European Winter Update - Harris Williams & Co. · • The outlook for 2014 in transport and logistics is positive, with 4% growth expected in logistics and 8% in sea freight, according

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European Winter

Update February 2014

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8900

Red Norrie

Managing Director

[email protected]

Julien Darmon

Managing 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

(33.3%)

3.0% 10.3%

Quarterly Quick Read

European

Economic

Environment1

European M&A

Deal Volume

Activity9

GDP2 Manufacturing

Confidence3 Consumer Confidence3

+8.7%

Inbound

M&A Deal Volume

to Europe9

Consumer Prices3

+0.1%

M&A

Environment

• Overall European middle market M&A activity decreased by 4.3% in Q4 relative to Q3 with volumes down 18% compared

with Q4 2012

• UK & Eire transactions accounted for the largest share of overall European activity by volume (41%) in the quarter. An

uptick in activity in Spain (up c. 20% on Q3 2013) was more than offset by declining quarterly volumes in France (19%

decline) and DACH (18% decline)

1

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 31 December, 2013

(1) For the countries based in the EU27; (2) Year-on-year GDP growth for Q3 2013; (3) PMI, CCI and CPI quarterly growth shown for September 2013 - December 2013;

(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 Q3 2013 to Q4 2013

(20.0%)

TMT6 Consumer Industrials5 T&L7 ADG4 Business

Services

Healthcare &

Life Sciences

Energy &

Power

(0.3%)

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

(13.1%) (7.1%)

(0.2%)

33.3% (66.7%)

Last Quarter 9.3% 4.7% 3.4% 5.8% (0.4%) 7.5% 8.5% 5.5%

Last Year 33.5% 22.6% 18.5% 27.6% (0.1%) 26.2% 26.5% 28.3%

Last 3 Years 43.6% 30.8% 15.7% 16.2% (10.7%) 7.5% 23.5% 16.1%

(50.0%) (10.5%) (1.4%)

75.0% 16.7% 26.7% (33.3%) (15.8%)

TMT

Consumer

ADG

Energy & Power

Industrials

Business Services

T&L

• Time Warner Cable rejected a $61.3 billion takeover offer from Charter Communications

• European enterprise software spend is expected to total $89.3 billion in 2014 and grow at a CAGR of 5.0% to reach $103.3

billion in 2017, driven by the conferencing, CRM, data integration, SCM and virtualisation infrastructure software segments

• Suntory made an offer to acquire Beam, the makers of Jim Beam and Makers Mark whiskey, for $15.7 billion, representing a

1-month premium of 27.0%

• Medical professionals and campaigners are putting pressure on governmental bodies to legislate for a reduction of sugar in

foods by up to 40% in four years in an effort to reduce the incidence of obesity and diabetes

• Airbus performed strongly in Q4 2013 with 507 aircraft orders, surpassing 332 orders secured by Boeing, while Boeing led

the Dubai Airshow securing twice as many commitments as Airbus

• At the European Council meeting, EU leaders agreed to greater defense cooperation, including joint development of drones,

in-flight re-fuelling aircraft, satellite communications systems and cyber-defense

• The European oilfield service and equipment M&A market remained active in Q4 2013 with several acquisitions by major

European construction, service, and oil and gas companies, including Amec’s offer to acquire US-based Foster Wheeler

• US-based private equity continued to demonstrate strong interest in the sector in Europe, with Wellspring Capital acquiring

Swift Technical Group from UK-based Gresham Private Equity

• In November 2013, seasonally adjusted industrial production grew by 1.8% in the Euro area (EA17) and by 1.5% in the EU27

compared to the previous month, according to estimates from Eurostat

• In December, the Markit Eurozone PMI Composite Index rose to 52.1, its second-highest level during the past two-and-a-half

years

• Growth in the Euro area slowed slightly in December 2013 due to ongoing weakness in certain countries, as growth in

Ireland, Spain and Germany was partly offset by contraction in France and Italy

• The UK services sector continued its expansion in Q4 2013 with the business confidence index at its highest level since

March 2010, driven by rising employment and positive business expectations

• The outlook for 2014 in transport and logistics is positive, with 4% growth expected in logistics and 8% in sea freight,

according to DVZ

• A report prepared for trade union groups concluded that EU postal liberalisation has resulted in declining services and

increased prices

Healthcare & Life

Sciences

• Graphite backed the MBO of domiciliary care provider, City & County Healthcare from Sovereign Capital

