Description
VENUE ® Market Spotlight
MEGADEALS
November 2015 Edition
. CONTENTS
Welcome 3
Foreword 4
Survey 5
2015 BN Deals in the room
About RR Donnelley
VENUE® Market Spotlight: Megadeals
9
10
. WELCOME
Dear Valued Reader,
Welcome to the November 2015 edition of the Venue Market Spotlight. This month, we take
a closer look at the future for deals so big that they dominate the mainstream and business news.
The story of M&A in 2015 has been driven by the huge increase in spending, despite the fall
in deal numbers. Indeed, while global M&A volume fell in the first three quarters of 2015 by 4%
year-on-year, deal value increased from US$2.4tn to US$2.9tn over the same period.
Much of this was due to the increase in megadeals – those valued at over US$10bn. So far in
2015, there have been 57 deals over that figure.
By comparison, there were only 35 US$10bnplus deals in the entirety of 2014. A combination of cheap debt, anemic organic growth and shareholder pressure have helped to foster this boom in gigantic deals. Yet, the huge sums being spent raised doubts as to whether these deals are sustainable going forward. Respondents to this month Spotlight, however, are confident that the next year will continue to bring deals that dominate the front pages as well as the financials. This year’s M&A environment, while high-valued, has shown just how complicated it can be to successfully take a deal from start to finish.
This has become even truer with the rise in megadeals, making the stakes in closing deals even higher and even more important to securely streamline the entire deal process. At RR Donnelley we not only see more deals to fruition than any other financial services provider, but last year our Venue virtual data room managed the largest M&A transaction of 2014. As always, please enjoy this month’s Spotlight. Best, Tom Juhase President, Financial Services Group 3 . FOREWORD Deals valued above US$10bn have dominated the M&A landscape in 2015, and are providing deal-makers with confidence of where the industry stands. To illustrate, the top five deals so far in 2015 have a combined value of almost US$400bn. For the whole of 2014, that figure was US$291bn. What has driven this increase in megadeal activity? As our respondents in this month’s Spotlight illustrate, there are many. Almost half agree that low financing costs are one of the top two drivers of megadeals (deals valued over US$10bn).
Yet at the same time, 44% believe that tax/operational efficiencies are also one of the main reasons. On top of this, just over one third each think that both shareholder pressure and the search for inorganic growth will further the impetus to deal. Not only are the drivers varied, but the increased activity of megadeals looks set to continue. Nearly 90% of respondents feel that the number of megadeals will increase in the next 12 months, with just under half of those expecting the increase to be significant. Other key findings include: • Over half of respondents (56%) each expect the energy, mining and utilities and TMT sectors to receive the most attention when it comes to megadeals. Energy companies will look to deals as low commodity prices hit balance sheets, while deals in the tech sector will continue to rise as the industry booms. • Rising interest rates and regulatory hurdles were considered the joint-most likely factors to curb megadeals in the next 12 months.
A rate hike could spell the end for cheaper debt used by companies to acquire, while regulatory hurdles already curtailed many tax inversion deals attempted in the past year. • Sixty-eight percent of respondents believe that Asia will see the most megadeals in the next year. This was closely followed by North America, with 64%. As competition for assets increases, so will the prices of the most prized possessions – continuing a circle of rising valuations and bigger, bolder deals. Our respondents see this happening still even at the top echelons of M&A.
Deal-makers, it seems, can look forward to a busy and profitable year to come. VENUE® Market Spotlight: Megadeals Rising interest rates and regulatory hurdles were considered the jointmost likely factors to curb megadeals in the next 12 months. . SURVEY What do you think will happen to the number of deals valued above US$10bn in the coming 12 months? 4% Decrease somewhat 8% Remain the same Increase somewhat 40% What have been the main drivers of deals with values of over US$10bn? (select top two) Low ï¬nancing costs 48% Tax/operational efï¬ciencies 44% 48% Search for growth inorganically 36% Shareholder pressure to use excess capital Increase significantly 36% Consolidation 28% Other 8% 0% Nearly 90% of respondents believe that the number of deals valued at above US$10bn will rise in the next year, with nearly half of these thinking the rise will be significant. Eight percent believe the level will remain constant, while just 4% feel the level of megadeals will drop. With economies recovering, some respondents feel that the time is right for M&A as companies can buy assets as they are on the up. “I think it will increase in the next year, ever since the beginning of the year the amount of investments of this size has been increasing. We feel it will continue,” says one head of corporate development.
