Professional Documents
Culture Documents
Jan
Feb 2012
Mar
Apr
WHATS INSIDE
Back from the Brink A Lesson from Lehman S&P 500 Companies Show Above-Average Credit Ratings Strength Sector Snapshots and Performance Graphs M&A and Private Capital Activity
MARKET OBSERVATIONS
Monthly compilation of high-level perspectives on M&A, public equity, private capital, and the capital markets.
EDITORS NOTE
With a new year unfolding and past performance being no indicator of future success, we welcome your continued input on content you would be interested in seeing in future issues of the MMO. This month, in addition to our regular content, two of our chief strategists offer contrasting perspectives for consideration. One, a rather convincing raft of wide-spread, positive indicators and an accompanying, nascent migration from capital preservation to growth strategies. The other, a cautionary tale of what we could expect if current market conditions turn out to be a red herring. You decide!
- Editorial Team
CONTACT INFORMATION Kaitlin Carlin- Production Editor kcarlin@spcapitaliq.com Cara Kiewel- Communications Director ckiewel@spcapitaliq.com Subscriptions and General Inquiries marketobservations@spcapitaliq.com
S&P Capital IQ clients can access the M&A data contained in Market Observations, as well as export customizable versions of our charts from the S&P Capital IQ platform. Navigation Tip: S&P Capital IQ> Markets tab > Visualizations: Market Observations
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
TABLE OF CONTENTS
Back from the Brink (pg 4) S&P Capital IQ Global Equity Strategist Alec Young shows how the year-to-date global equity markets have shown a striking role reversal since 2011. A Lesson from Lehman (pg 10)
S&P Capital IQs Valuation Chief Equity Strategist Sam Stovall takes a look back at the tumultuous month of November.
S&P 500 Companies Show Above-Average Credit Ratings Strength (pg 12) Diane Vazza, Managing Director, and Evan Gunter, Associate, discuss companies in the S&P 500 that have strong credit profiles. Sector Snapshots (pg 23)
Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Chart 1.
2011
YTD
Global Equity Strategist, Alec Young Year-to-date global equity performance has been marked by a striking role reversal. Last years higher-beta, cyclical laggards have surged to the front of the pack as risk aversion has receded globally. Conversely, 2011s defensive, counter-cyclical leaders have largely faded in the new-year. Specifically, after badly underperforming in 2011, developed international stocks are handily outperforming the S&P 500s 5.4% gain with a 7.5% year-to-date advance (in USD). Even more surprising to most, Europe is beating the U.S., rising 7.5%, led by Germanys 14.2% surge. Digging deeper, emerging market (EM) stocks have rebounded most, sporting an impressive 13.9% gain in the wake of last years 20.4% drubbing (see chart 1). Representing roughly 50% of the EM equity asset class, the BRIC nations are fueling the turnaround, rising 17% after last years 24.9% slide. Sector performance has been marked by a similar dynamic, with cyclical areas like Financials, Materials and Industrials surging to the front after trailing badly last year. Conversely, defensive sectors like Consumer Staples, Health Care and Telecom, last years stalwarts, have fallen to the wayside as risk aversion has dimmed in 2012 (see table 1). Not surprisingly, this stark performance shift has coincided with a dramatic decline in global equity volatility, as the bunker mentality that gripped investors in 2011 has receded. Trailing 60-day standard deviations for both developed and emerging market equities have declined to about 20 from readings in the mid 30s in early November. The standard deviations of both asset classes are now nearing their respective long-term averages in the high teens (see chart 2). Equity volatility has plunged in all major overseas markets, including Canada, Germany, the U.K., Japan, Australia, China, India, Brazil and Russia. Even France, Italy and Spain have gone along for the ride.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 4
Table 1
Sector Materials Financials Consumer Disc. Industrials Info. Tech. Energy Utilities Health Care Consumer Staples Telecom INDEX
YTD 13.2% 11.4% 10.6% 9.9% 6.0% 5.1% 2.6% 2.3% 1.4% -0.7% 7.7%
2011 -23.8% -22.3% -14.7% -17.0% -16.8% -7.4% -20.7% 1.8% 0.8% -6.7% -14.9%
Chart 2
35 30 25 20 15 10 5 0
Ma y11
Jul -11
Jun-1 1
Ma r11
De c-1 1
A pr - 1 1
F e b- 1 1
Se p-1 1
Oct -1 1
Ja n-1 2
Aug-1
N ov-
EAFE Volatility*
EM Volatility*
LT EAFE Avg.
