Deal Making In High Definition by J.P. Morgan + Thomson Reuters

Deal making in high definitionSector connections

DECEMBER 2009

J6100 M&A 104 page broch v4.qxd:Layout 1 3/12/09 11:20 Page 3

All inquiries should be directed to any of theindividuals at J.P. Morgan or Thomson Reuterslisted below.

Sam BridgesJ.P. MorganAssociate10 Aldermanbury, London EC2V 7RF0207 325 0545

Hernan CristernaJ.P. MorganManaging Director10 Aldermanbury, London EC2V 7RF0207 325 4631

Vincent FlasseurThomson ReutersDeals Intelligence30 South Colonnade, London, E14 5EP0207 542 1958


Table of contents1. Introduction 2

2. General observations 7

3. Food Beverages and Tobacco 9

4. Household & Personal Products 14

5. Consumer Durables and Apparels 19

6. Food and Staples Retail 24

7. Retailing 29

8. Healthcare 34

9. Telecom Services 39

10. Media 44

11. Information Technology 49

12. Energy 54

13. Utilities 59

14. Banks 64

15. Insurance 69

16. Auto and Components 74

17. Chemicals 79

18. Metals & Mining 84

19. Transport 89

20. Real Estate 94

1Deal making in high definition


1. IntroductionAs economies around the world begin to emerge from recession, many industry sectors willbecome ripe for increased M&A activity. This latest report from J.P. Morgan and ThomsonReuters looks at which industry sectors are most suited to respond to this upturn.

In our last report , “The Era of Globalized M&A: Winds of Change”, we established thatbusiness confidence, rather than opportunism, was the most important driver for M&Aactivity and was very closely tied to macro-economic conditions and stock marketperformance. To this end, M&A requires three main drivers:

1) Confidence

2) Improved business conditions

3) Available funds to make acquisitions

In the third quarter of 2009, there was positive GDP growth in the Eurozone (+0.4%) andthe United States (+0.9%). The MSCI European and North American indices both grew byover 20% in 2009 from January to November. This suggests that the developed world ispoised to emerge from recession, and the M&A environment is likely to see a significantincrease in activity. To help support this concept our framework will focus on:

1) Deal volumes and cross-border activity;

2) Sector performance vs. the broader world index;

3) Valuation;

4) Historical sector valuation and future EPS growth;

5) Capital raising;

6) Geographic footprint;

The current financial crises resulted in the postponement of M&A projects in 2009 ascompanies focused on ensuring that they have sufficient liquidity. With favorable capitalmarket conditions, many companies have raised record amounts of additional capital. Asdeveloped economies such as US and the Eurozone emerge from recession, plans arenow being dusted off as CEOs recognize the need to increase earnings by expanding theirbusinesses.

The aim of this report is to a) analyze the historical growth patterns across varioussectors, and b) to identify the sectors which are well capitalized and potential candidatesfor M&A through 2010 and beyond.

Sector connections2


We examine the behavior of sectors across two time periods; the “dot.com “bubble (1Q2000-1Q 2002) and the “leverage bubble” (4Q 2005-2Q 2008). The dot.com bubble, whilepredominantly confined to the telecoms and technology sectors, did produce increasedlevels of activity across other sectors whereas the leverage bubble was a product ofcheap financing, and a key factor in the rise in M&A across many sectors.

The table opposite forms the basis of the analysis that looks at the value destructioncaused by the financial crisis and the estimated earnings per share growth over a 12month period. We have examined 18 sectors in total which have experienced a degree ofM&A activity at one time or another over the entire time period. The sectors can beaggregated into the following groups:

1) Consumer, retail and healthcare;

2) Telecoms, media and technology;

4) Natural resources;

3) Financial institutions;

5) Diversified industries; and

6) Real estate;

Deal making in high definition 3


Exhibit 1.1

Financing acquisitions remains the single biggest challenge as lenders shy away fromover exposure on risky loans and CEOs balance the need for growth over the potentialnegative ratings from the agencies on highly leveraged acquisitions. The cost of debt isrelatively simple to calculate – it includes the risk-free rate and a risk premium. The costof equity is more complex as it does not pay a set return to investors and so the risk isnormally calculated by comparing the investment to other similar investments in order todetermine a median.

The multiples examined across the sectors (see exhibit 1.2) indicate that real estate hasthe highest EBITDA valuation multiple of 24.8x earnings.

Sector breakdown by market value and EPS 12 month growth forecast

Sector Sector as a % of total market

Mkt value difference between 2007 and 2009

EPS Growth (12 month estimate)*

Regional key growth areas

Food beverages and tobacco

6.5% (8.5%) 8.9% Europe ex. UK

Household & personal products

1.9% Flat 2.7% UK

Consumer durables and apparels

1.7% (8.5%) 113.1% North America

Food and staples retail 2.8% (14.1%) 7.5% Pacific ex. Japan

Retailing 2.5% (29.5%) 9.2% Emerging markets

Healthcare 10.8% (13.9%) 9.0% Europe ex. UK

Telecom services 6.0% (26.6%) 1.6% Emerging markets

Media 2.4% (45.1%) 6.8% Emerging markets

Information technology 13.9% (18.1%) 35.6% Europe ex. UK

Energy 13.4% (17.1%) 3.8% North America

Utilities 5.4% (19.4%) 7.4% Europe ex. UK

Banks 12.4% (28.9%) 24.8% Emerging markets

Insurance 4.8% (37.2%) 29.3% North America

Auto and components 2.5% (30.2%) N/A Emerging markets

Chemicals 2.9% (21.1%) 16.1% Emerging markets

Metals & mining 5.3% (14.9%) 17.1% UK

Transport 2.3% (26.4%) 18.9% North America

Real estate 2.5% (31.1%) (1.8%) Emerging markets

Total market 100% (25.2%) 19.2% -

* 12 month forecast is from 3Q 2009-3Q 2010

Sector connections4


Exhibit 1.2

Historically, chemicals has commanded the highest premiums (defined as the one monthmedian share price prior to the announcement date) across all sectors, while real estateis the lowest in the sample.

Exhibit 1.3

Sector premium median (1998-3Q 2009) as a percentage

30.428.5 28.1 28.1 27.5 26.5 26.2

22.5 22.4 22.421.2

20 19.9 19 18.3 17.716.4

15.1

Chem

icals IT

Food

Bever

ages

and

Tob

acco

House

hold

& Per

sona

l Pro

ducts

Health

care

Auto

Met

als &

Mini

ng

Energ

y

Trans

port

Teleco

m S

ervic

es

Insu

ranc

e

Retail

ing

Consu

mer

Dur

ables

and

App

arel

Utilitie

s

Med

ia

Banks

Food

& Stap

les R

etail

Real E

state

Sector median for EBITDA and PE multiples (1998-3Q 2009)

24.8

18 16.8 16.6

11.7 11.1 10.8 10.7 10.5 10.4 10.3 10 9.9 9.5 9.3 8.9

22.3

40.8

35 34.6

22.1

28

23.3 23.920.4

25.929.4

22.8

16.4

23.4

17.821.1

Real E

state IT

Med

ia

Health

care

Trans

port

Teleco

m S

ervic

es

Retail

ing

Food

Bever

ages

and

Tob

acco

Utilitie

s

House

hold

& Per

sona

l Pro

ducts

Food

& Stap

les R

etail

Consu

mer

Dur

ables

and

App

arel

Met

als &

Mini

ng

Chem

icals

Auto

Energ

y

Banks

Insu

ranc

e

EBITDA P/E



Exhibit 1.4

Fundamental to any up tick in M&A is economic growth. With a number of key marketsemerging from recession during the third quarter, improved business confidence shouldre-energize M&A deal flow with only the UK and Spain yet to experience growth of themajor developed markets.

Exhibit 1.5

Quarter-on-quarter GDP percentage change 2007-3Q 2009

Quarter France US UK Eurozone Germany Spain Japan

1Q 2007 0.7 0.3 0.7 0.8 0.3 0.9 1.4

2Q 2007 0.4 0.8 0.6 0.4 0.3 0.8 0.0

3Q 2007 0.7 0.9 0.5 0.6 0.8 0.7 (0.6)

4Q 2007 0.3 0.5 0.5 0.3 0.1 0.6 1.0

1Q 2008 0.5 (0.2) 0.6 0.8 1.6 0.4 1.0

2Q 2008 (0.4) 0.4 (0.1) (0.3) (0.6) 0.0 (0.7)

3Q 2008 (0.2) (0.7) (0.7) (0.4) (0.3) (0.6) (1.7)

4Q 2008 (1.5) (1.4) (1.8) (1.8) (2.4) (1.1) (3.0)

1Q 2009 (1.4) (1.6) (2.5) (2.5) (3.5) (1.6) (3.2)

2Q 2009 0.3 (0.2) (0.6) (0.2) 0.4 (1.1) 0.7

3Q2009 0.3 0.9 (0.4) 0.4 0.7 (0.3) 1.2

Overall M&A activity by target sector year- on- year percentage change based value/number of deals

(23)%

(9)%

(16)%

(4)%

(20)%

(21)%

23%

(14)%

(9)%

(7)%

35%

(22)%

14%

(11)%

(6)%

(22)%

(21)%

(8)%

(4)%

95%

7%

(3)%

(6)%

(10)%

(23)%

(23)%

(25)%

(34)%

(35)%

(40)%

(46)%

(48)%

(53)%

(54)%

(61)%

(64)%

(71)%

188% Auto & Components

HH & Perso Products

Healthcare

Transport

Energy

IT

Insurance

Metals & Mining

Retailing

Global M&A All Sectors

Real Estate

Banks

Chemicals

Utilities

Media

Food & Staples Retail

Consumer Durables & Apparel

Telecom Services

Food Beverages & Tobacco

Based on $ value Based on number of deals

Sector connections6


2. General observationsGeneral observations

• The growth of M&A: Business conditions for companies to consider undertaking M&Aare improving. At date of publication, global corporate bond issuance is up 17%compared to the same period last year while follow on equity issuance is up 41%.Syndicated lending continues to suffer from effects of the credit crunch but the capitalmarkets have provided much needed liquidity and easier access to capital. Privateequity firms have started to take advantage of this change in economic health. We havealready seen an increase in the financial sponsor activity during the fourth quarter,including the recently announced leveraged buyouts of Anheuser-Busch InBev’s CentralEuropean and Busch Entertainment assets (USD5.7 billion) and IMS Health (USD5.1billion). As conditions continue to improve, we can expect an influx of financial sponsoractivity as these firms put to work the funds they raised at record levels in the yearfollowing the onset of the credit crisis in mid-2007.

• Consolidation: Bearing in mind the expected growth in M&A activity in 2010, we havefocused on looking at various factors across industries to establish which sectors inparticular demonstrate characteristics that make them likely candidates forconsolidation in the near term. Based on analysis covering earnings per share growth,equity capital markets performance, fundraising activity, market capitalization, andM&A trends seen during the last major economic cycles, including considerationstructure, premia and exit multiple analysis, we have identified the following sectors ashaving strong credentials conducive to M&A:

– Consumer durables & apparels– Telecommunications, media & technology– Insurance– Food beverages & tobacco

– Opportunities may present themselves in the following sectors especially so in theemerging markets

– Banking– Utilities– Chemicals

• We expect the following sectors to see little in the way of M&A activity:

– Real estate– Auto & components

By sector

• The consumer durables and apparel sector has seen 12 month EPS growth of 113.1%through to November 2009 suggesting a confident and bullish market with a marketvalue decrease of 8.5% between 2007 and 2009. Follow–on, convertible and corporatebond issuance has been strong in 2009 suggesting that companies in the sector haveshored up balance sheets to support the strong earnings potential and market pricing.

• Twelve of the 20 largest telecoms IPOs in the sector to reach the market since 2005are from emerging markets and more notably from MENA. We have already seenserious attempts for domestic consolidation in the emerging markets most notablyfrom Bharti/ MTN. We also expect to see cross-border M&A to take place between lowgrowth developed markets and the high growth opportunities that the emergingmarkets represent.

• Corporate bond issuance in media in the first nine months of 2009 already exceeds thevolumes of the last 2 years with USD40.8 billion almost double 2008 figures. Strong



8 Sector connections

borrowing for corporate issuers is due to the high cost of going to the loans market atthis time, meaning it is much more cost effective to borrow on the bonds market in thecurrent recession. Follow-on issuance is also up with USD7.2 billion, almost treble lastyear’s value of USD2.5 billion.

• Earnings in the information technology sector are forecasted to grow by 36% over thenext 12 months with emerging Asia and developed Europe offering the best prospects.Emerging markets players more than doubled (150%) their market capitalization since2002 and now account for 14% of the sector’s capitalization. Emerging Asia is now thesecond largest area by market capital behind North America.

• The insurance sector is likely to see regulatory changes that will promote consolidation.The number of public participants in the sector has increased from 92 in 2007 to 97 in2009, with more companies in North America and Japan. Cross-border activityaccounted for as much as 40% of the top 20 deals between 1998 and 2009 with amixture of intra-European cross-border activity and a degree of transatlantic flow.

• In food beverages and tobacco, emerging markets along with Japan offer the bestprospects for earnings growth over the next 12 months with estimated 12 month EPSgrowth above the sector’s average of 8.9%.

• Banking has already seen a large degree of consolidation and government bailoutactivity in 2008 and 2009. However, based on expected improvement in EPS growthand likely regulatory policy in the US that would limit the size and scope of theseinstitutions, there may still be plenty of room for M&A activity. The obvious targets willbe in the emerging markets as growing economies in Asia have led to a morecompetitive global landscape.

• Of the 20 largest utilities IPOs to reach the market since 2005 it is worth noting that 7were from BRIC (Brazil, Russia, India and China) countries, including 4 from India alone.Renewable energy alongside privatizations of the last remaining government controlledentities across developed and emerging market represent some of the main sources ofnew entrants in the sector.

• During the last cycle in chemicals, emerging markets were the key growth areas with11% market share compared to 7% in 2002. The UK market share contracted to 3%during the last cycle compared to 6% in 2002. Based on analysis of the top 20 IPOs,North America has had 8 newly listed companies compared to 4 from emergingmarkets. Furthermore, growth in the number of constituents in the developed marketshas been confined to North America while emerging markets saw a decline in thenumber of companies operating in 2009 compared with 2007.

• The real estate sector’s mean 12 month EPS growth rate forecast of -1.8% in 2009 iswell below the 2002 return of 18.5% and the 2009 world average of 19.2%. The creditcrunch has resulted in a steep decline in M&A activity as buyers no longer have accessto financing and depressed stock prices have held strategic buyers at bay. Since theheight of the last boom in M&A, the number of participants has declined by 20.4% to109 with the biggest falls in developed markets such as Europe and North America. Inthe near term, we can anticipate M&A activity to remain relatively flat with moderatelypriced and attractive opportunities in EMEA and Asia.

• Activity in auto and components in 2009 is in line to reach an all time high level, butthis is mostly due to the sector’s need to restructure as a result of the collapse of theglobal economy following the credit crisis. Illustrating the concentration of M&A activityin the sector, it is worth noting that, since 1998, 19 of the 20 largest acquisitionstargeting automobile and component companies took place either in the US or inEurope. We therefore expect limited consolidation until the effectiveness of therestructurings and a global recovery result in significantly stronger earnings.



3. Food Beverages and TobaccoExecutive summary

EPS growth of 8.9% in this sector is forecast to grow below the sector average for the next12 months increasing pressure on low growth companies in developed markets to acquiretargets already established in emerging markets.

• M&A activity peaked in 2008 with the Anheuser-Busch/InBev deal (USD60 billion) ending5 years of continuous growth from the 2003 low of USD52 billion. In 2008 a recordUSD298 billion worth of transactions got announced, 40% of which were initiated byforeign acquirors. (Exhibit 3.1).

• Cross-border activity is an essential driver to this sector’s M&A activity. Foreignacquisitions account for 48% of all transactions since 1998, and despite the slow downrecorded in 2009 their proportion have increased to 50% in 2009. By comparison cross-border deals only account for 34% of global M&A since 1998 and stand at a record low of27% so far in 2009. (Exhibit 3.1).

• Since 1998 the largest transactions targeting the sector have predominantly been paid incash with valuations well in excess of the sector’s EBITDA multiple median of 10.7x,especially during the recent leverage bubble. (Exhibit 3.2-4).

• The market value of emerging markets players have more than doubled since 2002 andare now worth a combined USD100 billion (up 114%) and accounts for 8% of the globalsector’s market capitalization. Nevertheless the US, Europe and the UK still make up foran imposing 85% of the sectors capitalization. (Exhibit 3.7-8)

• Emerging markets along with Japan offer the best prospects for earnings growth overthe next 12 months with estimated 12 month EPS growth above the sector’s average of8.9%. (Exhibit 3.6)

Exhibit 3.1

Food Beverage and Tobacco targeted M&A

0

20

40

60

80

100

120

140

160

1Q98

2Q98

3Q98

4Q98

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

.

M&

A (

$bn)

60

80

100

120

140

160

180

Inde

x pr

ice

Sector M&A ($bn) Cross Border M&A ($bn) MSCI Sector Index MSCI World Index

Dot.com bubble Leverage bubble


Exhibit 3.2

Exhibit 3.3

Exhibit 3.4

Price/earnings–Food Beverage and Tobacco acquisitions >$500mm

0

10

20

30

40

50

60

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me

Cash Only Stock Only Hybrid

Rank value/EBITDA–Food Beverage and Tobacco acquisitions >$500mm

0

5

10

15

20

25

30

35

40

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Ran

k V

alu

e/E

BIT

DA


Offer price to target share price–Food Beverage and Tobacco acquisitions >$500mm

0

20

40

60

80

100Ja

n-9

8

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

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p-0

0

Fe

b-0

1

Jul-

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Dec

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Apr

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Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

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Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-0

9

Offe

r P

rice/

Tar

get S

hare

Pric

e (%

)


Sector median*

* Sector median across all charts is represented by this line

Sector connections10


Exhibit 3.5 Exhibit 3.6




Food Beverage and Tobacco convertibles

1.5

2.7

2.2

3.6 3.6

1.0

0.5 0.5

2.4

5.4

4.6

1.1

0

1

2

3

4

5

6

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

2

4

6

8

10

12

14

16

18

20

Value ($bn) No. of issues

Food Beverage and Tobacco corporate bonds

43.743.0

27.9

26.8

38.039.5

73.2

27.8

46.7

18.321.3

63.8

0

10

20

30

40

50

60

70

80

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250


Food Beverage and Tobacco follow on offerings

1.9

5.8

2.5 2.73.4

1.6

5.4

31.2

6.6

3.23.6

17.7

0

5

10

15

20

25

30

35

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140


Food Beverage and Tobacco IPOs

3.1

4.84.4

10.3

2.0

0.9

2.3

7.1

3.32.8

1.2

7.1

0

2

4

6

8

10

12

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70Value ($bn) No. of issues

Food Beverage and Tobacco market capitalisation by region–3Q2009

25.7%

16.3%

5.0% 3.3%

3.8%2.1%

43.3%

0.6%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM

EM EMEA EM Asia EM Lat. Am.

Food Beverage and Tobacco market capitalisation by region–1Q2002

22.9%

13.7%

1.5%5.0% 2.6%

51.1%

2.1%1.1%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


EPS growth % 12 mths

26.027.3

10.8

19.2

13.615.3

8.97.6

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Fd./Bev./Tob.

Market value ($m)

672,971 797,885

1,303,0851,424,755

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Fd./Bev./Tob. ($)

23,752,48031,774,96016,733,02022,114,240



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Exhibit 3.14

To

p F

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d B

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age

and

To

bac

co IP

Os

sin

ce 2

005

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e D

ate

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mm

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tor

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tanb

ul

No



4. Household & Personal ProductsExecutive summary

We expect minimal M&A activity from this sector which accounts for only 1.9% marketshare of all sectors coupled with low forecasted EPS over the next 12 months.

• Equity performance across the sector over the last 12 months is disappointingly low at(9)%. North America, the largest market by capitalization (70% of global market) wasthe worse hit, down 14% in the last year. (Exhibit 4.7-8).

• Earnings growth rates forecast for the sector is historically low at 2.7% for the next 12months. By comparison, in June 2007, just before the credit crisis started, analystsestimated the sector to outgrow the global market with a 12 month growth rate of 14%.Today, emerging Asia and Latin America offer the best prospect for growth withexpected +42% and +12% respectively. (Exhibit 4.6).

Exhibit 4.1

Household & Personal Products targeted M&A

0

2

4

6

8

10

12

14

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9.

M&

A (

$bn)

60

80

100

120

140

160

180

Inde

x pr

ice




Exhibit 4.2

Exhibit 4.3

Exhibit 4.4

Price/earnings–Household & Personal Products acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Household & Personal Products acquisitions >$500mm

0

10

20

30

40

50

Jan

-98

Ma

y-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

Ma

y-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan

-05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan

-07

Ma

y-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

Ma

y-09

Sep

-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Household & Personal Products acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)









Household & Personal Products convertibles

0.13

0.05

0.28

0.13

0.01

0.090.10

0.00

0.05

0.10

0.15

0.20

0.25

0.30

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

0.5

1

1.5

2

2.5


Household & Personal Products market capitalisation by region–1Q2002

73.4%

16.1% 1.7%0.0%

6.1%N/A 2.7%

0.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Household & Personal Products corporate bonds

2.3

4.33.7

3.23.8

4.4

8.8

2.7

12.7

6.5

4.7

9.1

0

2

4

6

8

10

12

14

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

2

4

6

8

10

12

14

16

18

20


Household & Personal Products follow on offerings

0.1

0.7

0.20.2

0.10.10.1

0.1

1.3

0.10.2

1.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25


Household & Personal Products IPOs

0.3

0.8

0.1

0.0

0.4

0.1

0.3

0.1

0.5

0.4

0.0

0.7

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

1

2

3

4

5

6

7

8

9


Household & Personal Products market capitalisation by region–3Q2009

70.0%

10.9%7.8%

1.4%6.2%

N/A3.8%

0.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


EPS growth % 12mths

26.027.3

10.8

19.2

12.2 12.613.9

2.7

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI H/H Pres Prd

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

255,539 281,337 380,775381,104

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI H/H Pres Prd ($)



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er H

ouse

war

es

Op

US

H

ouse

hold

& P

erso

nal P

rodu

cts

Bor

den

Inc(

Koh

lber

g K

ravi

s)

US

29/1

1/02

58

8.7

Unk

now

n 26

.3

8.6

107.

6 O

ntex

NV

B

elgi

um

Hou

seho

ld &

Per

sona

l Pro

duct

s O

NV

Hol

dco

NV

B

elgi

um



Exhibit 4.14

To

p H

ou

seh

old

& P

erso

nal

Pro

du

cts

IPO

s si

nce

200

5

Issu

e da

te

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

sec

tor

Exc

hang

e P

E b

acke

d?