“The market conditions are ideal as countries and economies are recovering and the price of company assets within these economies is quite low.” MAJORITY OF RESPONDENTS EXPECT THE NUMBER OF MEGADEALS TO RISE OVER THE NEXT YEAR 10% 20% 30% 40% 50% 60% Respondents cited a variety of reasons why megadeals would rise in the next year. Chief among them was low financing costs (48%), brought on by a prolonged interest rate slump. Tax and operational efficiencies was chosen by 44% of respondents as the second greatest driver, while inorganic growth search and shareholder pressure tied for third (36%). The sharp increase in ease of financing has certainly put bigger deals back on the agenda, according to a M&A director at a corporate: “In the past few years financing deals would prove to be very expensive with costs being very high. Companies would need to come up with some of their own funds to be able to finance the deal.
This at times could be very hard to do because they may not have that much reserves,” he says. “But with interest costs being low nowadays and banks looking for investment options this path has become much more viable.” Creating synergies in operations was also cited as a driver. “It is imperative to realize operational efficiencies in this competitive business environment, and businesses are doing so by acquiring their competitors or slightly smaller players in their industry and restructuring business activity to gain higher efficiencies,” says a partner at a private equity firm. In one recent megadeal, AB InBev’s US$120bn takeover of SABMiller, AB InBev directors said after the announcement that the “combined group will be able to achieve incremental recurring run rate pre-tax cost synergies of at least US$1.4bn per annum.” 5 .
SURVEY (CONTINUED) Which sectors will see the most deals with a value of over US$10bn in the coming year? (select top two) Energy, mining & utilities 56% TMT 56% Pharma, medical and biotech 36% What event(s) do you think are most likely to reduce/hinder deals valued at over US$10bn over the next 12 months? (select up to two) Rise in interest rates 48% Regulatory interference 48% Stock market fall Consumer 44% Sustained economic recovery 44% 32% Industrials & chemicals 16% Financial services Closure of leveraged debt markets 4% 0% 10% 20% 30% 40% 50% 60% Energy, mining and utilities as well as TMT companies are expected to see the most deals above US$10bn over the coming year, according to 56% of respondents each. Big pharma deals were expected to drive the megadeal market by 36% of respondents, while 32% suggested the consumer sector will see many deals of this magnitude. Energy and TMT reflect sectors doing big deals for different reasons. On the one hand, energy companies are under pressure to shore up bottom lines after a heavy fall in commodity prices. “The energy industry is in a slump right now and the price fluctuations have impacted value greatly. It has also added onto pressure in managing operations which makes businesses in this sector a good target,” says a strategy director at an investment bank. Conversely, the rise of technology has seen investors and companies scramble to get a hold of the next big thing. “Technology has been a major driver of growth in many economies — right from mobile phones to drones to different types of evolution of technology in different areas,” says a private equity partner.
“As technology improves so will the demand for these companies. Just looking at companies such as Google and Tesla, we can understand the way these sectors are moving forward and show great potential in the future.” VENUE® Market Spotlight: Megadeals 16% 0% 10% 20% 30% 40% 50% 60% With cheap debt one of the main factors behind megadeals, it is not surprising that a rise in interest rates is considered one of the key things that would hinder their activity. Interest rate rises was chosen by 48% of respondents, the same percentage who chose regulatory interference.
Close behind was a fall in the stock markets and a sustained economic recovery (44% each). “A rise in interest rates is a crucial factor that would hinder deals valued over US$10bn as businesses may not have that amount of capital to freely invest. They would to some degree depend on debt offering parties to finance the deal,” explains the strategy director at an investment bank. Crackdowns from government can also stem big-deal activity. “Changes in the regulations can cause the deal to change directions, leading it to be unsuccessful due to the lack of approvals from the governing bodies and also political interferences that slow down the deal performance,” says the managing director of an investment bank. “Businesses do not want to take such risks and therefore will not indulge in any deals if there is regulatory interference.” .
In which geographies do you expect to see the highest number of deals over US$10bn in the coming year? (select up to two) Asia What do you think will happen to the number of private equity (PE) deals valued above US$10bn in the coming 12 months? 8% 68% 4% Decrease significantly Decrease somewhat North America 64% Europe 32% Remain the same Increase somewhat Increase significantly 40% 40% Latin America 16% Africa 12% 0% 16% 10% 20% 30% 40% 50% 60% 70% Interestingly, the highest percentage of respondents (68%) expected Asia to have the highest number of megadeals, just ahead of North America (64%). Europe was chosen by 40% of respondents, while Latin America (16%) and Africa (12%) were way down. Many respondents feel that Asia’s potential is opening it up to more super-sized deals. “Asia is one geography we see the highest number of deals happening with its urbanization, population size, economic and income growth. There is the evolution of financial markets within the region and adoption of technology leading to further innovation and productivity,” says a director of strategy and corporate development. Elsewhere, North America’s already-set business precedents and rising economy will also continue to attract big money for deals.
