Table of Contents * 1

Foreword ………………………………………………………………………………………02

Executive Summary ………………………………………………………………………03

2011 Global M&A Outlook ……………………………………………………………04

Private Equity Review ……………………………………………………………………10

Americas M&A Review …………………………………………………………………14

APAC M&A Review ……………………………………………………………………… 18

EMEA M&A Review ………………………………………………………………………22

The Year In Opinions …………………………………………………………….. 26

 Foreword * 2

The 2011 M&A Outlook report is a compilation of key M&A activity statistics from various perspectives. The report presents in-depth
data on deal-making activity across a broad array of deal types, regions, and industry sectors.

Historical data cited in the report represents M&A transactions that Bloomberg was made aware of between January 1, 2010 and
November 30, 2010. Aggregate M&A data is comprised of mergers, acquisitions, divestitures, spin-offs, debt-for-equity-swaps, joint
ventures, private placements of common equity and convertible securities, and the cash injection component of recapitalizations
according to Bloomberg standards. The announced total value represents the price paid, and not the value of individual companies
or their assets.

Bloomberg delivers real-time coverage of the M&A market around the world. We provide a global perspective and local insight into
unique deal structures in various markets through a network of over 800 financial and legal advisory firms, ensuring an accurate
reflection of key market trends. Our quarterly league table rankings are a leading benchmark for legal and financial advisory
performance, and our DealSpace and Brief newsletters provide daily and weekly summaries of M&A activity.

Visit NI BRIEF<GO> or NI DEALSPACE<GO> or NI LEAG CRL<GO> on the Bloomberg Professional to download copies of the report
and a full range of market-specific league tables. Visit MA <GO> and PE <GO> for related data and functionality.

Edited By: Uvarshanie Nandram, Mariana Trindade, Iyan Adewuya, and Carol Chuang

For queries please contact:

Uvarshanie Nandram Iyan Adewuya Humphrey Johandy Putra

+212-617-7743 +212-617-6152 +65-6231-3431
unandram1@bloomberg.net iadewuya@bloomberg.net hjohandyputr@bloomberg.net

Carol Chuang Mariana Trindade Jon Daly

+212-617-3642 +212-617-3692 +44-20-7073-3353
cchuang2@bloomberg.net mtrindade1@bloomberg.net jdaly13@bloomberg.net

The BLOOMBERG PROFESSIONAL service and data products are owned and distributed by Bloomberg Finance L.P. and its subsidiaries (BFLP) except in Argentina, Bermuda, China, India, Japan and
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believe the information herein came from reliable sources, but do not guarantee its accuracy. No information or opinion herein constitutes a solicitation of the purchase or sale of securities or
commodities.
Executive Summary

 The results of the Bloomberg Global Poll of over 1,000 financial market professionals show a tempered optimism about a
continuing rebound of dealmaking activity in 2011.

 Survey respondents expect attractive target valuations to be the primary driver that will present M&A opportunities in
2011. While domestic competition is perceived as another strong catalyst for M&A activity, respondents saw market volatility
as the most significant potential obstacle to global deal-making in 2011.

 Asia Pacific companies are expected to be the most acquisitive buyers in 2011, while respondents expect the most
attractive targets to continue to be found among firms based in the North American region.

 Global M&A activity witnessed a strong comeback with aggregate volume and deal count figures surpassing 2009 levels.
Through the end of November 2010, over 21,000 deals were announced with more than $1.9 trillion in total volume. This
represented a 12% increase from 2009 volume levels, and marked a sharp reversal in the two-year decline of dealmaking
activity that began in 2008.

 Dealmaking opportunities are expanding beyond domestic borders, with over 8,100 cross border deals worth roughly
$945 billion announced in 2010, a 41% increase in volume compared to last year. On average, targets of cross border
transactions are receiving slightly higher premiums, 24% on average compared to the 22% for all deals. Roughly 52% of all
cross border volume is in the form of a company takeover, with 22% in asset sales, 14% in minority stake purchase, and 9% in
majority stake purchases. Tender offers comprise 8% of cross border deals in 2010.

 Asia Pacific experienced a significant growth in M&A activity, reporting over 8,700 deals that involved an Asian company as
the target, seller, or buyer, eclipsing Europe as the second most active region, following North America. Fueling this growth is
acquisition opportunities in China, with approximately 2,500 deals worth $110 billion, a 29% increase in deal activity and 15%
increase in volume from 2009, and a staggering 108% increase in deal volume since 2005. China’s appetite for buying
opportunities is also increasing, with $145 billion worth of deals announced in 2010, a 453% increase from 2005 levels.

 Brazil M&A is at a 10 year high, with over $130 billion in announced M&A activity. This includes deals such as the sale of
Brasilcel NV to Telefonica SA, and the sale of Repsol YPF Brasil to China Petroleum & Chemical company. Energy &
communications were the top industries undergoing consolidation in the country.

 Lastly, Private Equity players are on the comeback, with more than 1,700 deals announced. The Carlyle Group in particular,
announced 33 deals year to date worth $16 billion in transactions, the highest number of deals since 2007. Top buyers and
targets remain in the U.S. and U.K., with Canada and Australia emerging as attractive countries for private equity dealmaking.
The majority of transactions are below $500 million, with 58 deals in the $1-5 billion range and 53 deals in the $500 million to
$1 billion range. Overall, while deal activity and deal volume has increased substantially from 2009 levels and is on track to
surpass 2008 levels, there is still quite a way to recovery.

Executive Summary * 3
2011
GLOBAL
M&A
OUTLOOK
M&A
M&A Sentiment
Sentiment
Overall, 2010 M&A activity turned out to be largely in-line with expectations expressed in the
2010 M&A sentiment survey conducted last year.
80% $4,500

60% $4,000
In 2009, 60% of survey $3,500
respondents expected a small 40%
$3,000
increase in global M&A volume, 20% $2,500
with the most optimistic group
0% $2,000
being on the buy-side. In fact,
global volume increased by 5%. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 $1,500
-20%
$1,000
-40% $500
-60% $-
Volume % Growth

Compared to 2010, what do you expect to happen to the volume of mergers and
acquisitions in 2011?

This year’s survey respondents ASIA

were slightly less optimistic than Large Increase
last year, with approximately
Small Increase
70% expecting an increase in EUR
No Change
M&A volume overall compared
to 90% in 2009. Small Decrease
US
Large Decrease

0% 20% 40% 60% 80% 100%

70%
Of the different roles in the
financial industry, research 60%

analysts and traders were less

50%
bullish than PM’s and Sales, with
roughly 60% expressing positive 40%
responses compared to 80% of
the PM community. 30%

20%

10%

0%
Large Increase Small Increase No Change Small Decrease Large Decrease

TRADER RESEARCH ANALYST PORTFOLIO MANAGERS SALES

2011 Global M&A Outlook * 5

 Macro Trends & Drivers
Attractive target valuations continue to be the primary driver that will present M&A opportunities in 2011.
Domestic competition is perceived as another strong catalyst for M&A activity for the upcoming year.
Market volatility is seen as the most significant obstacle to global deal-making in 2011, which is consistent
with last year’s results.

In your opinion, what will be the primary What do you think will be the most
drivers of M&A activity in 2011? significant obstacles to the global deal-
making in 2011?
Shareholder
Demand Slow Economic Growth
10% Financing
16%
Market Volatility
Domestic
Market
Competition
Stability Government Regulation
17%
11%

Unrealistic Valuations

Target Foreign Target Finances

Valuations Players
23% 23%
0.0% 20.0% 40.0%

Target Profile
Billion-dollar deals are expected to make a comeback in 2011, with roughly 35% of survey respondents
expecting to see deals within the $1-$5 billion range, compared to 25% of respondents last year. The
majority of deals are still expected to fall within the $250 million -$1 billon range. All eyes are still on
distressed companies as the most frequent target in 2011, followed by public mid-cap companies.
What ranges will most M&A deals fall within Which type of firm do you think will be the
in 2011? most frequent target in 2011?
90.0%
50.0%
80.0%
40.0% 70.0%
60.0%
30.0%
50.0%

20.0% 40.0%
30.0%
10.0% 20.0%
10.0%
0.0%
> 5bln 5bln-1bln 1 bln-250mln <250mln 0.0%

2011 Global M&A Outlook * 6

Regional Expectations
The market was very optimistic about M&A growth in the Asia Pacific region. While the region did
experience moderate growth compared to other regions, it was Latin America M&A activity that jumped the
most, followed by North America.