09/2

8/06

40

4.8

Bar

e E

scen

tual

s In

c U

S

Hou

seho

ld &

Per

sona

l Pro

duct

s N

asda

q Y

es

04/1

6/08

36

5.9

Hyp

erm

arca

s S

A

Bra

zil

Hou

seho

ld &

Per

sona

l Pro

duct

s B

OV

ES

PA

N

o

11/1

3/07

22

0.7

Dun

i AB

S

wed

en

Hou

seho

ld &

Per

sona

l Pro

duct

s O

MX

Sto

ck

Yes

06/3

0/07

16

2.7

Vin

da In

tern

atio

nal H

ldg

Ltd

Hon

g K

ong

Hou

seho

ld &

Per

sona

l Pro

duct

s H

ong

Kon

g N

o

12/0

3/07

12

3.9

Tra

nsde

rmal

Cos

met

ics

PLC

U

K

Hou

seho

ld &

Per

sona

l Pro

duct

s P

LUS

10/2

5/07

68

.1

Min

g F

ai In

tern

atio

nal

Hon

g K

ong

Hou

seho

ld &

Per

sona

l Pro

duct

s H

ong

Kon

g N

o

06/1

9/05

51

.5

Zel

mer

SA

P

olan

d H

ouse

hold

& P

erso

nal P

rodu

cts

War

saw

N

o

11/1

5/07

47

.1

Spl

ash

Cor

p P

hilip

pine

s H

ouse

hold

& P

erso

nal P

rodu

cts

Phi

lippi

ne

No

11/3

0/06

37

.1

Aup

u G

roup

Hol

ding

Co

Ltd

Chi

na

Hou

seho

ld &

Per

sona

l Pro

duct

s H

ong

Kon

g N

o

12/0

8/06

22

.9

Fuj

ian

Gua

nfu

Mod

Hou

seho

ld C

o C

hina

H

ouse

hold

& P

erso

nal P

rodu

cts

She

nzhe

n N

o

11/0

5/07

22

.5

Sun

sprin

g M

etal

Cor

p T

aiw

an

Hou

seho

ld &

Per

sona

l Pro

duct

s T

aiw

an

No

09/1

9/07

18

.6

Art

& F

ragr

ance

SA

S

witz

erla

nd

Hou

seho

ld &

Per

sona

l Pro

duct

s B

erne

N

o

01/2

1/05

15

.7

Abl

e C

& C

Inc

Sou

th K

orea

H

ouse

hold

& P

erso

nal P

rodu

cts

Kor

ea O

TC

N

o

07/1

4/05

15

.0

Orc

hids

Pap

er P

rodu

cts

Co

US

H

ouse

hold

& P

erso

nal P

rodu

cts

Am

eric

an

No

05/0

5/06

12

.3

Mas

trad

Fin

ance

s F

ranc

e H

ouse

hold

& P

erso

nal P

rodu

cts

Alte

rPar

is

No

09/1

8/06

11

.8

Bio

care

Sol

utio

ns P

LC

UK

H

ouse

hold

& P

erso

nal P

rodu

cts

Lond

on A

IM

09/0

2/09

8.

4 S

HO

-BI C

orp

Japa

n H

ouse

hold

& P

erso

nal P

rodu

cts

Jasd

aq

No

02/0

8/05

8.

4 Z

enith

Hyg

iene

Gro

up P

LC

UK

H

ouse

hold

& P

erso

nal P

rodu

cts

Lond

on A

IM

11/2

6/07

7.

8 M

arbl

etre

nd G

roup

Ltd

A

ustr

alia

H

ouse

hold

& P

erso

nal P

rodu

cts

Aus

tral

ia

No

11/0

8/06

6.

5 T

eam

Int M

arke

ting

SA

B

elgi

um

Hou

seho

ld &

Per

sona

l Pro

duct

s E

uron

ext B

N

o



5. Consumer Durables and ApparelsExecutive summary

Follow-on, convertible and corporate bond issuance has been strong in 2009 and wellcapitalized balance sheets and EPS forecast of 113.1% over the next 12 months wouldindicate that this sector has the ‘dry powder’ to conduct M&A.

• M&A activity in the consumer durables and apparel sector peaked in 2005 with theUSD57 billion acquisition of Gillette by Procter & Gamble. Activity has fallen consistentlyever since and 2009 is in line to be one of the weakest years on record with only USD12billion worth of transactions announced so far. (Exhibit 5.1).

• The performance of the sector stocks have been neutral over the last 12 months with theUK +14%, emerging Asia +20% and emerging Latin America +13% recording the beststock performance over the last year.

• The sector as a whole offers one of the best prospects for earnings growth over the next12 months with a forecasted mean EPS growth rate of 113%. The US +64%, emergingAsia +49% and Latin America +37% are expected to generate the best growth rates.(Exhibit 5.6).

• Since 2002 the market capitalization of emerging markets stocks has more than trebledto now stand at USD30 billion and account for 9% of the sectors, up from 3% in 2002.With a majority of IPOs since 2005 originating from emerging markets the region couldsee further market gain and potentially generate M&A activity. (Exhibit 5.7-8, 5.14).

Exhibit 5.1

Consumer Durables and Apparels targeted M&A

0

10

20

30

40

50

60

70

1Q98

2Q98

3Q98

4Q98

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

.

M&

A (

$bn)

50

70

90

110

130

150

170

190

Inde

x pr

ice




Exhibit 5.2

Exhibit 5.3

Exhibit 5.4

Price/earnings–Consumer Durables and Apparels acquisitions >$500mm

0

10

20

30

40

50

60

70

80

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Equ

ity V

alue

/Ne

t Inc

om

e


Rank value/EBITDA–Consumer Durables and Apparels acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-

01

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-0

9

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Consumer Durables and Apparels acquisitions >$500mm

0

10

20

30

40

50

60Ja

n-98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Offe

r P

rice/

Tar

get S

hare

Pric

e (%

)








Consumer Durables and Apparels corporate bonds

18.7

7.8

22.3

15.6

20.1

16.2

8.3

18.2

12.9

17.516.2

12.1

0

5

10

15

20

25

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Consumer Durables and Apparels convertibles

2.0 2.0

1.0

3.5

0.1

2.9

1.1

0.3

1.6 1.6

0.4

2.5

0

1

2

3

4

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30


Consumer Durables and Apparels follow on offerings

1.8

3.5

2.7

2.1

4.8

1.6

4.4

1.4

2.8

1.7

2.5

3.1

0

1

2

3

4

5

6

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

180


Consumer Durables and Apparels IPOs

2.3 2.4

3.1

1.11.4

1.9

4.03.5

4.6

1.7

1.1

8.0

0

1

2

3

4

5

6

7

8

9

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70

80

90


Consumer Durables and Apparels market capitalisation by region–3Q2009

25.7%

33.1%

6.0%1.6% 2.0%

1.2%

29.6%

0.6%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Consumer Durables and Apparels market capitalisation by region–1Q2002

0.1%1.9%

26.9%

45.9%

0.1%

22.5%

2.2%0.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.819.222.0

186.0 113.1

20.7

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Cons Dur/App

Source: Thomson Reuters Datastream

Market value ($m)

23,752,480

31,744,960

16,733,02022,114,240

551,813 330,515334,662644,350

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Fd./Bev./Tob. ($)

Source: Thomson Reuters Datastream



Exhibit 5.13

To

p 2

0 C

on

sum

er D

ura

ble

s an

d A

pp

arel

s ac

qu

isit

ion

s

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

28/0

1/05

57

,226

.8

Cas

h an

d S

tock

Com

bina

tion

17.6

18

.6

32.5

G

illet

te C

o U

S

Oth

er C

onsu

mer

Pro

duct

s P

roct

er &

Gam

ble

Co

US

15/0

1/01

11

,736

.1

Cas

h O

nly

36.0

N

P

28.4

R

alst

on P

urin

a C

o U

S

Oth

er C

onsu

mer

Pro

duct

s N

estle

SA

S

witz

erla

nd

03/1

0/05

7,

210.

1 S

tock

Onl

y (1

.6)

NP

14

.9

Alli

ance

Uni

Che

m P

LC

UK

O

ther

Con

sum

er P

rodu

cts

Boo

ts G

roup

PLC

U

K

29/0

1/03

7,

132.

7 S

tock

Onl

y (5

.4)

20.0

21

.5

Nic

him

en C

orp

Japa

n O

ther

Con

sum

er P

rodu

cts

Nis

sho

Iwai

Cor

p Ja

pan

05/0

6/98

6,

090.

0 U

nkno

wn

N

P

NP

A

stra

Mer

ck In

c(M

erck

& C

o)

US

O

ther

Con

sum

er P

rodu

cts

Ast

ra A

B

Sw

eden

21/0

5/01

4,

950.

0 C

ash

Onl

y

NP

N

P

Bris

tol-

Mye

rs S

quib

b-C

lairo

l U

S

Oth

er C

onsu

mer

Pro

duct

s P

roct

er &

Gam

ble

Co

US

29/1

1/05

4,

942.

2 S

tock

Onl

y 17

.1

3.8

13

.1

Bra

mbl

es In

dust

ries

PLC

U

K

Oth

er C

onsu

mer

Pro

duct

s B

ram

bles

Indu

strie

s Lt

d A

ustr

alia

19/0

2/08

4,

893.

6 C

ash

Onl

y 12

.5

10.2

28

.0

Cor

pora

te E

xpre

ss N

V

Net

herla

nds

Oth

er C

onsu

mer

Pro

duct

s S

tapl

es In

c U

S

18/0

3/03

4,

530.

0 C

ash

Onl

y 56

.4

12.2

30

.2

Wel

la A

G

Ger

man

y O

ther

Con

sum

er P

rodu

cts

Pro

cter

& G

ambl

e C

o U

S

28/1

0/05

4,

390.

2 C

ash

and

Sto

ck C

ombi

natio

n (3

.9)

19.0

N

/M

Tom

en C

orp

Japa

n O

ther

Con

sum

er P

rodu

cts

Toy

ota

Tsu

sho

Cor

p Ja

pan

02/0

8/05

4,

288.

1 C

ash

Onl

y 38

.0

12.3

21

.3

Ree

bok

Inte

rnat

iona

l Ltd

U

S

Tex

tiles

& A

ppar

el

adid

as-S

alom

on A

G

Ger

man

y

16/1

2/05

3,

540.

1 C

ash

Onl

y

NP

N

P

Kan

ebo

Cos

met

ics

Inc

Japa

n O

ther

Con

sum

er P

rodu

cts

Kao

Cor

p Ja

pan

16/0

3/01

3,

523.

4 C

ash

and

Sto

ck C

ombi

natio

n 9.

7

11.5

N

/M

Ber

gen

Bru

nsw

ig C

orp

US

O

ther

Con

sum

er P

rodu

cts

Am

eriS

ourc

e H

ealth

Cor

p U

S

25/0

5/98

3,

512.

0 S

tock

Onl

y 7.

9

13.6

36

.1

US

Sur

gica

l Cor

p U

S

Oth

er C

onsu

mer

Pro

duct

s T

yco

Inte

rnat

iona

l Ltd

B

erm

uda

26/0

4/02

3,

460.

0 O

ther

4.6

N

/M

Com

disc

o In

c U

S

Oth

er C

onsu

mer

Pro

duct

s C

redi

tors

U

S

10/0

3/04

3,

286.

3 O

ther

NP

N

P

Kan

ebo

Ltd-

Cos

met

ics

Div

Ja

pan

Oth

er C

onsu

mer

Pro

duct

s In

d R

evita

lisat

ion

Cor

p of

JP

Ja

pan

28/0

9/07

3,

093.

8 O

ther

NP

N

P

CJ

Cor

p-B

usin

ess

Co

Sou

th K

orea

O

ther

Con

sum

er P

rodu

cts

Sha

reho

lder

s S

outh

Kor

ea

10/0

9/01

3,

039.

1 U

nkno

wn

(63.

0)

NP

39

.5

Guc

ci G

roup

NV

N

ethe

rland

s T

extil

es &

App

arel

P

inau

lt P

rinte

mps

-Red

oute

F

ranc

e

01/0

3/00

2,

985.

3 S

tock

Onl

y 11

.6

NP

16

.5

Rat

in A

/S

Den

mar

k O

ther

Con

sum

er P

rodu

cts

Ren

toki

l Ini

tial P

LC

UK

19/0

3/99

2,

925.

0 C

ash

Onl

y

26.1

38

.1

Guc

ci G

roup

NV

N

ethe

rland

s T

extil

es &

App

arel

P

inau

lt P

rinte

mps

-Red

oute

F

ranc

e



Exhibit 5.13

To

p C

on

sum

er D

ura

ble

s an

d A

pp

arel

s IP

Os

sin

ce 2

005

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

05/1

6/07

1,

273.

7 B

elle

Intl

Hol

ding

s Lt

d H

ong

Kon

g T

extil

es &

App

arel

H

ong

Kon

g N

o

10/0

3/07

89

3.0

Bos

iden

g In

tl H

ldg

Ltd

Chi

na

Tex

tiles

& A

ppar

el

Hon

g K

ong

No

10/0

3/07

81

1.1

Chi

na D

ongx

iang

(Gro

up)C

o Lt

d C

hina

O

ther

Con

sum

er P

rodu

cts

Hon

g K

ong

No

02/0

9/05

51

5.2

Pre

stig

e B

rand

s H

oldi

ngs

Inc

US

O

ther

Con

sum

er P

rodu

cts

New

Yor

k Y

es

04/0

6/06

51

5.2

Sea

ly C

orp

US

H

ome

Fur

nish

ings

N

ew Y

ork

Yes

06/3

0/07

46

6.0

AN

TA

Spo

rts

Pro

duct

s Lt

d C

hina

T

extil

es &

App

arel

H

ong

Kon

g N

o

05/2

2/07

45

8.3

RS

C H

oldi

ngs

Inc

US

O

ther

Con

sum

er P

rodu

cts

New

Yor

k Y

es

06/2

8/07

44

4.7

Ste

lla In

tern

atio

nal H

ldgs

Ltd

H

ong

Kon

g T

extil

es &

App

arel

H

ong

Kon

g N

o

07/2

6/07

37

6.7

Lulu

lem

on A

thle

tica

Inc

Can

ada

Tex

tiles

& A

ppar

el

NA

SD

AQ

Tor

onto

Y

es

07/2

6/07

34

6.3

Spr

ings

Glo

bal P

artic

ipac

oes

Bra

zil

Tex

tiles

& A

ppar

el

BO

VE

SP

A

No

05/3

0/08

32

8.7

Pou

She

ng In

tl H

ldgs

Ltd

H

ong

Kon

g O

ther

Con

sum

er P

rodu

cts

Hon

g K

ong

No

05/2

8/08

28

5.4

Xte

p In

tern

atio

nal H

oldi

ngs

Chi

na

Tex

tiles

& A

ppar

el

Hon

g K

ong

No

11/1

1/05

28

1.4

Sam

son

Hol

ding

Ltd

C

hina

H

ome

Fur

nish

ings

H

ong

Kon

g N

o

07/2

5/07

26

6.8

Cia

Pro

vide

ncia

B

razi

l T

extil

es &

App

arel

B

OV

ES

PA

N

o

06/2

3/09

26

3.4

361

Deg

rees

Inte

rnat

iona

l Ltd

C

hina

O

ther

Con

sum

er P

rodu

cts

Hon

g K

ong

No

07/2

2/05

24

6.7

Mai

denf

orm

Bra

nds

Inc

US

T

extil

es &

App

arel

N

ew Y

ork

Yes

05/1

1/07

24

5.2

Pac

ific

Tex

tiles

Hol

ding

s Lt

d H

ong

Kon

g T

extil

es &

App

arel

H

ong

Kon

g N

o

12/2

0/07

24

4.2

Asi

anlo

gic

Ltd

Brit

ish

Virg

in

Oth

er C

onsu

mer

Pro

duct

s Lo

ndon

AIM

N

o

03/1

0/08

23

0.7

Li H

eng

Che

mic

al F

ibre

Tec

h C

hina

T

extil

es &

App

arel

S

inga

pore

N

o

05/1

8/06

22

8.8

Gru

po F

amsa

SA

de

CV

M

exic

o O

ther

Con

sum

er P

rodu

cts

Mex

ico

No



6. Food and Staples RetailExecutive summary

Cross-border M&A has historically posed one of the most challenging obstacles for thissector with a number of unsuccessful forays into markets dominanted by domesticinstitutions. Likewise domestic consolidation is fraught with regulatory red tape and wetherefore anticpate low levels of M&A at this time based on solid but unspectacular EPSforecasts for the next 12 months and the challenges this sector faces.

• The food & staples retail sector underwent an initial wave of activity in the late 1990swith numerous domestic and cross-border strategic deals. With the economic downturnthat followed the dot.com bubble, M&A activity in the sector came to a near stand stillby 2003. Subsequently the sector witnessed 6 years of uninterrupted M&A activitygrowth that culminated in 2007 at the high point of the leverage bubble with the largesttransaction of the decade, the USD21 billion buyout of Alliance Boots. Private investors,private equity funds and sovereign wealth funds were key drivers of the second cycle ofM&A activity. (Exhibit 6.1, 6.13).

• A vast majority of mid-size and larger transactions to occur since 1998 incorporated aform of stock consideration. All the 20 largest transactions announced since 1998targeted developed economies. (Exhibit 6.2-4, 6.13).

• In the 12 months leading to 3Q 2009 stocks from the food & staples retail sectorperformed poorly, down 3.7%. Japan and the US were the worst hit, down 12% and 9%respectively. Meanwhile, emerging EMEA markets and emerging-Pacific excluding Japanperformed the best, up 34% and 21% respectively.

• As at the end of 3Q 2009 US companies accounted for just over the majority (52%) ofthe sectors capitalization. Emerging markets trebled their market share from 2002 to6%. Furthermore, half of the 20 largest IPOs to reach the market since 2005 haveoriginated in emerging markets. (Exhibit 6.5, 6.14)

• Earnings in the sector are expected to grow by an average 7.5% over the next 12 months.Japan and emerging EMEA markets offer the best prospects for earnings growth with anexpected 21% and 15% growth rate over the next 12 months. (Exhibit 6.6)

Exhibit 6.1

Food and Staples Retail targeted M&A

0

5

10

15

20

25

30

35

1Q98

2Q98

3Q98

4Q98

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

.

M&

A (

$bn)

50

70

90

110

130

150

170

Inde

x pr

ice




Exhibit 6.2

Exhibit 6.3

Exhibit 6.4

Price/earnings–Food and Staples Retail acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Food and Staples Retail acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-

01

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-0

9

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Food and Staples Retail acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-

01

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-0

9

Offe

r Pric

e/T

arg

et S

hare

Pric

e (%

)








Food and Staples Retail market capitalisation by region–1Q2002

23.8%17.4%

4.7% 3.0% 0.9%

49.3%

0.1%0.8%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Food and Staples Retail corporate bonds

9.2

12.7

23.4

19.0

14.1

12.0

23.1

13.7

25.1

14.914.7

22.9

0

5

10

15

20

25

30

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70


Food and Staples Retail convertibles

1.6

0.90.8 0.8

0.4

0.9

1.31.4

0.1

0.6

0.2

0.3

0.0

0.3

0.5

0.8

1.0

1.3

1.5

1.8

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

1

2

3

4

5

6

7


Food and Staples Retail follow on offerings

5.5

0.8

2.8

3.2

1.2

3.9

2.2

1.4

0.8

3.9

1.3

0.7

0

1

2

3

4

5

6

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30


Food and Staples Retail IPOs

0.5

0.3

2.9

0.50.3 0.3

1.3 1.2

0.40.3

0.1

1.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

2

4

6

8

10

12

14

16


Food and Staples Retail market capitalisation by region–3Q2009

12.3% 11.9% 11.5%

5.6%2.7%1.8%1.5%

52.8%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.027.3

10.8

19.217.3 18.0

7.5

12.7

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Fd./Staples Rtl.

Market value ($m)

23,752,48031,744,960

16,733,020

22,114,240

220,295 252,660

556,036647,510

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Fd./Staples Rtl. ($)



Exhibit 6.13

To

p 2

0 F

oo

d a

nd

Sta

ple

s R

etai

l acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get

Nat

ion

Sub

Sec

tor

Acq

uiro

r N

ame

Acq

uiro

r N

atio

n

09/0

3/07

21

,450

.0

Oth

er

39.8

16

.1

28.5

A

llian

ce B

oots

PLC

U

K

Oth

er R

etai

ling

AB

Acq

uisi

tions

Ltd

U

K

22/0

1/06

17

,367

.8

Cas

h an

d S

tock

Com

bina

tion

8.1

7.1

22.7

A

lber

tson

s In

c U

S

Foo

d &

Bev

erag

e R

etai

ling

AB

Acq

uisi

tion

LLC

U

S

30/0

8/99

15

,837

.5

Sto

ck O

nly

20.3

23

.8

54.3

P

rom

odes

F

ranc

e F

ood

& B

ever

age

Ret

ailin

g C

arre

four

SA

F

ranc

e

02/0

7/07

15

,727

.0

Cas

h an

d S

tock

Com

bina

tion

7.9

18.5

17

.4

Col

es G

roup

Ltd

A

ustr

alia

F

ood

& B

ever

age

Ret

ailin

g W

esfa

rmer

s Lt

d A

ustr

alia

20/0

4/05

12

,483

.1

Cas

h an

d S

tock

Com

bina

tion

13.3

N

P

29.0

S

even

-Ele

ven

Japa

n C

o Lt

d Ja

pan

Foo

d &

Bev

erag

e R

etai

ling

Ito-Y

okad

o C

o Lt

d Ja

pan

03/0

8/98

11

,719

.7

Cas

h an

d S

tock

Com

bina

tion

30.5

9.

4 30

.2

Am

eric

an S

tore

s C

o U

S

Foo

d &

Bev

erag

e R

etai

ling

Alb

erts

ons

Inc

US

14/0

6/99

10

,742

.9

Oth

er

38.1

11

.5

21.2

A

SD

A G

roup

PLC

U

K

Foo

d &

Bev

erag

e R

etai

ling

Wal

-Mar

t Sto

res(

UK

)Ltd

U

K

09/0

1/03

7,

470.

3 S

tock

Onl

y 32

.9

7.3

17.7

S

afew

ay P

LC

UK

F

ood

& B

ever

age

Ret

ailin

g W

m M

orris

on S

uper

mar

kets

PLC

U

K

07/0

9/00

5,

586.

3 S

tock

Onl

y 15

.5

8.0

10.6

D

elha

ize

Am

eric

a In

c U

S

Foo

d &

Bev

erag

e R

etai

ling

Eta

blis

sem

ents

Del

haiz

e F

rere

s B

elgi

um

18/0

8/99

3,

642.

2 C

ash

and

Sto

ck C

ombi

natio

n 24

.0

12.7

34

.4

Han

nafo

rd B

ros

Co

US

F

ood

& B

ever

age

Ret

ailin

g F

ood

Lion

Inc

US

24/0

8/06

3,

470.

0 C

ash

and

Sto

ck C

ombi

natio

n

NP

N

P

Jean

Cou

tu G

roup

(PJC

)US

A In

c U

S

Oth

er R

etai

ling

Rite

Aid

Cor

p U

S

16/0

7/08

3,

127.

0 C

ash

Onl

y

14.2

N

/M

Som

erfie

ld S

tore

s Lt

d U

K

Foo

d &

Bev

erag

e R

etai

ling

Co-

oper

ativ

e G

roup

Ltd

U

K

28/0

8/98

3,

071.

3 C

ash

and

Sto

ck C

ombi

natio

n 12

.6

16.2

39

.6

Com

ptoi

rs M

oder

nes

SA

F

ranc

e F

ood

& B

ever

age

Ret

ailin

g C

arre

four

SA

F

ranc

e

12/0

8/08

2,

852.

9 C

ash

Onl

y 29

.7

10.2

24

.5

Long

s D

rug

Sto

res

Cor

p U

S

Oth

er R

etai

ling

CV

S C

arem

ark

Cor

p U

S

19/0

5/98

2,

676.

1 C

ash

Onl

y 14

.1

13.1

37

.0

Gia

nt F

ood

Inc

US

F

ood

& B

ever

age

Ret

ailin

g K

onin

klijk

e A

hold

NV

N

ethe

rland

s

05/0

7/99

2,

546.

0 C

ash

Onl

y 9.

3 10

.1

19.2

G

ener

al N

utrit

ion

Cos

Inc

US

F

ood

& B

ever

age

Ret

ailin

g K

onin

klijk

e N

umic

o N

V

Net

herla

nds

26/0

3/04

2,

475.

0 C

ash

Onl

y

NP

N

P

Sha

ws

Sup

erm

arke

ts In

c U

S

Foo

d &

Bev

erag

e R

etai

ling

Alb

erts

ons

Inc

US

05/0

4/04

2,

375.