“The high levels of growth in the North American region is attracting more investments and the availability of suitable targets combined with the openness to invest will drive the activity in this region. The valuations in this region are already high, but investors do not mind acquiring targets in this region as they understand the potential it can gain in the near future. Local financing is also available and this is attracting strategic businesses,” says the managing director of an investment bank. Respondents are divided on what will happen with private equity (PE) and megadeals in 2016.
While 40% believe it will increase over the coming year, 32% think that activity will actually fall to a certain degree. Those who feel that major PE deals will increase believe the fact that sponsors have the capital ready to deploy will compel them to do so. “With large amounts of equity capital available, PE firms are looking for new avenues to invest,” says one corporate director of strategy. “They cannot invest solely with debt they need to have some amount of equity capital to be able to invest and with these reserves paired with the fact that interest rates are low, this will drive a large number of PE deals in the coming 12 months.” By contrast, respondents who felt that PE activity could decrease pointed out increased competition from corporates is driving prices up.
“PE deals will decrease slightly mainly due to the competition they are facing from the strategic investors. They are unable to meet the corporate offers in terms of exit strategies and the high level of investments required. Therefore they are unlikely to invest in deals over US$10bn,” says the managing director of an investment bank. 7 . 9 . 2015 BN Deals in the room Venue® data room: A special report Incipio Technologies acquires Incase Designs September 16, 2015 $4.2 BN Industry: Computer: Hardware; Consumer: Other; Consumer: Retail; Telecommunications: Hardware Hexagon acquires EcoSys Management September 10, 2015 $6.5 BN Financial Advisor for Target: Aeris Partners Industry: Computer software Schlumberger Limited acquires Cameron International Corporation August 26, 2015 $13.8 BN Financial Advisor for Target: Credit Suisse Counsel for Target: Alston & Bird LLP; Cravath, Swaine & Moore LLP Financial Advisor for Buyer: Goldman Sachs Counsel for Buyer: Baker Botts LLP; Gibson Dunn & Crutcher LLP; Skadden Arps Slate Meagher & Flom LLP Industry: Energy; Industrial automation; Industrial products and services Berry Plastics Group, Inc. has agreed to acquire AVINTIV Inc. from Blackstone Group L.P. July 31, 2015 $2.5 BN Financial Advisor for Buyer: Barclays; Credit Suisse Counsel for Buyer: Bryan Cave LLP Financial Advisor for Seller: Bank of America Merrill Lynch; Citi Counsel for Seller: Simpson Thacher & Bartlett LLP Industry: Automotive; Manufacturing (other); Medical; Services (other); Telecommunications: Hardware Avago Technologies Ltd to acquire Broadcom Corporation May 28, 2015 $34.9 BN H.J. Heinz Company merges with Kraft Foods Group, Inc. July 2, 2015 $54.5 BN Financial Advisor for Target: Centerview Partners Counsel for Target: Davis Polk & Wardwell LLP; Sullivan & Cromwell LLP Financial Advisor for Buyer: Lazard Counsel for Buyer: Cravath, Swaine & Moore LLP; Kirkland & Ellis LLP Industry: Consumer: Foods NXP Semiconductors N.V. acquires Freescale Semiconductor Inc. March 2, 2015 $15.9 BN Financial Advisor for Target: Evercore Partners Inc; JP Morgan Financial Advisor for Target: Morgan Stanley Counsel for Target: Davis Polk & Wardwell LLP; Paul Weiss Rifkind Wharton & Garrison LLP; Skadden Arps Slate Meagher & Flom LLP; Sullivan & Cromwell LLP; WongPartnership LLP Counsel for Target: Houthoff Buruma; Skadden Arps Slate Meagher & Flom LLP; Wilson Sonsini Goodrich & Rosati P.C. Financial Advisor for Buyer: Bank of America Merrill Lynch; Barclays; Citi; Credit Suisse; Deutsche Bank AG Counsel for Buyer: Latham & Watkins LLP; Simpson Thacher & Bartlett LLP Industry: Computer: Semiconductors; Computer software; Telecommunications: Hardware For more information: Please contact your RR Donnelley Sales Rep. Call 1.888.773.8379 Financial Advisor for Buyer: Credit Suisse Counsel for Buyer: Davis Polk & Wardwell LLP; De Brauw Blackstone Westbroek; Simpson Thacher & Bartlett LLP; White & Case LLP Debt Provider (Other) for Buyer: Credit Suisse Industry: Computer: Semiconductors; Telecommunications: Carriers Or visit www.venue.rrd.com Venue demo (audio enabled): Venue.RRD.com/Demo Corporate Headquarters 35 West Wacker Drive Chicago, IL 60601 U.S.A. Verizon acquires AOL June 23, 2015 $4.4 BN Financial Advisor for Target: Allen & Company LLC Counsel for Target: Wachtell, Lipton, Rosen & Katz; White & Case LLP Financial Advisor for Buyer: Guggenheim Partners, LLC; LionTree Advisors, LLC Counsel for Buyer: Weil Gotshal & Manges LLP Industry: Internet/ecommerce Axis Capital and PartnerRe merge January 26, 2015 $5.3 BN Financial Advisor for Target: Credit Suisse Counsel for Target: Appleby; Davis Polk & Wardwell LLP; Skadden Arps Slate Meagher & Flom LLP Financial Advisor for Buyer: Goldman Sachs Counsel for Buyer: Conyers Dill & Pearman; Simpson Thacher & Bartlett LLP Industry: Financial Services; Insurance related Deals. Done.