LT EM Avg.
F e b- 1 2
11
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Chart 3
(,blns.)
8 7 6 5 4 3 2 1 0
Italy 2 Yr. Bond Yld. (RHS) Spain 2 Yr. Bond Yld. (RHS) ECB BALANCE SHEET (LHS)
A pr - 1 1 Ma y11
Oct -1 0 De c-1 0
Ja n-1 1
Jul -11
Ma r11
Aug-1
N ov-
De c-1 1
Se p-1 1
F e b- 1 2
11
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Ma y07
Ma y08
Ma y09
Ma y10
Ma y11
Ja n-0 8
Ja n-0 9
Ja n-1 0
Ja n-1 1
Se p-0 7
Se p-0 8
Se p-0 9
Se p-1 0
Emerging markets have clearly been the stars of the show year-to-date, outperforming the S&P 500 and developed international equities by 850 bps and 640 bps, respectively. Easing inflation (see chart 5) has been the spark, in our view, as several months of falling prices have led key central banks to signal a greater willingness to ease monetary policy to revive slowing economic growth.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Se p-1 1
Ja n-1 2
Chart 5
16 14 12 10 8 6 4 2 0 -2 -4
China Y/Y CPI India Y/Y WPI* Brazil Y/Y CPI Russia Y/Y CPI
F eb-0 9 Ap r-0 9 Jun -0 9 Au g-0 9 Oct-0 9 D ec-0 9 F eb-1 0 Ap r-1 0 Jun -1 0 Au g-1 0 Oct-1 0 D ec-1 0 F eb-1 1 Ap r-1 1 Jun -1 1 Au g-1 1 Oct-1 1 D ec-1 1
*wholesale inflation
Lastly, we think attractive valuations have helped set the stage for 2012s strong start. While low valuations alone rarely make assets rise, they help create the foundation for alpha once bullish catalysts emerge. After last years swoon, overseas stocks were priced for extremely negative macro economic outcomes ranging from a global credit crunch to a Chinese hard landing, by our analysis. As these risks have receded we think low valuations have made it easier for foreign stocks to snap back impressively. Even after the year-to-date bounce, developed and emerging market equities are trading at only 11.1X and 10.2X 12-month forward consensus EPS, respectively, both discounts to their long-term averages (see chart 6), giving us confidence the gains are sustainable even as the pace of the advance likely slows.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
16 12 8 4 EAFE 12 Mo. Forward P/E EM 12 Mo. Forward P/E EAFE LT Avg. EM LT Avg.
F e b- 0 7 Jun-0 7 Oct -0 7 F e b- 0 8 Jun-0 8 Oct -0 8 F e b- 0 9 Jun-0 9 Oct -0 9 F e b- 1 0 Jun-1 0 Oct -1 0 F e b- 1 1 Jun-1 1 Oct -1 1 F e b- 1 2
Source: Bloomberg
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Source: S&P Capital IQ, MSCI, Bloomberg. Past performance is no guarantee of future results.
During the fourth quarter of 2008, the S&P declined 22.6% in price, which was the worst quarterly price performance since the 23.2% drop during the fourth quarter of 1987. In addition, the 500 sequentially sank 9.1%, 16.9%, and 7.5% in price in September, October and November of that year, as the market anticipated, and then responded to, the Lehman collapse. During that three-month stretch, there was but one place to hide among global assets. Other than U.S Treasury bonds the iShares Barclays 20+Year U.S. Treasury Bond Fund (TLT 119, NR) gained nearly 13% during those three months 12 other global asset classes declined more than 7.6% on a total return basis.
Source: Bloomberg
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Table 1
Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total
Data as of January 31, 2012. Source: Standard & Poor's Global Fixed Income Research and S&P Capital IQ.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Table 2
Data as of January 31, 2012. Source: Standard & Poor's Global Fixed Income Research and S&P Capital IQ.