0 C

ash

Onl

y

NP

N

P

JC P

enne

y-E

cker

d S

tore

s,N

E U

S

US

O

ther

Ret

ailin

g Je

an C

outu

Gro

up(P

JC)I

nc

Can

ada

25/0

5/05

2,

153.

7 C

ash

and

Sto

ck C

ombi

natio

n

NP

N

P

Foo

dlan

d-N

ew Z

eala

nd B

us

New

Zea

land

F

ood

& B

ever

age

Ret

ailin

g W

oolw

orth

s Lt

d A

ustr

alia

09/0

2/05

2,

006.

2 O

ther

21

.6

7.7

17.2

S

omer

field

PLC

U

K

Foo

d &

Bev

erag

e R

etai

ling

Vio

let A

cqui

sitio

ns L

td

Cay

man

Isla

nds



Exhibit 6.14

To

p F

oo

d a

nd

Sta

ple

s R

etai

l IP

Os

sin

ce 2

005

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

05/0

5/05

68

7.2

Pya

tero

chka

R

ussi

an F

ed

Foo

d &

Bev

erag

e R

etai

ling

Lond

on

No

11/0

8/07

38

4.2

Chi

na N

ep C

hain

Dru

gsto

re L

td

Chi

na

Oth

er R

etai

ling

New

Yor

k N

o

05/1

8/07

36

0.0

Dix

y G

roup

OJS

C

Rus

sian

Fed

F

ood

& B

ever

age

Ret

ailin

g R

ussi

an T

S

MIC

EX

N

o

07/0

8/05

21

6.0

BIM

(B

irles

ik M

agaz

alar

) T

urke

y F

ood

& B

ever

age

Ret

ailin

g Is

tanb

ul

No

04/0

3/09

13

3.6

Silv

er B

ase

Gro

up H

oldi

ngs

Ltd

Hon

g K

ong

Foo

d &

Bev

erag

e R

etai

ling

Hon

g K

ong

No

07/0

6/07

12

9.5

Tim

es L

td

Hon

g K

ong

Foo

d &

Bev

erag

e R

etai

ling

Hon

g K

ong

No

12/0

6/05

12

5.6

Hak

on In

vest

AB

S

wed

en

Foo

d &

Bev

erag

e R

etai

ling

Sto

ckho

lm

No

10/1

8/06

12

3.3

Sus

ser

Hol

ding

s C

orp

US

F

ood

& B

ever

age

Ret

ailin

g N

AS

DA

Q

Yes

05/3

0/06

91

.2

Kob

e B

ussa

n C

o Lt

d Ja

pan

Foo

d &

Bev

erag

e R

etai

ling

Osa

ka 2

N

o

09/2

2/06

87

.8

Bei

jing

Jing

kelo

ng C

o Lt

d C

hina

F

ood

& B

ever

age

Ret

ailin

g H

K G

EM

N

o

07/0

2/08

72

.8

Labe

l?V

ie S

A

Mor

occo

F

ood

& B

ever

age

Ret

ailin

g C

asab

lanc

a N

o

06/3

0/08

72

.2

Abd

ulla

h A

l-Oth

aim

Mar

kets

Co

Sau

di A

rabi

a F

ood

& B

ever

age

Ret

ailin

g D

ubai

Exc

h N

o

05/1

7/06

53

.4

Liqu

or B

arn

Inco

me

Fun

d C

anad

a F

ood

& B

ever

age

Ret

ailin

g T

oron

to

No

06/2

2/05

52

.0

Alli

on H

ealth

care

Inc

US

O

ther

Ret

ailin

g N

AS

DA

Q

No

07/1

0/08

47

.1

Fuj

ian

New

Hua

Du

Sup

erce

nter

C

hina

F

ood

& B

ever

age

Ret

ailin

g S

henz

hen

No

06/2

8/05

46

.9

Col

abor

Inco

me

Fun

d C

anad

a F

ood

& B

ever

age

Ret

ailin

g T

oron

to

No

07/0

9/08

45

.8

Hal

wan

i Bro

s S

audi

Ara

bia

Foo

d &

Bev

erag

e R

etai

ling

Tad

awul

N

o

01/3

1/05

44

.6

Eur

ocas

h S

A

Pol

and

Foo

d &

Bev

erag

e R

etai

ling

War

saw

N

o

04/1

3/07

38

.5

Uni

vers

e C

o Lt

d Ja

pan

Foo

d &

Bev

erag

e R

etai

ling

Tok

yo 2

N

o

05/1

8/07

38

.3

Jiah

ua S

tore

s H

oldi

ngs

Ltd

Chi

na

Foo

d &

Bev

erag

e R

etai

ling

Hon

g K

ong

No



7. RetailingExecutive summary

The outlook for the retail sector based on the mean 12 months EPS estimate would indicate thatthe sector will underperform against the world average by 10%. Regional EPS growth is expectedto be in Latin America with 39.4% and Japan with 28.1% over the next 12 months. In the nearterm, M&A activity in the retail sector could remain relatively flat with deal flow to continue to beprimarily driven by domestic transactions by strategic buyers in Asia-Pacific and Latin America.

• The retail sector saw a period of consolidation from 2004 to 2007 as the sector’s stockperformance exceeded that of the world equity index. M&A activity was mainly restrictedto domestic transactions with 80% of the top 20 deals classified as domestic. Deal flowwas predominately driven by North America with 11 of the top 20 deals targetingcompanies headquartered in the US. (Exhibit 7.1).

• The retail sector has only seen two transactions valued at USD10 billion or more:Federated Department Stores’ USD16.8 billion acquisition of May Department Stores andKmart’s USD13.8 billion merger with Sears Roebuck. The transactions were announcedwithin three months of each other (2004-2005) and both deals involved a mixture ofcash and stock with comparably low premiums of 12-13%. The latter part of the leveragecycle involved transactions paid mainly in cash whereas the credit crunch has resulted infar fewer transactions, which have been paid either in stock or cash-stock hybrids as thesector and world indices have trended upwards. (Exhibit 7.2).

• Exit multiples in this sector showed that historically in 1998-1999 retail firms wereexiting on stock and hybrid transactions at 15-30x EBITDA and just 10x EBITDA on cashonly deals. EBITDA multiples during the leverage cycle trended upwards from around 6xEBITDA in 2005 to around 12x EBITDA at the end of the cycle. (Exhibit 7.3).

• Since the end of the leverage cycle, the number of participants in the retail sector hasdeclined by 19.5% to 78 with the number of EMEA participants halved during that time.The only region that experienced growth in terms of number of participants was theAsian emerging markets, which increased from 5 in 2007 to 8 in 2009.

• The aggregate market capitalization has declined by 29.6% since the beginning of theleverage cycle as North American retailers lost USD205 billion in market value, a 37.6%decrease from 2002, and ceded a 9% market share to Europe, Asia-Pacific, and Japan.Europe experienced the largest growth as market share increased from 6.5% to 10.0%.(Exhibit 7.7-8).

Exhibit 7.1

Retailing targeted M&A

0

5

10

15

20

25

30

35

40

45

1Q98

2Q98

3Q98

4Q98

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

.

M&

A (

$bn)

50

70

90

110

130

150

170

Inde

x pr

ice

MSCI Sector Index MSCI World IndexSector M&A ($bn) Cross Border M&A ($bn)



Exhibit 7.2

Exhibit 7.3

Exhibit 7.4

Price/earnings–Retailing acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-

01

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-0

9

Equ

ity V

alu

e/N

et In

com

e


Rank value/EBITDA–Retailing acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Ran

k V

alu

e/E

BIT

DA


Offer price to target share price–Retailing acquisitions >$500mm

0

20

40

60

80

100Ja

n-98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Offe

r Pric

e/T

arg

et S

hare

Pri

ce (%

)








Retailing corporate bonds

13.9

10.110.5

17.5

10.3

16.3

13.4

19.8

28.1

13.613.4

18.3

0

5

10

15

20

25

30

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120


Retailing convertibles

1.3

3.1

1.4

4.5

3.4

2.62.4

0.4

1.51.7

2.4

1.0

0

1

2

3

4

5

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30


Retailing Follow on Offerings

1.2

4.4

1.4 1.3

5.7

2.3

4.4

1.81.6

3.5

1.2

4.4

0

1

2

3

4

5

6

7

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70

80

90


Retailing IPOs

1.7

3.9 3.7

2.6 2.4

1.2

3.9 3.7

9.4

7.1

1.10.6

0

1

2

3

4

5

6

7

8

9

10

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60


Retailing market capitalisation by region–3Q2009

10.0%7.4% 3.2%

66.7%

1.6%4.2%

5.5%1.40%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Retailing market capitalisation by region–1Q2002

6.5% 5.9% 5.5%0.7%

78.1%

1.2% 1.9%

0.2%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.216.6

29

9.211.5

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Retailing

Market value ($m)

834,403 698,662510,785

725,401

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Retailing ($)

23,752,480

31,774,960

16,733,020

22,114,240



Exhibit 7.14

To

p 2

0 R

etai

ling

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get

Nat

ion

Sub

Sec

tor

Acq

uiro

r N

ame

Acq

uiro

r N

atio

n

28/0

2/05

16

,789

.9

Cas

h an

d S

tock

Com

bina

tion

13.0

10

.5

20.0

M

ay D

epar

tmen

t Sto

res

Co

US

D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

Fed

erat

ed D

epar

tmen

t Sto

res

US

17/1

1/04

13

,846

.3

Cas

h an

d S

tock

Com

bina

tion

12.0

N

/M

5.8

Sea

rs R

oebu

ck &

Co

US

D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

KM

art H

oldi

ng C

orp

US

19/1

0/98

9,

850.

5 C

ash

and

Sto

ck C

ombi

natio

n (0

.5)

23.6

76

.4

Fre

d M

eyer

Inc

US

D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

The

Kro

ger

Co

US

19/0

6/07

8,

500.

0 C

ash

Onl

y

NP

N

P

Hom

e D

epot

Sup

ply

US

H

ome

Impr

ovem

ent R

etai

ling

HD

Sup

ply

SP

V

US

11/0

3/07

7,

003.

5 C

ash

Onl

y 31

.1

15.5

50

.4

Dol

lar

Gen

eral

Cor

p U

S

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g B

uck

Acq

uisi

tion

Cor

p U

S

17/0

3/05

6,

114.

4 C

ash

Onl

y 17

.0

7.5

23

.8

Toy

s R

Us

Inc

US

O

ther

Ret

ailin

g In

vest

or G

roup

U

S

30/0

6/06

5,

604.

5 C

ash

Onl

y 29

.6

12.0

26

.8

Mic

hael

s S

tore

s In

c U

S

Oth

er R

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ling

Mic

hael

's S

tore

s S

PV

U

S

02/0

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5,

157.

3 C

ash

Onl

y 33

.8

9.8

21

.7

Nei

man

Mar

cus

Gro

up In

c U

S

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g In

vest

or G

roup

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S

14/1

2/06

4,

604.

2 C

ash

Onl

y

21.5

46

.4

Viv

arte

SA

F

ranc

e A

ppar

el R

etai

ling

Cha

rter

hous

e C

apita

l Par

tner

s U

K

15/0

5/02

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7 C

ash

Onl

y 3.

9

24.7

27

.0

Cas

tora

ma

Dub

ois

Fra

nce

Hom

e Im

prov

emen

t Ret

ailin

g K

ingf

ishe

r P

LC

UK

25/0

9/98

4,

149.

0 S

tock

Onl

y

30.6

12

2.6

Cas

tora

ma

Dub

ois

Fra

nce

Hom

e Im

prov

emen

t Ret

ailin

g B

&Q

PLC

U

K

23/0

8/07

3,

761.

9 S

tock

Onl

y 3.

9

18.9

10

.4

Mits

ukos

hi L

td

Japa

n D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

Iset

an C

o Lt

d Ja

pan

26/1

2/05

3,

612.

4 C

ash

Onl

y

NP

7.

9 M

illen

nium

Ret

ailin

g In

c Ja

pan

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g S

even

& I

Hol

ding

s C

o Lt

d Ja

pan

08/0

2/07

3,

542.

4 C

ash

Onl

y

12.2

16

.6

Edg

ars

Con

solid

ated

Sto

res

Ltd

Sou

th A

fric

a O

ther

Ret

ailin

g B

ain

Cap

ital L

LC

US

22/0

3/06

3,

293.

8 C

ash

Onl

y 10

.9

9.5

18

.3

Kes

a E

lect

rical

s P

LC

UK

C

ompu

ters

& E

lect

roni

cs R

etai

ling

Inve

stor

Gro

up

UK

09/0

6/04

3,

240.

0 C

ash

Onl

y

NP

N

P

Mar

shal

l Fie

ld &

Co

US

D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

May

Dep

artm

ent S

tore

s C

o U

S

03/0

7/98

3,

213.

5 C

ash

and

Sto

ck C

ombi

natio

n 15

.1

14.3

6.

9 S

aks

Hol

ding

s U

S

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g P

roffi

tt’s

Inc

US

13/1

2/04

3,

143.

3 C

ash

Onl

y 11

.6

11.7

34

.4

Rex

el S

A

Fra

nce

Oth

er R

etai

ling

Ray

Acq

uisi

tion

SC

A

Fra

nce

12/0

9/03

3,

128.

0 C

ash

Onl

y

7.7

15

.8

Deb

enha

ms

PLC

U

K

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g B

aron

ess

Ret

ail L

td

UK

18/0

5/98

3,

026.

3 S

tock

Onl

y 43

.9

26.6

44

.0

Vik

ing

Offi

ce P

rodu

cts

Inc

US

In

tern

et a

nd C

atal

og R

etai

ling

Offi

ce D

epot

Inc

US



Exhibit 7.14

To

p R

etai

ling

IPO

s si

nce

200

5

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

01/2

7/06

3,

738.

9 Lo

tte S

hopp

ing

Co

Ltd

Sou

th K

orea

D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

Lond

on

No

05/0

3/06

1,

925.

3 D

eben

ham

s P

LC

UK

D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

Lond

on

02/2

7/07

1,

822.

4 S

port

s D

irect

Intl

PLC

U

K

Oth

er R

etai

ling

Lond

on

No

04/0

4/07

1,

357.

8 R

exel

SA

F

ranc

e O

ther

Ret

ailin

g E

uro

Par

is

Yes

10/1

0/07

59

2.3

Dah

Cho

ng H

ong

Hol

ding

s Lt

d H

ong

Kon

g A

utom

otiv

e R

etai

ling

Hon

g K

ong

No

11/2

1/05

58

6.7

Der

Pra

ktik

er B

au-

und

Ger

man

y O

ther

Ret

ailin

g F

rank

furt

N

o

03/1

0/05

53

0.9

SM

Inve

stm

ents

Cor

p P

hilip

pine

s D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

Phi

lippi

ne

No

03/1

4/06

44

2.1

Alp

en C

o Lt

d Ja

pan

Oth

er R

etai

ling

Tok

yo 1

N

ago

ya

No

06/2

7/06

43

2.4

J C

rew

Gro

up In

c U

S

App

arel

Ret

ailin

g N

ew Y

ork

Yes

06/3

0/05

38

1.3

Loja

s R

enne

r S

A

Bra

zil

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g B

OV

ES

PA

N

o

04/2

7/06

36

8.4

OA

O M

agni

t R

ussi

an F

ed

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g R

ussi

an T

S

No

03/1

3/07

35

7.0

Intim

e D

ept S

tore

(Grp

)Co

Chi

na

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g H

ong

Kon

g N

o

04/2

4/08

35

4.2

Mao

ye In

tl H

ldg

Ltd

Chi

na

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g H

ong

Kon

g N

o

10/2

1/06

35

1.6

Faw

az A

bdul

aziz

Alh

okai

r C

o S

audi

Ara

bia

App

arel

Ret

ailin

g S

audi

Exc

h N

o

07/0

5/07

34

6.7

New

Wor

ld D

ept S

tore

Chi

na L

td

Hon

g K

ong

Dis

coun

t and

Dep

artm

ent S

tore

Ret

ailin

g H

ong

Kon

g N

o

12/1

8/06

34

6.2

Duf

ry S

outh

Am

eric

a Lt

d B

razi

l D

isco

unt a

nd D

epar

tmen

t Sto

re R

etai

ling

BO

VE

SP

A

No

08/0

9/07

33

2.8

Mer

cado

libre

Inc

Arg

entin

a In

tern

et a

nd C

atal

og R

etai

ling

NA

SD

AQ

N

o

06/2

8/05

30

7.3

DS

W In

c U

S

App

arel

Ret

ailin

g N

ew Y

ork

Yes

08/0

2/06

30

1.0

Bic

Cam

era

Inc

Japa

n C

ompu

ters

& E

lect

roni

cs R

etai

ling

JAS

DA

Q

No

05/2

2/07

29

7.8

Sic

huan

Xin

hua

Win

shar

e C

hain

C

hina

O

ther

Ret

ailin

g H

ong

Kon

g N

o



8. HealthcareExecutive summary

Earnings in the healthcare sector are expected to grow by 9% over the next 12 months,under performing the forecasted global earning growth rate by 10%. Emerging Asia andJapan offer the best EPS growth prospect over the next 12 months with 56% & 44%respectively. The ability to tap funds from investors with record issuance in follow-ons andvalue of corporate bonds along with jumbo yankee bonds in the form of Genentechunderlines the capacity that this sector has to do large scale M&A.

• M&A in the healthcare sector initially coped better than other sectors when therecession hit thanks to two of the largest deals ever announced in 1Q 2009, Wyeth atUSD64 billion and Schering-Plough at USD46 billion. Domestic consolidation accountsfor 80% of the M&A in 2009, higher than the 70% average since 1998. At its highest, in2007 with USD275 billion, cross-border transactions accounted for 40% of healthcareM&A. 15 of the top 20 deals since 1998 are domestic. Nevertheless cross-border M&A isup for the third consecutive quarter and 3Q 2009 and accounts for 54% of the activity.(Exhibit 8.1).

• At end of the leverage cycle, the number of participants in healthcare declined slightlyto 134. North America, Europe and Japan all increased their number of participantsfrom 2007 to 2009.

• The US holds the majority of global capitalization in this industry with 60% in 3Q 2009.When comparing M&A cycle low of 1Q 2002 to 3Q 2009 both the US and the UK have lostapproximately 7% and 4% in capitalization respectively, while Japan, Europe and theemerging markets have increased there capitalization. However the emerging marketsparticipants haven’t grown in the same proportion as in other sectors only up from 1%to 3%. (Exhibit 8.7-8).

• Both follow-on and IPO activity was up in 2009 with USD11.4 billion and USD3.9 billionrespectively. Corporate bonds were at an all time high in 2009 with USD109 billion upfrom USD28.5 billion last year. The largest corporate bond for the first nine months ofthe year, valued at USD16 billion, was issued by Roche who initiated a shift from loan tocorporate bonds to finance their USD42 billion acquisition of the remaining stake inGenentech. This was the largest U.S. dollar-denominated corporate bond sale in history,topping the USD10.9 billion sold by General Electric Capital Corp in 2002. (Exhibit 8.9-12).

Exhibit 8.1

Healthcare targeted M&A

0

20

40

60

80

100

120

140

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

60

80

100

120

140

160

180

Inde

x pr

ice




Exhibit 8.2

Exhibit 8.3

Exhibit 8.4

Price/earnings–Healthcare acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Healthcare acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Healthcare acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)








Healthcare corporate bonds

32.8

3.8

17.2

7.3

27.9

11.9

28.536

.4

71.4

29.2

25.0

109.

6

0

20

40

60

80

100

120

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120


Healthcare convertibles

3.2

1.3

9.9

13.0

8.9

14.1

10.6

6.5

20.4

16.6

4.1

2.6

0

5

10

15

20

25

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70


Healthcare follow on offerings

4.0 4.

8

11.6

10.1

8.7

4.8

9.7

19.4 20

.2

6.4

9.1

11.4

0

5

10

15

20

25

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300

350

400

450


Healthcare IPOs

2.3

4.4

10.6

5.75.2

1.4

7.0

5.6

7.6

1.3

3.9

11.6

0

2

4

6

8

10

12

14

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

180


Healthcare market capitalisation by region–3Q2009

59.8%

21.7% 5.9%1.2%8.5% 0.5%

2.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Healthcare market capitalisation by region–1Q2002

66.5%

16.3% 12.2%0.0%

3.9%0.4% 0.3%0.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.027.3

10.8

19.2

14.2

10.89.0

12.6

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Healthcare

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

1,681,917 2,041,697 2,168,0072,518,012

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Healthcare ($)



Exhibit 8.13

To

p 2

0 H

ealt

hca

re a

cqu

isit

ion

s

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

04/1

1/99

88

,771

.1

Sto

ck O

nly

25.3

30

.1

51.4

W

arne

r-La

mbe

rt C

o U

S

Pha

rmac

eutic

als

Pfiz

er In

c U

S

17/0

1/00

78

,775

.1

Sto

ck O

nly

4.6

20.7

42

.2

Sm

ithK

line

Bee

cham

PLC

U

K

Pha

rmac

eutic

als

Gla

xo W

ellc

ome

PLC

U

K

26/0

1/04

65

,656

.7

Cas

h an

d S

tock

Com

bina

tion

21.6

12

.7

26.6

A

vent

is S

A

Fra

nce

Pha

rmac

eutic

als

San

ofi-S

ynth

elab

o S

A

Fra

nce

26/0

1/09

64

,479

.7

Cas

h an

d S

tock

Com

bina

tion

29.3

8.

1 15

.2

Wye

th

US

P

harm

aceu

tical

s P

fizer

Inc

US

15/0

7/02

60

,704

.0

Sto

ck O

nly

38.3

17

.8

27.4

P

harm

acia

Cor

p U

S

Pha

rmac

eutic

als

Pfiz

er In

c U

S

21/0

7/08

46

,694

.8

Cas

h O

nly

16.1

16

.7

30.8

G

enen

tech

Inc

US

B

iote

chno

logy

R

oche

Hol

ding

AG

S

witz

erla

nd

09/0

3/09

45

,704

.4

Cas

h an

d S

tock

Com

bina

tion

33.9

15

.1

20.2

S

cher

ing-

Plo

ugh

Cor

p U

S

Pha

rmac

eutic

als

Mer

ck &

Co

Inc

US

24/0

7/06

32

,147

.0

Cas

h O

nly

16.8

8.

3 16

.6

HC

A In

c U

S

Hos

pita

ls

Her

cule

s A

cqui

sitio

n C

orp

US

09/1

2/98

31

,774

.3

Sto

ck O

nly

13.1

15

.9

27.5

A

stra

AB

S

wed

en

Pha

rmac

eutic

als

ZE

NE

CA

Gro

up P

LC

UK

07/0

4/08

27

,733

.7

Cas

h O

nly

21.9

22

.8

31.7

A

lcon

Inc

US

H

ealth

care

Equ

ipm

ent &

Sup

plie

s N

ovar

tis A

G

Sw

itzer

land

20/1

2/99

26

,772

.0

Sto

ck O

nly

(1.1

) N

P

36.5

P

harm

acia

& U

pjoh

n In

c U

S

Pha

rmac

eutic

als

Mon

sant

o C

o U

S

05/1

2/05

25

,385

.7

Cas

h an

d S

tock

Com

bina

tion

16.4

27

.3

67.3

G

uida

nt C

orp

US

H

ealth

care

Equ

ipm

ent &

Sup

plie

s B

osto

n S

cien

tific

Cor

p U

S

01/1

1/06

25

,092

.9

Oth

er

21.5

13

.5

24.5

C

arem

ark

Rx

Inc

US

H

ealth

care

Pro

vide

rs &

Ser

vice

s

CV

S C

orp

US

23/0

3/06

20

,122

.5

Cas

h O

nly

33.4

13

.4

27.2

S

cher

ing

AG

G

erm

any

Pha

rmac

eutic

als

Bay

er A

G

Ger

man

y

17/1

2/01

16

,684

.6

Cas

h an

d S

tock

Com

bina

tion

19.2

14

1.0

95.2

Im

mun

ex C

orp

US

B

iote

chno

logy

A

mge

n In

c U

S

26/0

6/06

16

,600

.0

Cas

h O

nly

N

P

NP

P

fizer

Con

sum

er H

ealth

care

U

S

Pha

rmac

eutic

als

John

son

& J

ohns

on

US

27/1

0/03

16

,441

.7

Cas

h an

d S

tock

Com

bina

tion

20.4

10

.0

19.5

W

ellP

oint

Hea

lth N

etw

orks

Inc

US

H

ealth

care

Pro

vide

rs &

Ser

vice

s

Ant

hem

Inc

US

23/0

4/07

14

,681

.2

Cas

h O

nly

20.8

66

.5

90.0

M

edIm

mun

e In

c U

S

Bio

tech

nolo

gy

Ast

raZ

enec

a P

LC

UK

11/0

3/07

14

,433

.0

Cas

h O

nly

N

P

NP

O

rgan

on B

iosc

ienc

es{O

BS

} N

ethe

rland

s P

harm

aceu

tical

s S

cher

ing-

Plo

ugh

Cor

p U

S

08/0

5/06

12

,026

.9

Cas

h an

d S

tock

Com

bina

tion

7.0

12.4

25

.6

Fis

her

Sci

entif

ic In

tl In

c U

S

Hea

lthca

re E

quip

men

t & S

uppl

ies

The

rmo

Ele

ctro

n C

orp

US



Exhibit 8.14

To

p H

ealt

hca

re IP

Os

sin

ce 2

005

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

sec

tor

Exc

hang

e P

E b

acke

d?