Simple. 888.773.8379 www.rrdonnelley.com www.venue.rrd.com Copyright © 2015 RR Donnelley® and RRD are trademarks of R.R. Donnelley & Sons Company. All rights reserved. . ABOUT RR DONNELLEY RR Donnelley is a global provider of integrated communications. Our company works collaboratively with more than 60,000 customers worldwide to develop custom communications solutions that help to drive top-line growth, reduce costs, enhance ROI and ensure compliance. Drawing on a range of proprietary and commercially available digital and conventional technologies deployed across four continents, the company employs a suite of leading Internet based capabilities and other resources to provide premedia, printing, logistics and business process outsourcing services to clients in virtually every private and public sector. RR DONNELLEY AT A GLANCE $11.6 billion 2014 net sales 65,000+ 500+ Employees Global locations design that allow you to easily organize, manage, share and track all of your you can manage who has access to your data room, which documents they see, and how they can interact with those documents. Venue data rooms are backed by RR Donnelley, a $11.6 billion corporation with more than 500 locations and over 65,000 employees worldwide. RR Donnelley’s total revenues are larger than all other virtual data room providers combined. We bring extensive experience to providing integrated communications services. us directly. Sr. D 255 Fax: 212.341.7475 |venuecommunications@rrdvenue.com Da VENUE® Market Spotlight: Megadeals Manufacturing locations 750+ About Venue Nearly 125 Issued and pending patents Nearly $2 billion Capital investments over the past six years .
VENUE DATA ROOM ® The World’s Workspace Venue is the fast-growing virtual data room solution of RR Donnelley, the leader in integrated communications services. Our Venue virtual data room provides a secure online workspace with a powerful feature-set and an intuitive design that allow you to easily organize, manage, share and track all of your sensitive information. A Venue workspace provides complete control, ensuring that you can manage who has access to your data room, which documents they see, and how they can interact with those documents. We serve hundreds of thousands of Venue users, who are accessing content related to the highest proï¬le deals in the market. With a Venue data room you have access to the RR Donnelley global footprint, where you can leverage our suite of ï¬nancial services— everything you need from pre-negotiation to post-transaction ï¬ling and archiving— anytime, anywhere. powerful, intuitive features that deliver what you need right now. Best-in-class security: Trust your information to our industry-leading security: AT 101 compliant, redundant, third-party-tested platform, exclusive protection features and maximum precautions for all interactions. Unmatched room service: We give you hands-on, startto-ï¬nish service that’s unique to the industry. The Venue team delivers local service no matter where you are thanks to in-house staff at hundreds of locations around the globe. Mobile : Venue mobile allows you to manage your documents and users no matter where you are, in a variety of different languages.
Whether you are rushing to a meeting —or in the midst of travel— access your Venue data room in a familiar and easy-to-use interface from any IOS device. User activity reports: Track exactly who is —or isn’t— accessing the ï¬les of your data room with instant, realtime reports. The Venue Executive Suite: Leverage the enhanced functionality of the intuitive Venue interface to deliver even more control over and access to your multiple Venue data room projects from the executive level dashboard. One-click translations: Continue to leverage the RR Donnelley global footprint to help you do business anywhere in the world, easily and securely, with our translations services. Our linguists translate documents within a Venue data room in over 140 languages—with a simple click. Google search: Secure, full-text search, powered by Google. For more information please visit www.venue.rrd.com. 888.773.8379 www.rrdonnelley.com www.venue.rrd.com Copyright © 2015 R. R. Donnelley & Sons Company. All rights reserved. 11 .
