Corporate Transaction Trends

Transcription

1 Corporate Transaction Trends Transaction Advisory Services Transactions by Sweden s largest companies Deal activity contracts in Q2; still too early to revise 15 projection a quarterly publication that aims to identify trends in the level and direction of transactions completed by Sweden s largest companies reports a contraction in transaction activity during Q2 15. Large Swedish companies completed 32 transactions in Q2 15, a decrease of approximately % compared to both the 39 transactions closed in Q1 15, and the 41 transactions completed during the second quarter of 14. The decrease in year on year activity was driven by fewer acquisitions (25 in Q2 15 compared to 35 the same quarter last year), whilst the decrease compared to Q1 15 principally reflects a significant decline in the number of divestments (7 in Q2 15; down from 13 in Q1 15). The relatively steep decline in confirmed and closed transactions is a bit surprising considering the overall activity we are currently seeing in the market, but may in part reflect cutoff effects, i.e. that the completion date for a number of transactions have been postponed to the next quarter. This hypothesis is supported by a rather long list of confirmed, but not yet closed, transactions. This pending list currently includes some transactions for Q3 roughly twice the amount normally confirmed for the coming quarter. At the outset of 15, in our Q4 14 report, we speculated that the number of completed transactions this year could reach 180. This projection was based on the positive momentum in transaction activity, and assumed the absence of an unexpected shock to the financial system. The current number of completed transactions on an LTM basis (157) suggests that our initial assessment appears challenging. However, due to the strong pipeline of confirmed transactions going forward coupled with continued confidence in the global economy, our view is that it is still too early to discount the initial projection. The outcome of the third quarter will likely be the decisive factor. Rolling last twelve months (LTM) transactions No. of transactions Q2 '08 Q2 '09 Q2 '10 Q2 '11 Q2 '12 Q2 '13 Q2 '14 Q2 '15 LTM no. of transactions LTM no. of aquisitions LTM no. of divestments

2 Quarterly data No. of divestments No. of acquisitions Year on year quarterly acquisitions Q1 Q2 Q3 Q4 FY12 FY13 FY14 FY15 Year on year quarterly divestments Q1 Q2 Q3 Q4 FY12 FY13 FY14 FY15 The completion of ICA Gruppen s divestment of its Norwegian grocery operations to COOP represents the largest transaction in terms of Enterprise Value of the second quarter. The deal was first announced in October 14, but a prolonged review and remedies imposed by the Norwegian Competition Authority delayed closing until April. The largest finalised acquisitions comprises two realestate transactions*, with Castellum acquiring 27 properties and entering a strategic joint venture in the Linköping/Norrköping region; and Kungsleden exiting a nonstrategic segment in a deal with Sagax. Other significant transactions in Q2 15 include Addtech s acquisition of Mediplast, and two divestments by SKF in the market. The region accounted for 60% of the acquisitions and 71% of the divestments completed in Q2 15. The share of Western European transactions has continued to decrease, representing only 16% of acquisitions in the quarter compared to levels around 30% during 14. The most active industry was Manufacturing and construction, accounting for 53% of total transactions completed in Q2 15. * CTT excludes real estate transactions that are considered normal course of business for the involved parties, even those of high value. However, instances where a whole business or a significant portfolio in the nature of a business segment are included if deemed strategic or transformational. Q2 15 largest transactions (ranked by Enterprise Value) Date Target Seller Buyer Enterprise Target Value ( 100% ) Turnover M M 15/04 Real estate portfolio Heimstaden Castellum 260 n/a 15/05 Commercial real estate portfolio Kungsleden Sagax 1 57 n/a 15/06 Mediplast RoosGrppen; Priveq Addtech ~ /04 ICA Norge ICA Gruppen COOP Norge ~300 1,725 15/06 Purafil; Kaydon Custom Filtration SKF Filtration Group /05 Erin Engineering SKF Jensen Hughes Sagax acquired the portfolio along with its associated company Söderport Fastigheter (jointly owned with Hemfosa Fastigheter) Sources: Press releases and latest available financial reports 2

3 Size and sector LTM and 14 by size Target Turnover Q3'14 Q4'14 Q1'15 Q2'15 LTM 14 under M M over M Total Target Turnover Q3'14 Q4'14 Q1'15 Q2'15 LTM 14 under M M over M Total Q2 15 and LTM by industry sector and size Target Turnover Q2'15 LTM Industry sector Band Basic industries under M 1 M over M Manufacturing and construction under M M over M Retail and consumer goods under M M over M Finance and real estate under M M over M Healthcare under M 3 M 100 over M TMT under M 1 8 M over M Services under M 2 3 M over M 100 Total under M M over M Total

4 Geographic region Q2 15 by geographic region Americas (excl ) Asia (excl Japan) 8% 29% 16% 60% 71% LTM by geographic region Asia (excl Japan) 9% Americas (excl ) 8% 13% 39% 13% 11% 68% 2% 25% 4

5 Transaction Advisory Services Contacts Jesper Almström Head of Transaction Advisory Services, Transaction Support Jens Dellensjö Transaction Support Staffan Ekström M&A Advisory Staffan Folin M&A Advisory Björn Gustafsson Valuation & Business Modelling Henrik Eriksson Operational Transaction Services Kristin Ringland Commercial Advisory Services Kristoffer Ståhlbröst Restructuring Carsten Kuhlmann Transaction Tax Transaction Advisory Services provides professional advice in connection with acquisitions, divestments, financing, restructuring and other transactions. Our services include M&A advice, restructuring advice (including advice on working capital management), valuations and business modelling, transaction support (including financial due diligence), operational transaction services (including operational due diligence and integration services) and transaction tax services. Transactions covered in this publication are transactions completed by large Swedish companies, defined to mean (i) companies which are listed on the Stockholm Stock Exchange and have a market capitalization over MSEK 5,000; and (ii) other Swedish companies with a turnover of more than MSEK 10,000. Swedish companies that are controlled by foreign groups have been excluded, unless they are headquartered in Sweden. Only transactions completed or declared unconditional in the period with an estimated deal value over approximately 50 MSEK and which have resulted in a change of control or significant change of influence have been included. If large Swedish companies are present on both sides of the same transaction, the transaction is recorded as an acquisition. Public takeovers by third parties and demergers are recorded as divestments. EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organisation and / or one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. About EY s Transaction Advisory Services How you manage your capital agenda today will define your competitive position tomorrow. We work with clients to create social and economic value by helping them make better, more informed decisions about strategically managing capital and transactions in fastchanging markets. Whether you re preserving, optimising, raising or investing capital, EY s Transaction Advisory Services combine a unique set of skills, insight and experience to deliver focused advice. We help you drive competitive advantage and increased returns through improved decisions across all aspects of your capital agenda. For more information about our organisation and our services, please visit This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. Ernst & Young AB accepts no responsibility for any loss arising from any action taken or not taken by anyone using the material in this publication. For further enquiries, or to add your name to the mailing list for this publication, please send an to transactions@se.ey.com. 15 Ernst & Young AB. All Rights Reserved.