09/1

6/09

1,

295.

6 C

hina

Nat

iona

l Pha

rma

Grp

Cor

p C

hina

P

harm

aceu

tical

s H

ong

Kon

g N

o

09/3

0/09

1,

064.

0 T

alec

ris B

ioth

erap

eutic

s H

ldg

US

P

harm

aceu

tical

s N

asda

q Y

es

09/2

0/06

1,

059.

0 W

arne

r C

hilc

ott H

oldi

ngs

Co

Ber

mud

a P

harm

aceu

tical

s N

asda

q Y

es

05/0

4/07

95

1.5

OA

O P

harm

stan

dard

R

ussi

an F

ed

Pha

rmac

eutic

als

Lond

on M

ICE

X

Rus

sian

TS

N

o

06/1

9/07

93

6.6

Alm

irall

Pro

desf

arm

a S

A

Spa

in

Pha

rmac

eutic

als

Mad

rid B

arce

lona

B

ilbao

Val

enci

a M

erca

do C

n N

o

12/0

5/05

85

3.6

Saf

ilo S

pA

Italy

H

ealth

care

Equ

ipm

ent &

Sup

plie

s M

ilan

No

10/2

5/07

78

2.0

Am

il P

artic

ipac

oes

SA

B

razi

l H

ealth

care

Pro

vide

rs &

Ser

vice

s (H

MO

s)

BO

VE

SP

A

No

10/1

1/07

49

5.6

Pro

nova

Bio

Pha

rma

AS

A

Nor

way

P

harm

aceu

tical

s O

slo

No

05/1

5/06

43

9.2

Grif

ols

SA

S

pain

P

harm

aceu

tical

s M

adrid

Bar

celo

na

Val

enci

a B

ilbao

M

erca

do C

n N

o

02/0

2/06

42

1.6

Hea

lthS

prin

g In

c U

S

Hea

lthca

re P

rovi

ders

& S

ervi

ces

(HM

Os)

N

ew Y

ork

Yes

12/0

6/05

41

1.7

Ipse

n S

A

Fra

nce

Pha

rmac

eutic

als

Eur

o P

aris

Y

es

07/0

7/06

40

7.0

Sou

ther

n C

ross

Hea

lthca

re

UK

H

ealth

care

Pro

vide

rs &

Ser

vice

s (H

MO

s)

Lond

on

10/0

4/07

34

0.5

Ars

eus

NV

B

elgi

um

Pha

rmac

eutic

als

Eur

onex

t B

Eur

onex

tAM

N

o

09/2

1/06

34

0.1

Med

ial S

aude

SA

B

razi

l H

ealth

care

Pro

vide

rs &

Ser

vice

s (H

MO

s)

BO

VE

SP

A

No

09/2

5/09

33

6.0

Sel

ect M

edic

al H

oldi

ngs

Cor

p U

S

Hos

pita

ls

New

Yor

k Y

es

02/0

7/07

33

1.2

Acc

uray

Inc

US

H

ealth

care

Equ

ipm

ent &

Sup

plie

s N

asda

q N

o

09/2

5/06

31

0.5

Min

dray

Med

ical

Intl

Ltd

Chi

na

Hea

lthca

re E

quip

men

t & S

uppl

ies

New

Yor

k N

o

05/1

5/07

29

7.1

Ski

lled

Hea

lthca

re G

roup

Inc

US

H

ealth

care

Pro

vide

rs &

Ser

vice

s (H

MO

s)

New

Yor

k Y

es

04/2

5/06

28

0.0

Ver

opha

rm

Rus

sian

Fed

P

harm

aceu

tical

s R

ussi

an T

S

No

04/2

6/07

27

3.3

Cre

mer

SA

B

razi

l H

ealth

care

Equ

ipm

ent &

Sup

plie

s B

OV

ES

PA

Y

es



9. Telecom ServicesExecutive summary

Twelve of the 20 largest telecoms IPOs in the sector to reach the market since 2005 arefrom emerging markets and more notably from MENA. We have already seen seriousattempts for domestic consolidation in the emerging markets most noteably from Bharti/MTN we also expect to see cross-border M&A to take place between low growth developedmarkets and the high growth opportunities that the emerging markets represent.

• M&A in the telecom services sector peaked in 1999-2000 as major economies marketsunderwent intensive consolidation. Activity culminated at the end of 1999 with thelargest M&A deal ever announced, the USD203 billion acquisition of Mannesmann byVodafone Airtouch. After hitting a low in 2003 activity built up again to reach a secondcycle high in 2006 with an accumulation of domestic deals in the US, Japan and Mexico.(Exhibit 9.2, 9.13).

• Exit multiples and premiums in the sectors were historically high at the end of the firstcycle, with large cash and stock consideration transactions offering in excess of 30xEBITDA, well above the sector’s median of 11.1x. The second cycle saw valuations realignwith the sector median and, coinciding with the leverage cycle, the emergence of cashas an alternative consideration type. (Exhibit 9.2-9.4).

• Stock performance in the telecom services sector is universally flat over the last 12months with Japan and Europe recording the best growth rates (12% and 7.5%respectively). In terms of market capitalization, emerging markets grew the most since2002, up 146% and now worth USD275 billion or 22.8% of the sector’s capitalization (upfrom only 11% in 2002). The spectacular growth is mostly at the expense of NorthAmerica which saw their combined market capitalization shrink 23% to USD341 billionand account for 28% of the global market, just ahead of developed Europe (27%).(Exhibit 9.5, 9.7-8)

• 12 of the 20 largest IPOs in the sector to reach the market since 2005 are from emergingmarkets and more notably from EMEA. (Exhibit 9.14).

• The global sector’s earnings forecast is bleak with analysts predicting 1.6% growth overthe next 12 months. That compares to 10% in the month prior to the start of the creditcrisis and 81% back in 2002 as global M&A hit the last cycle’s low. Nevertheless,emerging EMEA markets offer the best EPS growth prospects with 10.6% ahead of Japan(9.3%). (Exhibit 9.6).

Exhibit 9.1

Telecom Services targeted M&A

0

50

100

150

200

250

300

350

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

30

50

70

90

110

130

150

170

190

Inde

x pr

ice




Exhibit 9.2

Exhibit 9.3

Exhibit 9.4

Price/earnings–Telecom Services acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Eq

uity

Val

ue/N

et In

com

e


Rank value/EBITDA–Telecom Services acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-

01

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-0

9

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Telecom Services acquisitions >$500mm

0

20

40

60

80

100Ja

n-98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)








Telecom Services corporate bonds

171.

6

145.

8

72.3

75.9

62.467

.6

84.9

87.7

80.9

63.7

59.9

95.5

0

20

40

60

80

100

120

140

160

180

200

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250


Telecom Services convertibles

8.5 9.3

16.0

32.4

7.3

11.2

3.9 3.2 3.0

8.9

2.6 2.6

0

5

10

15

20

25

30

35

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35

40

45


Telecom Services follow on offerings

19.1

38.4

4.1

10.5

22.9

11.5

35.9

53.8

4.67.8

10.6

3.0

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

180


Telecom Services IPOs

33.9

19.7

51.3

6.7 7.7

1.3

11.212.8

6.75.3

1.4

9.7

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140


Telecom Services market capitalisation by region–3Q2009

28.4% 27.3%

11.6%

3.0%6.8% 5.9%

10.7%

6.3%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Telecom Services market capitalisation by region–1Q2002

42.6%

23.0%15.7%

2.6% 5.5% 4.5%

5.2%

1.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.819.220.6

80.7

10.11.6

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI T/CM SVS

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

2,558,2801,047,293 1,202,8341,640,133

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI T/CM SVS ($)



Exhibit 9.13

To

p 2

0 T

elec

om

Ser

vice

s ac

qu

isit

ion

s

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ate

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ium

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get

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ion

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tor

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r N

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n

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89.2

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ouch

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icat

ions

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atio

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l Atla

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70

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26.9

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S

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mun

icat

ions

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15/0

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65

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Cas

h an

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tion

40.6

34

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83.2

A

irTou

ch C

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atio

ns In

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S

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mun

icat

ions

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up P

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17/0

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e

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orks

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8.3

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p U

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mun

icat

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S



Exhibit 9.14

To

p T

elec

om

Ser

vice

s IP

Os

sin

ce 2

005

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

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hang

e P

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acke

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05/0

9/08

1,

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5 T

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n A

S

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key

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mun

icat

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vice

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ul

No

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1 M

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Tel

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mun

icat

ions

S

audi

Ara

bia

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mun

icat

ions

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ul

No

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AO

AF

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iste

ma

Rus

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Fed

T

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unic

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Lond

on

No

10/0

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1,

377.

0 H

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ske

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No

04/1

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etro

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unic

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ns In

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No

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gium

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No

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9.5

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mun

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85

7.9

BY

D E

lect

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c(In

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o Lt

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unic

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ns E

quip

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t H

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g N

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aric

om L

td

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ya

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less

N

airo

bi

No

02/0

7/06

81

9.0

MT

N G

roup

Ltd

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outh

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ica

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less

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hann

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o

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8.0

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stco

m L

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non

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ecom

mun

icat

ions

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vice

s Lo

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ubai

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h N

o

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0.3

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ante

l O

man

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ss

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an

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7/05

74

0.1

Inm

arsa

t PLC

U

K

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ecom

mun

icat

ions

Ser

vice

s Lo

ndon

New

Yor

k

05/2

6/05

67

4.5

Tom

Tom

N

ethe

rland

s T

elec

omm

unic

atio

ns E

quip

men

t E

uron

extA

M

No



10. MediaExecutive summary

Corporate bond issuance in the first nine months of 2009 already exceeds the last 2 yearsvolumes with USD40.8 billion almost double 2008 figures. Strong borrowing for corporateissuers is due to the current high cost of going to the loans market, it is much more costeffective to borrow on the bonds market in the current recession. Follow-on issuance is alsoup with USD7.2 billion almost treble last year’s value of USD2.5 billion. Armed with additionalcapital and despite unattractive EPS forecasts we still expect to see a period of consolidationin this sector which for the most part of the leverage cycle did not involve media.

• M&A activity targeting the media sector peaked in 1Q 2000 with 662 transactions wortha cumulated USD268 billion, which was largely due to a surge in deals over USD1 billion.Activity reached the second all-time low in 2002 after 2009 with USD63 billion whenactivity was down 86% from the 2000 high. From 2003 to 2007 the sector recorded asteady growth of M&A volumes bringing it back to the levels seen before the 2000 peak.That trend eventually inverted in 2007 and activity reached a quarterly low in 3Q 2009,with USD7.3 billion, the lowest value since 1998. (Exhibit 10.1).

• The level of cross-border activity is one of the lowest of all the sectors with only 24%since 1998 and never exceeded 38% (2007). The 7 out of the top 10 media acquisitionsare all US domestic deals. (Exhibit 10.1, 13).

• At end of the leverage cycle, the number of participants in the media sector haddeclined by 37% to 63. None of the regions experienced any growth in terms of numberof participants during this period.

• Two thirds of the global capitalization for this industry is captured by North Americawhich has retained its dominant position from 2002 to year-to-date. Emerging marketsplayers’ market share increased threefold from 2% in 2002 to 6% in the period from2002-2009 year-to-date. Europe also increased its market share by 5% up to 18%year-to-date and is the second largest area behind North America. (Exhibit 10.7-8).

• Earnings in the media sector are expected to grow by 6.8% over the next 12 months,slower than the expected global equity market earning growth rate of 19%. Japan andemerging Asia offer the best EPS growth prospect over the next 12 months with 125% &29% respectively. (Exhibit 10.6).

Exhibit 10.1

Media targeted M&A

0

50

100

150

200

250

300

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

30

50

70

90

110

130

150

170

190

Inde

x pr

ice




Exhibit 10.2

Exhibit 10.3

Exhibit 10.4

Price/earnings–Media acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Equ

ity V

alue

/Ne

t Inc

ome

Cash OnlyStock OnlyHybrid

Rank value/EBITDA–Media acquisitions >$500mm

0

25

50

75

100

125

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun

-03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun

-05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me

Cash Only Stock Only

Hybrid

Offer price to target share price–Media acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%) Cash Only Stock Only Hybrid







Media convertibles

4.7

14.2

6.5

17.1

5.2

9.1

3.42.5

1.0

2.8

1.31.7

0

2

4

6

8

10

12

14

16

18

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35

40


Media corporate bonds

33.2

24.0

32.6

23.3

40.0

21.6 22

.7

51.9

30.9

30.7

27.7

40.8

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

180


Media follow on offerings

8.9

13.1

5.1

2.5

3.4

6.4

5.5

12.6

7.5

6.3

4.8

7.2

0

2

4

6

8

10

12

14

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

180

200


Media IPOs

10.6

14.7

12.4

2.9

1.8

4.8

7.26.5

4.5

0.90.3

5.7

0

2

4

6

8

10

12

14

16

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120


Media market capitalisation by region–3Q2009

63.8%

17.8% 2.3%1.8%8.5% 2.3%

0.4%3.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Media market capitalisation by region–1Q2002

67.4%

12.9% 11.7% 1.0%1.7%4.7% 0.5%

0.1%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.222.2

20.2

6.8

55.1

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Media

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

905,622675,005 475,443

865,121

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Media ($)



Exhibit 10.13

To

p 2

0 M

edia

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

10/0

1/00

18

1,56

8.9

Sto

ck O

nly

70.9

16

.7

84.1

T

ime

War

ner

US

M

otio

n P

ictu

res

/ Aud

io V

isua

l A

mer

ica

Onl

ine

Inc

US

08/0

7/01

72

,041

.2

Cas

h an

d S

tock

Com

bina

tion

N

P

N/M

A

T&

T B

road

band

& In

tern

et S

vcs

US

C

able

C

omca

st C

orp

US

24/0

6/98

69

,896

.5

Oth

er

44.2

35

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5

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200

5



11. Information TechnologyExecutive summary

Earnings in the information technology sector are forecasted to grow by 36% over the next12 months with emerging Asia and developed Europe offering the best prospects. Emergingmarkets players more than doubled (150%) their market capitalization since 2002 and nowaccount for 14% of the sector’s capitalization. Emerging Asia is now the second largest areaby market capital behind North America.

• The dot.com bubble of the late 1990s and early 2000s saw the stock of the IT sectoroutperforming the global equity market for about 2 years and boosted M&A activity thatreached an all time high in 2000 with 8,607 transactions worth USD488 billion. Activitypeaked more precisely in 1Q 2000 with 2,511 transactions worth a cumulated USD199billion, which was largely due to the growth of deals over USD1 billion. Activity reachedan all-time low in 2002 with USD66.9billion when activity was down 86% from the 2000high. From 2003 to 2007 the sector recorded a steady growth of M&A volumes bringingit back to the levels seen before the 2000 peak. That trend eventually inverted in 2008and activity reached a quarterly low in 1Q 2009, below the USD10 billion mark for theonly time since 1998. (Exhibit 11.1).

• M&A activity was mainly restricted to domestic transactions with 72% of the activityfrom 1998 to 2009. The top 10 IT acquisitions are all US domestic deals, eight of whichhad a form of stock payment (stock or hybrid). (Exhibit 11.1).

• The dot.com bubble saw an overwhelming proportion of stock and hybrid deals, whilstthe 2003-2007 build up saw a majority of cash deals. From 1998-2000 premiums andexit multiples are high above the sector median. (Exhibit 11.2)

• At end of the leverage cycle, the number of participants in the IT sector was 275, as of3Q 2009 the number declined by 13.8% to 237. The only region that experienced growthof the number of its participants was the Asian emerging markets, which increased from78 in 2007 to 82 in 2009.

• Two thirds of the global capitalization for this industry is captured by North Americawhich has retained its dominant position from 2002 to year-to-date. Emerging marketsplayers (mostly Asia) more than doubled (150%) their market capitalization since 2002and now account for 14% of the sector’s capitalization. Emerging Asia is now the secondlargest area by market capital behind North America. (Exhibit 11.7-8).

• 13 out of the top 20 IT IPOs since 2005 were on NYSE or Nasdaq. (Exhibit 11.14).

Exhibit 11.1

Information Technology targeted M&A

0

20

40

60

80

100

120

140

160

180

200

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

4

54

104

154

204

254

Inde

x pr

ice




Exhibit 11.2

Exhibit 11.3

Exhibit 11.4

Price/earnings–Information Technology acquisitions >$500mm

0

50

100

150

200

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun

-03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun

-05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me

Cash Only Stock Only

Hybrid

Rank value/EBITDA–Information Technology acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Information Technology acquisitions >$500mm

0

20

40

60

80

100

120Ja

n-9

8

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)








Information Technology corporate bonds

35.3

27.8

34.8

21.5

17.3

23.3

48.0

45.9

39.4

16.1

25.4

49.7

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Information Technology convertibles

6.3

11.7

31.7

21.1

13.0

29.8

17.5

10.2

19.3

25.4

8.3

6.0

0

5

10

15

20

25

30

35

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140


Information Technology follow on offerings

10.5

35.8

21.0

9.5

15.3

11.4

15.7

80.0

15.5

15.8

22.3

21.7

0

10

20

30

40

50

60

70

80

90

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

100

200

300

400

500

600

700

800


Information Technology IPOs

11.6

41.9

59.6

14.0

5.07.5

20.4

15.216.2

2.34.4

20.3

0

10

20

30

40

50

60

70

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

100

200

300

400

500

600

700


Information Technology market capitalisation by region–3Q2009

68.0%

6.7% 10.4%0.3%0.4%0.4%13.6%

0.3%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Information Technology market capitalisation by region–1Q2002

69.9%

12.2% 8.0% 9.6%0.1%

0.3% 6.6%0.5%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.2

31.4

16.3

35.6

113.9

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI IT

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

5,207,354

2,207,039 2,798,7753,421,417

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI IT ($)



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9,

475.

8 C

ash

Onl

y

NP

N

P

Phi

lips

Sem

icon

duct

ors

Net

herla

nds

Sem

icon

duct

ors

Inve

stor

Gro

up

US

06/0

6/03

8,

930.

2 C

ash

Onl

y 75

.4

24.0

14

7.9

Peo

pleS

oft

Inc

US

S

oftw

are

Ora

cle

Cor

p U

S

15/0

6/98

8,

743.

5 S

tock

Onl

y 35

.0

N/M

N

/M

Bay

Net

wor

ks In

c U

S

Com

pute

rs &

Per

iphe

rals

N

orth

ern

Tel

ecom

Ltd

C

anad

a

26/0

1/98

8,

680.

5 C

ash

and

Sto

ck C

ombi

natio

n 32

.1

14.8

33

.2

Dig

ital E

quip

men

t Cor

p U

S

Com

pute

rs &

Per

iphe

rals

C

ompa

q C

ompu

ter

Cor

p U

S

17/0

3/00

8,

250.

0 U

nkno

wn

N

P

NP

A

OL

Eur

ope,

AO

L A

ustr

alia

G

erm

any

Sof

twar

e A

mer

ica

Onl

ine

Inc

US

28/0

9/09

7,

975.

8 C

ash

and

Sto

ck C

ombi

natio

n 33

.6

7.2

18.2

A

ffilia

ted

Com

pute

r S

vcs

Inc

US

IT

Con

sulti

ng &

Ser

vice

s X

erox

Cor

p U

S



Exhibit 11.14

To

p In

form

atio

n T

ech

no

log

y IP

Os

sin

ce 2

005

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

10/2

6/07

1,

694.

3 A

libab

a.co

m L

td

Chi

na

E-c

omm

erce

/ B

2B

Hon

g K

ong

Yes

06/2

7/05

1,

658.

3 P

arty

Gam

ing

PLC

G

ibra

ltar

Inte

rnet

Sof

twar

e &

Ser

vice

s Lo

ndon

N

o

10/0

6/06

1,

496.

0 E

xper

ian

Gro

up L

td

UK

C

ompu

ters

& P

erip

hera

ls

Lond

on

No

12/1

3/06

1,

488.

0 F

PT

Cor

p V

ietn

am

IT C

onsu

lting

& S

ervi

ces

HoC

hiM

inh

No

11/0

7/05

1,

345.

6 S

UM

CO

Cor

p Ja

pan

Sem

icon

duct

ors

Tok

yo 1

N

o

08/1

3/07

1,

100.

6 V

Mw

are

Inc

US

In

tern

et S

oftw

are

& S

ervi

ces

New

Yor

k N

o

10/3

1/07

1,

044.

5 G

iant

Inte

ract

ive

Gro

up In

c C

hina

S

oftw

are

New

Yor

k N

o

09/2

4/09

1,

043.

8 S

hand

a G

ames

Ltd

C

hina

In

tern

et S

oftw

are

& S

ervi

ces

Nas

daq

No

07/2

5/07

75

6.0

Mon

eysu

perm

arke

t.com

U

K

Inte

rnet

Sof

twar

e &

Ser

vice

s Lo

ndon

N

o

08/0

5/09

74

5.2

Ava

go T

echn

olog

ies

Ltd

Sin

gapo

re

Sem

icon

duct

ors

Nas

daq

Yes

02/1

5/05

72

0.0

Wrig

ht E

xpre

ss C

orp

US

C

ompu

ters

& P

erip

hera

ls

New

Yor

k N

o

06/2

8/05

69

5.8

Neu

Sta

r In

c U

S

Inte

rnet

Sof

twar

e &

Ser

vice

s N

ew Y

ork

Yes

06/0

7/06

68

4.1

Ter

anet

Inco

me

Fun

d C

anad

a In

tern

et S

oftw

are

& S

ervi

ces

Tor

onto

N

o

08/0

8/06

62

7.9

Qim

onda

AG

G

erm

any

Sem

icon

duct

ors

New

Yor

k N

o

03/0

7/07

60

0.0

Cle

arw

ire C

orp

US

In

tern

et S

oftw

are

& S

ervi

ces

Nas

daq

No

02/1

6/05

56

9.3

Dol

by L

abor

ator

ies

Inc

US

E

lect

roni

cs

New

Yor

k N

o

12/1

5/05

56

7.2

Spa

nsio

n In

c U

S

Sem

icon

duct

ors

Nas

daq

No

03/3

0/06

51

0.6

Him

ax T

echn

olog

ies

Inc

Tai

wan

S

emic

ondu

ctor

s N

asda

q N

o

07/1

9/07

51

0.0

Orb

itz W

orld

wid

e In

c U

S

E-c

omm

erce

/ B

2B

New

Yor

k N

o

07/2

3/08

50

0.0

GT

Sol

ar In

tern

atio

nal I

nc

US

S

emic

ondu

ctor

s N

asda

q Y

es



12. EnergyExecutive summary

North America and the emerging markets have continued to grow while Europe and the UKhave seen their market capitalization shrink since 2002 while EPS 12 month forecasts indicatethat the emerging markets could see growth of around 24.8% and with 12 out of the top 20deals since 1998 with US targets we would conclude that M&A activity is likely to take place inthe emerging markets. It should also be noted that the energy sector as a whole has recordedrecord bond issuance during 2009 and high levels of follow on issurance since 2003.