VENUE® Market Spotlight: Megadeals .
By comparison, there were only 35 US$10bnplus deals in the entirety of 2014. A combination of cheap debt, anemic organic growth and shareholder pressure have helped to foster this boom in gigantic deals. Yet, the huge sums being spent raised doubts as to whether these deals are sustainable going forward. Respondents to this month Spotlight, however, are confident that the next year will continue to bring deals that dominate the front pages as well as the financials. This year’s M&A environment, while high-valued, has shown just how complicated it can be to successfully take a deal from start to finish.
This has become even truer with the rise in megadeals, making the stakes in closing deals even higher and even more important to securely streamline the entire deal process. At RR Donnelley we not only see more deals to fruition than any other financial services provider, but last year our Venue virtual data room managed the largest M&A transaction of 2014. As always, please enjoy this month’s Spotlight. Best, Tom Juhase President, Financial Services Group 3 . FOREWORD Deals valued above US$10bn have dominated the M&A landscape in 2015, and are providing deal-makers with confidence of where the industry stands. To illustrate, the top five deals so far in 2015 have a combined value of almost US$400bn. For the whole of 2014, that figure was US$291bn. What has driven this increase in megadeal activity? As our respondents in this month’s Spotlight illustrate, there are many. Almost half agree that low financing costs are one of the top two drivers of megadeals (deals valued over US$10bn).
Yet at the same time, 44% believe that tax/operational efficiencies are also one of the main reasons. On top of this, just over one third each think that both shareholder pressure and the search for inorganic growth will further the impetus to deal. Not only are the drivers varied, but the increased activity of megadeals looks set to continue. Nearly 90% of respondents feel that the number of megadeals will increase in the next 12 months, with just under half of those expecting the increase to be significant. Other key findings include: • Over half of respondents (56%) each expect the energy, mining and utilities and TMT sectors to receive the most attention when it comes to megadeals. Energy companies will look to deals as low commodity prices hit balance sheets, while deals in the tech sector will continue to rise as the industry booms. • Rising interest rates and regulatory hurdles were considered the joint-most likely factors to curb megadeals in the next 12 months.
A rate hike could spell the end for cheaper debt used by companies to acquire, while regulatory hurdles already curtailed many tax inversion deals attempted in the past year. • Sixty-eight percent of respondents believe that Asia will see the most megadeals in the next year. This was closely followed by North America, with 64%. As competition for assets increases, so will the prices of the most prized possessions – continuing a circle of rising valuations and bigger, bolder deals. Our respondents see this happening still even at the top echelons of M&A.
Deal-makers, it seems, can look forward to a busy and profitable year to come. VENUE® Market Spotlight: Megadeals Rising interest rates and regulatory hurdles were considered the jointmost likely factors to curb megadeals in the next 12 months. . SURVEY What do you think will happen to the number of deals valued above US$10bn in the coming 12 months? 4% Decrease somewhat 8% Remain the same Increase somewhat 40% What have been the main drivers of deals with values of over US$10bn? (select top two) Low ï¬nancing costs 48% Tax/operational efï¬ciencies 44% 48% Search for growth inorganically 36% Shareholder pressure to use excess capital Increase significantly 36% Consolidation 28% Other 8% 0% Nearly 90% of respondents believe that the number of deals valued at above US$10bn will rise in the next year, with nearly half of these thinking the rise will be significant. Eight percent believe the level will remain constant, while just 4% feel the level of megadeals will drop. With economies recovering, some respondents feel that the time is right for M&A as companies can buy assets as they are on the up. “I think it will increase in the next year, ever since the beginning of the year the amount of investments of this size has been increasing. We feel it will continue,” says one head of corporate development.
“The market conditions are ideal as countries and economies are recovering and the price of company assets within these economies is quite low.” MAJORITY OF RESPONDENTS EXPECT THE NUMBER OF MEGADEALS TO RISE OVER THE NEXT YEAR 10% 20% 30% 40% 50% 60% Respondents cited a variety of reasons why megadeals would rise in the next year. Chief among them was low financing costs (48%), brought on by a prolonged interest rate slump. Tax and operational efficiencies was chosen by 44% of respondents as the second greatest driver, while inorganic growth search and shareholder pressure tied for third (36%). The sharp increase in ease of financing has certainly put bigger deals back on the agenda, according to a M&A director at a corporate: “In the past few years financing deals would prove to be very expensive with costs being very high. Companies would need to come up with some of their own funds to be able to finance the deal.