Rated Companies On The S&P 500 Are Predominantly Investment Grade Although the majority of S&P 500 companies is investment grade, the ratings have declined since 2008, just as the ratings on most companies Standard & Poor's rates have declined. Within the S&P 500, the share of companies rated 'AA' or 'A' has declined to 32% from 37%, while the share of 'BBB' rated entities has increased to 41% from 36%. Despite this shift, the median rating has remained 'BBB+' for the S&P 500 companies--three notches higher than the median rating of 'BB+' for all rated U.S. companies.
2008
2005
%-Rated 87 91 85
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Chart 2
AA
BBB
BB
Current 5 yr Treasury Yield
10
12
14 (%)
16
18
20
22
24
26
28
All OAS (option-adjusted spreads) are calculated off the reference five-year Treasury yield. 'AAA' rated entities are not shown owing to small sample size. Range width in each rating category represents the minimum and maximum points of corporate bond yields in the period Jan. 31, 2011- Jan. 31, 2012. Source: Standard & Poor's Global Fixed Income Research.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Chart 3
Data as of January 31, 2012. Source: Standard & Poor's Global Fixed Income Research and S&P Capital IQ.
Total debt of the S&P 500 companies declined to $6.9 trillion at the end of 2011 from $9.5 trillion in 2007. As the debt level has declined, firms' cash holdings increased to $1.3 trillion from $1.1 trillion (see chart 3). As net debt, or debt minus cash, has declined, the ratio of net debt has fallen to 1.13x EBITDA from 1.55x in 2010. As this ratio decreases, it indicates increased credit strength. Meanwhile, debt remained relatively stable as a proportion of assets, at 0.31 (see chart 4).
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Chart 4
2.5
0.70
Data as of December 31, 2011. Source: Standard & Poor's Global Fixed Income Research and S&P Capital IQ.
0.20
0.10
Average Market Capitalization ($ bln) 214.0 109.3 37.2 14.4 8.3 3.5 18.3 25.0
Average Total Enterprise Value ($ bln) 204.0 116.0 41.7 18.5 13.9 8.6 17.1 28.6
Debt / Debt & Equity (%) Total Debt / EBITDA (X) 14.0 0.3 28.2 1.0 36.5 1.5 41.3 2.0 63.5 3.6 58.7 3.8 12.7 0.4 36.9 1.5
Data as of 12/31/2011. Excludes S&P 500 Companies from the financial sector, as well corporates with significant financial sector exposure. Note: Total Enterprise Value is not calculated for banks, brokers or financial services companies as most of the inputs used in a TEV calculation represent operating and not financial assets and liabilities for these companies. Source: Standard & Poor's Global Fixed Income Research & S&P Capital IQ.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Table 4
Top Ten Nonfinancial Companies Ranked by Market Capitalization and Total Enterprise Value
Constituents Name Apple Inc. Exxon Mobil Corporation Microsoft Corporation International Business Machines Corp. Wal-Mart Stores Inc. Chevron Corporation General Electric Company Google Inc. Johnson & Johnson AT&T, Inc. Rating NR AAA AAA A+ AA AA AA+ AAAAA AMarket Cap ($ blns) 425.6 401.4 247.8 223.4 210.1 205.4 197.5 188.6 180.0 174.3 Constituents Name General Electric Company Exxon Mobil Corporation Apple Inc. Wal-Mart Stores Inc. International Business Machines Corp. AT&T, Inc. Microsoft Corporation Procter & Gamble Co. Verizon Communications Inc. Chevron Corporation Rating AA+ AAA NR AA A+ AAAA AAAAA Total Enterprise Value ($ blns) 520.7 413.4 395.5 267.0 242.9 236.1 209.9 204.4 197.8 195.6
Data as of January 31, 2012. Source: Standard & Poor's Global Fixed Income Research and S&P Capital IQ.