• The energy sector which comprises oil & gas has consistently outperformed the worldmarket since 2Q 2000. From the early 1980s to 2003 the price of crude brent oil was onaverage below USD25 per barrel, however from 2003 the price rose steadily until itpeaked in July 2008 at USD145. Correspondingly the energy equity index also peaked in2Q 2008, after which performance dropped dramatically by 45% over three quarters.There has been some recovery since then with levels returning to those seen in early2007. M&A activity reached a high in 2007 with 2,222 transactions worth USD308 billion,but activity has declined steadily since then. The first nine months of 2009 activityreached USD124 billion and was down 45% when compared to 2008. (Exhibit 12.1).

• At the end of the first nine months of 2009, the number of participants in the energysector has remained stable at 162 participants.

• North America which holds over half of the global capitalization in this market hasretained its dominating position from 2002 to year-to-date. Both North America and theemerging markets have also increased their market capitalization since 2002, up from47% to 54% and 5% to16% respectively. In comparison Europe and the UK shrunk by14% and 5% in the same period. (Exhibit 12.7-8).

• Earnings in the energy sector are expected to grow by 3.8% over the next 12 months,under performing the global equity market earning growth of 19.2%. Emerging Asia andUK offer the best EPS growth prospect over the next 12 months with 24.8% & 5.3%respectively. (Exhibit 12.6).

• 12 deals out of the top 20 M&A deals announced since 1998 are US targeted. The topdeal year-to-date was Suncor Energy’s acquisition of Petro Canada in a stock swaptransaction valued at USD18.2billion which makes up 68% of total activity for 2009.(Exhibit 12.13).

Exhibit 12.1

Energy targeted M&A

0

20

40

60

80

100

120

140

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

60

110

160

210

260

310

360

410

Inde

x pr

ice




Exhibit 12.2

Exhibit 12.3

Exhibit 12.4

Price/earnings–Energy acquisitions >$500mm

0

20

40

60

80

100

Jan

-98

Ma

y-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

Ma

y-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan

-05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan

-07

Ma

y-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

Ma

y-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Energy acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Energy acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Offe

r Pri

ce/T

arg

et S

hare

Pric

e (%

) Cash Only Stock Only Hybrid







Energy IPOs

8.2

1.7

6.88.6

2.6 1.9

5.6

11.4

41.1

8.9

1.9

21.1

0

5

10

15

20

25

30

35

40

45

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120


Energy follow on offerings

6.5

11.9

23.2

23.1

12.2

8.1

7.0

6.0

38.6

17.8

22.8

26.8

0

5

10

15

20

25

30

35

40

45

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

100

200

300

400

500

600

700

800


Energy corporate bonds

54.6

32.5

48.0

68.6

47.4

61.8

88.2

75.2

107.

1

51.1

50.2

176.

1

0

20

40

60

80

100

120

140

160

180

200

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Energy convertibles

2.01.0

4.0

6.7

4.9

8.8

4.7

6.6

8.4

20.5

8.6

4.2

0

5

10

15

20

25

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70

80

90


Energy market capitalisation by region–3Q2009

53.7%

10.8% 1.0%2.2%15.9%4.9%6.1%5.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Energy market capitalisation by region–1Q2002

48.0%

24.9% 20.6%

1.7%1.0%0.3% 0.9%

2.6%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.2

31.3

4.9 3.8

(12.3)

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Energy

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

1,077,714 1,219,9872,698,9153,258,127

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Energy ($)



Exhibit 12.13

To

p 2

0 E

ner

gy

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

01/1

2/98

85

,125

.8

Sto

ck O

nly

26.3

10

.7

24.1

M

obil

Cor

p U

S

Oil

& G

as

Exx

on C

orp

US

28/1

0/04

80

,304

.7

Sto

ck O

nly

(0.3

) 5.

5 12

.0

She

ll T

rans

port

& T

radi

ng C

o U

K

Oil

& G

as

Roy

al D

utch

Pet

role

um C

o N

ethe

rland

s

05/0

7/99

55

,339

.6

Sto

ck O

nly

30.2

13

.5

94.3

E

lf A

quita

ine

Fra

nce

Oil

& G

as

Tot

al F

ina

SA

F

ranc

e

11/0

8/98

52

,717

.1

Sto

ck O

nly

22.4

9.

4 17

.7

Am

oco

Cor

p U

S

Oil

& G

as

Brit

ish

Pet

role

um C

o P

LC

UK

16/1

0/00

43

,318

.3

Cas

h an

d S

tock

Com

bina

tion

17.7

8.

3 15

.5

Tex

aco

Inc

US

P

etro

chem

ical

s C

hevr

on C

orp

US

12/1

2/05

36

,472

.0

Cas

h an

d S

tock

Com

bina

tion

20.9

7.

6 16

.4

Bur

lingt

on R

esou

rces

Inc

US

O

il &

Gas

C

onoc

oPhi

llips

U

S

01/0

4/99

33

,485

.2

Cas

h an

d S

tock

Com

bina

tion

27.2

19

.7

N/M

A

tlant

ic R

ichf

ield

Co

US

P

etro

chem

ical

s B

P A

moc

o P

LC

UK

18/1

2/06

31

,998

.4

Sto

ck O

nly

(3.3

) N

P

NP

N

orsk

Hyd

ro A

SA

N

orw

ay

Oil

& G

as

Sta

toil

AS

A

Nor

way

29/0

5/06

27

,489

.7

Cas

h O

nly

27.4

16

.4

23.0

K

inde

r M

orga

n In

c U

S

Oil

& G

as

Kni

ght H

oldc

o LL

C

US

18/1

1/01

24

,785

.5

Sto

ck O

nly

(0.3

) 4.

7 7.

7 C

onoc

o In

c U

S

Pet

roch

emic

als

Phi

llips

Pet

role

um C

o In

c U

S

11/0

3/98

19

,748

.5

Sto

ck O

nly

12.6

10

.2

N/M

W

aste

Man

agem

ent I

nc

US

W

ater

and

Was

te M

anag

emen

t U

SA

Was

te S

ervi

ces

Inc

US

23/0

3/09

18

,245

.8

Cas

h an

d S

tock

Com

bina

tion

33.4

2.

6 6.

2 P

etro

-Can

ada

Can

ada

Oil

& G

as

Sun

cor

Ene

rgy

Inc

Can

ada

23/0

6/06

18

,217

.2

Cas

h O

nly

40.2

9.

0 53

.3

Ker

r-M

cGee

Cor

p U

S

Oil

& G

as

Ana

dark

o P

etro

leum

Cor

p U

S

04/0

4/05

18

,165

.5

Cas

h an

d S

tock

Com

bina

tion

40.8

N

P

12.9

U

noca

l Cor

p U

S

Oil

& G

as

Che

vron

Tex

aco

Cor

p U

S

23/0

7/07

17

,372

.7

Cas

h an

d S

tock

Com

bina

tion

0.1

10.9

13

.2

Glo

balS

anta

Fe

Cor

p U

S

Oil

& G

as

Tra

nsoc

ean

Inc

US

29/0

4/99

16

,865

.7

Cas

h O

nly

31.3

8.

9 26

.8

YP

F S

A

Arg

entin

a O

il &

Gas

R

epso

l SA

S

pain

22/0

7/08

13

,998

.0

Cas

h O

nly

11

.0

27.7

S

uez

Env

ironm

ent S

A

Fra

nce

Wat

er a

nd W

aste

Man

agem

ent

Sha

reho

lder

s F

ranc

e

22/0

4/03

13

,615

.2

Sto

ck O

nly

68.3

11

.3

16.1

S

ibne

ft R

ussi

an F

ed

Oil

& G

as

Yuk

osne

ftega

z R

ussi

an F

ed

28/0

9/05

13

,101

.1

Cas

h O

nly

5.

6 8.

8 S

ibne

ft R

ussi

an F

ed

Oil

& G

as

OA

O G

azpr

om

Rus

sian

Fed

23/0

6/08

12

,728

.8

Cas

h an

d S

tock

Com

bina

tion

0.8

7.7

17.9

A

llied

Was

te In

dust

ries

Inc

US

W

ater

and

Was

te M

anag

emen

t R

epub

lic S

ervi

ces

Inc

US



Exhibit 12.14

To

p e

ner

gy

IPO

s si

nce

200

5

Issu

e da

te

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

sec

tor

Exc

hang

e P

E b

acke

d?

07/1

3/06

10

,656

.2

OA

O R

osne

ft R

ussi

an F

ed

Oil

& G

as

Mos

cow

Lo

ndon

R

ussi

an T

S

No

12/2

8/07

4,

268.

9 P

TT

Aro

mat

ics

& R

efin

ing

PC

L T

haila

nd

Oil

& G

as

Tha

iland

N

o

06/1

2/08

4,

102.

0 O

GX

Pet

role

o e

Gas

B

razi

l O

il &

Gas

B

MF

BO

VE

SP

A

No

05/1

2/06

2,

949.

9 S

aras

SpA

Ita

ly

Pet

roch

emic

als

Mila

n N

o

09/2

6/07

2,

850.

0 E

cope

trol

C

olom

bia

Oil

& G

as

Col

ombi

a N

o

11/2

9/06

2,

395.

8 P

etro

plus

Hol

ding

s A

G

Sw

itzer

land

O

il &

Gas

S

wis

s E

xch

No

09/2

9/06

2,

255.

4 K

azM

unai

Gas

Exp

l & P

rodn

JS

C

Kaz

akhs

tan

Oil

& G

as

Lond

on

Kaz

akh

No

07/1

3/06

1,

879.

1 D

aqin

Rai

lway

Com

pany

Lim

ited

Chi

na

Pip

elin

es

Sha

ngha

i N

o

05/0

7/07

1,

800.

2 S

audi

Kay

an P

etro

chem

ical

Co

Sau

di A

rabi

a P

etro

chem

ical

s S

audi

Exc

h N

o

10/0

9/06

1,

690.

7 B

iffa

PLC

U

K

Wat

er a

nd W

aste

Man

agem

ent

Lond

on

02/1

2/07

1,

517.

7 O

il R

efin

erie

s Lt

d Is

rael

P

etro

chem

ical

s T

el A

viv

No

10/2

3/06

1,

390.

8 G

alp

Ene

rgia

SG

PS

SA

P

ortu

gal

Oil

& G

as

Eur

onxt

L

Mer

cado

Cn

Yes

12/1

9/06

1,

296.

5 C

airn

Indi

a Lt

d In

dia

Oil

& G

as

Bom

bay

Nat

iona

l N

o

01/0

5/08

1,

231.

6 P

etro

Rab

igh

Sau

di A

rabi

a P

etro

chem

ical

s S

audi

Exc

h N

o

04/0

7/06

1,

202.

3 Le

gran

d S

A

Fra

nce

Oth

er E

nerg

y &

Pow

er

Eur

o P

aris

Y

es

10/1

6/06

1,

011.

7 Id

emits

u K

osan

Co

Ltd

Japa

n P

etro

chem

ical

s T

okyo

1

No

07/2

1/05

96

6.3

Nov

atek

R

ussi

an F

ed

Oil

& G

as

Lond

on

No

11/3

0/06

91

3.6

Oil

& G

as D

evel

opm

ent C

orp

Pak

ista

n O

il &

Gas

Lo

ndon

N

o

09/1

3/05

83

8.2

PG

NiG

(Pol

and)

P

olan

d O

il &

Gas

W

arsa

w

No

01/2

0/05

80

0.0

Cel

anes

e C

orp

US

P

etro

chem

ical

s N

ew Y

ork

Yes



13. UtilitiesExecutive summary

From the 20 largest utilities IPOs to reach the market since 2005 it is worth noting that 7 werefrom BRIC (Brazil, Russia, India and China) countries including 4 from India alone. Renewableenergy along side privatizations of the last remaining government controlled entities acrossdeveloped and emerging market represent some of the main source of new entrants for thesector.

• The utility sector witnessed over the past 12 years 2 M&A cycles aligned to those of theglobal M&A and ECM markets. The second cycle, the result of a wave of intra-Europeanconsolidation and the largest LBO ever announced (TXU, USD44 billion), peaked in 2007(USD300 billion) at nearly twice the level reached at the first cycle-high (1999, USD174billion). Cash has consistently been the consideration of choice in the sector across bothcycles whilst valuations have remained close to the sector’s EBITDA median (10.5X).(Exhibit 13.1-4).

• Cross-border transactions are an essential driving force of the sector’s M&A activity. Itaccounts for a combined 41% over the period covered (1998-2009) and has nowexceeded domestic activity for the last 2 years to stand at a record 55% in 2009 YTD.(Exhibit 13.1).

• Shares of utilities companies have generally underperformed the global equity marketand are down 7.8% over the last 12 months. The UK and the US are the worst hit over thesame period, down 26% and 12% respectively. In contrast, utilities companies fromemerging Asia and Latin America recorded the best performance of the sector, up 23%and 15% respectively. As at the end of 3Q 2009 the market capitalization of utilitiescompanies from emerging markets had more than doubled to USD105 billion, up 165%from 2002. (Exhibit 13.5,7-8).

• The level of corporate bonds issuance is at a 10 year high in 2009 (USD208 billion), up forthe 4th consecutive year in 3Q 2009. Similarly follow on offerings are also at a 10 yearhigh with USD34 billion raised so far in 2009. (Exhibit 13.9-12).

• At 7.4% the 12 months forecasted earnings growth in the utilities sector is significantlybelow the global average (19.2%). Nevertheless companies from emerging Asia and Japanoffer the best prospect for earnings growth with expected 117% and 59% growth raterespectively. (Exhibit 13.6).

Exhibit 13.1

Utilities targeted M&A

0

20

40

60

80

100

120

140

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

50

70

90

110

130

150

170

190

Inde

x pr

ice




Exhibit 13.2

Exhibit 13.3

Exhibit 13.4

Price/earnings–Utilities acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

Dec

-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

Dec

-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

Dec

-08

May

-09

Se

p-09

Eq

uity

Val

ue/

Net

Inco

me


Offer price to target share price–Utilities acquisitions >$500mm

0

20

40

60

80

100Ja

n-98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%) Cash Only Stock Only Hybrid

Rank value/EBITDA–Utilities acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Ran

k V

alue

/EB

ITD

A








Utilities corporate bonds

208.

2

73.079

.1

144.

0

98.7

181.

8

96.9

126.

7

84.3

74.9 87

.0

117.

4

0

50

100

150

200

250

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

100

200

300

400

500

600


Utilities convertibles

2.7

10.1

4.4

8.8

5.4

8.4

3.3

2.2 2.2

0.81.4 1.3

0

2

4

6

8

10

12

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30


Utilities follow on offerings

4.6 4.3

7.4

11.1

13.313.3

9.5

6.3

20.0

10.2

8.0

34.1

0

5

10

15

20

25

30

35

40

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120


Utilities IPOs

1.5

20.1

7.0

5.1

1.72.8

7.7

17.4

5.2

8.5

2.6

14.0

0

5

10

15

20

25

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35

40


Utilities market capitalisation by region–3Q2009

34.8% 32.7%

7.3%3.8%

11.8%

3.8%

4.5%1.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Utilities market capitalisation by region–1Q2002

47.7%

23.5%

9.7%3.3%

9.5%2.0%3.3%

1.1%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.027.3

10.8

19.2

7.49.4 8.3 7.4

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Utilities

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

769,396 631,120 1,086,5281,349,494

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Utilities ($)



Exhibit 13.13

To

p 2

0 U

tilit

ies

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get n

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

25/0

2/06

75

,242

.3

Sto

ck O

nly

3.7

10.6

17

.8

Sue

z S

A

Fra

nce

Pow

er

Gaz

de

Fra

nce

SA

F

ranc

e

26/0

2/07

44

,372

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Cas

h O

nly

20.1

8.

0 12

.9

TX

U C

orp

US

P

ower

T

XU

Cor

p S

PV

U

S

28/1

1/06

26

,634

.8

Oth

er

4.9

11.2

11

.3

Sco

ttish

Pow

er P

LC

UK

P

ower

Ib

erdr

ola

SA

S

pain

02/0

4/07

26

,437

.8

Cas

h O

nly

116.

4 9.

6 17

.2

End

esa

SA

S

pain

P

ower

In

vest

or G

roup

Ita

ly

30/0

7/08

19

,468

.2

Cas

h O

nly

13.2

10

.5

13.8

U

nion

Fen

osa

SA

S

pain

P

ower

G

as N

atur

al S

DG

SA

S

pain

11/1

0/99

18

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Cas

h O

nly

9.

0 23

.3

Ent

e N

azio

nale

per

l'E

nerg

ia

Italy

P

ower

In

vest

ors

Italy

22/0

4/02

18

,439

.9

Sto

ck O

nly

6.4

8.0

10.7

La

ttice

Gro

up P

LC

UK

O

il &

Gas

N

atio

nal G

rid G

roup

PLC

U

K

18/0

1/00

15

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Cas

h an

d S

tock

Com

bina

tion

26.8

11

.5

19.9

C

oast

al C

orp

US

O

il &

Gas

E

l Pas

o E

nerg

y C

orp

US

24/0

9/08

15

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Oth

er

35.4

20

.2

57.3

B

ritis

h E

nerg

y G

roup

PLC

U

K

Pow

er

Lake

Acq

uisi

tions

Ltd

U

K

09/0

4/01

15

,025

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Oth

er

26.5

15

.4

11.9

P

ower

Gen

PLC

U

K

Pow

er

E O

N A

G

Ger

man

y

16/1

0/06

14

,888

.8

Cas

h O

nly

6.

8 21

.3

Tha

mes

Wat

er P

LC

UK

W

ater

and

Was

te M

anag

emen

t K

embl

e W

ater

Ltd

A

ustr

alia

27/0

9/99

14

,858

.1

Sto

ck O

nly

(4.4

) 5.

9 21

.2

VIA

G A

G

Ger

man

y P

ower

V

EB

A A

G

Ger

man

y

28/0

3/08

14

,342

.2

Cas

h O

nly

N

P

NP

E

ndes

a Ita

lia

Italy

P

ower

E

ON

AG

G

erm

any

09/0

5/05

14

,137

.8

Cas

h an

d S

tock

Com

bina

tion

13.4

11

.8

21.8

C

iner

gy C

orp

US

P

ower

D

uke

Ene

rgy

Cor

p U

S

23/0

9/99

13

,968

.2

Cas

h an

d S

tock

Com

bina

tion

(8.5

) 5.

8 11

.4

Uni

com

Cor

p U

S

Pow

er

Phi

lade

lphi

a E

lect

ric C

o U

S

09/0

8/05

13

,843

.1

Cas

h an

d S

tock

Com

bina

tion

8.0

18.1

23

.6

Ele

ctra

bel S

A

Bel

gium

P

ower

S

uez

SA

F

ranc

e

20/0

2/09

13

,470

.0

Cas

h O

nly

9.

0 5.

4 E

ndes

a S

A

Spa

in

Pow

er

Ene

l SpA

Ita

ly

07/1

2/98

12

,509

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Cas

h an

d S

tock

Com

bina

tion

24.7

8.

5 34

.2

Pac

ifiC

orp

US

P

ower

S

cotti

sh P

ower

PLC

U

K

27/0

2/06

11

,872

.1

Cas

h O

nly

16.1

9.

2 18

.6

Key

Spa

n C

orp

US

O

il &

Gas

N

atio

nal G

rid P

LC

UK

30/0

3/07

11

,453

.2

Oth

er

13.3

39

,590

.5

45,7

58.4

A

linta

Ltd

A

ustr

alia

O

il &

Gas

In

vest

or G

roup

S

inga

pore



Exhibit 13.14

To

p U

tilit

ies

IPO

s si

nce

200

5

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

11/1

8/05

7,

479.

1 E

DF

F

ranc

e P

ower

E

uro

Par

is

No

12/1

1/07

6,

565.

3 Ib

erdr

ola

Ren

ovab

les

SA

S

pain

P

ower

B

arce

lona

Bilb

ao M

adrid

Val

enci

a N

o

07/0

7/05

4,

781.

0 G

az d

e F

ranc

e F

ranc

e O

il &

Gas

E

uro

Par

is

No

01/2

1/08

2,

917.

9 R

elia

nce

Pow

er L

td

Indi

a P

ower

B

omba

y N

atio

nal

No

06/0

2/08

2,

437.

4 E

DP

Ren

ovav

eis

SA

P

ortu

gal

Alte

rnat

ive

Ene

rgy

Sou

rces

E

uron

xt L

N

o

04/2

2/08

1,

358.

2 A

mer

ican

Wat

er W

orks

Co

Inc

US

W

ater

and

Was

te M

anag

emen

t N

ew Y

ork

No

08/2

0/09

1,

247.

1 N

atio

nal H

ydro

Ele

ctric

Pow

er

Indi

a P

ower

B

omba

yNat

iona

l N

o

07/2

4/07

1,

105.

1 M

einl

Inte

rnat

iona

l Pow

er L

td

Jers

ey

Pow

er

Vie

nna

No

04/2

1/06

1,

103.

0 R

enew

able

Ene

rgy

Cor

p A

SA

N

orw

ay

Alte

rnat

ive

Ene

rgy

Sou

rces

O

slo

No

12/1

2/07

1,

091.

4 M

PX

Ene

rgia

SA

B

razi

l P

ower

B

OV

ES

PA

N

o

12/0

7/05

1,

056.

6 S

P A

usN

et

Aus

tral

ia

Pow

er

Aus

tral

ia, S

inga

pore

N

o

09/2

8/07

99

5.9

OG

K-2

R

ussi

an F

ed

Pow

er

Rus

sian

TS

ICE

X L

ondo

n N

o

11/0

4/08

73

9.3

Gru

pa E

nerg

etyc

zna

EN

EA

SA

P

olan

d P

ower

W

arsa

w

No

09/1

4/07

73

8.9

Pow

er G

rid C

orp

of In

dia

Ltd

Indi

a P

ower

N

atio

nal B

omba

y N

o

06/1

7/05

67

1.6

Elia

B

elgi

um

Pow

er

Eur

onex

t B

No

08/0

3/09

63

7.5

Ada

ni P

ower

Ltd

In

dia

Pow

er

Bom

bay

Nat

iona

l Y

es

11/2

8/06

51

3.4

ED

F E

nerg

ies

Nou

velle

s S

A

Fra

nce

Pow

er

Eur

o P

aris

N

o

07/1

2/05

50

7.3

ED

P E

nerg

ias

do B

rasi

l SA

B

razi

l P

ower

No

07/0

4/07

50

1.3

Eni

a S

pA

Italy

P

ower

M

ilan

ST

AR

N

o

07/0

9/07

48

0.5

Red

es E

nerg

etic

as N

acio

nais

P

ortu

gal

Pow

er

Eur

onxt

L

No



14. BanksExecutive summary

It is worth noting that 11 of the top 20 bank IPOs since 2005 originated from BRIC countries,indicating that this group of countries could a either attract foreign buyer looking for higherearning growth, or, provided that access to capital remains available, drive activity viaexpansion of their own.