This at times could be very hard to do because they may not have that much reserves,” he says. “But with interest costs being low nowadays and banks looking for investment options this path has become much more viable.” Creating synergies in operations was also cited as a driver. “It is imperative to realize operational efficiencies in this competitive business environment, and businesses are doing so by acquiring their competitors or slightly smaller players in their industry and restructuring business activity to gain higher efficiencies,” says a partner at a private equity firm. In one recent megadeal, AB InBev’s US$120bn takeover of SABMiller, AB InBev directors said after the announcement that the “combined group will be able to achieve incremental recurring run rate pre-tax cost synergies of at least US$1.4bn per annum.” 5 .
SURVEY (CONTINUED) Which sectors will see the most deals with a value of over US$10bn in the coming year? (select top two) Energy, mining & utilities 56% TMT 56% Pharma, medical and biotech 36% What event(s) do you think are most likely to reduce/hinder deals valued at over US$10bn over the next 12 months? (select up to two) Rise in interest rates 48% Regulatory interference 48% Stock market fall Consumer 44% Sustained economic recovery 44% 32% Industrials & chemicals 16% Financial services Closure of leveraged debt markets 4% 0% 10% 20% 30% 40% 50% 60% Energy, mining and utilities as well as TMT companies are expected to see the most deals above US$10bn over the coming year, according to 56% of respondents each. Big pharma deals were expected to drive the megadeal market by 36% of respondents, while 32% suggested the consumer sector will see many deals of this magnitude. Energy and TMT reflect sectors doing big deals for different reasons. On the one hand, energy companies are under pressure to shore up bottom lines after a heavy fall in commodity prices. “The energy industry is in a slump right now and the price fluctuations have impacted value greatly. It has also added onto pressure in managing operations which makes businesses in this sector a good target,” says a strategy director at an investment bank. Conversely, the rise of technology has seen investors and companies scramble to get a hold of the next big thing. “Technology has been a major driver of growth in many economies — right from mobile phones to drones to different types of evolution of technology in different areas,” says a private equity partner.
“As technology improves so will the demand for these companies. Just looking at companies such as Google and Tesla, we can understand the way these sectors are moving forward and show great potential in the future.” VENUE® Market Spotlight: Megadeals 16% 0% 10% 20% 30% 40% 50% 60% With cheap debt one of the main factors behind megadeals, it is not surprising that a rise in interest rates is considered one of the key things that would hinder their activity. Interest rate rises was chosen by 48% of respondents, the same percentage who chose regulatory interference.
Close behind was a fall in the stock markets and a sustained economic recovery (44% each). “A rise in interest rates is a crucial factor that would hinder deals valued over US$10bn as businesses may not have that amount of capital to freely invest. They would to some degree depend on debt offering parties to finance the deal,” explains the strategy director at an investment bank. Crackdowns from government can also stem big-deal activity. “Changes in the regulations can cause the deal to change directions, leading it to be unsuccessful due to the lack of approvals from the governing bodies and also political interferences that slow down the deal performance,” says the managing director of an investment bank. “Businesses do not want to take such risks and therefore will not indulge in any deals if there is regulatory interference.” .
In which geographies do you expect to see the highest number of deals over US$10bn in the coming year? (select up to two) Asia What do you think will happen to the number of private equity (PE) deals valued above US$10bn in the coming 12 months? 8% 68% 4% Decrease significantly Decrease somewhat North America 64% Europe 32% Remain the same Increase somewhat Increase significantly 40% 40% Latin America 16% Africa 12% 0% 16% 10% 20% 30% 40% 50% 60% 70% Interestingly, the highest percentage of respondents (68%) expected Asia to have the highest number of megadeals, just ahead of North America (64%). Europe was chosen by 40% of respondents, while Latin America (16%) and Africa (12%) were way down. Many respondents feel that Asia’s potential is opening it up to more super-sized deals. “Asia is one geography we see the highest number of deals happening with its urbanization, population size, economic and income growth. There is the evolution of financial markets within the region and adoption of technology leading to further innovation and productivity,” says a director of strategy and corporate development. Elsewhere, North America’s already-set business precedents and rising economy will also continue to attract big money for deals.