• Duke Street announced the acquisition of Air Products’ homecare operations in the UK & Ireland

European Economic Climate

2

Key Countries % Y-o-Y Growth

Q3 14E Q3 13A

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

(40)

(30)

(20)

(10)

0

10

20

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

Co

nsu

mer

Pri

ce I

nd

ex (

%)

Co

nsu

mer

Co

nfi

den

ce I

nd

ica

tor

CCI CPI Y-o-Y %

40

45

50

55

60

(10%)

(5%)

0%

5%

10%

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13

PM

I In

dex

Va

lue

Ch

an

ge in

PM

I (M

-o-M

)

Change (M-o-M %) Eurozone PMI

(6%)

(4%)

(2%)

0%

2%

4%

6%

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

Source: Eurostat, latest available data as of January 20th, 2014

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

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

European Manufacturing Confidence European Consumer Confidence

• EU-28 GDP grew by 0.2% Q-o-Q in Q3 2013 and by 0.1% on a Y-o-Y basis, according to the latest figures

available from Eurostat

• The latest estimates from the National Institute of Economic and Social Research indicate that the UK

economy grew by 0.7% in Q4 2013, suggesting annual economic growth of 1.9% for the year

• The Eurozone economy is expected to return to growth in 2014, with increased activity driving economic

growth of 1.1% for the year, according to the latest estimates from the European Commission

• The Eurozone Composite Purchasing Managers Index remained stable at 52.1 in December, in line with

activity levels recorded in September and maintaining levels indicating growth (>50)

• Industrial production in the Eurozone grew by 1.8% in November compared to October, rising at the fastest

monthly pace in more than three years

• Consumer confidence continued to improve in December with the Eurozone Consumer Confidence Indicator

increasing by 0.9 points relative to September

• Eurozone inflation fell to 0.7% in October, the first time it had dropped below 1.0% since February 2010,

prompting the ECB to cut the interest rate to a record low of 0.25%

• At 0.8%, inflation remained below 1.0% in December, however, the ECB stated there were no signs of

deflation or an urgent need for another rate cut

• The Eurozone unemployment rate remained flat at 12.1% in November, with youth unemployment increasing

by 0.5% compared with August to reach 24.2%

(1) (2) (3)

UK +1.9% +2.6%

Germany +0.6% +2.1%

France +0.2% +0.6%

Spain (0.7)% +0.3%

Italy (1.8)% (0.2)%

Netherlands (0.4)% +0.5%

Sweden +0.7% +1.9%

38% 41%

18% 15%

15% 14%

11%10%

7%8%

6% 8%

4% 5%

0%

20%

40%

60%

80%

100%

Q3-13 Q4-13

Italy

Spain

Benelux

France

Scandinavia

DACH

UK & Eire

0

300

600

900

1,200

1,500

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

Nu

mb

er o

f T

ra

nsa

cti

on

s

ADG

Energy & Power

Transportation & Logistics

Healthcare

Business Services

Industrials

Consumer

TMT

87%

13%

Strategics Financials

European M&A Environment

Market Observations

• European middle market M&A activity contracted 18% Q-o-Q in Q4 2013, contributing to an overall decline in

volume for the full year of c. 28% relative to 2012. The full year decline in activity impacted all sectors. TMT

and Consumer were the two most active sectors, together accounting for over 50% of total annual volume

• Senior loan volume for European LBOs in Q4 2013 increased to circa €9.1 billion, up from €6.4 billion during

the same period in 2012

• In 2013 the average purchase price multiple (TTM EBITDA basis) for European LBOs with an Enterprise

Value of €250m or less was 7.0x, 0.4x lower than for the full year 2012

• Equity contribution1 in European LBOs averaged 42% during 2013, compared to 52% during 2012,

demonstrating the continued strength of debt markets and healthy lending appetite

Transactions by Target Country2 Buyer Segmentation Q4 20131

783

Middle Market

Transactions

Source: S&P Capital IQ

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) DACH defined as Germany, Austria, Switzerland; (5) Scandinavia defined as Denmark, Norway, Sweden and Finland