Data as of January 31, 2012. Note: Total Enterprise Value is not calculated for banks, brokers or financial services companies as most of the inputs used in a TEV calculation represent operating and not financial assets and liabilities for these companies. Source: Standard & Poor's Global Fixed Income Research & S&P Capital IQ.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Table 5
Data as of January 31, 2012. Source: Standard & Poor's Global Fixed Income Research & S&P Capital IQ.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Table 6
Data as of January 31, 2012. Source: Standard & Poor's Global Fixed Income Research & S&P Capital IQ.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
SECTOR SNAPSHOTS
Sector Snapshots
S&P Capital IQ and S&P Indices collaborated to produce these monthly performance views for the top ten sectors of the S&P 500.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 24
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 25
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 26
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 27
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 28
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 29
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 30
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 31
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 32
Equities | U.S.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 33
M&A MARKET
M&A Market
S&P Capital IQ provides detailed information on M&A and financing transactions covering the most active markets in the world. We track all publicly announced mergers, acquisitions, private placements, public offerings, shelf registrations, equity buybacks, and bankruptcies. Transaction data is updated daily from various sources such as regulatory filings, company websites, newsletters, trade publications, and press releases.
Our Transaction Data S&P Capital IQ covers 1,300,000+ transactions globally. All transaction information is seamlessly integrated in the S&P Capital IQ platform and S&P Capital IQ Excel Plug-In, and can be viewed alongside the most accurate company fundamentals. To learn more about our transaction coverage, history, and collection process contact information@spcapitaliq.com.
M&A Activity M&A Valuations Leveraged Buyouts Strategic M&A Private Equity Investments Pipes Venture Capital
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
Source: S&P Capital IQ Notes: Figures are based on announce dates and on a trailing three months basis through September 30, 2011. Includes both closed and pending transactions as well as those without transaction values.
Notes: Includes M&A transactions involving US and Canadian targets where relevant financials were available to calculate EBITDA and Net Income valuation multiples. Figures are based announce dates on a trailing three months basis through September 30, 2011. Includes both closed and pending transactions.
Notes: Includes M&A transactions involving European targets where relevant financials were available to calculate EBITDA and Net Income valuation multiples. Figures are based on announce dates on a trailing three months basis through September 30, 2011. Includes both closed and pending transactions.
Transactions | Europe
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 37
Target's Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities
Less Than $500M 12.1x 5.3x 10.9x 12.1x 12.0x 7.0x 12.1x 6.9x 6.2x 12.1x
Target's Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities
Less Than $500M 16.4x 11.0x 20.3x 15.8x 21.7x 15.8x 21.7x 12.7x 75.6x 20.6x
2011 Greater Than $500M 17.4x 14.5x 36.2x 24.5x 33.1x 22.9x 41.2x 31.3x 0.9x 19.5x
2012 Less Than Greater $500M Than $500M 16.2x 20.5x 21.1x 12.1x 11.7x 22.7x 15.5x 14.5x 18.4x 21.9x 14.6x 22.0x 17.5x 39.9x 12.7x 17.3x N/A 44.5x 14.6x 17.5x
Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions. N/A = Not available. N/M = Not made.
Target's Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities
Less Than $500M 9.0x 9.6x 5.2x 15.3x 10.6x 7.4x 8.7x 9.3x 5.8x 7.5x
Target's Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities
Less Than $500M 16.3x 12.6x 13.5x 16.1x 15.8x 11.6x 14.3x 15.8x 15.3x 14.3x
2011 Greater Than $500M 68.9x 32.9x 20.5x 19.8x 25.2x 19.0x 30.5x 21.5x 8.2x 13.3x
2012 Less Than Greater $500M Than $500M 15.6x 18.6x 15.2x 23.6x 10.9x 15.8x 14.4x 20.3x 20.0x 21.5x 14.5x 22.5x 21.2x 32.6x 9.3x 18.7x 14.5x 15.3x 12.4x 17.5x
Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions. N/A = Not available. N/M = Not made.
