Corporate Transaction Trends

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1 No. of transactions Corporate Transaction Trends Transaction Advisory Services Transactions by Sweden s largest companies Upbeat market sentiment behind strong M&A activity in Q a quarterly publication that aims to identify trends in the level and direction of transactions completed by Sweden s largest companies reports the highest number of transactions in the first quarter since before the financial crisis. Sweden s largest companies completed 43 transactions in Q1 2017, a 26% increase compared to the 34 transactions closed in Q4 2016, and a 2% increase in transaction intensity compared to Q where 42 transactions was closed. The ramp-up in transaction activity was attributable to a high number of acquisitions (32), a significant increase from the previous quarter and just below the average of 2016, whereas the number of divestments (11) was unchanged from the previous quarter and in line with the average for Despite the slowdown during the last quarter of 2016, underlying strength in the transaction market was still evident and the statistics was somewhat hampered by pending deals. On an LTM basis, the number of completed transactions (179) corresponds to a slight increase compared to the LTM number ending with Q4 2016, emphasizing the strong previous four quarters. Even though the year 2016 ended with a slight slowdown in deal activity in Q4, 2017 is off to a strong start. It is evident that the underlying market is stable and we can conclude that the 43 transactions closed in Q1 are in the line with the last four quarter average and the two-year quarterly average of 43 transactions. With several deals already closed in Q2, and many announced but not yet closed transactions pending, we maintain our view that we will see continued strong deal activity during Hence, our year-end projection of 170 closed transactions remains unchanged. Rolling last twelve months (LTM) transactions Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 LTM no. of transactions LTM no. of aquisitions LTM no. of divestments

2 No. of divestments No. of acquisitions Quarterly data Year on year quarterly acquisitions Q1 Q2 Q3 Q4 FY14 FY15 FY16 FY17 Year on year quarterly divestments Electrolux s acquisition of Kwikot and Axfood s acquisition of Matse were the largest acquisitions in Q ranked by Enterprise Value. In terms of divestments, Skanska s divestment of its 30% holding in Gdansk Transport Company was the largest transaction during the first quarter ranked by Enterprise Value, followed by Bonnier s and Bridgepoint Adviser s divestment of Cinema Group. The region accounted for 19% of the acquisitions completed in Q1 2017, down from 26% in the previous quarter. The share of divestments was up from 45% in Q to 55% in Q The share of acquisitions in Western Europe increased by 8 percentage points to 56%, whereas divestments in the region decreased by 19 percentage points to 36%. The US share of total acquisitions fell to 6% in Q1 2017, from 13% in Q Manufacturing and construction was the most active sector, representing 44% of acquisitions and 27% of divestments in the first quarter. - Q1 Q2 Q3 Q4 FY14 FY15 FY16 FY17 Q largest transactions (ranked by Enterprise Value) Date Target Seller Buyer Enterprise Target Value ( 100% ) Turnover Acquisitions M M Kwikot RMB Corvest Electrolux ~217 ~ Matse Holding Private Axfood ~52 ~ CFR Hospitaler Private Capio ~38 ~ Gdansk Transport Company Skanska Consortium of infrastructure funds ~1812 ~ Cinema Group Bonnier, Bridgepoint Advisers AMC Entertainment ~893 ~312 ABB (global high-voltage cable ABB system business) NKT Holding ~836 ~472 Only includes transactions for which an Enterprise Value has been reported or otherwise possible to derive 2

3 Size and sector LTM and by size Acquisitions Target Turnover Q2'16 Q3'16 Q4'16 Q1'17 LTM 2016 under M M over M Total Target Turnover Q2'16 Q3'16 Q4'16 Q1'17 LTM 2016 under M M over M Total Q and LTM by industry sector and size Target Turnover Q1'17 LTM Industry sector Band Acquisitions Total Acquisitions Basic industries under M 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 M over M TMT under M M over M Services under M M over M Total under M M over M Total

4 Geographic region Q by geographic region Acquisitions Other Americas 13% RoW 3% 9% US 6% 19% 3% 36% 55% 56% LTM by geographic region Acquisitions Japan Other 1% Americas 4% Asia (excl Japan) 5% RoW 1% Americas (excl US) 2% 2% Asia (excl Japan) 7% RoW 2% 5% US 11% 36% 35% 52% 37% 4

5 Hot Topic Hot Topic Capital Confidence Barometer Pär-Ola Hansson Deputy leader EMEIA Transaction Advisory Services Tel Mobile The 16 th edition of EY s Global Capital Confidence Barometer (CCB), a survey of more than 2,300 executives across 43 countries and 14 industry sectors, finds a near-record 56% of companies actively pursuing acquisitions in the next 12 months up six percentage points from a year ago. With dealmaking at an already elevated level, the fact that 36% of companies expect their deal pipelines to expand further in the next year, and that 96% of executives expect the M&A market to improve or remain stable over the same period, points to a continued strong deal optimism. Looking ahead, cross-border deals are expected to remain at a high level. Many companies operate in a global environment, driven by worldwide supply chains, and see M&A as an effective way of protecting their international superstructures. Another theme expected over the next 12 months is for larger, more established companies to acquire innovative startups as a competitive tactic to accelerate growth. These acquisitions will include tactics spanning from full asset purchases to investments via corporate venture-capital arms. Although the appetite for deals remains solid, there are a number of challenges facing executives, with geopolitical or emerging policy concerns being seen as the greatest risk to economic growth for 69% of businesses. Amongst others, the fears of increasing protectionism and intervention by governments in 2016 have turned into uncertainty about policy that could impact global trade. Despite trade barrier speculations, however, cross-border M&A has been a hallmark of deal making in To summarize, the M&A market remains healthy despite concerns about geopolitical risks and policy changes. Expectations are for deal making to continue at a high pace as companies aim to secure innovation, global supply chains and structures to keep up with disruptive technologies and changing customer preferences. Expectations to pursue an acquisition Although geopolitical risk and policy changes concern executives, the impact of disruptive technology will remain the number one boardroom topic over the coming six months, according to the survey. Technology-driven disruption challenges many business models, and as companies feel the pressure to innovate in order to stay ahead of rapidly changing customer preferences and transformation occurring in an exponential pace, buying assets is one of the fastest ways to secure market positons and future growth. 25% '12 29% '13 35% '13 30% '14 40% '14 56% '15 59% '15 50% '16 57% 56% 42% avg. '16 '17 5

6 Transaction Advisory Services Contacts Jesper Almström Head of Transaction Advisory Services, Transaction Support Brian Gonourie 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 fast-changing 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 EY AB. All Rights Reserved.