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)

Q4 - 13

Sector

Breakdown

0.6%

2.2%

5.1%

9.3%

15.1%

14.9%

Change of

Q4 - 13 over

Q4 - 12

22.1%

Middle Market M&A Activity – By Sector

3

30.7%

100.0% Total

Source: S&P Leveraged Commentary & Data

Notes: (1) Equity contribution including retained equity/vendor financing and contributed equity

4

3

5

66.7%

6.3%

(45.2%)

14.1%

(12.6%)

(23.1%)

(25.9%)

(13.0%)

(17.6%)

0

2,000

4,000

6,000

8,000

10,000

0

50

100

150

200

Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13

Dea

l V

alu

e (

€m

)

Nu

mb

er o

f T

ra

nsa

cti

on

s

International Activity by Number International Activity by Value

North America81%

South America4%

China3%

Asia (excl. China & India)8%

Africa & Middle East4%

European

Inbound M&A Environment

Acquisitions by Non-European Buyers1,2

Non-European Buyers by Country Q4 131,2

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

4

Market Observations

• International inbound M&A volume into Europe was broadly consistent in Q4 compared to Q3 2013, with

116 closed transactions

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

international acquirers accounting for 40% and 20% of completed transactions in the quarter, respectively

• The Business Services, Transportation & Logistics and Consumer sectors recorded the greatest increases in

inbound M&A volume

• North American groups continued to dominate non-European buyers, closing 94 transactions in the quarter.

South American buyers closed 5 transactions in Q4 2013, representing their most active quarter since Q4

2011


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

% of Total Deal Volume Q 4-11 Q 1-12 Q2-12 Q 3-12 Q 4-12 Q1-13 Q 2-13 Q 3-13 Q 4-13

ADG 23% 0% 29% 25% 67% 50% 13% 30% 40%

Business Services 9% 10% 8% 5% 10% 10% 15% 11% 18%

Consumer 8% 9% 9% 6% 8% 8% 8% 8% 11%

Industrials 10% 8% 11% 10% 9% 11% 12% 10% 12%

Energy & Power 23% 19% 8% 7% 13% 18% 36% 16% 0%

Healthcare 9% 15% 16% 14% 6% 9% 11% 20% 14%

TMT 17% 16% 18% 21% 18% 20% 17% 24% 20%

Transportation & Logistics 7% 5% 5% 10% 3% 0% 9% 6% 10%

Aerospace, Defence & Government

Services

5

European ADG Equity Markets1

European ADG Middle Market M&A Activity

UK and Eire France DACH Spain Italy Benelux Scandinavia

Price Change since last quarter 2.1% 10.9% 0.7% NA 24.5% 20.5% 11.7%

Cash on Balance Sheet (€ bn) 6.5 5.0 0.3 NA 1.0 5.3 0.1

Net Debt / LTM EBITDA Multiple 1.3x 1.1x 0.6x NA NM NM NM

LTM EBITDA Multiple 9.5x 14.1x 8.5x NA 7.9x 17.1x 10.4x

Change since last quarter 0.1x 0.7x (0.6x) NA 1.6x 9.3x 3.5x

LTM EBITDA Margin 13.0% 8.7% 9.5% NA 7.0% 7.5% 9.0%

Consensus 2Yr Fwd Revenue Growth (p.a.) 3.9% 2.6% 8.0% NA (2.2%) 4.3% 8.0%

0

1

2

3

4

5

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

Nu

mb

er o

f T

ran

sact

ion

s

North America Asia (excl. China & India) China

India South America Africa & Middle East

0

2

4

6

8

10

12

14

16

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

Nu

mb

er o

f T

ran

sact

ion

s

UK & Eire Scandinavia DACH France Benelux Spain Italy

Source: S&P CapitalIQ

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); (3) Resignation or appointment of CEO,

CFO or Chairman

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

Selected European ADG M&A

Market Observations

• Airbus performed strongly in Q4 2013 with 507 aircraft orders, surpassing 332 orders secured by Boeing. In