Transactions | Europe
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 39
# of Deals 2,499 446 1,095 4,478 1,347 2,249 2,214 1,251 117 255 15,951
2012 Value ($mil) $ $ $ $ $ $ $ $ $ $ $ 68,886 14,507 191,259 255,893 178,372 83,730 111,804 88,732 10,605 39,626 1,043,414
European Target M&A (As of 1/31/12) 2008 # of Deals Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total 4,302 1,337 470 2,381 860 4,547 2,398 1,387 312 491 18,485 $ $ $ $ $ $ $ $ $ $ $ Value ($mil) 230,537 104,131 65,227 454,567 83,449 144,336 68,661 104,408 102,252 199,030 1,556,599 Last Twelve Months Ending January 31st of: 2009 2010 2011 # of Deals Value ($mil) # of Deals Value ($mil) # of Deals Value ($mil) 3,567 1,059 315 2,220 794 4,118 1,982 1,093 194 470 15,812 $ $ $ $ $ $ $ $ $ $ $ 102,487 40,960 38,578 228,866 36,591 128,972 35,656 51,801 19,089 88,901 771,901 2,917 836 311 2,829 652 2,856 1,474 721 198 469 13,263 $ $ $ $ $ $ $ $ $ $ $ 53,561 37,141 45,680 129,071 63,115 93,160 19,545 13,885 28,812 71,180 555,149 3,313 1,026 380 3,770 817 3,341 1,744 920 228 571 16,110 $ $ $ $ $ $ $ $ $ $ $ 58,276 37,980 47,151 153,930 28,018 133,128 20,855 62,665 66,571 51,901 660,474
# of Deals 3,495 989 390 3,988 740 3,524 1,797 919 203 560 16,605
2012 Value ($mil) $ $ $ $ $ $ $ $ $ $ $ 82,509 30,703 45,155 176,801 38,040 113,708 42,744 50,962 39,268 64,617 684,507
Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions as well as those without transaction values.
2012 # of Deals Value ($mil) 292 55 24 148 75 205 138 85 7 11 1,040 $ $ $ $ $ $ $ $ $ $ $ 12,022 3,065 8,021 4,506 23,323 12,072 18,104 2,187 1,001 1,255 85,555
European Target Leveraged Buyouts (As of 1/31/12) 2008 # of Deals Value ($mil) Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total 788 175 18 176 107 654 211 179 27 20 2,355 $ $ $ $ $ $ $ $ $ $ $ 54,945 8,034 3,496 25,503 37,786 42,593 8,005 12,079 24,141 24,745 241,327 Last Twelve Months Ending January 31st of: 2009 2010 2011 # of Deals Value ($mil) # of Deals Value ($mil) # of Deals Value ($mil) 653 149 19 182 80 614 208 164 8 21 2,098 $ 18,987 $ 4,115 $ 6,653 $ 11,714 $ 4,106 $ 43,100 $ 5,707 $ 7,528 $ $ 1,123 $ 103,032 551 116 10 224 61 365 137 94 12 28 1,598 $ $ $ $ $ $ $ $ $ $ $ 9,065 4,095 1,798 7,506 2,279 44,100 3,758 2,232 1,131 871 76,835 604 132 20 253 105 461 148 131 16 51 1,921 $ $ $ $ $ $ $ $ $ $ $ 15,141 3,084 38 10,799 6,382 20,292 3,342 5,451 4,455 3,901 72,885
2012 # of Deals Value ($mil) 627 116 13 190 83 409 162 102 19 56 1,777 $ $ $ $ $ $ $ $ $ $ $ 23,844 1,507 8,904 9,924 434 19,332 7,496 7,996 10,504 6,398 96,340
Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions as well as those without transaction values.
