split by industry, geography and investor type
17
INVESTOR EXPECTATIONS
Source: Deloitte Italian Private Equity Confidence Survey
• Every semester, Deloitte Financial Advisory Services publishes the “Italian Private Equity Confidence Survey”, a
survey addressed to Private Equity and Venture Capital operators aimed at understanding trends and expectations
about their activities.
• According to the recent survey for the 2nd semester 2015, 55,9% of the respondents believe that the number of
deals will probably increase, increasing from 45% of the 1st semester 2015; 41,2% expects that the number of
deals will remain stable, while the remaining 2,9% forecasts a decrease in the number of deals.
10,3%14,6%
50,0%55,0%
45,0%
55,9%
87,2%
73,2%
42,5% 42,5%
55,0%
41,2%
2,6%
12,2% 7,5%
2,5% 0,0%
2,9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1S 2013 2S 2013 1S 2014 2S 2014 1S 2015 2S 2015
Increases
Remains stable
Decreases
Forecast on PE/VC activities in 2015
Deloitte Italian Private Equity Confidence Survey (1/2)
18
INVESTOR EXPECTATIONS
Source: Deloitte Italian Private Equity Confidence Survey
• According to the survey,
preferred sector in which
PE/VC firms are expected
to invest during next
semester is
manufacturing (29% of
interviewed).
• 10,1% of total PE/VC
interviewed have selected
as suitable industry for
future investments
Chemical sector, Luxury
and Industrial products.
• High interest is also
shown in Automotive
(7,2%), Non Financial
Services (7,2%) and in
Packaging and Retail
sector (both 5,8%).
Ag
rico
ltu
re
Ap
pa
rel
Au
tom
otive
Che
mic
al
Con
str
uctio
n
Pu
blishin
g
Fo
od &
win
e
IT (
So
ftw
are
& H
ard
wa
re)
Le
isu
re &
Ho
spita
lity
Life
Scie
nce
s &
He
alth
ca
re
Lu
xu
ry
Ma
nu
factu
rin
g
Me
dia
& C
om
mu
nic
ation
Pa
ckag
ing
Ele
ctr
on
ics
Ind
ustr
ial p
rodu
cts
Rea
l E
sta
te
Reta
il
Non
Fin
an
cia
l S
erv
ice
s
Fin
an
cia
l S
erv
ice
s
TL
C
Utilit
ies
Investments forecast by industry
Deloitte Italian Private Equity Confidence Survey (2/2)
19
RECENT CROSS-BORDER TRANSACTIONS
Source: Mergermarket and Deloitte analysis
From to
Date Target Company Sector Bidder Company Bidder Country Seller Company Seller Country Deal Value €m
July '14
Oltan Gida Maddeleri
Ihracat Ithalat Ve Ticaret
Ltd Sti
Hazelnut production and export Ferrero SpA Italy - Turkey n.a.
March '14 Termo Makina A.S. Manufacturing heavy machines and large components
Danieli & C.
Officine
Meccaniche SpA
Italy - Turkey n.a.
January '14ILMAK Makine Sanayi ve
Ticaret A.Ş. (50% Stake)
Manufacturing of packaging products and systems for
food and other products
Cuki Cofresco
S.p.A.Italy - Turkey n.a.
January '14
Polmot Makina Sanayi ve
Ticaret Motor Ltd. Sti
(50% Stake)
Manufacturing of submersible borehole motors and
pumpsCaprari S.p.A. Italy - Turkey n.a.
August '13Rultrans Transmisyon
A.S.
Distributing and producing of power transmissionand
polyurethane conveyor beltsMegadyne SpA Italy Cukurel Family Turkey n.a.
July '13Callus Bilgi ve Iletisim
Hizmetleri A.S. Call center Comdata S.p.A. Italy Koc Holding AS Turkey 30
March '13Wallmerk Yapı
Kimyasallari A.S.Construction materials and chemicals Mapei S.p.A. Italy - Turkey 12
December
'12
Finar Enformasyon
Derecelendirme ve
Danismanlik Hizmetleri
A.S.; Dun & Bradstreet
Bilgi ve Danismanlik A.S.