2013, Airbus secured 1,619 jet orders compared to Boeing’s 1,355

• However, the Dubai Airshow in November saw Boeing secure orders and commitments worth $101.5bn, more

than double that of Airbus

• The global air travel market expanded by 5.1% during the first 11 months of 2013 compared to the same period

in 2012, while European air travel grew by 3.7% over the same period

• The global commercial airline industry is forecast to generate net profit of $12.9bn in 2013, up from $7.4bn

in 2012

• At the European Council meeting, EU leaders agreed to greater defense cooperation, including joint

development of drones, in-flight re-fuelling aircraft, satellite communications systems and cyber-defense. The

last defense summit in 2008 resulted in a commitment for defense spending of 2% of GDP, but EU military

spending has fallen by 10% since then

• Finmeccanica, Safran and Airbus Group are looking to bid for Avio's space division, Avio Spazio, which could

be worth €300m

Target Country Acquirer Country Sub Sector EV (€m)

Thermal Engineering Senior A&D Components 34

PGA Electronic Astronics Corporation Avionics and Electronics 27

Composystem Carbures Europe A&D Components NA

TRAC Group Chromalloy Gas Turbine A&D Components NA

GAVAP RUAG Holding Defense Electronics NA

Business Services

6

European Business Services Equity Markets1

European Business Services Middle Market M&A Activity


Price Change since last quarter 6.2% 0.9% 0.2% NM 15.9% 13.0% 4.7%

Cash on Balance Sheet (€ bn) 4.4 7.4 3.5 0.2 0.0 1.2 NM

Net Debt / LTM EBITDA Multiple 1.6x 1.7x 1.4x 10.0x 11.0x 3.0x 2.1x

LTM EBITDA Multiple 11.3x 7.0x 10.7x NM 8.9x 11.6x 10.6x

Change since last quarter 0.9x 0.4x 0.9x NM (0.3x) (0.3x) 0.1x

LTM EBITDA Margin 10.3% 9.5% 6.4% 7.3% 4.0% 3.5% 8.6%

Consensus 2Yr Fwd Revenue Growth (p.a.) 5.6% 3.7% 2.7% (3.1%) 1.3% 6.3% 2.1%


mergermarket BC Partners Professional Services 460

Norland Managed Services CBRE Facility Management 356

Alexander Mann Group New Mountain Capital Staffing Services 307

Busy Bees Childcare Teachers' Private Capital Childcare Services 264

Bestinvest Permira Advisers Professional Services 53

Alpha Financial Markets Consulting Baird Capital Partners Europe Consulting Services 33

Millbrook Proving Ground Rutland Partners Testing Services NA

CMO Global Inflexion Private Equity Partners Software Services NA

Leasedrive Group HgCapital Support Services NA

London Offshore Consultants Bridgepoint Development Capital Consulting Services NA

Europa Support Services Bilfinger Facility Management NA

Conquaestor KPMG Advisory Consulting Services NA

0

5

10

15

20

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

Nu

mb

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s



0

50

100

150

200

250

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

Nu

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Selected European Business Services M&A

Market Observations

• Growth in the Euro area slowed in December 2013 due to ongoing weakness in certain countries. The Markit

Services Business Activity Index fell slightly to 51.0 in December, compared to 51.2 in November, as growth

in Ireland, Spain and Germany was partly offset by contraction in France and Italy

• The UK services sector continued its expansion in Q4 2013 with the business confidence index at its highest

level since March 2010, driven by rising employment and positive business expectations

• In October, the EU proposed a new directive which would give governments the opportunity to blacklist

outsourcing service providers who fall below the required quality standard when serving the public sector, as

concerns over cases such as G4S and Serco were raised

• Bureau Veritas, the French testing services company, made four acquisitions in Q4 2013, acquiring businesses

in Canada (two), South Africa and Singapore, to grow its market share globally

• Management moves3: Bureau Veritas, Capita, Clifford Chance, Michael Page, Serco Group


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

0

5

10

15

20

25

30

35

Q3-11 Q1-12 Q3-12 Q1-13 Q3-13

Nu

mb

er o

f T

ran

sact

ion

s



0

50

100

150

200

250

300

350

400

Q3-11 Q1-12 Q3-12 Q1-13 Q3-13

Nu

mb

er o

f T

ran

sact

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s


Consumer

European Consumer Equity Markets1

European Consumer Middle Market M&A Activity


7


Price Change since last quarter 4.4% 1.4% 2.2% 4.8% 9.6% 1.5% 2.9%

Cash on Balance Sheet (€ bn) 29.0 35.6 22.8 4.2 4.3 NM NM


LTM EBITDA Multiple 10.4x 8.2x 8.8x 10.2x 9.0x 9.3x 9.8x

Change since last quarter 0.2x 0.1x 0.4x 0.9x 0.6x (0.3x) (0.3x)