$500
$450 North America

$400 Western Europe

$350
Asia Pacific
$300
Latin America & Caribbean
$250
$200 Eastern Europe
$150 Middle East & Africa
$100
$50
$-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Looking ahead, Asia Pacific companies are expected to be the most acquisitive buyers in 2011, followed
closely by North American firms. In terms of attractive buyout targets, the global respondents are looking
to North America & South and Central America in 2011, as opposed to Asia Pacific (projected target region
for 2010).

In which region do you expect the most In which regions do you think that the most
active buyers to be based in 2011? attractive acquisition targets will be based in
2011?
Asia Pacific Central Asia
45% 6%
North
Central Asia America
13% Asia Pacific
25%
23%

South &
Africa / North Central
America Africa / America
Middle East
22% Middle East 15%
3%
Western 7%
Europe South &
Central Western Eastern
7%
America Europe Europe
7% 18% 6%

2011 Global M&A Outlook * 7

 Industry & Private Equity Outlook
The energy industry was projected to experience the heaviest consolidation in 2010; in reality, mergers in the
financial industry overtook M&A volume in the energy industry, reporting a total of $328 billion worth of
deals compared to $300 billion. This year, survey respondents expected the utilities and energy industries to
undergo more consolidation in 2011.

Which industry sectors do you expect to Global M&A Volume By Top Industries
contain the most M&A activity in 2011?
Energy Financials Telecom Healthcare Materials Utilities
IT
2000 $146.67 $506.91 $526.11 $20.76 $118.69 $97.24
Consumer Discretionary 2001 $139.62 $408.24 $140.81 $17.37 $94.75 $108.89
2002 $74.26 $260.77 $91.15 $24.03 $50.50 $95.30
FIG
2003 $73.59 $347.89 $105.64 $52.29 $63.81 $47.01
Industrials 2004 $186.05 $522.14 $220.69 $55.03 $105.19 $68.43
2005 $215.18 $581.61 $269.44 $90.48 $149.37 $123.95
Utilities
2006 $252.45 $940.56 $281.37 $133.68 $283.92 $249.33
Health Care 2007 $279.54 $1,016.80 $205.93 $118.66 $296.35 $304.52
2008 $235.33 $724.34 $175.35 $63.53 $184.88 $121.10
Materials
2009 $223.14 $422.55 $98.40 $25.96 $81.73 $103.01
Telecom 2010 $300.10 $328.86 $162.71 $56.05 $134.42 $127.08

Consumer Staples

Energy

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

From 2009 to 2010, North America, Western Europe, and Asia Pacific experienced the most growth in
private equity deal volume. Next year, private equity players are expected to be the most active within
North America and Asia Pacific.
$500
$450 In which regions do you expect private
$400 equity/venture capital firms to be the most
$350
$300 active in 2011?
$250
$200 Central Asia
12%
$150 North
$100 America
$50 31%
$-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
North America Asia Pacific
Western Europe 36%
South &
Asia Pacific Central
Latin America & Caribbean America
Eastern Europe 8%
Eastern
Middle East & Africa Africa / Western Europe
Middle East Europe 3%
1% 9%

2011 Global M&A Outlook * 8

 Cross-Border Opportunities
Cross-border deals were deemed as the most attractive deal type for 2010, according to 68% of the
respondents. This proved to be true with 49% of global M&A volume being cross-border transactions, a
significant hike up from 39% in 2009, and 30% six years ago.

What deal type will present a more

60% $2,500
attractive proposition for buyers in
50%
$2,000 2011?
40% Domestic
$1,500 25%
30%
$1,000
20%

$500
10%

0% $-
Cross
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 border
75%
Cross-border deals are also looking increasingly attractive,
with 75% of survey respondents favoring these deals over
domestic M&A.

Doing The Deal

The majority of survey respondents expect What do you expect to be the major source
equity to be the major source of capital for of capital for M&A deal financing in 2011?
M&A deal financing, followed by cash, and
finally debt. This is in contrast with last year, Cash
when debt issuance was expected to be the 29%
main source of M&A financing. Equity
44%

Debt
27%

2011 Global M&A Outlook * 9

PRIVATE
EQUITY
REVIEW
 Notable Highlights Top Industry by Volume

 After hitting a seven-year low in total transaction volume Chemical Chemicals -

in 2009, the Private Equity dealmaking firmly rebounded in Services $33.10 Diversified
2010. $123.06

 With over 1,700 deals announced and an aggregate Diversified

transaction volume of $211 billion, this year’s activity Manufacturing
marked a stark 142% increase over 2009 levels. Operations
$41.76
 Despite the uptick, Private Equity deal activity is still a long
way off from its 2007 highs with this year’s transaction
Consumer Non-
volume still coming in 5% below 2008 levels.
Cyclical $224.65
 Another sign of the fragility of the comeback of Private
Equity dealmaking was the lack of deals larger than $10 Top Countries by Volume
billion in size. Only the KKR-led buyout of Del Monte Foods
managed to crack the $5 billion ceiling. United Australia
Kingdom $12,140
$27,500
 The largest pool of deals were transacted within the $1 Spain
billion to $5 billion range, with 58 deals having an aggregate $6,440
value of $116 billion in this pool. France
$7,070
 This year’s most popular targets were companies in the
Chemicals, Retail Restaurant, and Manufacturing Operations United
sectors and were primarily based in the US, UK, and States
Australia. $104,690

Top Private Equity Company Takeovers

Deal Type Announce Date Target Name & Country Acquirer Name & Country Announced Total Value Target Business Description
Acquisition 11/25/10 Del Monte Foods Company Centerview / KKR / Vestar $ 5.10 Private label food & pet product, producer,
United States United STates distributor, & marketer
Acquisition 07/19/10 Thomkins PLC Pinafore Acquisitons Ltd $ 4.77 Group of manufacturing co
United Kingdom Canada
Acquisition 04/22/10 Burger King Holdings 3G Capital Inc $ 3.93 Fast-food hamburger chain &
United States United STates franchisor
Divestiture 07/27/10 Extended Stay America Inc Blackstone / Centerbridge / Paulson $ 3.93 Develops, owns, & operates
United States Russia extended long stay facilities
Acquisition 07/15/10 NBTY Inc Carlyle Group $ 3.81 Nutritional supplement manufacturer &
United States United States retailer in US & UK
Divestiture 06/23/10 Cognis Holding GmbH BASF SE $ 3.80 Chemicals holding co
Germany Germany
Acquisition 10/25/10 CommScope Inc Carlyle Group $ 3.79 Hihg-performance electronic & fiber
United States United States optic cable operations
Divestiture 08/11/10 Albertis Infraestructers SA CVC Capital Partners Ltd $ 3.69 Toll highway & parking garage operations
Spain United Kingdom
Divestiture 11/04/10 Eversholt Rail Group Eversholt Investment Group $ 3.41 Diversified operations
United Kingdom United States & United Kingdom
Divestiture 11/05/10 High Speed 1 Ontario Teachers' Pension Plan $ 3.40 Rail transportation
United Kingdom Canada

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 Private Equity Review * 11

 Notable Highlights Private Equity Target Multiples

 On average, firms paid a 27% premium for acquisition Target Multiples Deals Min - Max Median
targets with median enterprise value EBITDA of 9x. FFO 1 99.31 - 99.31 99.31
Free Cashflow 100 1.64 - 1925.25 28.77
 Evidence of Private Equity firms chasing healthy returns Income B/F XO 103 1.91 - 619.56 21.58
overseas could be seen in the significant amount of cross Net Income 108 .46 - 619.56 21.47
border deals. Cross border transactions accounted for 40%
Net Income + Deprec 123 .46 - 1968.98 13.20
of total deal count and 50% of aggregate deal volume.
EBIT 117 1.62 - 148.82 12.77
 The downstream effect of investors looking for higher Cashflow from Ops. 129 1.57 - 365.65 11.46
yields and banks nearly doubling leveraged loans sales was EBITDA 114 .81 - 2653.18 8.81
clearly felt with the announcement of 454 leveraged Stockholder Eqty 158 .00 - 224.93 2.56
buyouts having a total volume of $92 billion. Book Value 155 .01 - 224.93 2.55
Market Cap 136 .00 - 29.67 1.57
 While some Private Equity firms sought to deploy Revenue 166 .01 - 70.81 1.37
significant amounts of “dry powder” in their funds, others
Enterprise Value 142 .00 - 11.39 1.28
desperate sought exits. This caused a significant amount of
secondary transactions with firms selling 14 portfolio
Total Assets 172 .00 - 1553.25 1.04
companies to each other with a total value of $6 billion.
Private Equity Announced Premiums
 With 33 deals announced and an aggregate value of $16
billion, The Carlyle Group was this year’s most acquisitive Premiums Paid # Deals Volume %
Private Equity firm. >100% 21 2.42B 0.9
75.01-100% 20 1.69B 0.62
 Carlyle, which oversees $98 billion, participated in a
diverse range of transactions ranging from its $3.8 billion 50.01-75% 36 11.38B 4.22
leveraged buyout of vitamin maker NBTY Inc, to its purchase 25.01-50% 99 54.77B 20.28
of a $200 million stake in Shandong Aneng Conveyor Rubber 10.01-25% 92 35.34B 13.09
Co. 0-10% 3,594 164.45B 60.89