“The high levels of growth in the North American region is attracting more investments and the availability of suitable targets combined with the openness to invest will drive the activity in this region. The valuations in this region are already high, but investors do not mind acquiring targets in this region as they understand the potential it can gain in the near future. Local financing is also available and this is attracting strategic businesses,” says the managing director of an investment bank. Respondents are divided on what will happen with private equity (PE) and megadeals in 2016.
While 40% believe it will increase over the coming year, 32% think that activity will actually fall to a certain degree. Those who feel that major PE deals will increase believe the fact that sponsors have the capital ready to deploy will compel them to do so. “With large amounts of equity capital available, PE firms are looking for new avenues to invest,” says one corporate director of strategy. “They cannot invest solely with debt they need to have some amount of equity capital to be able to invest and with these reserves paired with the fact that interest rates are low, this will drive a large number of PE deals in the coming 12 months.” By contrast, respondents who felt that PE activity could decrease pointed out increased competition from corporates is driving prices up.
“PE deals will decrease slightly mainly due to the competition they are facing from the strategic investors. They are unable to meet the corporate offers in terms of exit strategies and the high level of investments required. Therefore they are unlikely to invest in deals over US$10bn,” says the managing director of an investment bank. 7 . 9 . 2015 BN Deals in the room Venue® data room: A special report Incipio Technologies acquires Incase Designs September 16, 2015 $4.2 BN Industry: Computer: Hardware; Consumer: Other; Consumer: Retail; Telecommunications: Hardware Hexagon acquires EcoSys Management September 10, 2015 $6.5 BN Financial Advisor for Target: Aeris Partners Industry: Computer software Schlumberger Limited acquires Cameron International Corporation August 26, 2015 $13.8 BN Financial Advisor for Target: Credit Suisse Counsel for Target: Alston & Bird LLP; Cravath, Swaine & Moore LLP Financial Advisor for Buyer: Goldman Sachs Counsel for Buyer: Baker Botts LLP; Gibson Dunn & Crutcher LLP; Skadden Arps Slate Meagher & Flom LLP Industry: Energy; Industrial automation; Industrial products and services Berry Plastics Group, Inc. has agreed to acquire AVINTIV Inc. from Blackstone Group L.P. July 31, 2015 $2.5 BN Financial Advisor for Buyer: Barclays; Credit Suisse Counsel for Buyer: Bryan Cave LLP Financial Advisor for Seller: Bank of America Merrill Lynch; Citi Counsel for Seller: Simpson Thacher & Bartlett LLP Industry: Automotive; Manufacturing (other); Medical; Services (other); Telecommunications: Hardware Avago Technologies Ltd to acquire Broadcom Corporation May 28, 2015 $34.9 BN H.J. Heinz Company merges with Kraft Foods Group, Inc. July 2, 2015 $54.5 BN Financial Advisor for Target: Centerview Partners Counsel for Target: Davis Polk & Wardwell LLP; Sullivan & Cromwell LLP Financial Advisor for Buyer: Lazard Counsel for Buyer: Cravath, Swaine & Moore LLP; Kirkland & Ellis LLP Industry: Consumer: Foods NXP Semiconductors N.V. acquires Freescale Semiconductor Inc. March 2, 2015 $15.9 BN Financial Advisor for Target: Evercore Partners Inc; JP Morgan Financial Advisor for Target: Morgan Stanley Counsel for Target: Davis Polk & Wardwell LLP; Paul Weiss Rifkind Wharton & Garrison LLP; Skadden Arps Slate Meagher & Flom LLP; Sullivan & Cromwell LLP; WongPartnership LLP Counsel for Target: Houthoff Buruma; Skadden Arps Slate Meagher & Flom LLP; Wilson Sonsini Goodrich & Rosati P.C. Financial Advisor for Buyer: Bank of America Merrill Lynch; Barclays; Citi; Credit Suisse; Deutsche Bank AG Counsel for Buyer: Latham & Watkins LLP; Simpson Thacher & Bartlett LLP Industry: Computer: Semiconductors; Computer software; Telecommunications: Hardware For more information: Please contact your RR Donnelley Sales Rep. Call 1.888.773.8379 Financial Advisor for Buyer: Credit Suisse Counsel for Buyer: Davis Polk & Wardwell LLP; De Brauw Blackstone Westbroek; Simpson Thacher & Bartlett LLP; White & Case LLP Debt Provider (Other) for Buyer: Credit Suisse Industry: Computer: Semiconductors; Telecommunications: Carriers Or visit www.venue.rrd.com Venue demo (audio enabled): Venue.RRD.com/Demo Corporate Headquarters 35 West Wacker Drive Chicago, IL 60601 U.S.A. Verizon acquires AOL June 23, 2015 $4.4 BN Financial Advisor for Target: Allen & Company LLC Counsel for Target: Wachtell, Lipton, Rosen & Katz; White & Case LLP Financial Advisor for Buyer: Guggenheim Partners, LLC; LionTree Advisors, LLC Counsel for Buyer: Weil Gotshal & Manges LLP Industry: Internet/ecommerce Axis Capital and PartnerRe merge January 26, 2015 $5.3 BN Financial Advisor for Target: Credit Suisse Counsel for Target: Appleby; Davis Polk & Wardwell LLP; Skadden Arps Slate Meagher & Flom LLP Financial Advisor for Buyer: Goldman Sachs Counsel for Buyer: Conyers Dill & Pearman; Simpson Thacher & Bartlett LLP Industry: Financial Services; Insurance related Deals. Done.
