M&A Activity Global +/- From Prior Month March 2016, Issue 48 Figure 1 Figure 2 - Most Active U.S. Target Industries 3 U.S. +/- From Prior Month Total Volume (US$B) 310.25 117.31 100.50 19.27 No. of deals 2,890 (309) 831 (21) Avg. value of deals (US$mil) 213.5 91.5 293.0 28.4 Avg. deal multiple 1 11.3x 0.4 13.9x 1.3 Strategic Transactions Volume (US$B) 245.77 86.51 66.68 2.39 No. of deals 2,541 (298) 678 (3) Avg. value of deals (US$mil) 184.5 77.4 221.5 (13.1) Avg. deal multiple 1 11.2x 0.6 13.1x 0.5 Sponsor-Related Transactions Volume (US$B) 64.47 30.80 33.82 16.88 No. of deals 349 (11) 153 (18) Avg. value of deals (US$mil) 532.9 174.6 805.1 292.1 Avg. deal multiple 1 11.8x (0.6) 16.3x 3.8 Crossborder Transactions 2 Volume (US$B) 158.50 94.95 28.65 23.88 No. of deals 728 (70) 130 131 Avg. value of deals (US$mil) 470.3 295.8 421.3 487.3 Avg. deal multiple 1 10.8x 0.4 8.0x 10.0x 6.74 11.82 (11) (15) 84.3 219.3 (2.7) 1.4 Utility & Energy $20.81 Computers & Electronics $20.47 Professional Services Oil & Gas $15.24 $14.36 $10.04 $0 $200 $400 $600 $800 $544.12 Computers & Electronics $362.28 Telecommunications Oil & Gas Real Estate/Property $154.29 $152.93 $138.90 $0 $200 $400 $600 $800 Computers & Electronics 246 Professional Services Construction/Building Finance 106 85 37 33 0 1,000 2,000 3,000 4,000 5,000 Computers & Electronics 2,902 Professional Services 1,232 1,205 Finance 595 Real Estate/Property 449 0 1,000 2,000 3,000 4,000 5,000 Figures 1-3 were compiled using data from Dealogic, and are for the broader M&A market, including mergers of any value involving public and/or private entities. Figures 4 and 5 were compiled using data from FactSet MergerMetrics, and are limited to mergers involving public U.S. targets announced during the period indicated and valued at $100 million or higher regardless of whether a definitive merger agreement was reached and filed or withdrawn. All data is as of March 2016 unless otherwise specified. data is for the period from March 2015 to inclusive. Data from Dealogic and FactSet MergerMetrics may include multiple offers, as applicable, for the same target company. Data obtained from Dealogic and FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss. 1 Ratio of enterprise value to EBITDA, trailing 12 months. This statistic is calculated using a smaller subset of deals for which this data is available. 2 Global crossborder transactions are those where the acquirer and the target have different nationalities. Nationality is based on where a company has either its headquarters or a majority of its operations. U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer ( ) or the target ( ) has a U.S. nationality. 3 Industries categories are determined and named by Dealogic. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 1
M&A Activity (Continued) Figure 3 - Top 5 Countries of Origin or Destination for U.S. Crossborder Transactions U.S. Crossborder Transactions for U.S. Crossborder Transactions for the $15.26 $125.26 $9.43 $65.12 Japan $1.82 Israel $46.48 India $0.46 $39.76 $0.43 Netherlands $36.15 30 430 Japan 15 205 13 Japan 157 11 130 9 Australia 78 U.S. Crossborder Transactions for U.S. Crossborder Transactions for the Sweden $9.92 $63.19 $3.80 Spain $25.88 $3.60 $20.80 Argentina $1.58 Netherlands $17.88 Ireland $1.11 $16.73 25 390 23 295 10 Australia 104 4 India and Italy 9 100 Germany and 5 5 Australia Germany 99 4 Each of India and Italy was the country of destination for nine transactions in. 5 Each of Germany and Australia was the country of destination for five transactions in. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 2
M&A Activity (Continued) Figure 4 - Average Value of Announced U.S. Public Mergers (in US$mil) $25000 $24,302.6 $20000 $19,045.4 $22,529.2 $19,181.9 $21,315.0 $18,675.7 $16,859.9 $15000 $13,433.6 $10000 $5000 $0 $2,472.3 $6,276.6 $1,257.0 March 2015 April 2015 May 2015 $7,527.6 $7,506.0 $6,322.3 $5,761.5 June 2015 July 2015 August 2015 September 2015 $7,020.4 $5,997.6 $5,979.6 $5,759.2 $5,757.0 $3,352.5 $3,180.9 $2,165.7 $2,441.6 October 2015 November 2015 December 2015 January 2016 Average Value of Five Largest U.S. Public Mergers Average Value of All U.S. Public Mergers Figure 5 - Five Largest Announced U.S. Public Mergers Equity Value (US$B) The ADT Corporation ~ Apollo Global Management, LLC (February 16, 2016) $6.94 ITC Holdings Corp. ~ Fortis Inc. (February 9, 2016) $6.85 Ingram Micro, Inc. ~ Tianjin Tianhai Investment Co., Ltd. (February 17, 2016) $5.77 Alere, Inc. ~ Abbott Laboratories (February 1, 2016) Questar Corporation ~ Dominion Resources, Inc. (February 1, 2016) Equity Value (US$B) $4.37 $0 $20 $40 $60 $80 $100 6 EMC Corporation ~ Investment Group (October 12, 2015) $64.30 E.I. du Pont de Nemours and Company ~ The Dow Chemical Company (December 11, 2015) Time Warner Cable Inc. ~ Charter Communications, Inc. (May 26, 2015) Cigna Corporation ~ Anthem, Inc. (June 20, 2015) $61.72 $55.18 $47.23 Kraft Foods Group, Inc. ~ H.J. Heinz Company $46.07 (March 25, 2015) $0 $20 $40 $60 $80 $100 $4.85 6 Members of the investment group reported by FactSet MergerMetrics are Silver Lake s, MSD s LP and Dell Inc. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 3