Private Equity M&A Trend: 2009 -2010

$40 Volume Deal Count 200

180
160
140
Deal Volume ($ Blns)

Deal Count (#)

120
$20 100
80
60
40
20
$0 0
Apr-09

Apr-10
Feb-09

Sep-09

Feb-10

Sep-10
Jun-09

Jun-10
Jul-09

Jul-10
Mar-09

Mar-10
Dec-09
Oct-09

Oct-10
Aug-09

Aug-10
Jan-09

Nov-09

Jan-10

Nov-10
May-09

May-10

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 Private Equity Review * 12

 Private Equity Deal Type Summary 2010 Private Equity Capital Flow
Deal Type Summary # Deals Volume % $120
$109.92
Company Takeover 757 131.84B 62.42
$100
Cross Border 672 109.46B 51.82
Leveraged Buyout 454 92.71B 43.9 $80 $70.98

Volume (Blns)
Asset sale 217 30.97B 14.66
$60
Minority purchase 618 33.2B 15.72
Real Estate 12 7.22B 3.42 $40
$27.22
Special Situations/Distressed 12 5.81B 2.75
$20
Venture Capital 270 4.18B 1.98
$2.72 $0.37
Co-Investment 30 3.47B 1.64 $-
Mezzanine 6 3.03B 1.43 North Europe Asia Pacific LatAm Middle East
*All Total Value figures in USD Billions. America
*Data is as of November 30, 2010.

Top Private Equity M&A News

 PRIVATE EQUITY LOSES FUND COMMITMENTS AS
TONY JAMES WOOS OREGON
(Aug. 26) -- A year after the financial crisis subsided, the
$2.5 trillion private-equity industry is finding the easy
money may be gone. Managers saddled with $1.6 trillion in
buyouts made during a three-year boom have marked at
least 6 of the era’s 10 biggest deals at or below cost,
according to data compiled by Bloomberg. About $470
billion sits idle, according to London-based researcher
Preqin Ltd. Announced purchases so far this year total less
than a fifth of their volume at the peak in 2007. Pensions,
endowments and mutual funds cut new commitments to
buyout funds by more than 50 percent, according to Preqin,
questioning whether firms led by Blackstone Group LP have
grown too large to generate the returns that made their
founders billionaires.
 MIDEAST PRIVATE EQUITY HAS ROOM TO
RUN
(Dec. 7) -- Over the last decade, private equity in the
Middle East has gone from being virtually nonexistent to
become a booming prospect and then an industry facing
a shakeout. In 2004 the region was home to about 25
funds with a total of around $3 billion under
management; as of this year, roughly 142 funds are
managing more than $34.5 billion. The breakneck
evolution of private equity has made it difficult for
investors to obtain a clear picture of its fundamentals.
They have thus been understandably cautious about
directing funds to regional PE firms. In fact, it is now
becoming clear that the Middle Eastern region's heady
growth over the last decade masked some critical
weaknesses in the PE industry.

 BUYOUT BETS WANE AS ECONOMY KEEPS LBOS
IN CHECK
(Dec. 7) -- Buyout speculation that sent credit derivatives on
companies from Cardinal Health Inc. to Dell Inc. soaring two
months ago is waning as rising unemployment keeps the
takeover revival in check. The average cost of credit-default
swaps on 15 companies including the Dublin, Ohio-based
drug distributor and the computer maker founded by
Michael Dell has declined 33 basis points to 148 basis points,
compared with a drop of 2.5 for a benchmark swaps index.
Contracts on Cardinal Health have plunged to 60 basis points
from 148.3 on Oct. 25. Bets on a surge in leveraged buyouts
are diminishing as the sluggish recovery limits private-equity
and bank deals.
 FORTRESS’ $5 BILLION BUYOUT LOSS HAUNTS
EDENS AS BLACK HAS GAIN
(Jun. 16) -- Fortress Investment Group LLC has $5
billion in unrealized losses from private-equity funds
started since 2005, the beginning of a two-year buyout
boom, more than its largest New York rivals combined.
Blackstone Group LP, the biggest private-equity firm, had
an unrealized loss of $861 million in the period and KKR
& Co.’s buyout funds are down $708 million, according to
regulatory filings in the past six weeks. Funds at Leon
Black’s Apollo Global Management LLC posted a profit.
The numbers, some disclosed for the first time, show
how the largest buyout firms have navigated the damage
from investments made before the 2007 financial crisis
and allow clients to compare performance as managers
seek new money.

2010 Private Equity Review * 13

AMERICAS
M&A REVIEW
 Notable Highlights Top Target Industry by Volume

• The Americas region announced over $1.1 trillion in Oil Exploration &
transaction volume in 2010. This represented of 12% Production
Consumer Non-
increase from 2009. $99.84
Cyclical $224.65

 The average deal size for transactions in the region for

2010 was $264 million, and buyers paid 9.29x EBITDA on
average for publicly traded targets.
Telephone
 Deals in the region were dominated by exploration & Medical - Integrated
production oil companies, with an aggregate volume of Biomedical $50.40
$99.70 billion for targets and $74.85 billion for acquirers. $41.26
The most prominent deal in this sector was the Petrobras
purchase of offshore Brazilian oil properties from the
Federative Republic of Brazil for $42.5 billion. Top Target Countries by Volume

 Private Equity buyers were the second most active Mexico

acquirers in the Americas, announcing over $78 billion $51.19
worth of deals. Canada
$81.12
 Company takeovers (61.57% in 2010 and 62.2% in 2009),
cross border deals (45.68% in 2010 compared to 39.88% in Brazil
2009) & asset sales (24.45% compared to 23.5% in 2009) $127.44
remain the top three M&A transaction types.
US
UK $675.36
$45.90

Top M&A Company Takeovers in the Americas

Announced
Deal Type Announce Date Target Name & Country Acquirer Name & Country Total Value Target Business Description
Acquisition 01/13/10 Carso Global Telecom SAB de CV America Movil SAB de CV $ 25.74 Telecom holding company
Mexico Mexico
Acquisition 04/22/10 Qwest Communications International Inc CenturyLink Inc $ 22.16 Telecom provider in US
United States United States
Acquisition 08/29/10 Genzyme Corp Sanofi-Aventis SA $ 18.24 Biotechnology product development
United States France
Divestiture 03/08/10 American Life Insurance Co MetLife Inc $ 12.59 Insurance coverage provider
United States United States
Acquisition 02/21/10 Smith International Inc Schlumberger Ltd $ 12.34 Oil & gas exploration and production
United States United States supplier
Divestiture 02/25/10 Coca-Cola Refreshments USA Inc Coca-Cola Co/The $ 12.24 Drink bottling and distribution
United States United States
Divestiture 01/19/10 Pipeline & Midstream Assets Williams Partners LP $ 11.81 Assets
United States
Acquisition 01/14/10 Alcon Inc Novartis AG $ 10.57 Develops, manufactures, & markets
United States Switzerland eye care & related products
Divestiture 05/11/10 Brasilcel NV Telefonica SA $ 9.56 Telecom provider in Brazil
Brasil Spain
Acquisition 02/11/10 Allegheny Energy Inc FirstEnergy Corp $ 9.22 Electric utility holding company
United States United States

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 M&A Review of the Americas * 15

 Notable Highlights Americas Target Multiples

 North American and Latin American / Caribbean Target Multiples # Deals Min - Max Median
companies received the most capital from other North Free Cashflow 357 .01 - 1925.25 29.30
American firms, totaling $611 billion in transaction volume Income B/F XO 366 .00 - 2300.54 22.40
and 7,106 in deal count.
Net Income 374 .00 - 2300.54 22.34
 North American acquirers targeted firms in Europe more EBIT 399 .00 - 983.92 13.51
than in any other region in 2010 while those in Latin Net Income + Deprec 452 .00 - 2300.54 13.43
America / Caribbean looked to North America for attractive Cashflow from Ops. 446 .00 - 1821.27 12.18
targets. EBITDA 405 .00 - 394.75 9.30
Book Value 639 .00 - 1391.42 2.23
 Cash was the most prominent payment type, with more
Stockholder Eqty 645 .00 - 811.87 2.15
than 70% of deals being paid in either cash alone, or a mix
of cash and stock. Revenue 626 .00 - 2193.78 1.57
Market Cap 621 .00 - 824.00 1.36
 The majority of premiums paid were below 10%, with 15% Enterprise Value 615 .00 - 62.52 1.26
of deals reporting announced premiums between 10-25% Total Assets 700 .00 - 1553.25 1.08
and nearly 30% of deals reporting premiums in the 25%-50%
range.
Americas Announced Premiums
 Between 2000 and 2010, the oil & gas industry dominated.
Premiums Paid # Deals Volume %
Its resilience from the 2003 low ($26 billion) is apparent
with its total volume reaching $176 billion in 2010. The >100% 34 4.5B 0.79
second best performer is the telecommunications industry 75.01-100% 30 5.25B 0.92
reporting $87 billion in 2010 M&A activity. Commercial 50.01-75% 63 40.28B 7.09
services fell into third place with $47 billion worth of deals 25.01-50% 168 171.31B 30.14
announced. 10.01-25% 89 86.52B 15.22
0-10% 5,787 260.61B 45.84