Consensus 2Yr Fwd Revenue Growth (p.a.) 4.3% 4.0% 4.1% 2.6% 4.0% 2.0% 4.3%

Sources: S&P CapitalIQ, Bloomberg, Retail Gazette, Food and Drink Europe, 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, 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 European Consumer M&A Deals

• Suntory made an offer to acquire Beam, the makers of Jim Beam and Makers Mark whiskey, for $15.7 billion,

representing a 1-month premium of 27.0%

• Sysco acquired US Foods, the foodservice distributor, for $3.5 billion

• Premier Foods is nearing the sale of its Hovis business unit to the Gores Group following a competitive process

• Sports Direct acquired a 4.6% stake in Debenhams stating it wishes to work with the department store and

explore options at an operational level

• Medical professionals and campaigners are putting pressure on governmental bodies to legislate for a reduction

of sugar in foods by up to 40% in four years in an effort to reduce the incidence of obesity and diabetes

• The UK retail sector is expected to grow 2.4% to £324 billion in 2014 as recent signs of economic recovery

bolster consumer confidence

• Management moves3: Cineworld, Debenhams, ICA Gruppen, Orkla, Lookers, Rémy Cointreau, Sports Direct,

Valora

Market Observations


Campofrio Food Group Sigma Alimentos Processed Food 675

Basic Fit 3i Group Leisure 275

Tilda Hain Celestial Processed Food 261

Cambridge Education Group Bridgepoint Education 222

Park Holidays (UK) Caledonia Investments Leisure 206

Byron Hamburgers Hutton Collins Restaurants 120

Virgin Wines Mobeus Equity and Connection Capital Online Retail 19

Burton's Foods Ontario Teacher's Pension Plan Processed Food NA

Empire World Trade Univeg Katope Distribution NA

Snacks International Apax Partners France Processed Food NA

Arena Italia Capvis Equity Partners Apparel NA

Industrials

European Industrials Equity Markets1

European Industrials Middle Market M&A Activity


Selected European Industrials M&A

Market Observations

• GDP rose by 0.1% in the Euro area (EA17) and by 0.2% in the EU27 during the third quarter of 2013,

compared with the previous quarter

• In November 2013, seasonally adjusted industrial production grew by 1.8% in the Euro area (EA17) and by

1.5% in the EU27 compared to the previous month, according to estimates from Eurostat

• In December, the Markit Eurozone PMI Composite Index rose to 52.1, its second-highest level during the past

two-and-a-half years

• In December, the Economic Sentiment Indicator (ESI) increased by 1.6 points in the Euro area (to 100.0) and

1.4 points in the EU (to 103.5). Sentiment in the Euro area is thus back to its long-term average for the first

time since July 2011

• In October, The Marmon Group agreed to acquire the beverage dispensing and merchandising business of IMI

plc for $1.1 billion

• Management moves3: Digital Barriers, Edwards Group, Hexagon Composites, Indutrade, Infratek, Koninklijke

Philips, Marshalls, Monberg & Thorsen, Obrascon Huarte Lain, OC Oerlikon, Rational, Rosenbauer,

Schweiter, Serco Group, SGL Carbon, Siemens, Solar, Speedy Hire, Spirax-Sarco, Travis Perkins, TTS Group,

Volvo, WABCO, Waterlogic, Westag & Getalit


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, Switzerland), Spain, Italy, Benelux (Belgium, The

Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman 8






Change since last quarter 0.6x 0.5x 0.4x 0.8x 0.9x 0.7x 0.1x


Consensus 2Yr Fwd Revenue Growth (p.a.) 4.5% 1.9% 3.9% (0.2%) 2.8% 4.5% 3.3%

0

50

100

150

200

250

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

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0

5

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15

20

25

Q4-11 Q2-12 Q4-12 Q2-13 Q4-13

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ns




Acciai Speciali Terni and Outokumpu VDM ThyssenKrupp Steel 1,269

Ansaldo Energia Fondo Strategico Italiano Energy & Power Services 1,198

IMI, Beverage Dispense and Merchandising Divisions Marmon Holdings Industrial Machinery 814