• Despite the global nature of financial markets M&A activity in the banking sector remainsoverwhelmingly domestic (74% over the last 12 years). Until now activity consisted ofwaves of consolidations paid in stock within the main developed economies. The US (1998& 2003/2004), Japan (1999-2000), and Europe (1999-2001) each witnessed sequences ofintense market consolidations over the last decade. Lately, the now near exclusivedomestic nature of the M&A activity observed (96% in 2009) finds its origin in the manygovernment bailouts that make up the vast majority of the sector’s activity postcredit-crunch. (Exhibit 14.1).

• Globally stocks in the banking sector have suffered more than the overall equity market,down 4.4% in the 12 months leading to 3Q 2009. Based on stock performance thebanking sector is clearly broken down between developed (all down over 12 months) andemerging markets (all up over the same period). Emerging Asia and Latin America stockslead the way, both up 27% over 12 months whereas Japan, the UK and the US are down30%, 23% and 15% respectively. Consequently, emerging markets now account for over20% of the global banking sector market capitalization, up from only 5% at the bottom ofthe previous M&A cycle (1Q 2002). US banks meanwhile saw their market capitalizationshrink by over USD400 billion over the last 2 years. (Exhibit 14.5,7,8).

• The banking sector as a whole offers better earning growth perspective than the globalequity market with an expected EPS growth of 25% for the next 12 months. The US andemerging Asia banks are expected to drive the trend 12 month EPS growth forecast of29% and 22% respectively. (Exhibit 14.6).

• The sector, shaken by the recent crisis, has now gone through a phase of intenserecapitalization reflected by the all time-high activity level observed in follow-onofferings. The unexpectedly low level of corporate bonds issuance can be partly explainedby the switch to government guaranteed issuance from October 2008 and well into 2009.(Exhibit 14.9-12).

Exhibit 14.1

Banks targeted M&A

0

50

100

150

200

250

300

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

40

60

80

100

120

140

160

180

200

Inde

x pr

ice




Exhibit 14.2

Exhibit 14.3

Price/earnings–Banks acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-01

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Eq

uity

Val

ue/N

et In

com

e


Offer price to target share price–Banks acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)








Banks corporate bonds

680.

5

725.

0

674.

274

4.8

908.

0

607.

3

1,17

2.71,

387.

8

1,30

6.9

1,10

6.3

1,20

9.1

598.

5

0

200

400

600

800

1,000

1,200

1,400

1,600

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

1,000

2,000

3,000

4,000

5,000

6,000


Banks convertibles

10.2

6.0

2.4

9.7

5.9

13.5

8.09.4

7.9

26.5

52.7

2.5

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140


Banks follow on offerings

11.2 27

.2

8.5 21

.2

47.0

236.

3

17.0

18.1

75.0

20.5

19.4

179.

9

0

50

100

150

200

250

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

180


Bank IPOs

4.3

7.9

3.0 3.2 4.33.1

7.5

15.5

43.4

4.9 4.6

30.5

0

5

10

15

20

25

30

35

40

45

50

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35

40

45


Banks market capitalisation by region–3Q2009

20.0%25.4%

14.2% 12.5%7.2%

4.5%

11.7%

4.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Banks market capitalisation by region–1Q2002

36.0%

28.0%

18.9%

6.8% 5.0%1.2%2.8%1.4%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.027.3

10.8

19.220.7

28.9

10.4

24.8

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Banks

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

1,822,595 1,732,1632,492,4813,509,954

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Banks ($)



Exhibit 14.12

To

p 2

0 B

anks

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

25/0

4/07

98

,189

.2

Cas

h an

d S

tock

Com

bina

tion

14.2

14

.1

20.3

A

BN

-AM

RO

Hol

ding

NV

N

ethe

rland

s B

anks

R

FS

Hol

ding

s B

V

Net

herla

nds

06/0

4/98

72

,558

.2

Sto

ck O

nly

7.9

11.0

19

.8

Citi

corp

U

S

Ban

ks

Tra

vele

rs G

roup

Inc

US

13/0

4/98

61

,633

.4

Sto

ck O

nly

0.0

9.9

19.2

B

ankA

mer

ica

Cor

p U

S

Ban

ks

Nat

ions

Ban

k C

orp,

Cha

rlotte

,NC

U

S

14/0

1/04

58

,663

.1

Cas

h an

d S

tock

Com

bina

tion

15.1

12

.1

18.8

B

ank

One

Cor

p,C

hica

go,IL

U

S

Ban

ks

JPM

orga

n C

hase

& C

o U

S

27/1

0/03

49

,260

.6

Sto

ck O

nly

43.0

13

.2

22.8

F

leet

Bos

ton

Fin

anci

al C

orp,

MA

U

S

Ban

ks

Ban

k of

Am

eric

a C

orp

US

13/1

0/99

45

,494

.4

Sto

ck O

nly

3.9

29.9

77

.0

Sak

ura

Ban

k Lt

d Ja

pan

Ban

ks

Sum

itom

o B

ank

Ltd

Japa

n

18/0

2/05

41

,431

.0

Oth

er

27.8

N

/M

N/M

U

FJ

Hol

ding

s In

c Ja

pan

Ban

ks

Mits

ubis

hi T

okyo

Fin

anci

al G

rp

Japa

n

20/0

8/99

40

,096

.6

Sto

ck O

nly

17.8

N

/M

N/M

D

ai-I

chi K

angy

o B

ank

Ltd

Japa

n B

anks

F

uji B

ank

Ltd

Japa

n

29/1

1/99

38

,412

.9

Oth

er

36.3

9.

5 14

.3

Nat

iona

l Wes

tmin

ster

Ban

k P

LC

UK

B

anks

R

oyal

Ban

k of

Sco

tland

Gro

up

UK

26/0

8/06

37

,624

.2

Sto

ck O

nly

7.2

11.0

18

.0

San

Pao

lo IM

I SpA

Ita

ly

Ban

ks

Ban

ca In

tesa

SpA

Ita

ly

30/0

6/05

35

,810

.3

Cas

h an

d S

tock

Com

bina

tion

31.1

9.

8 16

.6

MB

NA

Cor

p U

S

Ban

ks

Ban

k of

Am

eric

a C

orp

US

08/0

6/98

34

,352

.6

Cas

h an

d S

tock

Com

bina

tion

9.3

12.6

25

.4

Wel

ls F

argo

,San

Fra

ncis

co,C

A

US

B

anks

N

orw

est C

orp,

Min

neap

olis

,MN

U

S

20/0

8/99

30

,759

.6

Sto

ck O

nly

8.8

N/M

N

/M

Indu

stria

l Ban

k of

Jap

an L

td

Japa

n B

anks

F

uji B

ank

Ltd

Japa

n

13/0

4/98

29

,616

.0

Sto

ck O

nly

26.5

12

.1

19.4

F

irst C

hica

go N

BD

Cor

p U

S

Ban

ks

BA

NC

ON

E C

orp,

Col

umbu

s,O

hio

US

20/0

5/07

29

,528

.1

Oth

er

12.1

11

.1

18.7

C

apita

lia S

pA

Italy

B

anks

U

nicr

edito

Ital

iano

SpA

Ita

ly

30/0

7/09

28

,078

.3

Oth

er

N

/M

N/M

C

itigr

oup

Inc

US

B

anks

P

refe

rred

Sha

reho

lder

s U

nkno

wn

13/1

0/08

26

,062

.9

Unk

now

n (2

7.2)

2.

3 3.

4 R

BS

U

K

Ban

ks

HM

Tre

asur

y U

K

18/0

9/08

25

,439

.5

Sto

ck O

nly

(37.

0)

2.3

3.6

HB

OS

PLC

U

K

Ban

ks

Lloy

ds T

SB

Gro

up P

LC

UK

29/0

9/08

23

,137

.3

Unk

now

n

NP

N

P

For

tis B

ank

Ned

erla

nd(H

oldi

ng)

Net

herla

nds

Ban

ks

Net

herla

nds

Net

herla

nds

07/0

3/09

22

,315

.8

Unk

now

n

89.3

15

8.7

Lloy

ds B

anki

ng G

roup

PLC

U

K

Ban

ks

HM

Tre

asur

y U

K



Exhibit 14.13

To

p B

ank

IPO

s si

nce

200

5

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

10/2

0/06

21

,969

.3

ICB

C

Chi

na

Ban

ks

Hon

g K

ong

Yes

05/2

3/06

11

,186

.4

Ban

k of

Chi

na L

td

Chi

na

Ban

ks

Hon

g K

ong

No

10/2

0/05

9,

226.

7 C

hina

Con

stru

ctio

n B

ank

Cor

p C

hina

B

anks

H

ong

Kon

g Y

es

05/1

0/07

7,

988.

1 B

ank

VT

B

Rus

sian

Fed

B

anks

Lo

ndon

Rus

sian

TS

MIC

EX

N

o

04/2

0/07

5,

945.

6 C

hina

CIT

IC B

ank

Cor

p Lt

d C

hina

B

anks

H

ong

Kon

g N

o

06/2

5/09

4,

330.

7 V

isan

et

Bra

zil

Ban

ks

BM

FB

OV

ES

PA

N

o

11/0

6/06

3,

213.

0 A

ozor

a B

ank

Ltd

Japa

n B

anks

T

okyo

1

Yes

04/1

6/08

2,

808.

1 A

linm

a B

ank

Sau

di A

rabi

a B

anks

S

audi

Exc

h N

o

05/2

4/06

2,

579.

3 M

aste

rCar

d In

c U

S

Ban

ks

New

Yor

k N

o

06/1

7/05

2,

165.

3 B

oCO

MM

C

hina

B

anks

H

ong

Kon

g N

o

01/1

5/07

2,

055.

2 In

dust

rial B

ank

Co

Ltd

Chi

na

Ban

ks

Sha

ngha

i N

o

09/0

3/07

1,

990.

7 B

ank

of B

eijin

g C

hina

B

anks

S

hang

hai

No

05/0

7/07

1,

869.

8 T

urki

ye H

alk

Ban

kasi

AS

T

urke

y B

anks

Is

tanb

ul

No

04/2

2/05

1,

455.

5 R

aiffe

isen

Inte

rnat

iona

l Ban

k-

Aus

tria

B

anks

V

ienn

a F

rank

furt

N

o

01/1

5/06

1,

133.

3 A

l Ray

an B

ank

Qat

ar

Ban

ks

Doh

aSec

Mkt

N

o

07/2

5/07

1,

113.

6 B

anris

ul

Bra

zil

Ban

ks

BO

VE

SP

A

No

11/1

4/05

1,

111.

8 V

akifb

ank

Tur

key

Ban

ks

Ista

nbul

N

o

10/0

6/05

1,

097.

0 E

FG

Inte

rnat

iona

l S

witz

erla

nd

Ban

ks

Sw

iss

Exc

h N

o

07/1

2/07

91

7.2

Ban

k of

Nan

jing

Co

Ltd

Chi

na

Ban

ks

Sha

ngha

i N

o

10/1

7/05

79

0.9

Tok

yo S

tar

Ban

k Lt

d Ja

pan

Ban

ks

Tok

yo 1

Y

es



14. InsuranceExecutive summary

The insurance sector is likely to see regulatory changes which will promote consolidation whilehistorically cross-border activity has accounted for as much as 40% of the top 20 deals between1998 to 2009 with a mixture of intra-European cross-border activity and a degree of transatlanticflow. We can anticipate increased deal flow in regions with higher than average EPS growth asbuyers seek to improve their bottom line with value acquisitions of companies trading atattractive earnings multiples, including companies based in North America and Japan.

• Amidst a decade of turbulence from terrorist attacks, natural disasters, includinghurricane Katrina and the 2004 tsunami, as well as the recent AIG bailout by the USTreasury in the aftermath of the credit crunch, the insurance sector as a wholeunderperformed during both peak cycles and by as much as 19.5% in 2000. (Exhibit 15.1).

• This sector produced a wave of consolidation during the first two cycles as stock issuanceremained the consideration of choice for mega-mergers, including AIG’s acquisitions ofAmerican General (USD23.4billion) and SunAmerica (USD18.1billion), despite decliningstock performance in the sector index midway through the first cycle. (Exhibit 15.2, 15.13).

• The recent leverage cycle saw smaller mergers as the average deal size decreased fromUSD150 million during the first cycle to USD91 million during the leverage cycle as buyersmoved to cash and stock hybrids as the consideration of choice as access to cheapfinancing was readily available and complemented by surging stock prices in both theworld and sector indices. (Exhibit 15.2).

• The last cycle has been driven largely by value plays as suppressed stock prices in thewake of the credit crunch left companies in search of liquidity, including ING, which took aUSD13.4 billion capital injection from the Dutch government at less than 4x earnings; wellbelow the MSCI Europe (excluding UK) sector multiple of 35.4x. The bid premiums duringthis cycle were less concentrated than other sectors with a spread evident across all dealsizes from around 10% to 50%. (Exhibit 15.4).

• Cross-border activity has accounted for as much as 40% of the top 20 deals with amixture of intra-European cross border activity and a degree of transatlantic deal flow.

• The number of participants in the sector has increased from 92 in 2007 to 97 in 2009with more companies in North America and Japan. In terms of market capitalization,North America and Europe (excluding UK) has ceded a 14% market share to Asia Pacific,Japan, and the emerging markets. The latter experienced the largest growth as marketshare increased from 1.9% in 2002 to 7.8% in 2009, including 6.9% held by Asianemerging market companies. (Exhibit 15.7-8).

• The IPO market for the insurance sector peaked in 2007, largely driven by Asian andJapanese issuers, including the USD4.1 billion private equity-backed issuance by ChinaPacific Insurance and a USD3.0 billion issuance by Sony Financial. This has since declinedto record low levels in both 2008 and 2009 as the financial markets destabilized. (Exhibit15.9).

• 12 Month EPS growth for the insurance sector is 10.1% higher than the world averageand, with an upward trend in the world and sector indices. (Exhibit 15.6).



Exhibit 15.1

Exhibit 15.2

Offer price to target share price–Insurance acquisitions >$500mm

0

10

20

30

40

50

60

70

80

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

De

c-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

De

c-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

De

c-08

May

-09

Se

p-09

Offe

r Pric

e/T

arg

et S

hare

Pric

e (%

)


Insurance targeted M&A

0

5

10

15

20

25

30

35

40

45

50

1Q98

2Q98

3Q98

4Q98

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

.

M&

A (

$bn)

30

50

70

90

110

130

150

170

Inde

x pr

ice








Insurance corporate bonds

35.4

51.7

86.3

51.1

83.7

48.8

61.1

80.2

94.5

80.3

72.4

48.1

0

10

20

30

40

50

60

70

80

90

100

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Insurance convertibles

3.8

2.5

6.6

7.7

6.5

5.2

4.4

7.3

2.3

3.6

7.8

0.5

0

3

6

9

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30


Insurance follow on offerings

4.93.7

6.5

10.210.3

13.0

9.4

21.7

12.6

6.3

14.7

12.4

0

10

20

30

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70


Insurance IPOs

1.9

3.7

8.5

11.4

6.5

8.1

10.3

4.1

8.5

0.6 0.4

10.3

0

2

4

6

8

10

12

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30


Insurance market capitalisation by region–3Q2009

43.4%

29.1%

8.5% 5.5% 5.7% 6.9%0.1%

0.8%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Insurance market capitalisation by region–1Q2002

34.0%

8.2% 2.1%

26.8%

2.4%1.0%0.9%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.2

8.5

46.8

29.3

5.7

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Insurance

Market value ($m)

808,068 717,448968,728

1,543,385

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Insurance ($)

23,752,480

31,774,960

16,733,020

22,114,240



Exhibit 15.11

To

p 2

0 In

sura

nce

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get

Nat

ion

Sub

Sec

tor

Acq

uiro

r na

me

Acq

uiro

r N

atio

n

03/0

4/01

23

,398

.2

Sto

ck O

nly

20.3

N

P

20.4

A

mer

ican

Gen

eral

Cor

p U

S

Insu

ranc

e A

IG

US

19/0

6/98

22

,300

.2

Sto

ck O

nly

23.4

N

P

23.0

G

ener

al R

e C

orp

US

In

sura

nce

Ber

kshi

re H

atha

way

Inc

US

17/0

4/00

19

,399

.1

Oth

er

13.9

N

P

14.2

A

llied

Zur

ich

PLC

U

K

Insu

ranc

e Z

uric

h A

llied

AG

S

witz

erla

nd

20/0

8/98

18

,117

.0

Sto

ck O

nly

25.9

N

P

43.0

S

unA

mer

ica

Inc

US

In

sura

nce

AIG

U

S

17/1

1/03

16

,136

.1

Sto

ck O

nly

(0.6

) N

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rave

lers

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y C

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lty C

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c U

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13

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h O

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tis (

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gium

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er

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y C

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lty

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lder

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S

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wic

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nion

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ranc

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nnui

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25/0

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on P

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bina

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IN

A

Italy

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icur

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pA

Italy

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ash

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tert

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ash

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Gen

eral

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p U

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Exhibit 15.12

To

p In

sura

nce

IPO

s si

nce

200

5

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

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omic

ile

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hang

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acke

d?

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ranc

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ndon

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8 C

hina

Pac

ific

Ins(

Grp

)Co

Ltd

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na

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ranc

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hang

hai

Yes

10/0

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3,

007.

4 S

ony

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anci

al H

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ngs

Inc

Japa

n In

sura

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Tok

yo 1

N

o

05/1

7/06

1,

742.

8 S

NS

Rea

al N

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herla

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uron

extA

M

No

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3/05

1,

008.

3 T

rygV

esta

A/S

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enm

ark

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ranc

e C

open

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n N

o

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3/05

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ashi

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mud

a In

sura

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Lond

on A

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No

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8/05

77

2.3

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o A

ssic

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ly

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ranc

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69

0.0

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con

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e G

roup

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3.0

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ploy

ers

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ding

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c U

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0.5

Sec

urity

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ital A

ssur

ance

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erm

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ork

No

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5.6

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Am

eric

a S

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zil

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ranc

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OV

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o

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38

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di A

rabi

a In

sura

nce

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di E

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4/07

34

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Val

idus

Hol

ding

s Lt

d B

erm

uda

Insu

ranc

e N

ew Y

ork

Yes

07/1

1/06

34

4.1

Alli

ed W

orld

Ass

ur C

o H

ldgs

B

erm

uda

Insu

ranc

e N

ew Y

ork

Yes

07/1

2/07

30

9.7

Par

is R

E

Sw

itzer

land

In

sura

nce

Eur

o P

aris

N

o

05/3

0/08

30

5.4

Poz

avar

oval

nica

Sav

a dd

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love

nia

Insu

ranc

e Lj

ublja

na

No

09/2

5/09

28

7.3

Ton

g Y

ang

Life

Ins

Co

Ltd

Sou

th K

orea

In

sura

nce

Kor

ea

No

12/0

6/07

23

3.5

Trip

le-S

Man

agem

ent C

orp

Pue

rto

Ric

o In

sura

nce

New

Yor

k N

o

05/2

4/07

22

4.0

Gre

enlig

ht C

apita

l Re

Ltd

Cay

man

Isla

nds

Insu

ranc

e N

AS

DA

Q

No

10/3

0/07

21

6.4

CN

insu

re In

c C

hina

In

sura

nce

NA

SD

AQ

N

o



16. Auto and ComponentsExecutive summary

Activity in auto and components in 2009 is in line to reach an all time high level but this ismostly due to the sector’s necessity to restructure following the collapse of the globaleconomy following the credit crisis. Illustrating the concentration of M&A activity in thesector it is worth noting that 19 of the 20 largest acquisitions targeting automobile andcomponent companies since 1998 took place either in the US or in Europe and wetherefore expect limited consolidation until the effectiveness of the restructurings andglobal recovery result in significantly stronger earnings.

• The observation of the global and sectorial equity indices shows how tightly correlatedthe equity performance of the sector is to the global equity market and global macroeconomic conditions in general since 2002. Nevertheless M&A activity in the sector hasnot until now particularly benefited from the 2 previous economic growth cycles. (Exhibit16.1).

• Activity in 2009 is in line to reach an all time high level but this mostly due to the sector’snecessity to restructure following the collapse of the global economy following the creditcrisis. (Exhibit 16.1).

• Illustrating the concentration of M&A activity in the sector it is worth noting that 19 of the20 largest acquisitions targeting automobile and components companies since 1998 tookplace either in the US or in Europe. (Exhibit 16.13).

• Based on market capitalization, Japan is the dominant market of the sector withcompanies valued at USD251 billion and accounting for 51%, up from 41% in 2002, of thesector’s market capitalization. US manufacturers are the worst hit since 2002 with marketcapitalization more than halved (USD119 billion to USD52 billion) and now only accountfor 11% of the total auto market (down from 30%). (Exhibit 16.7-8).

• Reflecting the intense pressure to refinance and recapitalize the level of debt and equitycapital raising has hit historical high in 2009. Follow-on offerings in the sectors have sofar in 2009 helped raise USD8.7 billion whilst corporate bonds totalled USD57 billion.(Exhibit 15.9-12).

Exhibit 16.1

Auto and Components M&A

0

10

20

30

40

50

60

70

80

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

50

70

90

110

130

150

170

190

Inde

x pr

ice




Exhibit 16.2

Exhibit 16.3

Exhibit 16.4

Price/earnings–Auto and components acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Auto and Components acquisitions >$500mm

0

2

4

6

8

10

12

14

16

18

20

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Auto and Components acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

De

c-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

De

c-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

De

c-08

May

-09

Sep

-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)








Auto and Components convertibles

0.751.33

7.56

3.87

0.02

3.79

5.39

0.00

2.00

4.00

6.00

8.00

10.00

12.00

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

2

4

6

8

10

12

14

16


Auto and Components corporate bonds

58.1

44.4

26.4

39.3

47.7

22.7

18.0

34.432.3

28.829.7

56.7

0

10

20

30

40

50

60

70

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Auto and Components follow on offerings

7.0 7.1

1.0

2.6

4.24.4

1.3

5.05.1

3.13.2

8.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70

80

90

100


Auto and Components IPOs

0.9

5.4

0.6

2.1

0.5

1.1

2.01.8 1.8

0.50.3

2.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35


Auto and Components market capitalisation by region–3Q2009

10.7%

27.3%

N/A

50.8%

N/A 11.2%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Auto and Components market capitalisation by region–1Q2002

30.3%24.1%

0.9%

0.0%

40.6%

3.9%

0.2%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


N/A


26.0 27.3

10.8

19.2

31.628.9

15.4

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Auto & Compo

N/A

MKT value ($m)

23,752,480

31,774,960

16,733,020

22,114,240

591,218393,572 494,424709,298

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Auto & Compo ($)



Exhibit 16.13

To

p 2

0 A

uto

an

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om

po

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ts a

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get N

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ann

Ate

cs A

G

Ger

man

y A

utom

obile

s &

Com

pone

nts

Inve

stor

Gro

up

Ger

man

y

01/0

7/04

3,

183.

1 C

ash

Onl

y

NP

N

/M

Aut

omob

ile A

ssoc

iatio

n U

K

Aut

omob

iles

& C

ompo

nent

s In

vest

or G

roup

U

K



Exhibit 16.14

To

p A

uto

an

d C

om

po

nen

ts IP

Os

sin

ce 2

005

Issu

e da

te

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

sec

tor

Exc

hang

e P

E b

acke

d?