Monthly M&A Trend in the Americas: 2009 -2010

$160 Volume Deal Count 1,200

$140
1,000
$120
Deal Volume ($ Blns)

800 Deal Count (#)

$100

$80 600

$60
400
$40
200
$20

$0 -
Apr-09

Apr-10
Feb-09

Sep-09

Feb-10

Sep-10
Jun-09

Jun-10
Jul-09

Jul-10
Mar-09

Mar-10
Dec-09
Oct-09

Oct-10
Aug-09

Aug-10
Jan-09

Nov-09

Jan-10

Nov-10
May-09

May-10

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 M&A Review of the Americas * 16

 Regional Deal Type Summary 2010 Regional Capital Flow
Deal Type Summary # Deals Volume % $800 $746.70
Company Takeover 5,415 703.17B 62.03 $700
Cross Border 4,116 528.87B 46.65 $600
Asset sale 3,307 273.96B 24.17

Volume (Blns)
$500
Private Equity 1,167 165.55B 14.6
$400
Additional Stake Purchase 542 143.03B 12.62
Tender Offer 147 125.18B 11.04 $300
$211.04
Minority purchase 907 106.32B 9.38 $200
$102.10
Leveraged Buyout 325 86.00B 7.59 $100 $66.89
Majority purchase 58.79B 5.19 $7.17
461 $-
Joint Venture 254 21.42B 1.89 North LatAm Europe Asia Pacific Middle East
*All Total Value figures in USD Billions. America
*Data is as of November 30, 2010.

Top Regional M&A News

 BHP SAYS WON’T CHANGE ACQUISITION PLAN
AWAY FROM LARGE TARGETS
(Nov. 16) -- "Urbanisation and industrialisation are the key
drivers that are transforming the lives of people in…fast
developing countries including Indonesia, Mexico and
Turkey," Chief Executive Marius Kloppers said. BHP
abandoned its US$39 bln bid to take over Potash Corp. of
Saskatchewan Inc. the world's largest miner of the
commodity used mainly in fertiliser, after the deal was
blocked by Canada's government. Kloppers said the
Canada's minister for industry "would have required
undertakings that would have been adverse to our strategy
and counter to creating shareholder value…Now, the
combination of this simple company structure, an
organisation of talented people focused on what is
important, & portfolio’s shape, enables our growth.“
 PETROBRAS TO PAY BRAZIL $42.5B IN STOCK
FOR OIL RESERVES
(Sept. 22) -- Petroleo Brasileiro SA, agreed to pay the
Brazilian government $42.5 bln in new stock for the
right to develop 5 billion barrels of offshore oil reserves.
Petrobras will pay on average $8.51 a barrel for the oil.
The value set for the reserves will determine how much
new stock Petrobras must offer minority investors in a
related public offering to raise funds for a $224 bln plan
to develop offshore fields and boost refinery capacity.
The price is “certainly at the high end” of what investors
and analysts were expecting, said Gianna Bern,
president of Brookshire Advisory & Research Inc., based
near Chicago. “Market conditions right now are less
than desirable, but Petrobras has a good long-term
growth story.”

 PIMCO SAID TO SEEK $1B TO BUY TROUBLES
ASSETS FROM BANKS
(Nov. 19) -- Pacific Investment Management Cois raising at
least $1 bln for a private fund to buy troubled loans from
banks divesting assets to meet new rules. Pimco plans to
work with a loan servicer to renegotiate the terms of the
acquired debt directly with creditors. Financial institutions
are selling assets after the 27-nation Basel Committee on
Banking Supervision adopted standards in September that
will more the double the ratio of capital banks must hold in
relation to the amount of risk on their balance sheets.
Pimco’s institutional fund will target smaller lenders and
community banks, and won’t buy consumer debt such as
credit-card Pimco and auto loans.
 DYNEGY MAY SELL IN PIECES AFTER
BLACKSTONE BID FAILS
(Nov. 24) -- Dynegy Inc. , the third-largest U.S.
independent power producer, may need to sell itself
piece by piece after Blackstone Group LP’s $604.5 million
offer to buy the whole company was rejected. yesterday
voted down the $5-a-share Blackstone bid. The company
is seeking a new buyer and proposed immediate talks
with Icahn and Seneca… and also said it would consider
asset sales, cost cutting and debt restructuring to remain
a standalone company. Dynegy may be worth $9 a share
if it’s broken apart, Fishman said. Selling off the
company’s assets could take several years and provide
more value to shareholders.

2010 M&A Review of the Americas * 17

APAC
M&A REVIEW
 Notable Highlights Top Target Industry by Volume

 The developed and emerging economies of Asia Pacific

Life/Health
engaged in over 8,700 deals worth more than $594 billion. Oil Exploration &
Insurance
This is a 25% increase in volume compared to 2009, where $26.32 Production
there were 9,288 reported deals worth $477 billion. $38.60

 The average deal size for transactions in the Asia Pacific for
2010 was $95 million, and buyers paid 8.22x EBITDA on Reasl Estate
average for publicly traded targets. Operations
$29.36
 The financial industry experienced the highest M&A
Consumer Non-
activity, with acquirers paying over $150 billion to acquire
Cyclical $224.65
companies located in China, Australia, Japan, India, and the
United States.
Top Target Countries by Volume
 The largest deal in the region was Bharti Airtel's purchase
of Zain Africa BV from Mobile Telecommunications for $10.7
billion. China
US Hong $110.31
 Cross border deals represented 61% of all APAC M&A $37.21 Kong
volume, with over 3,600 deals worth $362 billion $35.12
announced. This is an increase from 2009 cross border M&A
activity, which took up 50% of overall M&A activity in the
Asia Pacific region. Japan
$65.57
 The top M&A targets in the Asia Pacific region were
companies located in China, Australia, and Japan, Australia
$84.07
announcing an aggregate of $259.95 billion in transactions.

Top M&A Company Takeovers in APAC

Announced
Deal Type Announce Date Target Name & Country Acquirer Name & Country Total Value Target Business Description
Divestiture 03/30/10 Zain Africa BV Bharti Airtel Ltd $ 10.70 African telecom operator
Kenya India
Acquisition 08/24/10 Simotomo Trust & Banking Co Ltd Chuo Mitsui Trust Holdings $ 9.20 Trust banking & commercial banking
Japan Japan services
Acquisition 04/01/10 Lihir Gold Ltd Newcrest Mining Ltd $ 8.96 Gold exploration & development
Papau New Guinea Australia
Acquisition 10/25/10 ASX Ltd Singapore Exchange Ltd $ 8.28 Operates Australia's national stock
Australia Singapore exchange & equity derivatives market
Acquisition 11/28/10 Pan American Energy LLC Bridas Corp $ 7.06 Holding co for oil & natural gas
United Kingdom Argentina & China development cos in Argentina
Acquisition 11/15/10 AXA Asia Pacific Holdings Ltd AMPH Ltd $ 6.12 Insurance & investment provider
Australia Australia
Acquisition 08/17/10 Pactiv Corp Rank Group Ltd $ 5.95 Consumer & foodservice/food
United States New Zealand packaging producer
Divestiture 09/30/10 Mutiple Targets Prudential Financial Inc $ 4.80 Multi-line insurance provider
United States & Japan United States
Acquisition 07/15/10 Intoll Group Canada Pension Plan Investment Board $ 4.63 Infrastructure investment group
Australia Canada
Acquisition 03/08/10 Arrow Energy Ltd Multiple Acquirers $ 3.32 Oil & gas exploration co
Australia China & Netherlands

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 M&A Review of APAC * 19

 Notable Highlights APAC Target Multiples

 Asia Pacific targets received over 7,700 M&A offers with Target Multiples Deals Min - Max Median
average premiums of 15.12%. The most foreign investment
came from North America, in which buyers transacted over Net Income 507 .00 - 2705.55 18.72
$47 billion worth of M&A deals. Income B/F XO 506 .00 - 1812.96 18.38
Free Cashflow 434 .01 - 1104.57 13.13
 Buyers in the Asia Pacific region have transacted over EBIT 514 .00 - 4520.64 12.93
7,800 deals from January to November 2010. On average, Net Income + Deprec 561 .00 - 1968.98 11.00
they paid 16.96% in premiums for deals. The average Cashflow from Ops. 578 .01 - 1115.75 9.24
disclosed size of deals is $89 million. There is a significant EBITDA 539 .00 - 2653.18 8.22
increase in volume compared to 2009, with $517 billion Book Value 886 .00 - 3609.59 1.59
worth of deals announced compared to $417 billion last Stockholder Eqty 889 .00 - 3609.59 1.54
year.
Market Cap 886 .00 - 135.46 1.22
 The most acquisitive country was China, which announced Enterprise Value 860 .00 - 148.56 1.15
over $144.52 billion of deals. Japan and Australia followed, Revenue 849 .00 - 2193.78 0.99
with $85 billion and $58 billion worth of transactions Total Assets 931 .00 - 1553.25 0.72
respectively.