OFD Holding Yara International Chemicals (Fertilizer) 314

Stream MRC Global Flow Control 190

Allied Glass Containers CBPE Capital Packaging 156

TLT-Turbo China Power Construction Industrial Machinery NA

Swift Technical Services Wellspring Capital Management Oil & Gas Services NA

Valvitalia Group Fondo Strategico Italiano Industrial Machinery NA

VAT Capvis Equity Partners Industrial Machinery NA

Energy & Power

European Energy & Power Equity Markets1

9


Price Change since last quarter (3.9%) (0.5%) (1.3%) 10.6% 7.1% 2.9% (0.2%)

Cash on Balance Sheet (€ bn) 31.7 35.7 14.4 16.7 20.6 14.7 14.6



Change since last quarter 0.0x 0.0x 0.7x (0.5x) 0.6x 0.3x 0.4x


Consensus 2Yr Fwd Revenue Growth (p.a.) 13.0% 7.9% 0.9% 1.0% (3.6%) 2.0% 5.8%

European Energy & Power Equity Markets1

European Energy & Power Middle Market M&A Activity


Selected European Energy & Power M&A3

Market Observations

• The European oilfield service and equipment M&A market remained active in Q4 2013 with several

acquisitions by major European construction, service, and oil and gas companies, including Amec’s offer to

acquire US-based Foster Wheeler

• US-based private equity continued to demonstrate strong interest in the sector in Europe, with Wellspring

Capital acquiring Swift Technical Group from UK-based Gresham Private Equity

• Following the acquisition of Ampelmann Operations in Q3, 2013, IK Investment Partners have completed the

first add-on acquisition with the takeover of Offshore Solutions, the Dutch supplier of Motion Compensated

Gangway (MCG) systems to the offshore energy sector

• Management moves4: Fortum Oyj. Anglo Pacific Group, Crudecorp, Sevan Drilling, Ensco, Saipem, Enteq

Upstream, Bowleven, Ruspetro, Bergen Group


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, DACH (Germany,

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

acquisitions of majority stakes only (4) Resignation or appointment of CEO, CFO or Chairman

0

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10

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20

25

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35

40

45

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Price Change since last quarter (3.9%) (0.5%) (1.3%) 10.6% 7.1% 2.9% (0.2%)

Cash on Balance Sheet (€ bn) 31.7 35.7 14.4 16.7 20.6 14.7 14.6



Change since last quarter 0.0x 0.0x 0.7x (0.5x) 0.6x 0.3x 0.4x


Consensus 2Yr Fwd Revenue Growth (p.a.) 13.0% 7.9% 0.9% 1.0% (3.6%) 2.0% 5.8%


Well Intervention Services Business EQT Partners Oilfield Services 486

DONG Energy, Severn Power Station Macquarie Infrastructure Utility 417

AGR Seabed Intervention Marin Group Oilfield Equipment NA

Mentor IMC Group VINCI Energies Oilfield Services NA

Vryhof Anchors HitecVision Offshore Equipment NA

Offshore Solutions Ampelmann Operations Offshore Equipment NA

Promet AS Wepco; Habu; Nord Kapital. Oilfield Equipment NA

Swift Technical Group Wellspring Capital Oilfield Services NA

0

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8

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Healthcare & Life Sciences

10

European Healthcare & Life Sciences Equity Markets1









European Healthcare & Life Sciences Middle Market M&A Activity


Selected European Healthcare & Life Sciences M&A

Market Observations

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100

120

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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

• Graphite backed the MBO of domiciliary care provider, City & County Healthcare from Sovereign Capital

• Ravelstone Care Homes, an August Equity portfolio company, acquired Anglia Retirement Homes, expanding

the footprint of the group in the South East of England

• Duke Street announced the acquisition of Air Products’ homecare operations in the UK & Ireland. Duke Street

financed the deal with the support of the family office of Stagecoach founder, Sir Brian Souter