10/2

7/06

83

6.9

Tak

ata

Cor

p Ja

pan

Aut

omob

iles

& C

ompo

nent

s T

okyo

1

No

04/1

2/07

71

4.2

Yan

gziji

ang

Shi

pbui

ldin

g H

ldgs

C

hina

A

utom

obile

s &

Com

pone

nts

Sin

gapo

re

No

11/3

0/05

58

9.2

Don

gFen

g M

otor

Co

Ltd

Chi

na

Aut

omob

iles

& C

ompo

nent

s H

ong

Kon

g N

o

07/0

5/06

45

3.3

Pia

ggio

& C

o S

pA

Italy

A

utom

obile

s &

Com

pone

nts

Mila

n Y

es

02/0

3/05

39

2.5

Kum

ho T

ire C

o In

c S

outh

Kor

ea

Aut

omob

iles

& C

ompo

nent

s K

orea

Lon

don

No

06/2

1/07

24

6.5

Land

i Ren

zo S

pA

Italy

A

utom

obile

s &

Com

pone

nts

Mila

n S

TA

R

No

04/0

1/07

22

0.7

Aic

on Y

acht

s S

pA

Italy

A

utom

obile

s &

Com

pone

nts

Mila

n N

o

10/1

2/07

21

1.7

Mec

achr

ome

Inte

rnat

iona

l Inc

C

anad

a A

utom

obile

s &

Com

pone

nts

Tor

onto

N

o

07/0

8/07

20

7.1

Gha

bbou

r A

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SA

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pt

Aut

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iles

& C

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nent

s E

gypt

N

o

11/1

4/05

20

1.7

KK

Am

tel

Rus

sian

Fed

A

utom

obile

s &

Com

pone

nts

Lond

on

No

07/2

5/07

19

5.6

SA

F-H

OLL

AN

D S

A

Ger

man

y A

utom

obile

s &

Com

pone

nts

Fra

nkfu

rt

Yes

12/0

5/07

18

6.3

JES

Inte

rnat

iona

l Hol

ding

s Lt

d C

hina

A

utom

obile

s &

Com

pone

nts

Sin

gapo

re

No

06/0

6/08

16

7.3

Cho

ngqi

ng M

ach

& E

lect

ric C

o C

hina

A

utom

obile

s &

Com

pone

nts

Hon

g K

ong

No

08/1

9/05

16

5.2

New

Fly

er In

dust

ries

Ltd

Can

ada

Aut

omob

iles

& C

ompo

nent

s T

oron

to

No

08/2

7/09

13

4.2

Gua

ngdo

ng A

lpha

Ani

mat

ion

Co

Chi

na

Aut

omob

iles

& C

ompo

nent

s S

henz

hen

No

02/1

5/07

13

0.5

TS

Tec

h C

o Lt

d Ja

pan

Aut

omob

iles

& C

ompo

nent

s T

okyo

1

No

08/1

0/09

12

2.9

Tia

nrun

Cra

nksh

aft C

o Lt

d C

hina

A

utom

obile

s &

Com

pone

nts

She

nzhe

n N

o

06/2

3/05

11

6.3

Kon

gsbe

rg A

utom

otiv

e A

SA

N

orw

ay

Aut

omob

iles

& C

ompo

nent

s O

slo

No

04/2

7/06

11

2.9

Pol

ytec

Hol

ding

AG

A

ustr

ia

Aut

omob

iles

& C

ompo

nent

s V

ienn

a Y

es

12/1

1/07

10

9.1

Vie

tnam

Mnf

g &

Exp

ort P

roce

ss

Vie

tnam

A

utom

obile

s &

Com

pone

nts

Hon

g K

ong

No



17. ChemicalsExecutive summary

We expect chemicals to grow in the emerging markets which has grown from 7% marketshare in 2002 to 11% in 3Q 2009. The UK market share contracted to 3% during the lastcycle from 6% in 2002. Based on the analysis from the top 20 IPO’s, the data shows thatNorth America has had 8 newly listed companies compared to emerging markets with 4.Furthermore growth in the number of constituents in the developed markets has beenconfined to North America while emerging markets saw a decline in the number ofcompanies operating in 2009 compared to 2007.

• Chemicals experienced 2 waves of activity since 1998 which was in line with the globaltrend. This sector was driven by cross-border activity with a balance of inter-Europeandeals and transatlantic deal flow. During the start of the dot.com bubble the chemicalssector experienced a degree of restructuring in the form of demergers and resulted inthe creation of new types of global companies for example Syngenta, born from thedemerger of Astra Zeneca and Novartis and Lonza Group, which was spun-off fromAluuisse Lonza Group. Mid-size domestic consolidation on both sides of the Atlanticcontributed to the vast majority of deal value during this period. The second wave ofactivity was on the whole driven by European cross-border consolidation and to a lesserextent transatlantic activity. Both periods were absent of any tangible signs of emergingmarket influence with the exception of a Chinese domestic merger between Qinghai SaltLake Industry Group and Qinghai Salt Lake Potash Co for USD11 billion. (Exhibit 17.1).

• Premiums paid in the chemicals sector have been growing despite the global downturn.The growth in premiums paid was not specific to a particular deal size as growth isevident in all deal size ranges. However the biggest of the transactions have demandedthe highest premiums. 3 of the 4 USD15 billion plus transactions in the last cycle sawpremiums paid range in excess of 30% with cash as the primary consideration paid in •The exit multiples would suggest that this sector did not experience a divergence invaluation during the last cycle but with the absence of larger transactions in the downcycle, exit multiples have decreased in smaller transactions. (Exhibit17.3-4).

• During the last cycle chemicals outperformed the world index by 11.6% compared to adecline during the dot.com cycle of 4.9%

• Forward looking growth indicates that the chemicals sector will grow at a slowerestimated rate of 16.1% compared to 19.2% for the world index. Record follow-onofferings of USD4.7 billion in 2009 show that the sector is well capitalized for future M&A.(Exhibit 17.6,17.10)

Exhibit 17.1

Chemicals targeted M&A

0

5

10

15

20

25

30

35

40

45

50

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

50

100

150

200

250

300

Inde

x pr

ice

Sector M&A ($bn) Cross Border M&A MSCI Sector Index MSCI World Index



Exhibit 17.2

Exhibit 17.3

Exhibit 17.4

Offer price to target share price–Chemicals acquisitions >$500mm

0

20

40

60

80

100Ja

n-98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09O

ffer P

rice/

Tar

get S

hare

Pric

e (%

) Cash Only Stock Only Hybrid

Price/earnings–Chemicals acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Chemicals acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Ran

k V

alue

/EB

ITD

A








Chemicals corporate bonds

19.020.2

10.8

18.817.9

22.4

25.9

15.617.0

18.518.6

35.9

0

5

10

15

20

25

30

35

40

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250


Chemicals convertibles

1.3

2.4

0.20.5

1.0

1.51.3

1.1

3.4

5.9

0.3

1.1

0

1

2

3

4

5

6

7

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25


Chemicals follow on offerings

1.6

2.8

1.0

0.7

2.5

1.2

3.4

4.34.5

2.72.6

4.7

0

1

2

3

4

5

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70

80

90


Chemicals IPOs

2.1

4.7

2.0

1.10.6 0.6

2.3

5.7

7.9

2.9

2.2

0.8

0

1

2

3

4

5

6

7

8

9

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35

40

45


Chemicals market capitalisation by region–3Q2009

40.0%

29.2%

16.4%8.4%

0.9%2.2%

0.8%

2.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Chemicals market capitalisation by region–1Q2002

40.4%

30.9%

4.2%

16.9%

6.5%0.4% 0.3%

0.5%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.222.2

46.4

16.1

10

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Chemicals

Market value ($m)

397,761 315,683591,617

749,691

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World U$ MSCI ACWI Chemicals $

23,752,480

31,774,960

16,733,020

22,114,240



Exhibit 17.13

To

p 2

0 C

hem

ical

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

17/0

5/99

28

,353

.4

Sto

ck O

nly

(13.

2)

NP

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chst

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erm

any

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als

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A

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8 95

1.0

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als

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ell N

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10/0

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.1

32.2

R

ohm

& H

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US

C

hem

ical

s D

ow C

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ical

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US

18/0

6/07

15

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25/0

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Cas

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.1

21.4

B

OC

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hem

ical

s Li

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04/0

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11

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US

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ical

s S

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ayer

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18/0

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7 C

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.2

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50.9

A

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ical

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man

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13/0

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n 50

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ton

Inte

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s C

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02/1

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ther

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25/0

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13.0

89

.9

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co C

hem

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Co

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C

hem

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s S

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nais

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s E

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F

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15/0

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4,

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ash

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.6

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N/M

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iba

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16/0

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y

NP

N

P

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alco

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C

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Exhibit 17.14

To

p C

hem

ical

IPO

s si

nce

200

5

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

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Sec

tor

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hang

e P

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acke

d?

12/0

8/06

1,

845.

9 S

ymris

e G

mbH

& C

o K

G

Ger

man

y C

hem

ical

s F

rank

furt

Y

es

02/1

0/05

1,

593.

0 H

unts

man

Cor

p U

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New

Yor

k Y

es

01/3

1/05

1,

504.

6 La

nxes

s A

G

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man

y C

hem

ical

s F

rank

furt

N

o

04/0

9/06

1,

452.

2 W

acke

r C

hem

ie A

G

Ger

man

y C

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s F

rank

furt

N

o

04/2

1/08

1,

104.

0 In

trep

id P

otas

h In

c U

S

Che

mic

als

New

Yor

k N

o

10/1

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1,

068.

8 JS

C U

ralk

ali

Rus

sian

Fed

C

hem

ical

s Lo

ndon

N

o

04/0

7/06

77

9.4

Dyn

o N

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Ltd

A

ustr

alia

C

hem

ical

s A

ustr

alia

N

o

08/1

0/05

75

9.0

CF

Indu

strie

s H

oldi

ngs

Inc

US

C

hem

ical

s N

ew Y

ork

No

09/1

8/06

66

0.0

Sip

chem

S

audi

Ara

bia

Che

mic

als

Sau

di E

xch

No

06/1

3/06

48

2.7

Ver

asun

Ene

rgy

Cor

p U

S

Che

mic

als

New

Yor

k Y

es

09/3

0/09

46

9.8

Yin

gde

Gas

es In

vest

men

t Co

Ltd

Chi

na

Che

mic

als

Hon

g K

ong

Yes

08/1

6/05

46

9.4

Roc

kwoo

d H

oldi

ngs

Inc

US

C

hem

ical

s N

ew Y

ork

Yes

04/2

1/07

43

3.8

Pet

roV

ietn

am F

ert &

Che

m J

SC

V

ietn

am

Che

mic

als

HoC

hiM

inh

No

09/2

2/06

39

3.2

Chi

na B

lueC

hem

ical

Ltd

C

hina

C

hem

ical

s H

ong

Kon

g N

o

06/2

8/06

38

9.5

Ave

ntin

e R

enew

able

Ene

rgy

Hld

g U

S

Che

mic

als

New

Yor

k Y

es

08/1

8/05

26

0.6

Can

exus

Inco

me

Fun

d C

anad

a C

hem

ical

s

No

09/2

8/06

25

4.1

Cro

pEne

rgie

s A

G

Ger

man

y C

hem

ical

s F

rank

furt

N

o

11/2

1/05

24

4.7

Tro

nox

Inc

US

C

hem

ical

s N

ew Y

ork

No

06/0

9/05

21

0.9

Tita

n C

hem

ical

s C

orp

Bhd

M

ala

ysia

C

hem

ical

s K

uala

Lum

p N

o

05/0

9/05

20

2.3

Fos

eco

PLC

U

K

Che

mic

als

Lond

on



18. Metals & MiningExecutive summary

18 of top 20 deals in this sector where driven by developed markets, however a wave ofnew players over the last 3 years originating mostly from emerging markets and especiallyso from Russia and China may act as a catalyst for increased M&A in these markets. 14 ofthe top 20 IPOs since 2005 have been from the emerging markets. Follow-on offerings andcorporate bonds are at record levels in 2009 resulting in successful recapitalization.

• At the top of the last M&A cycle, metals and mining equities were vastly over performingthe world index +22.5% whilst at the previous cycle high the sector was level.Consolidation was concentrated during the second cycle in increased M&A which saw aperiod of sustained cross-border activity peaking during the third quarter of 2007.(Exhibit 18.1).

• Consolidation in this sector was driven by the need to create more efficient operations ashigher cost margins impacted profits despite record commodity prices. The sectoroutperformed the world index since 2003 and despite losing significant value during themain thrust of the crisis this sector has gained in value through the latter half of 2009 ascommodity prices rise on the weakness of the US dollar rather than demand for rawmaterials. (Exhibit 18.1).

• Premiums paid in this sector were sporadic during the dot.com period with no realconsensus on pricing. During the leverage cycle premiums have been coming down with atighter spread with the median premium standing at 26.2%. The vast majority oftransactions have been dominated by all cash or mixed consideration with only a handfulof all stock deals. (Exhibit 18.2).

• The number of constituents has increased from 114 in June 2007 compared to 128 in 3Q2009. Since the global downturn this sector has lost 15% in value while EPS growthindicates that the sector is expected to underperform over the next 12 months comparedto the world average.

• Emerging markets have not grown to the same levels as seen in other sectors with only2% market share gain from the period 2002 to 3Q 2009. State backed companies andprotectionism of sovereign raw materials have stemmed the flow of internationalinvestors. The UK experienced the highest growth in market share from 12% in 2002 to20% in 3Q 2009. (Exhibit 18.7-8).

Exhibit 18.1

Metals & Mining targeted M&A

0

10

20

30

40

50

60

70

80

90

1Q 9

82Q

98

3Q 9

84Q

98

1Q99

2Q 9

93Q

99

4Q 9

91Q

00

2Q 0

03Q

00

4Q 0

01Q

01

2Q 0

13Q

01

4Q 0

11Q

02

2Q 0

23Q

02

4Q 0

21Q

03

2Q 0

33Q

03

4Q 0

31Q

04

2Q 0

43Q

04

4Q 0

41Q

05

2Q 0

53Q

05

4Q 0

51Q

06

2Q 0

63Q

06

4Q 0

61Q

07

2Q 0

73Q

07

4Q 0

71Q

08

2Q 0

83Q

08

4Q 0

81Q

09

2Q 0

93Q

09

.

50

150

250

350

450

550

650

750

850

Inde

x pr

ice


M&

A (

$bn)



Exhibit 18.2

Exhibit 18.3

Exhibit 18.4

Price/earnings–Metals & Mining acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Equ

ity V

alue

/Net

Inco

me


Rank value/EBITDA–Metals & Mining acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Metals & Mining acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Sep

-00

Feb

-01

Jul-0

1

Dec

-01

Apr

-02

Sep

-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Sep

-09

Offe

r P

rice/

Tar

get S

hare

Pric

e (%

)








Metals & Mining corporate bonds

22.9

11.8

7.3

16.713.9

19.5

25.5

38.140.0

17.917.7

51.0

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Metals & Mining convertibles

2.2

0.7 0.8

2.1

3.2

5.9

6.8

1.3

5.4

12.5

7.6

11.8

0

2

4

6

8

10

12

14

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70


Metals & Mining follow on offerings

3.51.6 2.4 2.6

5.07.5

20.5

54.1

44.3

10.810.2

63.6

0

10

20

30

40

50

60

70

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

500

1,000

1,500

2,000

2,500Value ($bn) No. of issues

Metals & Mining IPOs

2.0 1.82.6

2.03.0 2.6

4.2

7.4

13.0

22.3

10.6

2.4

0

5

10

15

20

25

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Metals and mining market capitalisation by region–3Q2009

23.0%

6.0%

20.0%16.0%

7.0%13.0%

8.0%

7.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Metals and mining market capitalisation by region–1Q2002

32.0%

9.0%12.0% 14.0%

7.0% 5.0%

5.0%

16.0%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.2

62.7

39.6

17.1

8.7

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC Worl MSCI ACWI Metals & mining

Market value ($m)

269,958 278,100

1,066,8121,253,857

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World U$ MSCI ACWI Metals & mining $

23,752,48031,774,96016,733,02022,114,240



Exhibit 18.13

To

p 2

0 M

etal

s &

Min

ing

acq

uis

itio

ns

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

05/0

6/09

58

,000

.0

Unk

now

n

NP

N

P

Rio

Tin

to P

LC-W

A Ir

on O

re A

sts

Aus

tral

ia

Met

als

& M

inin

g B

HP

Bill

iton-

WA

Iron

Ore

Ast

s A

ustr

alia

12/0

7/07

43

,032

.2

Cas

h O

nly

9.

7 18

.6

Alc

an In

c C

anad

a M

etal

s &

Min

ing

Rio

Tin

to C

anad

a H

oldi

ngs

Inc

Can

ada

27/0

1/06

39

,463

.7

Cas

h an

d S

tock

Com

bina

tion

80.9

7.

1 7.

5 A

rcel

or S

A

Luxe

mbo

urg

Met

als

& M

inin

g M

ittal

Ste

el C

o N

V

Net

herla

nds

19/1

1/06

22

,629

.1

Cas

h an

d S

tock

Com

bina

tion

33.1

5.

8 14

.0

Phe

lps

Dod

ge C

orp

US

M

etal

s &

Min

ing

Fre

epor

t-M

cMoR

an C

oppe

r &

Gol

d U

S

11/0

8/06

18

,372

.2

Oth

er

31.5

N

P

20.7

In

co L

td

Can

ada

Met

als

& M

inin

g C

ia V

ale

do R

io D

oce

SA

B

razi

l

17/0

5/06

18

,235

.5

Cas

h O

nly

64.5

14

.7

26.6

F

alco

nbrid

ge L

td

Can

ada

Met

als

& M

inin

g X

stra

ta P

LC

Sw

itzer

land

19/0

3/01

15

,569

.6

Sto

ck O

nly

21.6

11

.5

17.4

B

illito

n P

LC

UK

M

etal

s &

Min

ing

BH

P L

td

Aus

tral

ia

01/0

2/08

14

,284

.2

Cas

h O

nly

21.1

15

.8

16.4

R

io T

into

PLC

U

K

Met

als

& M

inin

g S

hini

ng P

rosp

ect P

te L

td

Sin

gapo

re

29/0

7/08

13

,640

.8

Cas

h an

d S

tock

Com

bina

tion

11.8

22

.2

27.1

F

ordi

ng C

anad

ian

Coa

l Tru

st

Can

ada

Met

als

& M

inin

g T

eck

Com

inco

Ltd

C

anad

a

17/1

0/06

12

,694

.6

Cas

h O

nly

49.2

9.

2 31

.9

Cor

us G

roup

PLC

U

K

Met

als

& M

inin

g T

ata

Ste

el U

K L

td

UK

13/0

4/01

11

,893

.8

Sto

ck O

nly

(9.0

) 7.

9 3.

3 N

KK

Cor

p Ja

pan

Met

als

& M

inin

g K

awas

aki S

teel

Cor

p Ja

pan

15/0

2/01

10

,984

.3

Oth

er

42.1

52

.5

19.8

D

e B

eers

Con

solid

ated

Min

es

Sou

th A

fric

a M

etal

s &

Min

ing

DB

Inve

stm

ents

Lu

xem

bour

g

31/1

0/05

10

,256

.8

Cas

h an

d S

tock

Com

bina

tion

35.0

26

.0

107.

9 P

lace

r D

ome

Inc

Can

ada

Met

als

& M

inin

g B

arric

k G

old

Cor

p C

anad

a

05/0

8/08

9,

653.

8 C

ash

and

Sto

ck C

ombi

natio

n

5.2

10.1

O

AO

GM

K N

orils

k N

icke

l R

ussi

an F

ed

Met

als

& M

inin

g V

ladi

mir

Pot

anin

R

ussi

an F

ed

31/0

8/06

8,

710.

3 S

tock

Onl

y 32

.4

136.

7 44

5.2

Gla

mis

Gol

d Lt

d U

S

Met

als

& M

inin

g G

oldc

orp

Inc

Can

ada

03/0

5/07

8,

210.

9 C

ash

Onl

y 7.

7 8.

2 13

.0

IPS

CO

Inc

US

M

etal

s &

Min

ing

SS

AB

S

wed

en

08/0

3/05

7,

696.

8 C

ash

Onl

y 53

.0

6.9

7.0

WM

C R

esou

rces

Ltd

A

ustr

alia

M

etal

s &

Min

ing

BH

P B

illito

n Lt

d A

ustr

alia

07/0

7/03

7,

065.

1 U

nkno

wn

42.6

N

P

NM

P

echi

ney

SA

F

ranc

e M

etal

s &

Min

ing

Alc

an In

c C

anad

a

11/0

8/99

6,

053.

4 C

ash

and

Sto

ck C

ombi

natio

n 26

.9

7.5

18.9

R

eyno

lds

Met

als

Co

US

M

etal

s &

Min

ing

Alc

oa In

c U

S

03/0

5/07

5,

895.

1 C

ash

Onl

y

10.8

11

2.8

Lion

Ore

Min

ing

Intl

Ltd

Can

ada

Met

als

& M

inin

g O

AO

GM

K N

orils

k N

icke

l R

ussi

an F

ed



Exhibit 18.14

To

p IP

Os

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

06/0

8/05

3,

276.

0 C

hina

She

nhua

Ene

rgy

Co

Ltd

Chi

na

Met

als

& M

inin

g H

ong

Kon

g N

o

12/0

7/07

3,

044.

4 E

NR

C

UK

M

etal

s &

Min

ing

Lond

on

No

10/2

6/07

2,

503.

8 N

yrst

ar N

V

UK

M

etal

s &

Min

ing

Eur

onex

t B

No

05/0

6/08

2,

495.

8 N

ew W

orld

Res

ourc

es N

V

Net

herla

nds

Met

als

& M

inin

g P

ragu

e Lo

ndon

War

saw

N

o

07/1

5/08

2,

473.

6 M

a’ad

en

Sau

di A

rabi

a M

etal

s &

Min

ing

Sau

di E

xch

No

12/1

3/06

1,

945.

9 C

hina

Coa

l Ene

rgy

Co

Ltd

Chi

na

Met

als

& M

inin

g H

ong

Kon

g N

o

02/0

4/07

1,

813.

5 P

olym

etal

R

ussi

an F

ed

Met

als

& M

inin

g Lo

ndon

PO

RT

AL

No

05/0

9/08

1,

768.

4 F

resn

illo

PLC

M

exic

o M

etal

s &

Min

ing

Lond

on M

exic

o N

o

07/0

6/07

1,

697.

2 F

osun

Inte

rnat

iona

l Ltd

C

hina

M

etal

s &

Min

ing

Hon

g K

ong

No

10/0

6/05

1,

353.

2 K

azak

hmys

PLC

U

K

Met

als

& M

inin

g Lo

ndon

N

o

6/05

/08

1,32

3.4

Ada

ro E

nerg

y T

bk P

T

Indo

nesi

a M

etal

s &

Min

ing

Jaka

rta

No

04/1

0/08

1,

277.

0 Ji

ndui

chen

g M

olyb

denu

m G

roup

C

hina

M

etal

s &

Min

ing

Sha

ngha

i N

o

04/3

0/09

1,

270.

4 C

hina

Zho

ngw

ang

Hol

ding

s Lt

d C

hina

M

etal

s &

Min

ing

Hon

g K

ong

No

11/2

9/07

1,

261.

5 F

ranc

o-N

evad

a C

orp

Can

ada

Met

als

& M

inin

g T

oron

to

No

04/2

4/07

1,

121.

0 M

MK

R

ussi

an F

ed

Met

als

& M

inin

g Lo

ndon

Rus

sian

TS

MIC

EX

N

o

10/3

0/06

1,

069.

2 T

MK

R

ussi

an F

ed

Met

als

& M

inin

g Lo

ndon

Rus

sian

TS

N

o

11/0

8/06

1,

062.

5 O

AO

Sev

erS

tal

Rus

sian

Fed

M

etal

s &

Min

ing

Lond

on R

ussi

an T

S

No

04/1

9/07

1,

037.

4 C

hina

Mol

ybde

num

Co

Ltd

Chi

na

Met

als

& M

inin

g H

ong

Kon

g N

o

07/0

4/07

81

7.5

Wes

tern

Min

ing

Co

Ltd

Chi

na

Met

als

& M

inin

g S

hang

hai

No

02/1

4/07

65

9.8

Gem

Dia

mon

ds L

td

UK

M

etal

s &

Min

ing

Lond

on A

IM

No



19. TransportExecutive summary

EPS 12 month forecast of around 19% and record follow on issurance and high levels ofcorporate bonds will provide the necessary funds for consolidation in this sector. Howeverregulatory and government intervention has in the past derailed a number of M&Atransactions and therefore any future transactions will require considered structuring andconservative pricing.