2012 # of Deals Value ($mil) 2,207 391 1,071 4,330 1,272 2,044 2,076 1,166 110 244 14,911 $ $ $ $ $ $ $ $ $ $ $ 56,864 11,442 183,238 251,387 155,050 71,658 93,700 86,545 9,604 38,372 957,859
European Target Strategic M&A (As of 1/31/12) 2008 # of Deals Value ($mil) Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total 3,514 1,162 452 2,205 753 3,893 2,187 1,208 285 471 16,130 $ $ $ $ $ $ $ $ $ $ $ 175,592 96,097 61,731 429,064 45,663 101,743 60,656 92,329 78,112 174,285 1,315,272 Last Twelve Months Ending January 31st of: 2009 2010 2011 # of Deals Value ($mil) # of Deals Value ($mil) # of Deals Value ($mil) 2,914 910 296 2,038 714 3,504 1,774 929 186 449 13,714 $ 83,500 36,845 31,926 217,152 32,485 85,872 29,950 44,273 19,089 87,778 668,869 2,366 720 301 2,605 591 2,491 1,337 627 186 441 11,665 $ $ $ $ $ $ $ $ $ $ $ 44,496 33,047 43,882 121,564 60,835 49,060 15,787 11,653 27,681 70,309 478,314 2,709 $ 894 $ 360 $ 3,517 $ 712 $ 2,880 $ 1,596 $ 789 $ 212 $ 520 $ 14,189 $ 43,135 34,896 47,113 143,130 21,636 112,836 17,513 57,214 62,116 48,000 587,589
2012 # of Deals Value ($mil) 2,868 $ 873 $ 377 $ 3,798 $ 657 $ 3,115 $ 1,635 $ 817 $ 184 $ 504 $ 14,828 $ 58,665 29,196 36,251 166,878 37,605 94,376 35,248 42,966 28,764 58,219 588,167
Source: S&P Capital IQ Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions as well as those without transaction values.
2012 # of Deals Value ($mil) 345 $ 7,110 109 $ 2,174 113 $ 8,081 490 $ 13,941 764 $ 8,484 388 $ 6,949 954 $ 13,525 160 $ 4,670 36 $ 838 50 $ 5,942 3,409 $ 71,715
European Target Private Equity Investments (As of 1/31/12) Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total 2008 # of Deals Value ($mil) 96 $ 15,670 33 2,025 23 1,761 68 9,331 51 395 85 4,617 108 894 26 644 8 248 16 1,245 514 36,829 Last Twelve Months Ending January 31st of: 2009 2010 2011 # of Deals Value ($mil) # of Deals Value ($mil) # of Deals Value ($mil) 114 $ 1,469 203 $ 6,637 231 $ 3,216 31 $ 775 56 $ 1,136 67 $ 2,597 8 $ 399 13 $ 1,411 38 $ 5,819 99 $ 67,868 113 $ 56,586 230 $ 125,071 71 $ 1,240 112 $ 1,026 138 $ 2,277 103 $ 4,122 188 $ 9,579 342 $ 22,643 133 $ 1,033 175 $ 1,819 248 $ 5,436 30 $ 550 57 $ 3,002 74 $ 4,066 13 $ 2,332 15 $ 1,073 15 $ 2,136 14 $ 2,110 18 $ 8,740 31 $ 3,484 616 $ 81,898 950 $ 91,009 1,414 $ 176,745
2012 # of Deals Value ($mil) 176 $ 3,999 69 $ 576 29 $ 5,970 239 $ 52,029 130 $ 1,848 306 $ 12,163 243 $ 3,097 73 $ 1,342 9 $ 153 28 $ 13,637 1,302 $ 94,813
Source: S&P Capital IQ Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions as well as those without transaction values.
European Target PIPEs (As of 1/31/12) Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total 2008 # of Deals Value 45 $ 18 $ 43 $ 57 $ 47 $ 69 $ 60 $ 54 $ 5 $ 19 $ 417 $ ($mil) 2,969 212 2,422 14,233 1,036 4,335 854 9,158 283 10,111 45,614 Last Twelve Months Ending January 31st of: 2009 2010 2011 # of Deals Value ($mil) # of Deals Value ($mil) # of Deals Value 50 $ 868 42 $ 4,779 66 $ 16 $ 301 15 $ 1,107 23 $ 28 $ 663 57 $ 1,408 75 $ 79 $ 126,299 85 $ 81,611 105 $ 40 $ 1,140 49 $ 2,103 50 $ 52 $ 2,277 58 $ 3,786 57 $ 68 $ 564 67 $ 2,760 82 $ 34 $ 717 50 $ 2,573 66 $ 2 $ 27 6 $ 275 13 $ 646 4,546 2 $ 14 $ 16 $ 371 $ 133,501 443 $ 104,947 553 $
($mil) 6,122 786 2,895 12,855 408 3,944 628 1,820 573 1,298 31,328
($mil) 550 544 2,762 34,134 611 3,165 950 3,395 8 7,724 53,844
Source: S&P Capital IQ Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions as well as those without transaction values.