• Shire acquired the US rare disease specialist ViroPharma for $4.2 billion

• Johnson & Johnson sold its Ortho Clinical Diagnostics unit, a provider of solutions for screening and monitoring

diseases, to Carlyle for approximately $4.1 billion

• Madison Dearborn Partners acquired a majority stake in Ikaria, a provider of innovative therapies for critical care

units in hospitals, for approximately $1.6 billion

• Permira acquired Atrium Innovations, a health and nutrition products specialist, for $789 million

• Management moves3: Amarin Corporation, AstraZeneca, Meda AB, Optos, Probi AB and SkyePharma


Gentium Jazz Pharmaceuticals Italy Biotechnology 630

Laboratorios Indas Domtar Pharmaceuticals 425

Acino Holding Nordic Capital Pharmaceuticals 424

Spirogen MedImmune Biotechnology 326

Centro Medico Teknon Grupo Hospitalario Quirón Healthcare Services 225

Andor Technology Oxford Instruments Healthcare Equipment 174

Medipsy Ramsay Santé Healthcare Services 152

PULSION Medical Systems Getinge Healthcare Equipment 140

Biotech International Wright Medical Group Healthcare Equipment 59

Quotient Clinical Bridgepoint Development Capital Pharmaceuticals 37

City & County Healthcare Group Graphite Capital Healthcare Services NA

Technology, Media & Telecom

11

European Technology, Media & Telecom Equity Markets1

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


0

50

100

150

200

250

300

350

400

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Selected European Technology, Media & Telecom M&A

Market Observations

• Time Warner Cable rejected a $61.3 billion takeover offer from Charter Communications

• Liberty Media acquired the remaining stake in Sirius XM, the provider of radio services, for $10.4 billion

• Google acquired Nest Labs, the developer of connected home monitoring products, for $3.2 billion

• Alcatel-Lucent’s enterprise business is valued up to €250 million and is attracting interest from a number of

investors as it focuses on higher margin mobile network contracts

• European enterprise software spend is expected to total $89.3 billion in 2014 and grow at a CAGR of 5.0% to

reach $103.3 billion in 2017, driven by the conferencing, CRM, data integration, SCM and virtualisation

infrastructure software segments

• European cloud services spend is expected to be $36.0 billion in 2014 and grow at a CAGR of 13.3% to reach

$52.4 billion in 2017, driven by cloud application and system infrastructure management services and strong

uptake in Western Europe, especially in the UK, by far the largest user of cloud services in Europe

• Management moves3: Belgacom, Deutsche Telekom, Havas, Kabel Deutschland, SAP, Sage Group,

Swisscom, TeliaSonera, Vimpelcom, Vivendi

Sources: S&P CapitalIQ, Gartner, 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




Supercell SoftBank and GungHo Online Entertainment Media c.2,250

Scout24 Hellman & Friedman Media c.2,000

Unit4 Advent International Software 1,279

Personal & Informatik HgCapital Software 438

Deepmind Technologies Google Software 242

Total Specific Solutions Constellation Software Software c.240

Delcam Autodesk Software 194

Realtime Technology Dassault Systemes Software 177

The Property Software Group LDC Software 21

Shutl eBay Internet NA

CableCom Networking Inflexion Private Equity Telecoms NA

NextiraOne Management Dimension Data IT Services NA


European Transportation & Logistics Equity Markets1

12






Change since last quarter 0.5x (0.4x) 1.2x (0.8x) (0.3x) (0.0x) 0.8x



0

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European Transportation & Logistics Middle Market M&A Activity


Selected European Transportation & Logistics M&A

Market Observations

• The outlook for 2014 in transport and logistics is positive, with 4% growth expected in logistics and 8% in sea

freight, according to DVZ

• According to a new report produced for trade union groups, the EU postal liberalisation has led to “declining

services, increasing prices”. Fifteen years of European countries opening up their postal markets to full

competition has had an “overwhelmingly negative” result

• Following the investments of retailer Müller Holding and Amazon into intra-logistic providers, Hong-Kong

based Alibaba has formed a JV with Goodaymart, a subsidiary of Haier, to increase penetration in rural areas

in China. The investment totals $360m

• Management moves3: Belgian Post (remains in office until successor is found)