 Top private equity deals within the region include the APAC Announced Premiums
buyout of Healthscope Ltd by TPG and Carlyle for A$2.5
Premiums Paid # Deals Volume %
billion. The most acquisitive buyer in this category is Sequoia
Capital, which announced 13 deals worth nearly $200 >100% 21 2.42B 0.9
million in M&A deals. 75.01-100% 20 1.69B 0.62
50.01-75% 36 11.38B 4.22
25.01-50% 99 54.77B 20.28
10.01-25% 92 35.34B 13.09
0-10% 3,594 164.45B 60.89

Monthly M&A Trend: in APAC 2009 -2010

$100 Volume Deal Count 1200

1000
$80
Deal Volume ($ Blns)

800 Deal Count (#)

$60
600
$40
400

$20
200

$0 0
Apr-09

Apr-10
Feb-09

Sep-09

Feb-10

Sep-10
Jun-09

Jun-10
Jul-09

Jul-10
Mar-09

Mar-10
Dec-09
Oct-09

Oct-10
Aug-09

Aug-10
Jan-09

Nov-09

Jan-10

Nov-10
May-09

May-10

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 M&A Review of APAC * 20

 Regional Deal Type Summary 2010 Regional Capital Flow
Deal Type Summary # Deals Volume % $500
$439.01
Cross Border 3,647 359.53B 60.76 $450

Company Takeover 278.36B 47.04 $400

2,897
$350
Additional Stake Purchase 1,589 122.08B 20.63

Volume (Blns)
$300
Asset sale 1,873 117.34B 19.83
$250
Majority purchase 1,217 92.47B 15.63
$200
Minority purchase 1,611 88.38B 14.94 $150
Private Placement 589 61.53B 10.4 $100
$49.93 $47.79
Tender Offer 240 55.62B 9.4 $50 $34.24 $22.02
Private Equity 346 32.86B 5.55 $-
Leveraged Buyout 47 14.84B 2.51 Asia Pacific North Europe LatAm Middle East
*All Total Value figures in USD Billions. America
*Data is as of November 30, 2010.

Top Regional M&A News

 THAILAND’S TAKEOVER SPREE SPREADS AS BAHT
GAINS
(Nov. 30) -- Thai companies have gone beyond their nation's
borders to buy assets at a faster pace than businesses
elsewhere in Southeast Asia, spurred by the baht's surge to a
13-year high. "It's an unimaginable wave of overseas
acquisitions," said Vana Bulbon, CEO at UOB Asset
Management (Thai) Co., "There will be more overseas
acquisitions with rising cash-flows at Thai companies and the
strengthening baht. Most companies were fighting to survive
bankruptcy a decade ago, and now they are on a takeover
spree." Acquisitions announced or completed by Thai
companies have totaled $8.38 billion so far this year,
compared with $1.29 billion for all of 2009, the data show.
PTT Exploration & Production Pcl this month agreed to buy
40 percent of Statoil ASA's oil sands project in Canada for
$2.28 billion, the biggest-ever Thai acquisition.
 CHARLES RIVER YO BUY WUXI PHARMATECH
FOR $1.6B
(Apr. 26) -- Charles River Laboratories International Inc.
agreed to buy WuXi PharmaTech (Cayman) Inc. for
about $1.6 billion to expand in China, where revenue
from drug-testing services is growing as much as 30% a
year. Charles River will pay $21.25 a share, comprising
$11.25 in cash and $10 in stock, for each WuXi American
depositary share,. the deal would be the largest foreign
takeover of a Chinese company. It would give Charles
River testing facilities in Shanghai, Suzhou & Tianjin in
China, where cheaper labor and laboratory costs are
luring the world's biggest drugmakers in search of new
blockbuster medicines. "This is a vote of confidence that
China will be the main location for drug R&D
outsourcing in the future,"said Jinsong Du, an analyst at
Credit Suisse Group AG.

 AIG MAY SELL JAPAN UNITS FOR $4.8B IN CASH
(Sept. 29) -- American International Group Inc. may reach a
deal as soon as today to sell two Japanese life insurance
units to Prudential Financial Inc. for about $4.8 billion in
cash. An agreement would cap two years of intermittent
talks for Star Life Insurance Co. and AIG Edison Life
Insurance Co. between Prudential CEO John Strangfeld and
New York-based AIG, said the people who declined to be
identified because the negotiations are private. The
transaction under discussion values the units at close to
their book value, a measure of assets minus liabilities.
Prudential "is the most overcapitalized life insurance
company that we cover"Randy Binner, an analyst said in the
second quarter, "they're the classic acquirer.”
 INDIAN BILLIONAIRES SAID TO WEIGH BIDS
FOR EVONIK CARBON BLACK
(Nov. 30) -- Companies controlled by Indian billionaires
Kumar Mangalam Birla and Rama Prasad Goenka are
considering making offers for the carbon black unit of
Germany's Evonik Industries AG. Phillips Carbon Black
Ltd., part of Goenka's RPG Group, and Aditya Birla Group
are among potential bidders for Evonik's carbon black
unit, which makes material used in tires and synthetic
rubber. A deal would add to the record $26.9 billion of
overseas acquisitions by Indian companies this year.
Evonik is selling the carbon black unit and its real estate
and energy businesses to concentrate on chemicals.

2010 M&A Review of APAC * 21

EMEA
M&A REVIEW
 Notable Highlights Top Target Industry by Volume

 EMEA region reported over $787 billion in transaction Consumer Banks

volume this year. This represented an 18% increase from - Non-Us $35.75 Oil Exploration &
2009, a total of $662 billion. Production
$54.39
 The average deal size for transactions in the region for
2010 was $250 million, and buyers paid 6.98x EBITDA on
average for publicly traded targets.
Electric -
Integrated
 Financial companies and integrated electric companies
$41.33
were the most acquisitive companies, with each totaling $61
billion and $55 billion respectively. In comparison, 2009 was Consumer Non-
Cyclical $224.65
dominated by sovereign acquirers ($90.59 billion) with
investment companies totaling only $58 billion.
Top Target Countries by Volume
 APAX Partners announced the most deals in 2010 (23) ; it
partnered with Bridgepoint Capital Ltd to acquire Histoire
D’Or from One NFL LLP for €600 million in July . US
Italy
$150.59
$41.55 France
 Cross border (84.85% in 2010 and 65% in 2009), company $28.89
takeover (50.85% in 2010 compared to 36.52% in 2009) &
asset sales (22.19% compared to 18.41% in 2009) remain Brazil
the top 3 M&A transaction types. $44.08

 Acquirers paid smaller premiums for targets in 2010.

8.85% of acquisitions have moved into of the 0 – 10% range UK
for premiums paid from 2009 to 2010, 2,927deals to 3,186 $123.10
deals, respectively.