2012 # of Deals Value ($mil) 690 139 121 335 1,053 440 2,650 151 19 76 5,674 $ $ $ $ $ $ $ $ $ $ $ 5,397 308 4,910 8,676 8,672 9,123 12,607 2,454 89 2,241 54,477
European Target Venture Capital (As of 1/31/12) 2008 # of Deals Value ($mil) Sector Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Telecommunication Services Utilities Grand Total 314 56 40 104 370 260 859 69 33 40 2,145 $ $ $ $ $ $ $ $ $ $ $ 1,270 297 1,715 2,113 2,200 1,904 2,499 559 269 488 13,314 Last Twelve Months Ending January 31st of: 2009 2010 2011 # of Deals Value ($mil) # of Deals Value ($mil) # of Deals Value ($mil) 301 52 36 93 351 245 825 87 31 38 2,059 $ $ $ $ $ $ $ $ $ $ $ 2,150 289 1,113 4,428 1,750 2,540 3,679 461 266 526 17,202 268 43 22 76 282 195 722 67 14 53 1,742 $ $ $ $ $ $ $ $ $ $ $ 962 432 374 15,450 1,445 1,999 1,773 995 110 5,379 28,919 346 74 38 149 304 309 843 96 22 64 2,245 $ $ $ $ $ $ $ $ $ $ $ 2,905 535 3,943 6,580 1,482 6,341 2,459 1,646 302 2,650 28,842
2012 # of Deals Value ($mil) 327 $ 67 $ 32 $ 131 $ 309 $ 274 $ 909 $ 90 $ 13 $ 50 $ 2,202 $ 3,420 350 1,644 10,377 1,408 16,607 2,643 1,843 23 5,083 43,399
Notes: Figures are based on transaction announce dates. Includes both closed and pending transactions as well as those without transaction values.
CONTACT US
About S&P Capital IQ Market Observations
Market Observations is a monthly compilation of high-level perspectives on M&A, public equity, private capital, and the capital markets. Market Observations is primarily based on S&P Capital IQs public company, private company, and private equity information, and includes expert commentary from Standard & Poors Equity and Fixed Income Research. S&P Capital IQ is a Standard & Poors business, and provides the most accurate and timely financial information to investment banks, asset management firms, private equity firms, and corporations around the world. Learn more at www.capitaliq.com.
Media Inquiries
Please contact Cara Kiewel at ckiewel@spcapitaliq.com
Disclaimer: Any content contained in this report is the intellectual property of S&P Capital IQ, Inc. Any copying, republication or redistribution of S&P Capital IQ content, without the prior written consent of S&P Capital IQ , is expressly prohibited. S&P Capital IQ is not liable for any errors or delays in content, or for any actions taken in reliance on any content. Any reference to a particular security is not a recommendation to buy, sell, or hold such security, nor should it be considered to be investment advice. S&P Capital IQ and the S&P Capital IQ Logo are trademarks and registered trademarks of the McGraw-Hill Companies, Inc.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
DISCLOSURES
Copyright 2012 by Standard & Poors Financial Services LLC (S&P), a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P's opinions and analyses do not address the suitability of any security. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
DISCLOSURES
S&P STARS - Since January 1, 1987, S&P Capital IQ Equity Research has ranked a universe of U.S. common stocks, ADRs (American Depositary Receipts), and ADSs (American Depositary Shares) based on a given equitys potential for future performance. Similarly, S&P Capital IQ Equity Research has used STARS methodology to rank Asian and European equities since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), S&P equity analysts rank equities according to their individual forecast of an equitys future total return potential versus the expected total return of a relevant benchmark (e.g., a regional index (S&P Asia 50 Index, S&P Europe 350 Index or S&P 500 Index)), based on a 12-month time horizon. STARS was designed to meet the needs of investors looking to put their investment decisions in perspective. Data used to assist in determining the STARS ranking may be the result of the analysts own models as well as internal proprietary models resulting from dynamic data inputs. S&P Quality Rankings (also known as S&P Earnings & Dividend Rankings)Growth and stability of earnings and dividends are deemed key elements in establishing S&Ps earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of rankings: A+ Highest B- Lower A High C Lowest A- Above Average D In Reorganization B+ Average NR Not Ranked B Below Average