Simple. 888.773.8379 www.rrdonnelley.com www.venue.rrd.com Copyright © 2015 RR Donnelley® and RRD are trademarks of R.R. Donnelley & Sons Company. All rights reserved. . ABOUT RR DONNELLEY RR Donnelley is a global provider of integrated communications. Our company works collaboratively with more than 60,000 customers worldwide to develop custom communications solutions that help to drive top-line growth, reduce costs, enhance ROI and ensure compliance. Drawing on a range of proprietary and commercially available digital and conventional technologies deployed across four continents, the company employs a suite of leading Internet based capabilities and other resources to provide premedia, printing, logistics and business process outsourcing services to clients in virtually every private and public sector. RR DONNELLEY AT A GLANCE $11.6 billion 2014 net sales 65,000+ 500+ Employees Global locations design that allow you to easily organize, manage, share and track all of your you can manage who has access to your data room, which documents they see, and how they can interact with those documents. Venue data rooms are backed by RR Donnelley, a $11.6 billion corporation with more than 500 locations and over 65,000 employees worldwide. RR Donnelley’s total revenues are larger than all other virtual data room providers combined. We bring extensive experience to providing integrated communications services. us directly. Sr. D 255 Fax: 212.341.7475 |venuecommunications@rrdvenue.com Da VENUE® Market Spotlight: Megadeals Manufacturing locations 750+ About Venue Nearly 125 Issued and pending patents Nearly $2 billion Capital investments over the past six years .
VENUE DATA ROOM ® The World’s Workspace Venue is the fast-growing virtual data room solution of RR Donnelley, the leader in integrated communications services. Our Venue virtual data room provides a secure online workspace with a powerful feature-set and an intuitive design that allow you to easily organize, manage, share and track all of your sensitive information. A Venue workspace provides complete control, ensuring that you can manage who has access to your data room, which documents they see, and how they can interact with those documents. We serve hundreds of thousands of Venue users, who are accessing content related to the highest proï¬le deals in the market. With a Venue data room you have access to the RR Donnelley global footprint, where you can leverage our suite of ï¬nancial services— everything you need from pre-negotiation to post-transaction ï¬ling and archiving— anytime, anywhere. powerful, intuitive features that deliver what you need right now. Best-in-class security: Trust your information to our industry-leading security: AT 101 compliant, redundant, third-party-tested platform, exclusive protection features and maximum precautions for all interactions. Unmatched room service: We give you hands-on, startto-ï¬nish service that’s unique to the industry. The Venue team delivers local service no matter where you are thanks to in-house staff at hundreds of locations around the globe. Mobile : Venue mobile allows you to manage your documents and users no matter where you are, in a variety of different languages.
Whether you are rushing to a meeting —or in the midst of travel— access your Venue data room in a familiar and easy-to-use interface from any IOS device. User activity reports: Track exactly who is —or isn’t— accessing the ï¬les of your data room with instant, realtime reports. The Venue Executive Suite: Leverage the enhanced functionality of the intuitive Venue interface to deliver even more control over and access to your multiple Venue data room projects from the executive level dashboard. One-click translations: Continue to leverage the RR Donnelley global footprint to help you do business anywhere in the world, easily and securely, with our translations services. Our linguists translate documents within a Venue data room in over 140 languages—with a simple click. Google search: Secure, full-text search, powered by Google. For more information please visit www.venue.rrd.com. 888.773.8379 www.rrdonnelley.com www.venue.rrd.com Copyright © 2015 R. R. Donnelley & Sons Company. All rights reserved. 11 .
VENUE® Market Spotlight: Megadeals .