Top M&A Company Takeovers in EMEA

Announced
Deal Type Announce Date Target Name & Country Acquirer Name & Country Total Value Target Business Description
Divestiture 08/10/10 GDF Suez Energy International International Power PLC $ 25.76 Alternate sources of energy
Belgium United Kingdom
Acquisition 10/04/10 Weather Investments SpA VimpelCom Ltd $ 21.99 Telecom & internet service provider
Italy Russia
Acquisition 08/29/10 Genzyme Corp Sanofi-Aventis SA $ 18.24 Biotechnology product development
United States France
Divestiture 03/30/10 Zain Africa BV Bharti Airtel Ltd $ 10.70 African telecom operator
Kenya India
Acquisition 01/14/10 Alcon Inc Novartis AG $ 10.57 Develops, manufactures, & markets
United States Switzerland eye care & related products
Divestiture 05/11/10 Brasilcel NV Telefonica SA $ 9.56 Telecom provider in Brazil
Brasil Spain
Acquisition 11/28/10 Pan American Energy LLC Bridas Corp $ 7.06 Holding co for oil & natural gas
United Kingdom Argentina & China development cos in Argentina
Acquisition 02/28/10 Millipore Corp Merck KGaA $ 6.81 Produces technology, tools, &
United States Germany sevices for drug companies
Acquisition 09/10/10 Bank Zachodni WBK SA Banco Santander SA $ 5.35 Commercial banking services
Poland Spain
Acquisition 05/12/10 Sybase Inc SAP AG $ 5.32 Computing solutions provider
United States Germany

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 M&A Review of EMEA * 23

 Notable Highlights EMEA Target Multiples

 The European region kept most of its capital within the Target Multiples Deals Min - Max Median
region, paying $295 billion for other European targets in Free Cashflow 272 .01 - 1821.27 22.19
2010. The Middle East / Africa region acquired targets in
Net Income 352 .00 - 2749.56 17.74
North America for a total of $2 billion.
Income B/F XO 343 .00 - 2749.56 17.69
 European targets were the second most pursued targets, EBIT 355 .00 - 2898.84 12.53
attracting $45 billion in 311 deals in 2010. Net Income + Deprec 395 .00 - 2300.54 11.33
Cashflow from Ops. 353 .00 - 1821.27 11.26
 2009’s economic slump severely affected the M&A EBITDA 355 .00 - 2653.18 8.28
market. It totaled only $663 billion as compared to over $2 Book Value 513 .00 - 811.87 2.11
trillion in 2007. The 2010 exit from the global recession Stockholder Eqty 515 .00 - 811.87 2.06
positively affected the M&A market. Deal volume increased
Revenue 499 .00 - 3372.09 1.52
19.5%.
Market Cap 471 .00 - 154.47 1.20
 2003 was the only other year between 2000 and 2010 that Enterprise Value 456 .00 - 74.19 1.13
matched the M&A low of 2009 ($731 billion). Total Assets 539 .00 - 154.83 0.87

 Over a ten year period, investment companies have

maintained a volume range between $8.9 billion and $2.7 EMEA Announced Premiums
billion, reaching its lowest point in 2002. The oil & gas
Premiums Paid # Deals Volume %
industries, however, were much more volatile over the
decade moving from a peak in 2000 ($231.5 billion) its >100% 34 4.5B 0.79
lowest in 2002 ($86.5 billion); it has pursued an upward 75.01-100% 30 5.25B 0.92
trend and now accounts for $86.5 billion in M&A activity. 50.01-75% 63 40.28B 7.09
25.01-50% 168 171.31B 30.14
10.01-25% 89 86.52B 15.22
0-10% 5,787 260.61B 45.84

Monthly M&A Trend in EMEA: 2009 -2010

$120 Volume Deal Count 800

700
$100
600
Deal Volume ($ Blns)

$80 Deal Count (#)

500

$60 400

300
$40
200
$20
100

$0 0
Apr-09

Apr-10
Feb-09

Sep-09

Feb-10

Sep-10
Jun-09

Jun-10
Jul-09

Jul-10
Mar-09

Mar-10
Dec-09
Oct-09

Oct-10
Aug-09

Aug-10
Jan-09

Nov-09

Jan-10

Nov-10
May-09

May-10

*All Total Value figures in USD Billions.

*Data is as of November 30, 2010.

2010 M&A Review of EMEA * 24

 Regional Deal Type Summary 2010 Regional Capital Flow
Deal Type Summary # Deals Volume % $450 $415.11
Cross Border 4,620 662.44B 84.82 $400

Company Takeover 3,239 396.82B 50.81 $350

Asset sale 1,591 173.78B 22.25 $300

Volume (Blns)
Additional Stake Purchase 621 108.67B 13.91 $250
Minority purchase 886 104.93B 13.43 $200 $163.65
Tender Offer 169 93.73B 12 $150
Private Equity 699 92.42B 11.83 $100 $70.97 $67.11 $65.11
Majority purchase 649 70.67B 9.05 $50
Reverse Merger 28 29.91B 3.83 $-
Leveraged Buyout 171 27.92B 3.58 Europe North Middle East LatAm Asia Pacific
*All Total Value figures in USD Billions. America
*Data is as of November 30, 2010.

Top Regional M&A News

 BARCLAYS SETPS UP IN HIRING RUSSIA IN
LEADERSHIP BID
(June 18) -- Barclays Plc, the U.K.'s third-largest lender, will
hire dozens of bankers in Russia as it seeks to become the
leading foreign investment bank in 2 to 3 years, local chief
Bob Foresman said. "We will need to have over 100 people
just in the broker-dealer,"Foresman. He is overseeing "very
aggressive strategy" in Russia. Barclays of London is
stepping up hiring as the economy of the world's biggest
energy exporter rebounds from a record 7.9% contraction
last year, bolstered by higher oil and metals prices.
Barclays rival VTB Group is looking to recruit 250 bankers as
it merges its investment and corporate units, Yuri Soloviev,
CEO of the state-run bank's investment arm. “We have
every intention to set up a sales, trading & research team on
the equity side & build our own platform,” said Foresman.
 ALBERTIS LOAN SHOWS BANK APPETITE FOR
MERGERS
(July 7) -- Banks committed as much as €7 billion ($8.8
billion) in loans to fund the acquisition of Spain's Abertis
Infraestructuras SA as lenders boost financing for
takeovers and shrug off concern that a slowing economy
will weaken credit markets. Its two main shareholders &
CVC Capital Partners Ltd. are in talks with banks for the
biggest leveraged buyout financing commitment since
May, when Blackstone LP lined up $10 billion of debt to
back a failed takeover bid of Fidelity National
Information Services Inc. The transaction may signal that
banks from around the world have diminished concern
that Europe's fiscal crisis will slow the global economic
recovery or that stress tests on the region's financial
institutions will reveal inadequate capital.

 SANOFI SID TO WEIGH HIGHER TAKEOVER BID
FOR GENZYME
(Sept. 29) -- Sanofi-Aventis SA is weighing whether to make
a sweetened takeover offer for Genzyme Corp. as soon as
next week, said people with knowledge of the matter.
France's largest drugmaker is leaning toward raising the
current $69/share offer by $1 or $2. Genzyme rejected
Sanofi's Aug. 29 offer, which valued the U.S. biotechnology
company at $18.5 billion, as too low. Sanofi hasn't ruled out
making a hostile offer, though would prefer friendly
negotiations with Cambridge. An increased bid would come
after Sanofi CEO Chris Viehbacher held meetings in the past
month with Genzyme investors. Sanofi has the financing it
needs for an offer. It lined up about $10 billion of loans from
JPMorgan Chase & Co., BNP Paribas SA, and Societe
Generale SA.
 BAIN CAPITAL SAID CLOSE TO PURCHASE
RBS’S PRIORY GROUP
(Nov. 30) -- Bain Capital LLC may be close to a deal to
acquire Priory Group Ltd., the U.K. operator of mental-
health and addiction clinics being sold by RBS Group. RBS
went back to previous bidders including Advent
International Corp. & Blackstone Group LP last week
after Bain sought a lower purchase price. Priory attracted
offers of less than £1 billion ($1.55 billion), and RBS had
been seeking about £1.1 billion pounds. RBS took over
Priory, from ABN Amro Holding NV when it bought the
Dutch bank in 2007. RBS is selling assets including bank
branches and its credit card payment processing unit
after taking £45.5 billion of U.K. government funding
during the global financial crisis, more than any other
bank in the world.