Online sources of business information; consulting
services and software products for small scale financial
institutions, banks, industrial, and commercial companies
CRIF SpA ItalyD&B South Asia
Middle East Ltd.Turkey n.a.
July '12
Stelliferi Fındık ve Gıda
Sanayi; Stelliferi & Itavex
S.P.A.
Nuts processing and producer and seller of hazelnuts Ferrero SpA ItalyIF-Mariano
Stelliferi S.P.A.Turkey 64
July '11 Dr. F. Frik Ilac A.S. Pharmaceutical Recordati SpA ItalyIS Private Equity
Investment TrustTurkey 89
April '11Mondial A.S (92.85%
Stake) Site establishment and construction services Astaldi SpA Italy - Turkey n.a.
March '11Yeni Elektrik Uretim A.S.
(40% Stake)Construction and operation of natural gas plants
Ansaldo Energia
S.p.A.Italy Unit Group Turkey 86
20
RECENT CROSS-BORDER TRANSACTIONS
Source: Mergermarket and Deloitte analysis
From to
Date Target Company Sector Bidder Company Bidder Country Seller Company Seller Country Deal Value €m
June '14Trafilerie Brambilla
S.p.A.Steel wire production
Celik Halat ve Tel
Sanayi A.S.Turkey - Italy n.a.
May '14Terminal del Golfo
S.p.A. (50% Stake)
Multi purpose port
terminalArkas Holding S.A Turkey - Italy 107
November
'13
Carbostent &
Implantable Devices
S.p.a
Developement and
distribution of medical
technology devices
Alvimedica Medical
DevicesTurkey - Italy 50
July '13 Pernigotti s.p.a. Chocolate production Toksoz Holding Turkey Fratelli Averna SpA Italy 37
June '13Rondine S.p.A. (50%
Stake)
Production and
distribution of tiles
Celik Halat ve Tel
Sanayi A.S.Turkey
Progressio SGR
SpAItaly 65,0
December
'12
Acropolis S.p.A (51%
Stake)
Prestigious property
used for tourist
activities
Dogus Holding A.S. Turkey - Italy n.a.
March '12Lumberjack (3A
Antonini S.p.A.)Casual footwear
Ziylan Magazacılık ve
Pazarlama A.S.Turkey - Italy n.a.
July '11Industrie Fincuoghi
S.p.A.
Ceramic tile
manufacturerKale Grubu Turkey - Italy 76,0
February
'11Nuroll SpA
Manufacturing of bi-
oriented polyester
films
Polinas Plastik
Sanayi ve Ticaret
A.S.
TurkeyM&G Finanziaria
s.r.lItaly n.a.
21
CONTENT OF THE DOCUMENT
• KEY ECONOMICS AND RECENT DEVELOPMENTS
• ITALIAN PRODUCTION SYSTEM AND STRUCTURE
• M&A TRENDS AND RECENT CROSSBORDER TRANSACTIONS
• CONCLUSIONS
22
• Opportunity to have a good connection
to new markets
• Interest in Italian excellence industries
• High level of import from Italy of
products from the main industries (e.g.
industrial machineries)
• Companies and Government are open
to search for international
opportunities
CONCLUSIONS
• Strategic geographic position:
synergies to hit new markets
• Italian economy started to grow
again
• Government has actuated reforms to
facilitate foreign investments
• Attractive industries (Made in Italy
excellences)
• Plenty of small-medium sized
enterprises
• Several successful M&A deals
closed
ITALY TURKEY
23
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aderenti al suo network, ciascuna delle quali è un’entità giuridicamente separata e indipendente dalle altre. Si invita a leggere l’informativa completa relativa alla
descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo www.deloitte.com/about.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is
a legally separate and independent entity. Please see deloitte.com\about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and
its member firms.
Member of Deloitte Touche Tohmatsu Limited
Elio Milantoni
Partner | Head of Corporate Finance Advisory
Deloitte Financial Advisory S.r.l.
Via Tortona 25, Milano, 20144, Italy
Tel/Direct: +39 02 83325066
[email protected] | www.deloitte.it
24
1ST FDI ATTRACTION ROADSHOW
THE ITALIAN GOVERNMENT