• The sector index for transportation during the dot.com cycle underperformed by 31%compared to the world index while deal activity has been concentrated in the period ofthe last leverage cycle. Infrastructure transactions mainly in Europe saw a series ofroad toll privatizations in 2005 while isolated attempts to consolidate airport operatorsand domestic airlines produced a couple of top 20 transactions. The bulk of activity hasbeen in Europe with only 4 US deals listed in the top 20 transactions. (Exhibit19.1,19.13).

• Bid premiums in this sector kept a pace with the growth in the leverage cycle, peakingat 45% for the biggest deal in the sector which was Ferrovial’s acquisition of BAA Plcfor USD30 billion in 2006. Premiums have since declined to around 17% in 2009.(Exhibit 19.2).

• Sector performance fell 10.7% during a 12 month period in 2002 compared to 21%growth in the world index. Transportation still underperformed by 2.5% during the lastpeak in M&A compared to the world index. As of September 2009 the sector has lost26% in value since the start of the down turn.

• Forecasted 12 months EPS growth is in line with the world average with significantgrowth expected in Asia and the UK. (Exhibit 19.6).

• Transportation grew 8% in 2009 in the emerging markets compared to 3.3% in 2000with particularly strong growth in Asia and North America which grew to 6.2% and43.6% in 2009.

• The transportation sector is well capitalized as a result of record follow-on offeringsthrough 2007-2009 however capital raising was not restricted to the equity marketswith near record levels of corporate bond issuance in 2009. Historically this sector hassuffered from a high rate of failed deals either based on nationalistic protectionism oncross border deals as with the scrapped tie-up between Autostrade and Abertis ornational security issues especially with emerging market buyers seeking growthopportunities in developed markets will continue to prove troublesome. DP World Portswas forced to sell its US port operations in 2006 after the Emirate-based firm inheritedthe portfolio following the successful acquisition of Peninsular and Oriental. Roadconcessions and foreign investment as part of upgrading the US infrastructure systemshould create M&A opportunities in 2010 but local legislative bodies have in the pastblocked leases for example with the failed bid by Abertis and Citi InfrastructureInvestors to run the Pennsylvania Turkpike on a 75 year lease worth USD12.8 billion.



Exhibit 19.1

Exhibit 19.2

Exhibit 19.3

Exhibit 19.4

Price/earnings–Transport acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Equ

ity V

alu

e/N

et In

com

e


Rank value/EBITDA–Transport acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

De

c-99

May

-00

Se

p-00

Fe

b-01

Jul-

01

De

c-01

Apr

-02

Se

p-02

Fe

b-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

De

c-08

May

-09

Se

p-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Transport acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

De

c-99

May

-00

Se

p-00

Feb

-01

Jul-

01

De

c-01

Apr

-02

Se

p-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

De

c-08

May

-09

Se

p-09

Offe

r Pric

e/T

arge

t Sha

re P

rice

(%)


Transport targeted M&A

0

10

20

30

40

50

60

70

80

1Q 9

82Q

98

3Q 9

84Q

98

1Q 9

92Q

99

3Q 9

94Q

99

1Q 0

02Q

00

3Q 0

04Q

00

1Q 0

12Q

01

3Q 0

14Q

01

1Q 0

22Q

02

3Q 0

24Q

02

1Q 0

32Q

03

3Q 0

34Q

03

1Q 0

42Q

04

3Q 0

44Q

04

1Q 0

52Q

05

3Q 0

54Q

05

1Q 0

62Q

06

3Q 0

64Q

06

1Q 0

72Q

07

3Q 0

74Q

07

1Q 0

82Q

08

3Q 0

84Q

08

1Q 0

92Q

09

3Q 0

9

.

M&

A (

$bn)

50

70

90

110

130

150

170

190

210

Inde

x pr

ice

Sector M&A ($bn) Cross Border M&A MSCI Sector Index MSCI World Index







Transport corporate bonds

32.1

40.2

30.6

40.9

31.0

36.3

43.2

52.453.1

60.2

31.7

57.9

0

10

20

30

40

50

60

70

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300

350


Transport convertibles

1.21.5

0.6

2.9

2.2

4.9

3.7

3.1

4.2

1.9

2.4

3.3

0

1

2

3

4

5

6

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

5

10

15

20

25


Transport Follow on offerings

4.3 4.1

1.2

2.6

3.7

1.9

9.3

13.714.1

3.44.5

14.6

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120


Transport IPOs

1.1

9.2

4.0

1.8

5.04.5

9.98.9

13.1

15.5

2.3

0

2

4

6

8

10

12

14

16

18

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60


Transport market capitalisation by region–3Q2009

43.6%

16.9%22.2%

6.2%1.7%8.3%1.1%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Transport market capitalisation by region–1Q2002

38.3%

18.5%

9.2%

24.4%

3.3%6.3%0.1%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.216.5

50.6

18.9

10.4

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Transport

Market value ($m)

286,933 243,036470,132

639,404

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World U$ MSCI ACWI Transport $

23,752,480

31,774,960

16,733,020

22,114,240



Exhibit 19.13

To

p 2

0 T

ran

spo

rt a

cqu

isit

ion

s

Ran

k D

ate

Val

ue

($m

m)

Con

side

ratio

n P

rem

ium

V

alue

/ E

BIT

DA

P

/E

Tar

get N

ame

Tar

get N

atio

n S

ub S

ecto

r A

cqui

ror

Nam

e A

cqui

ror

Nat

ion

17/0

3/06

30

,190

.4

Cas

h on

ly

45.1

16

.1

22.1

B

AA

PLC

U

K

Tra

nspo

rtat

ion

& In

fras

truc

ture

A

irpor

t Dev

elop

men

t &

Spa

in

14/1

2/05

16

,289

.8

Cas

h on

ly

3.7

12

.8

29.3

A

SF

F

ranc

e T

rans

port

atio

n &

Infr

astr

uctu

re

Vin

ci S

A

Fra

nce

14/1

2/05

11

,852

.5

Cas

h on

ly

2.4

12

.6

46.5

A

PR

R

Fra

nce

Tra

nspo

rtat

ion

& In

fras

truc

ture

In

vest

or G

roup

F

ranc

e

27/0

6/02

11

,462

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Unk

now

n

NP

N

P

Rai

ltrac

k pl

c U

K

Tra

nspo

rtat

ion

& In

fras

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etw

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Rai

l Ltd

U

K

14/1

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939.

1 U

nkno

wn

0.4

14

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54.7

S

AN

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F

ranc

e T

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port

atio

n &

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up

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06/0

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9,

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ash

and

stoc

k co

mbi

natio

n (2

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176.

0

10.4

D

/S 1

912

Den

mar

k T

rans

port

atio

n &

Infr

astr

uctu

re

D/S

Sve

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Den

mar

k

29/1

1/05

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833.

0 C

ash

only

67

.6

18.6

N

/M

Pen

insu

lar

& O

rient

al S

team

U

K

Tra

nspo

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ion

& In

fras

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ture

T

hund

er F

ZE

U

AE

01/1

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1 U

nkno

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25.7

21

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233.

1 I

tiner

e In

frae

stru

ctur

as S

A

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in

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nspo

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ion

& In

fras

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ture

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ear

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tion

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p S

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pain

01/0

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685.

3 O

ther

6.1

N

/M

Del

ta A

ir Li

nes

Inc

US

T

rans

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n &

Infr

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Cre

dito

rs

US

19/0

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287.

0 C

ash

and

stoc

k co

mbi

natio

n 5.

4

13.6

54

.9

Exe

l PLC

U

K

Tra

nspo

rtat

ion

& In

fras

truc

ture

D

euts

che

Pos

t AG

G

erm

any

14/0

4/08

7,

012.

3 S

tock

onl

y 14

.2

4.4

1.

4 N

orth

wes

t Airl

ines

Cor

p U

S

Tra

nspo

rtat

ion

& In

fras

truc

ture

D

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Air

Line

s In

c U

S

13/0

6/08

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011.

0 U

nkno

wn

N

P

NP

A

ngel

Tra

ins

Ltd

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T

rans

port

atio

n &

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astr

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re

Inve

stor

Gro

up

Aus

tral

ia

17/1

2/01

6,

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9 C

ash

and

stoc

k co

mbi

natio

n

14.5

21

.6

P&

O P

rince

ss C

ruis

es P

LC

UK

T

rans

port

atio

n &

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astr

uctu

re

Car

niva

l Cor

p U

S

02/1

1/02

6,

440.

3 C

ash

only

19

.8

9.6

22

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Aut

ostr

ade

SpA

Ita

ly

Tra

nspo

rtat

ion

& In

fras

truc

ture

S

chem

aven

totto

SpA

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ly

04/0

6/03

6,

221.

0 O

ther

NP

N

P

Pen

nsyl

vani

a Li

nes

LLC

U

S

Tra

nspo

rtat

ion

& In

fras

truc

ture

N

orfo

lk S

outh

ern

Rai

lway

Co

US

29/0

3/06

6,

128.

6 C

ash

only

30

.8

16.8

28

.0

Ass

oc B

ritis

h P

orts

Hld

gs P

LC

UK

T

rans

port

atio

n &

Infr

astr

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Adm

iral A

cqui

sitio

ns U

K L

td

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02/0

7/99

5,

593.

5 C

ash

only

(4

.3)

11.3

11

8.9

Eas

t Jap

an R

ailw

ay C

o Ja

pan

Tra

nspo

rtat

ion

& In

fras

truc

ture

In

vest

ors

Japa

n

18/0

5/07

5,

560.

0 O

ther

5.9

N

/M

Nor

thw

est A

irlin

es C

orp

US

T

rans

port

atio

n &

Infr

astr

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re

Cre

dito

rs

US

22/0

8/05

5,

377.

3 C

ash

and

stoc

k co

mbi

natio

n 39

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17.5

35

.4

Pat

rick

Cor

p Lt

d A

ustr

alia

T

rans

port

atio

n &

Infr

astr

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re

Tol

l Hol

ding

s Lt

d A

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alia

23/0

1/98

5,

134.

1 U

nkno

wn

N

P

NP

A

rgen

tina-

Airp

orts

(33)

A

rgen

tina

Tra

nspo

rtat

ion

& In

fras

truc

ture

A

erop

uert

os A

rgen

tina

2000

A

rgen

tina



Exhibit 19.14

To

p T

ran

spo

rt IP

Os

sin

ce 2

005

Issu

e D

ate

Pro

ceed

s ($

mm

) Is

suer

D

omic

ile

Sub

Sec

tor

Exc

hang

e P

E B

acke

d?

11/2

0/07

4,

218.

9 D

P W

orld

U

AE

T

rans

port

atio

n &

Infr

astr

uctu

re

Dub

ai E

xch

No

12/0

9/06

2,

381.

9 C

hina

Com

mun

Con

str

Co

Ltd

Chi

na

Tra

nspo

rtat

ion

& In

fras

truc

ture

H

ong

Kon

g N

o

11/0

2/07

1,

692.

8 H

ambu

rger

Haf

en u

nd L

ogis

tik

Ger

man

y T

rans

port

atio

n &

Infr

astr

uctu

re

Ham

burg

F

rank

furt

N

o

06/1

5/06

1,

643.

3 A

erop

orts

de

Par

is

Fra

nce

Tra

nspo

rtat

ion

& In

fras

truc

ture

E

uro

Par

is

No

11/1

7/07

1,

471.

4 S

inot

rans

Shi

ppin

g Lt

d H

ong

Kon

g T

rans

port

atio

n &

Infr

astr

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re

Hon

g K

ong

No

06/2

5/05

1,

227.

1 C

hina

CO

SC

O H

oldi

ngs

Co

Ltd

Chi

na

Tra

nspo

rtat

ion

& In

fras

truc

ture

H

ong

Kon

g N

o

06/2

4/08

1,

118.

5 B

risC

onne

ctio

ns M

gmt C

o Lt

d A

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alia

T

rans

port

atio

n &

Infr

astr

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re

Aus

tral

ia

No

03/2

3/05

1,

114.

6 S

AN

EF

F

ranc

e T

rans

port

atio

n &

Infr

astr

uctu

re

Eur

o P

aris

N

o

11/0

2/07

1,

046.

7 O

AO

Nov

oros

siys

kiy

Mor

skoy

R

ussi

an F

ed

Tra

nspo

rtat

ion

& In

fras

truc

ture

Lo

ndon

N

o

02/2

3/06

1,

001.

7 G

rupo

Aer

opor

tuar

io P

acifi

co

Mex

ico

Tra

nspo

rtat

ion

& In

fras

truc

ture

N

ew Y

ork

No

09/2

7/06

94

0.8

Aer

Lin

gus

PLC

Ir

elan

d-R

ep

Tra

nspo

rtat

ion

& In

fras

truc

ture

Ir

ish

Stk

Lo

ndon

N

o

09/2

1/05

88

3.4

Pan

alpi

na A

G

Sw

itzer

land

T

rans

port

atio

n &

Infr

astr

uctu

re

Sw

iss

Exc

h N

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03/2

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69

9.0

Air

Ara

bia

PJC

S

UA

E

Tra

nspo

rtat

ion

& In

fras

truc

ture

D

ubai

Exc

h N

o

08/0

8/05

60

5.8

Sea

span

Cor

p H

ong

Kon

g T

rans

port

atio

n &

Infr

astr

uctu

re

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Yor

k N

o

11/2

0/06

60

0.3

Aer

Cap

Hol

ding

s N

V

Net

herla

nds

Tra

nspo

rtat

ion

& In

fras

truc

ture

N

ew Y

ork

Yes

11/2

8/06

59

0.2

Gru

po A

erop

ortu

ario

del

Cen

tro

Mex

ico

Tra

nspo

rtat

ion

& In

fras

truc

ture

N

AS

DA

Q

No

05/1

1/06

56

9.2

Air

Ber

lin P

LC &

Co

Ger

man

y T

rans

port

atio

n &

Infr

astr

uctu

re

Fra

nkfu

rt

No

11/1

0/06

56

6.8

Chi

na M

erch

ants

Ene

rgy

Shi

p C

o C

hina

T

rans

port

atio

n &

Infr

astr

uctu

re

Sha

ngha

i N

o

09/2

6/07

49

4.5

Bab

cock

& B

row

n A

ir Lt

d Ir

elan

d-R

ep

Tra

nspo

rtat

ion

& In

fras

truc

ture

N

ew Y

ork

No

04/2

9/08

47

0.4

Glo

baltr

ans

Inve

stm

ent P

LC

Cyp

rus

Tra

nspo

rtat

ion

& In

fras

truc

ture

Lo

ndon

N

o



20. Real EstateExecutive summary

The real estate sector’s mean 12 month EPS growth rate forecast of (-1.8%) in 2009 is wellbelow 2002 return of 18.5% and the 2009 world average of 19.2%. In the near term, wecan anticipate M&A activity in the real estate sector to remain relatively flat withmoderately priced and attractive opportunities in EMEA and Asia.

• The real estate sector outperformed the world index in 2007 by 2.1% with growth lastingfrom 2003 until 2007. M&A activity peaked during between 2006 and 2007 as leveragedbuyouts of US-based REITs Equity Office Properties Trust USD37.7 billion andArchstone-Smith Trust USD21.7 billion drove deal volumes. (Exhibit 20.1).

• Publicly-traded strategic buyers favoured stock and cash-stock blends as means ofpayment during the leveraged cycle as the sector’s stocks outperformed the world equityindex. However, cash only deals dominated the mega-acquisitions as private equitybuyers took advantage of access to cheap financing and accounted for 8 of the top 20deals. (Exhibit 20.2, 20.13).

• Exit multiples in this sector grew during 2003 and 2007 starting from around 18xearnings in 2003 to 30x earnings in 2007. More recently these multiples declined in themajority of the deals announced. (Exhibit 20.3-4)

• The credit crunch has resulted in a steep decline in M&A activity in the real estate sectoras buyers no longer have access to financing and depressed stock prices have heldstrategic buyers at bay. In the meantime, companies have tapped the equity markets asthe primary source for much needed capital as follow-on offerings during the first threequarters of 2009 doubled the proceeds raised during the full year 2008 to a recordUSD56.6billion with US issuers accounting for 37.4% of the market. (Exhibit 20.9-12)

• Since the height of the last boom in M&A, the number of participants has declined by20.4% to 109 with the biggest falls in developed markets such as Europe and NorthAmerica. Asia has however seen an expansion in the number of participants from 12 in2002 to 25 in 2009.

• In terms of market capitalization, companies headquartered in the UK and Pacific(excluding Japan) have ceded market share of 10% and 6%, respectively, from 2002 to2009 to Japan and the emerging markets. The latter experienced the largest growth asmarket share increased from 2.7% to 11.0%, including 9.2% held by Asian emergingmarket companies. (Exhibit 20.7-8)

Exhibit 20.1

Real Estate targeted M&A

0

20

40

60

80

100

120

140

160

180

1Q98

2Q98

3Q98

4Q98

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

.

M&

A (

$bn)

40

90

140

190

240

290

Inde

x pr

ice

MSCI Sector Index MSCI World IndexSector M&A ($bn) Cross Border M&A ($bn)



Exhibit 20.2

Exhibit 20.3

Exhibit 20.4

Price/earnings–Real Estate acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Equ

ity V

alu

e/N

et In

com

e


Rank value/EBITDA–Real Estate acquisitions >$500mm

0

10

20

30

40

50

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-

99

De

c-99

May

-00

Se

p-00

Feb

-01

Jul-

01

De

c-01

Apr

-02

Se

p-02

Feb

-03

Jun-

03

Nov

-03

Apr

-04

Au

g-0

4

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Au

g-0

6

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-

08

De

c-08

May

-09

Se

p-09

Ran

k V

alue

/EB

ITD

A


Offer price to target share price–Real Estate acquisitions >$500mm

0

20

40

60

80

100

Jan-

98

May

-98

Oct

-98

Mar

-99

Jul-9

9

Dec

-99

May

-00

Se

p-0

0

Fe

b-0

1

Jul-0

1

Dec

-01

Apr

-02

Se

p-0

2

Fe

b-0

3

Jun-

03

Nov

-03

Apr

-04

Aug

-04

Jan-

05

Jun-

05

Oct

-05

Mar

-06

Aug

-06

Jan-

07

May

-07

Oct

-07

Mar

-08

Jul-0

8

Dec

-08

May

-09

Se

p-0

9

Offe

r Pric

e/T

arg

et S

hare

Pri

ce (%

)








Real Estate corporate bonds

28.1

20.2

12.9

23.120.4

27.7 25.1

59.5

39.536.0

35.0

24.8

0

10

20

30

40

50

60

70

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300


Real Estate convertibles

4.2

0.8 1.3

3.8

1.82.4

5.4

3.5

14.2

25.3

6.0

4.4

0

3

6

9

12

15

18

21

24

27

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

10

20

30

40

50

60

70

80


Real Estate follow on offerings

13.5

5.2 5.97.8

10.410.8

44.6

28.2

56.3

18.3

24.4

56.6

0

10

20

30

40

50

60

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

50

100

150

200

250

300

350


Real Estate IPOs

3.7 3.8

1.02.9

4.1

7.0

14.2

19.3

32.4

4.0 4.1

39.4

0

5

10

15

20

25

30

35

40

45

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140


Real Estate market capitalisation by region–3Q2009

29.5%

6.2% 5.2%

34.0%

14.0%9.2%

1.70%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM


Real Estate market capitalisation by region–1Q2002

4.5%

15.2% 11.4%

26.8%

39.4%

0.1%2.2%0.3%

NorthAmerica

Europe ex.UK

UK Pacific ex.Japan

Japan EM



26.0 27.3

10.8

19.219.4 18.5

(1.8)

6.7

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World MSCI ACWI Real Estate

Market value ($m)

168,577 129,500502,620

729,808

03/31/2000 03/31/2002 06/30/2007 09/30/2009

MSCI AC World (U$) MSCI ACWI Real Estate ($)

23,752,480

31,774,960

16,733,020

22,114,240



Exhibit 20.13

To

p 2

0 R

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stat

e ac

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s

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ate

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ue

($m

m)

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get N

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get

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tor

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uiro

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ame

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n

19/1

1/06

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Equ

ity O

ffice

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pert

ies

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st

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roup

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ith T

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20/0

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US

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s G

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22/0

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28/0

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Exhibit 20.14

To

p R

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Os

sin

ce 2

005

Issu

e D

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Pro

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s ($

mm

) Is

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11/2

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No

09/2

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na

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10/2

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10/1

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0 G

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FA

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Man

agem

ent

Ger

man

y R

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rt

No

06/0

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059.

4 R

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Bus

ines

s S

A

Spa

in

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Cn

No

09/1

9/06

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2 N

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n C

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al In

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men

t Ja

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Tok

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No

08/1

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1.5

Sta

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d P

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Tru

st In

c U

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l Est

ate

Man

agem

ent &

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men

t N

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No

09/2

1/06

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4.1

Pro

Logi

s E

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ean

Pro

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ies

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mbo

urg

RE

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N

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06/2

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0.0

KK

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inan

cial

Cor

p U

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ITs

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Yor

k N

o

12/0

8/07

89

8.3

Dar

Al-A

rkan

Rea

l Est

ate

Sau

di A

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a O

ther

Rea

l Est

ate

Sau

di E

xch

No

09/2

7/06

87

5.5

Shu

i On

Land

Ltd

C

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O

ther

Rea

l Est

ate

Hon

g K

ong

No



Notes:



Disclaimer

Note: The information contained herein is based solely uponpublicly available information, including informationprovided by Thomson Reuters. All market statistics arebased on deals announced through 01/01/1998 with datasourced on 30/09/2009. In contested transactions, only thehighest offer is counted. Partial purchases are included ifthey exceed $100mm or involved an advisor. Data canchange from quarter to quarter as a result of updates orreclassifications made by Thomson Reuters. Numbers invarious tables may not sum due to rounding. Distribution ofthis report is permitted to J.P. Morgan’s Investment Bankingclients, subject to approval by J.P. Morgan. This edition ofthe M&A Review reflects recent changes to achieve globalstandardization in our commentary. The most important ofthese is a shift to use of “target volume” rather than“involved volume” for European M&A. Although many tracktotal European M&A activity by combining European targetvolume with European acquisition volume of non-Europeantargets (“European involved volume”), this countsnon-European target deals twice in any global analysis, i.e.,in European volume and in the volume of the target regionwhich, for Europeans, is primarily the United States, but alsoCanada and Latin America. With the “target” approach, allregion totals add to the global total, but European volumesappear lower in this report than in past editions due to thischange. We have also conformed our definitions of the TMTand industrials sectors globally by moving aerospace volumeout of the technology sector (i.e., TMT) in the United Statesand into the industrials sector. We have standardized ouranalysis of premiums to measure the “one-day” announcedpremium and the “one-month” premium in both Europe andthe United States. Throughout we use the “announced andnot withdrawn” classification of Thomson ReutersThomson Reuters makes no representation or warrantyregarding the accuracy or completeness of any informationprovided in this report and any reliance you place on suchinformation will be at your sole risk. This report does notconstitute a recommendation to buy or sell securities of anykind. In no event will Thomson Reuters or its third partysuppliers be liable for any damages of any kind, includingwithout limitation, direct or indirect, special, incidental, orconsequential damages, losses or expenses arising inconnection with your use of the report. You may notdistribute or sell this report to any third party without theconsent of Thomson Reuters

The following mergers and acquisitions analysis document isa research initiative and collaboration between ThomsonReuters and J.P. Morgan.

All data has been sourced from Thomson Reuters investmentbanking products and Datastream.

J.P.Morgan is the global brand name for JPMorgan ChaseBank, N.A. Copyright 2009 JPMorgan Chase & Co. All rightsreserved. This material or any portion hereof may not bereprinted, sold or redistributed without the written consentof J.P.Morgan.



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