2010 M&A Review of EMEA * 25

THE YEAR IN
OPINIONS
 2011 M&A Optimism
Ingrassia Sees More Optimism in Corporate Boardroom
Commentary by Michael J Moore & Jeffrey McCracken
(Sept. 30) -- Corporate boards are more optimistic
about prospects for the U.S. economy than the general
public is, said Timothy J. Ingrassia, head of mergers and
acquisitions in the Americas for Goldman Sachs Group Inc.
"I do think there's a little more optimism in the
boardroom than you read in the newspapers,"Ingrassia,
46, said at the Bloomberg Dealmakers Summit in New
York. "We've sensed a significant pickup in the
brainstorming and white- boarding around activity that
gives us some optimism about the merger market looking
forward.“
The third quarter was the busiest in two years for mergers,
with $566.5 billion of announced transactions. BHP Billiton
Ltd. made an unsolicited $40 billion offer for Potash Corp.
of Saskatchewan Inc., Sanofi- Aventis SA began its pursuit
of Genzyme Corp. for at least $18.5 billion, and Intel Corp.
announced its largest acquisition, the $7.7 billion takeover
of security-software maker McAfee Inc.
With almost $3 trillion of cash, companies drove a 60
percent increase in takeovers from a year ago. Record-low
borrowing costs encouraged dealmaking as the Standard
& Poor’s 500 Index headed for its best September since
1939. Even more important will be the pace of economic
recovery, Peter Weinberg, founding partner of Perella
Weinberg Partners LP, said today at the conference.
"The big question mark is, where are we going and
where is the economy going,"Weinberg, 53, said. "The
success of any merger will be determined more so by the
environment than by the deal price. Though there are
many factors that suggest a significant increase in activity,
there's still one big question out there that's on
everybody's mind."
The U.S. economy grew at a 1.7 percent annual rate in
the second quarter, marking the start of a slowdown in
growth that has concerned the Federal Reserve. That's
down from a 3.7 percent rate in the first quarter and 5
percent in last year's fourth quarter.
In boardrooms, there is a reluctance to get involved in
significant transactions because of the lack of certainty,"
Martin Lipton, 79, founding partner of Wachtell, Lipton,
Rosen & Katz, said at the conference. "I personally doubt
there will be great increases in activity in M&A until we
have a restoration of confidence as to where the economy
is going.“
'Real Health'
The financial system is in a slow state of recovery and
areas such as basic middle-market lending are "very, very
long way from real health,” Evercore Partners Inc.
Chairman Roger Altman, 64, said.
Commercial and industrial loans at U.S. banks fell 24
percent from their 2008 peak to $1.24 trillion as of August.
Completed global deals were $1.16 trillion so far this
year, up 3.6 percent from a year earlier.. Total announced
takeovers were $1.49 trillion in the first nine months of
2010, compared with $1.76 trillion in all of 2009.
Financial institutions and health-care companies will be
among the most active sectors, Weinberg said.
Lazard Ltd. Vice Chairman Gary W. Parr said the pace of
financial-industry takeovers will be held back by doubts
over the value of bank assets and questions about new
capital requirements from regulators.
New Capital
Banks worldwide will need $500 billion to $1 trillion of
new capital over the next few years after having raised
about $1.6 trillion since the financial crisis, Parr said.
Regulators may push for higher capital levels faster than
proposals from the Basel Committee on Banking
Supervision, which phase in the new requirements from
2013 to 2023, he said.
'A lot of regulators around the world are applying
pressure to their regulated entities and saying that we
want you to be better capitalized sooner,"Parr said. Banks
could get the capital from earnings if given enough time,
as U.S. and European lenders together generate about
$400 billion a year in net income, Parr said.
Tony James, president of Blackstone Group LP, said there
isn't enough capital available from investors to fund all the
opportunities he sees in the market, while Carlyle Group
co-founder David Rubenstein said private-equity firms are
having to cut their fees as fundraising becomes more
difficult.
Thomas Barrack, chairman of private-equity firm Colony
Capital LLC, said his best investment opportunities can be
found in the U.S.
‘A lot of regulators around the
world are applying pressure to
their regulated entities and saying
that we want you to be better
capitalized sooner’
- Gary W Parr, Lazard Ltd
Commentary: A Year in Opinions * 27
 2011 M&A Optimism (cont’d)
S&P Rally
The S&P 500 Index rallied 80 percent from its bear
market low in March 2009 through April 23 of this year,
data compiled. The benchmark gauge for U.S. equities
then retreated 16 percent through July 2 and has since
rebounded 12 percent.
"They are more confident that we'll be in a sluggish
environment as opposed to a double-dip," said Blair
Effron, co-founder of Centerview Partners. "If you ask
most companies, they'll say that the next five years will be
much more difficult than the five years before the
downturn."
Wall Street will probably have to eliminate about
80,000 jobs in coming months and year-end bonuses will
"disappoint dramatically,"Meredith Whitney, founder of
Meredith Whitney Advisory Group, said.
‘The best way to play this game is
to invest in companies whose
financial characteristics make
them attractive to potential
buyers’
- John Dorfman
Possible M&A Targets
Attractive Stocks Likely to Be Takeover Targets
Commentary by John Dorfman
(Oct. 4) -- Before I became an investment manager 13
years ago, I spent a decade as a reporter at the Wall Street
Journal. I had a rival at another newspaper who frequently
wrote about takeover rumors.
One day he filed a story saying that Coca-Cola Co. might
buy Wendy's, the fast-food chain. Coca-Cola responded
with a statement, which I framed and have held onto all
these years. The Atlanta-based soft drink giant said that its
policy was not to comment on such speculation, and that
in this case it wanted to add that the reporter "does not
have a clue.“
People who invest based on unconfirmed reports about
possible mergers or acquisitions often do themselves a
disservice. If even well-connected pundits are often
wrong, imagine how far you can go astray if you act on
such gossip, whether it comes from friends, acquaintances
or stockbrokers.
It's natural to try to pick stocks that will become takeover
bait. If you succeed, it can be very lucrative: purchases
usually occur at a 20 percent to 70 percent premium over
the previous day's trading price.
And now is a good time to seek out such opportunities.
The third quarter was the busiest for M&A activity in two
years.
The best way to play this game is to invest in companies
whose financial characteristics make them attractive to
potential buyers. Frequently these are stocks you would be
happy to own even if no deal were imminent.
Finding Targets
Last week, I ran a screen to identify such situations.
I looked for companies with an enterprise value no more
than six times Ebitda. Enterprise value is the market value
of a company's stock, plus the total of its debt. It gives an
approximation of what one company must pay to acquire
another.
Ebitda is earnings before interest, taxes, depreciation and
amortization. Some investors consider it a truer
representation of a company's value than earnings under
generally accepted accounting principles, or GAAP earnings.
For most purposes, I usually prefer GAAP earnings
because I consider interest, taxes and depreciation real
things, not phantoms. In takeover situations, however,
Ebitda may be a better measure.
An acquirer may not care much about those factors
because they may be nullified or changed after the
acquisition. For example, the buyer might pay off the target
company's debt, and not have to worry about interest
charges thereafter.
Key Characteristics
To make sure my potential takeover targets were not too
big or too small for acquirers' taste, I restricted my search to
U.S. companies with a market value from $500 million to $5
billion.
I also looked for ones that sell for 15 times earnings or
less, have cash or safe short-term investments of at least
$50 million, and have debt less than stockholders' equity.
Those characteristics make a company more attractive to
a potential acquirer -- and they are good things to see even
if no one comes courting. When I ran the screen, 75
companies made the cut.
Several were for-profit education companies: ITT
Educational Services Inc. of Carmel, Indiana; Education
Management Corp., based in Pittsburgh; Career Education
Corp. in Hoffman Estates, Illinois; and Corinthian Colleges
Inc. of Santa Ana, California.
Commentary: A Year in Opinions * 28
 Possible M&A Targets
Opportunities Pop Up
Another is Washington Post Co., which is known as a
media company yet gets more than half its revenue from its
Kaplan Higher Education unit.
Education stocks have been popping up on value screens
for weeks. They are cheap because the U.S. government
may end aid to schools whose students are too slow
repaying federally backed education loans, or whose
students have low job-placement rates.
In response to criticism that they recruit students
indiscriminately, including some who have little chance of
benefiting from their programs, several for-profit schools
have begun no-fee provisional enrollment programs or
instituted special training sessions to enhance the study
skills of entering students.
The biotech firm Cephalon Inc. is the largest company on
the list, with a stock-market value of about $5 billion. Based
in Frazer, Pennsylvania, its drugs treat pain, cancer and
central nervous system disorders. The company’s most
successful product is Provigil, a drug that combats
narcolepsy.
Attractive Valuations
A few years ago I sold Cephalon shares short, betting on
a decline. At that time the stock was expensive, trading at
20 to 40 times earnings. I was also concerned about off-
label use of Provigil by truck drivers and others trying to
induce wakefulness. I'm still concerned that if the U.S.
regulators crack down, Provigil would quickly lose a lot of its
sales, but valuations are now favorable with the stock
priced at 11 times earnings.
Information-technology stocks that look like potential
takeover candidates include Teradyne Inc., a North
Reading, Massachusetts-based maker of semiconductor
test equipment; Tech Data Corp., a Clearwater, Florida,
distributor of technology products; and Malvern,
Pennsylvania-based Vishay Intertechnology Inc., which
makes transistors, capacitors and other electronic
components.
Disclosure note: I have no long or short positions in the
stocks discussed above, personally or for clients. Four
stocks that I own did make the 75-stock list: Endo
Pharmaceuticals Holdings Inc. of Chadds Ford,
Pennsylvania; GT Solar International Inc. of Merrimack, New
Hampshire; Mirant Corp. of Atlanta; and Rowan Cos. in
Houston. Most of these have been discussed in previous
columns.
Returns on LBOs
Buyout Firms Still Manage to Finagle Hefty Return
Commentary by David Pauly
(Nov. 11) -- Leveraged buyout firms are struggling. They
have been begging lenders for better terms on the heavy
debts of companies they control. An iffy stock market
prevents them from unloading their investments on the
public.
Not all is lost, though. KKR & Co., Bain Capital LLC and
Bank of America Corp. have pretty much recouped their
2006 investment as major players in HCA Inc., the biggest
U.S. hospital chain.
You won't be surprised to know they are doing it by
paying themselves dividends out of HCA's pocket and
adding still more to the hospital company's debt.
HCA, based in Nashville, Tennessee, this week said in a
Securities and Exchange Commission filing it plans to pay its
owners, including associates of HCA co-founder Thomas F.
Frist Jr., and key executives a $2 billion dividend.
HCA distributed $1.75 billion to these same folks in
February and paid an additional $500 million to them in
May.
The LBO investors initially said they would put up $5.3
billion for their buyout of HCA, borrowing the rest of the
$33 billion cost. A later filing with the SEC indicates they
may have invested less.
HCA's three distributions this year total $4.25 billion. If
KKR and the others did invest $5.3 billion, they have earned
back 80% of that in four years. If they invested less, they
may already have gotten most of their money back. The
person I spoke to at HCA was unable to help me pin this
down.
The health-care company's total debt was already $26.1
billion as of Sept. 30.
Vital Signs
HCA is healthy enough, considering all its borrowings.
In the third quarter, the company said it earned $243
million on revenue of $7.65 billion. HCA executives say
the new U.S. health-care law will help the company by
forcing more patients to have medical insurance.
Let's hope that HCA treats the patients at its 162
hospitals and 104 surgery centers as well as it does its
stakeholders.
The company's executives benefited from the 2006
buyout right away. They took advantage of the change-of
Commentary: A Year in Opinions * 29
 Possible M&A Targets
control provisions of the deal that enhanced their company
holdings by immediately vesting options and restricted
shares. Jack Bovender Jr. got $46 million in such benefits as
the company's chief executive while then-president Richard
Bracken made $20 million. As its chief executive last year,
Bracken's salary and other pay totaled $12.3 million.
Generating Fees
Let's not forget those major stakeholders in all LBOs: Wall
Street firms. They invest in the acquired companies. They
get adviser fees on the deals. They earn fees for selling
bonds to the bought-out companies and make more fees for
taking them
public again.
HCA is half-way through the LBO process for a second
time. It went private in 1989 and public again in 1992. Last
May it announced plans for a public sale of $4.6 billion in
shares but hasn't done so because of the tepid initial
offering market.
A successful IPO might allow KKR and HCA's other
investors to get an additional return of as much as $2.1
billion by selling some of their shares. HCA said $2.5 billion
of the sale would be in new shares earmarked for debt
payment.
The preliminary notice for the IPO stated that after the
sale, HCA had no plans to pay dividends. No need: KKR, Bain
and Bank of America already have done very well on their
original stake in HCA, in spite of the unruly times.
Focus on Private Equity
KKR Sale Means End of Private-Equity Stardom
Commentary by Roger Lowenstein
(Aug. 3) -- The public stock offering of KKR & Co. put me in
mind of three vexing questions.
First, if KKR is based on the premise that private equity is a
better, more efficient form of organization, why did KKR
itself go public?
Second, is there evidence that private equity is truly
better? Does society benefit? Do investors? Or only the fund
managers who pocket those gargantuan fees?
Third, what happened to Congress's plan to end the tax
break that benefits managers of private-equity funds, as
well as other investment funds? Will it summon the guts to
tax billionaires at the same rate as other wage-earners?
Private equity has its roots in the leveraged-buyout fad of
the 1980s. The premise was that public-company chief
executives weren't sufficiently rewarded for success, and
thus had let their companies drift. Perhaps a small division
of a big public company was overlooked, or starved for
capital, and would perform better if it were the sole focus of
manager-owners. Or maybe the CEO was so insulated from
market pressure, or fattened with guaranteed bonuses, he
had no incentive.
Henry Kravis, a KKR founder, and like apostles preached
the remedy of going private. Give managers a piece of the
action and, surely, their capitalist juices would stir. Since not
even the KKRs of the world could replace the public equity,
most of the enterprise was financed with debt.
Not that this was cause for alarm. Lots of debt meant lots
of interest, which cut the tax man's take. Better still,
leverage magnified gains. Admiring scholars added a
beguiling coda: high levels of debt were actually a plus, as
the ever-present risk of bankruptcy would keep managerial
minds focused.
Celebrated Essay
In a celebrated 1989 essay, Harvard's Michael Jensen
predicted the 'Eclipse of the Public Corporation.' Jensen's
enthusiasm proved to be the peak. As early deals begat high
profits, capital rushed in, pushing up buyout prices. Deals
such as KKR's acquisition of RJR Nabisco didn't make sense,
not that that cooled the dealmakers' ardor.
In a trend that troubled even Jensen, buyout kings --
supposed paragons of capitalist virtue -- were pocketing
princely fees upfront (rather like the slothful, public CEOs
they were replacing) and irrespective of eventual results. In
1990, the buyout market crashed. LBOs with too much "L"
experienced the dubious charm of bankruptcy.
Then, after a mild recession, buyouts returned. This
second wave was distinguished by two subtle changes.
Sloths Disappear
First, public-company CEOs, under pressure to raise their
stock prices, were no longer so slothful, if ever they had
been so. They were cutting costs, spinning off divisions that
didn't fit -- the very tricks employed in LBOs. This left fewer
companies susceptible to formulaic, easy improvement.
But the buyout artists were emboldened by the second
change. Miraculously, they were 'LBO" firms no more; they
had been reborn as "private equity." The new name
conjured up an image of baronial elegance, as if merely to
invest with a Stephen Schwarzman was to enter a satiny
world of quiet money and managerial brilliance.
Ultimately, Schwarzman bolted for the grubbier, but
more bountiful, world of public markets. Blackstone Group
Inc., the private-equity firm he co-founded, got a jump on
KKR, going public in 2007. Evidently, buyout kingpins are
anxious for an exit strategy, which public shares enable.
The industry has never escaped its boom-to-bust pattern.
Strong returns in the early 1990s attracted competition,
Commentary: A Year in Opinions * 30
 Possible M&A Targets
leading to lower returns later in the decade. The cycle was
repeated in the 2000s, as deals struck in the easy-credit
environment of 2006-2007 collapsed.