M&A Terms Figure 6 - Average Break Fees as % of Equity Value 7 12% (US$mil) $10,000 10.5% $8,514.4 $7,940.2 $6,836.7 $6,322.3 $6,611.0 $6,955.9 $5,393.2 6% 5.4% 5.7% 4.6% 5.3% 5.2% 5.1% 5.7% 4.6% 5.8% $3,676.4 4.8% 4.1% $5,000 3.5% 4.2% 3.8% 3.4% 3.5% 3.1% 3.5% $2,348.0 3.4% 3.7% $2,370.6 3.6% 3.8% $2,441.6 3.2% $1,257.0 March 2015 April 2015 May 2015 June 2015 July 2015 August 2015 September 2015 October 2015 November 2015 December 2015 January 2016 Avg. Target Break Fee as % of Equity Value Average Value of All U.S. Public Mergers with Definitive Agreements Avg. Reverse Break Fee as % of Equity Value Figure 7 - Average Break Fees as % of Equity Value 7 Figure 8 - U.S. Public Merger Go-Shop Provisions February 2016 Last 12 Months February 2016 Last 12 Months Target Break Fee for All Mergers 3.2 3.6 February 2016 Last 12 Months Reverse Break Fee for All Mergers 4.8 5.4 Reverse Break Fee for Mergers Involving 5.2 7.1 Financial Buyers Reverse Break Fee for Mergers Involving Strategic Buyers 4.6 4.8 Figures 6-12 were compiled using data from FactSet MergerMetrics, and are limited to select mergers involving public U.S. targets announced during the period indicated, valued at $100 million or higher and for which a definitive merger agreement was reached and filed (unless otherwise indicated). Data obtained from FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss. % of Mergers with Go-Shops 7.1 11.4 % of Mergers Involving Financial Buyers with Go-Shops % of Mergers Involving Strategic Buyers with Go-Shops 25.0 38.5 0.0 7.2 Avg. Go-Shop Window (in Days) for All 41.0 34.9 Mergers with Go-Shops 8 Avg. Go-Shop Window (in Days) for Mergers Involving Financial Buyers with Go-Shops 9 Avg. Go-Shop Window (in Days) for Mergers Involving Strategic Buyers with Go-Shops 10 41.0 38.9 N/A 31.2 7 Based on the highest target break fees and reverse break fees payable in a particular deal. 8 One transaction in had a go-shop provision. 9 One transaction in involving a financial buyer had a go-shop provision. 10 No transactions in involving a strategic buyer had a go-shop provision. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 4
M&A Terms (Continued) Figure 9 - Form of Consideration as % of U.S. Public Mergers 11 14.3% Figure 10 - % of Partial and All Stock Deals that Have a Fixed Exchange Ratio 12 100.0 92.6 7.1% 78.6% 0.5% 10.9% Cash Only Stock Only Cash & Stock Only Choice (Cash Election) Other Figure 11 - Tender Offers as % of U.S. Public Mergers 0.0 19.7 Figure 12 - Hostile/Unsolicited Offers as % of U.S. Public Mergers 13 0.0 15.2 53.4% 20.7% 14.5% 11 Due to rounding, percentages may not add up to 100%. 12 There were only three partial or all stock transactions in. 13 This data includes both announced transactions for which a definitive merger agreement was reached and filed and those for which a definitive merger agreement was never reached and filed (including withdrawn transactions). Paul, Weiss is a leading law firm serving the largest publicly and privately held corporations and financial institutions in the United States and throughout the world. Our firm is widely recognized for achieving an unparalleled record of success for our clients, both in their bet-the-company litigations and their most critical strategic transactions. We are keenly aware of the extraordinary challenges and opportunities facing national and global economies and are committed to serving our clients short- and long-term goals. Our Mergers & Acquisitions Practice The Paul, Weiss M&A Group consists of 30 partners and over 100 counsel and associates based in, Washington, Wilmington, London, Toronto, Tokyo, Hong Kong and Beijing. The firm s Corporate Department consists of 60 partners and more than 200 counsel and associates. Our M&A Group is among the most experienced and active in the world. We represent publicly traded and privately held companies, leading private equity firms, hedge funds, financial advisors, and other financial institutions and investors in their most important mergers and acquisitions, joint ventures and other strategic transactions. Our expertise advising corporations and private investors in a broad range of sophisticated transactions enables us to identify new opportunities for our clients to realize value. We have particular experience in guiding clients as they engage in proxy battles, company-altering and market consolidating transactions or capital markets transactions. Recent highlights include: advising Time Warner Cable in its $78.7 billion merger with Charter Communications (pending); representing Automatic Data Processing in its $5 billion spin-off of ADP Dealer Services, now called CDK Global; advising Encana in its $7.1 billion acquisition of Athlon Energy; advising EXOR in its $6.9 billion unsolicited cash bid for Re (pending); representing NorthStar Realty Finance in its $4 billion acquisition of Griffin-American REIT II; advising Platform Specialty Products in its $2.3 billion acquisition of Alent; and representing Grupo Salinas in its $2.5 billion sale of Iusacell to AT&T. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 5
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