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
DISCLOSURES
S&P Issuer Credit Rating - A Standard & Poors Issuer Credit Rating is a current opinion of an obligors overall financial capacity (its creditworthiness) to pay its financial obligations. This opinion focuses on the obligors capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation, as it does not take into account the nature of and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. In addition, it does not take into account the creditworthiness of the guarantors, insurers, or other forms of credit enhancement on the obligation. S&P Capital IQ EPS Estimates S&P Capital IQ earnings per share (EPS) estimates reflect analyst projections of future EPS from continuing operations, and generally exclude various items that are viewed as special, non-recurring, or extraordinary. Also, S&P Capital IQ EPS estimates reflect either forecasts of S&P Capital IQ equity analysts; or, the consensus (average) EPS estimate, which are independently compiled by Capital IQ, a data provider to S&P Capital IQ Equity Research. Among the items typically excluded from EPS estimates are asset sale gains; impairment, restructuring or merger-related charges; legal and insurance settlements; in process research and development expenses; gains or losses on the extinguishment of debt; the cumulative effect of accounting changes; and earnings related to operations that have been classified by the company as discontinued. The inclusion of some items, such as stock option expense and recurring types of other charges, may vary, and depend on such factors as industry practice, analyst judgment, and the extent to which some types of data is disclosed by companies. S&P Core Earnings S&P Capital IQ Core Earnings is a uniform methodology for adjusting operating earnings by focusing on a company's after-tax earnings generated from its principal businesses. Included in the S&P Capital IQ definition are employee stock option grant expenses, pension costs, restructuring charges from ongoing operations, write-downs of depreciable or amortizable operating assets, purchased research and development, M&A related expenses and unrealized gains/losses from hedging activities. Excluded from the definition are pension gains, impairment of goodwill charges, gains or losses from asset sales, reversal of prior-year charges and provision from litigation or insurance Settlements.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com
DISCLOSURES
S&P 12 Month Target Price The S&P Capital IQ equity analysts projection of the market price a given security will command 12 months hence, based on a combination of intrinsic, relative, and private market valuation metrics, including S&P Fair Value. S&P Capital IQ Equity Research S&P Capital IQ Equity Research U.S. includes Standard & Poors Investment Advisory Services LLC; Standard & Poors Equity Research Services Europe includes McGraw-Hill Financial Research Europe Limited trading as Standard & Poors; Standard & Poors Equity Research Services Asia includes Standard & Poors LLCs offices in Singapore, Standard & Poors Investment Advisory Services (HK) Limited in Hong Kong, Standard & Poors Malaysia Sdn Bhd, and Standard & Poors Information Services (Australia) Pty Ltd. Abbreviations Used in S&P Capital IQ Equity Research Reports CAGR- Compound Annual Growth Rate CAPEX- Capital Expenditures CY- Calendar Year DCF- Discounted Cash Flow EBIT- Earnings Before Interest and Taxes EBITDA- Earnings Before Interest, Taxes, Depreciation and Amortization EPS- Earnings Per Share EV- Enterprise Value FCF- Free Cash Flow FFO- Funds From Operations FY- Fiscal Year P/E- Price/Earnings PEG Ratio- P/E-to-Growth Ratio PV- Present Value R&D- Research & Development ROE- Return on Equity ROI- Return on Investment ROIC- Return on Invested Capital ROA- Return on Assets SG&A- Selling, General & Administrative Expenses WACC- Weighted Average Cost of Capital Dividends on American Depository Receipts (ADRs) and American Depository.
To learn more about S&P Capital IQ, please contact us at +1 212.438.8701 or info@capitaliq.com S&P Capital IQ Market Observations February 2012 | Page 50