Index Funds
How does the record look overall? Steven Kaplan, a
University of Chicago Business School professor, has been
studying private equity since the late 1980s. Kaplan’s
findings: some firms solidly beat the pack, though the
industry as a whole bests the stock market by only a modest
amount. And after fees, outside investors would do as well
or better with their money in an index fund that tracks the
Standard & Poor’s 500.
There is no doubt, Kaplan adds, that private-equity firms
add operational improvements. But the gains are given back
at the outset, in the premiums paid to acquire targets. And
as public-company managements have improved, the gap
between private and public efficiency has probably
narrowed.
In sum, private equity adds modest and probably only
temporary efficiencies. As a social good, this isn't exactly
curing cancer.
Which brings us to the issue of taxes. Whereas the feds
tax ordinary income at up to 35%, capital gains on
investments held for more than one year are taxed at only
15%, a rate designed to attract investment in capital
markets.

Undeserved Break
Managers of private-equity funds, and of other
investment partnerships, enjoy an undeserved exception.
The performance fee they charge investors, typically 20
percent of profits, is treated as a capital gain and taxed at
the lower rate. This makes no economic sense; an outside
investor has the same incentive to participate regardless of
the tax paid by the manager. It makes sense only if you are
Henry Kravis and prefer to pay less.
The House of Representatives has voted three times to
end this unwarranted privilege. After the financial crisis, the
Senate seemed likely to concur. Then, industry lobbyists
stormed Congress. The matter now rests with the Senate
Finance Committee. Since nothing is more arbitrary than the
proper rate at which to tax, the only sure principle is
consistency: what one party pays, so should the other.
No great industry is at stake -- private equity is hardly the
engine of job creation its flag-waving lobby maintains, and
the industry will survive at any rate. The only principle at
stake is fairness: billionaires should pay as much as
everyone else.

Commentary: A Year in Opinions * 31

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