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




Far Freight Gebrüder Weiss Freight forwarding NA

Deben Group Industries Avocet Capital Distributor NA

Retailo Blackhawk Network Distributor 50

R. Geist Spedition Clipper Logistics Group Logistics NA

Fleet Care Services arwe Service Mobility services NA

Logent Adelis Equity Partners Logistics NA

QEF Global Park-Ohio Holdings Supply chain optimisation NA

West Cargo Vårgårda Bring Express Norge Cargo services NA

Hofmeister & Meincke Wilhelm Fricke Distributor NA

ACi Transport & Spedition Blue Water Shipping Freight forwarding NA

Neptumar Scand. Shipping & Logistics Freight shipping NA

13 13

0

2,000

4,000

6,000

8,000

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12,000

14,000

2012 2013

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India

China

Africa & Middle East

South-America

Asia (excl. China & India)

Europe

North-America

0

1,000

2,000

3,000

4,000

5,000

2012 2013

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ADG

Energy & Power


Healthcare

Business Services

Industrials

Consumer

TMT

Featured Theme

“Review of 2013 European M&A”

• With 3,287 deals, down from 4,589 in 2012, European middle market M&A fell 28% by volume in 2013, a

sharper decline than the 14% drop seen globally

− Europe represented 29% of global middle market M&A in 2013 against 35% in 2012

− With more stable overall deal volume in 2013, North America increased its share of the global market

to 55%

• A closer look at the sector breakdown demonstrates that none were spared in 2013, with no significant

change in relative deal activity by sector. TMT, Consumer and Industrials were the most active sectors

• HW&Co. closed 15 deals during the last quarter of 2013, and our momentum continues in 2014, with a

record deal pipeline suggesting a positive outlook for middle market M&A activity in 2014

• European inbound M&A remained strong overall in 2013, representing 14% of total deals compared to

12% in 2012. Inbound activity continued to be dominated by North America which accounted for 83% of

acquisitions in Europe in 2013, compared to 76% in 2012

• A more positive outlook in the financing markets in 2013 resulted in private equity activity accounting for

13% of European transactions in 2013, up from 11% in 2012

European Deals by Sector Global Deals by Region

Selected HW&Co. 2013 Transactions


Note: Includes closed M&A transactions of majority stakes only, where deal value

was undisclosed or between €25m – €650m, within the United Kingdom, Eire,

France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,

the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and

Finland)

29%

25%

15%

13%

8%

7% 2% 1%

30%

23%

15%

14%

8% 6% 2% 1%

4,589 deals 3,287 deals 13,270 deals 11,349 deals


Note: Includes closed M&A transactions of majority stakes only, where deal value

was undisclosed or between €25m – €650m, within the United Kingdom, Eire,

France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,

the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and

Finland), North-America, South-America, Asia and Africa & Middle East

35%

51%

3%

1% 1%

7%

2%

29%

55%

3% 1% 1%

8% 2%

has been acquired by

a portfolio company of

&



a division of




a subsidiary of


has been acquired by has been acquired by




and


agrees to be acquired by has been acquired by





and







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http://www.google.com/url?sa=i&rct=j&q=bio+scrip+logo&source=images&cd=&cad=rja&docid=JygbZbV2MV25ZM&tbnid=42Ok86njwnEtAM:&ved=0CAUQjRw&url=http://www.watchlistnews.com/2013/08/16/bioscrip-receives-neutral-rating-from-zacks-bios/&ei=JqobUrrBHbe5sQSny4DwAg&bvm=bv.51156542,d.dmg&psig=AFQjCNFmhGy6PuFG9cARrTOOaPidtqlMAw&ust=1377631127546884

Contacts and Disclosures

Thierry Monjauze

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8901

[email protected]

Julien Darmon

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8905

[email protected]

Red Norrie

Managing Director

63 Brook Street

London W1K 4HS

United Kingdom

Phone: +44 20 7518 8906

[email protected]

Jeffery Perkins

Managing Director

Bockenheimer Landstr. 33-35

60325 Frankfurt

Germany

Phone: +49 69 3550638 00

[email protected]

www.harriswilliams.com

www.harriswilliams.de

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Documents

European Winter Update - Harris Williams & Co. · • The outlook for 2014 in transport and logistics is positive, with 4% growth expected in logistics and 8% in sea freight, according