german m&a: post-crisis deal structures, frankfurt
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German M&A: Post-Crisis Deal StructuresFrankfurt Q3 2009
www.mergermarket.com/events/
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german m&a: post-crisis deal
structures
Contents
Speakers around the table 03
Transcription of the discussion 04
Duff & Phelps: Where the debt breaks 10
Latham & Watkins: Foreign investments under closer scrutiny - Recent changes to the German Foreign Trade Act and the German Foreign Trade Regulation 12
Historical data 16
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Speakers around the table
Robert A. Bartell CFA
Managing Director
Duff & Phelps
Guy Street
Partner
Deloitte & Touche GmbH
Dr. Dirk Oberbracht
Partner
Latham & Watkins LLP
Prof. Dr. Bernhard Schwetzler
Chair of Financial Management and Centre for Corporate Transactions
HHL - Leipzig Graduate School of Management
Catherine Raisig
Managing Editor
Remark, The Mergermarket Group
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Dr. Dirk Oberbracht (DO):
do: There has been a big change in deal structures due to the lack of financing available to private equity firms. This has meant that the way in which they approach investments has altered and they are increasingly looking at doing more minority investments; distressed M&A deals; or investing in debt instruments. We are also seeing that they are looking at companies they were interested in over the last couple of years, but that they may not have been able to win at auction. Private equity firms are now coming back and saying that these are great companies and start investing to hold, or to own the company eventually. Some of these investors have lots of cash or few, if any, difficulties financing bigger transactions.
It is also a very good time for trade buyers and you see very big transactions going on – in particular, in industries like software, energy and the like.
Guy Street (GS):
gs: I think there are different environments for private equity sponsors and trade buyers. For trade buyers, their situation is very sector related and they are taking advantage of lower prices, but I do not think seller’s expectations have decreased so much that there is now a real boom in terms of M&A. With regards to private equity related activity, the statistics here in Germany show that in
the first half of the year activity levels were down on those of 1995 and there were no buyouts worth over €100m completed. In the third quarter, I think we saw three or four such deals. Right now, new debt is limited to packages of around €200m and constructing a package is very difficult, so there’s virtually no syndication. Every deal takes longer and you have to calculate considerable breakup costs if you don’t complete a deal. Many sponsors have not really been in the market; they’ve been looking at origination and have been kept busy with their portfolios, searching for small niche add-ons to ensure they are positioned, but being very selective about what they actually look at.
It also makes a big difference if a sponsor’s raised a fund in the last year or two, i.e. is the sponsor at the beginning of his fund, or in the later stage of a previous fund, where perhaps he’s put a fair bit of equity in portfolios that are now highly leveraged?
Prof. Dr. Bernhard Schwetzler (BS): Bs: From a theoretical perspective, I should add that it is not just the uncertainty that has been increasing and seriously hampering businesses and transactions. Another factor is the imbalance in the informational symmetry between the parties. The perceived or actual difference in the information level of the parties has proven to be one of the major deal breakers. However, there are instruments such as earn-outs designed exactly to bridge these gaps and I feel that in the current market environment it is these instruments that are being applied.
Robert Bartell (RB):
rB: We see larger buyouts being replaced with more mid-sized buyouts. For the time being, we will not read about multi-billion euro transactions on the front page of the Ft. sponsors that were doing those deals are now very interested in transactions that are between €100m to €500m. Furthermore, we have seen sponsors more interested in businesses and industries that have market growth opportunities, even if they are traditional buyout funds. obviously, one sector where there’s a big buzz is clean technology and renewable energy, but there are other areas where even a buyout fund can participate if they believe there is a high potential for growth, rather than just something that they can leverage assets against.
do you Feel that deal structures have changed in the course oF the Financial crisis and iF yes, hoW?
With current m&a and corporate finance related activity in germany low, this roundtable event held in Q3 2009 in Frankfurt examined the impact that the financial crisis has had on deal structuring. the following is an edited transcript of the discussion.
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hoW are the Buyers oF distressed assets protected From liaBilities? do: The big theme here is how to get rid of debt. Obviously, there are many companies with a debt burden accrued during the era of cheap financing in the past years. These debts now need to be restructured and that essentially raises the question of how to get rid of the debt. On the back of this we see debt-to-equity swaps, packed solutions wherein the equity sponsor is working together with the senior syndicate to try and get rid of mezzanine and second tier lenders, then bond restructurings.
rB: I have been surprised to see sponsors working with senior lenders to come up with strategies in a pre-pack to sort or push out the mezzanine. We will see more of that as the market improves and then the question of value in debt, and where debt breaks, is only going to get more complex. I predict that it will not be uncommon for some of these businesses to be almost given away because they require either liability assumptions and pensions, or they’re haemorrhaging money and require significant investment in the next year. Most businesses face severe pressure on the top line, regardless of industry, whether they’re a law firm, advertising agency, or in the automotive industry - everybody’s top line is really pinched. As a consequence, trade players are very interested in making deals happen because there is so much pressure to grow revenues and earnings as a listed company today.
gs: We have seen waivers, resets and equity being topped up by the sponsors who have been holding their positions. Banks have been happy to do that, because normally the new equity will want a write-down and that’s not really something the banks have been eager to do, so accounting areas have been playing a role there. As the economy picks up, you’ve still got the equity hole there with these companies and, although the ratios may look a little better, effectively, they are going to be trading at a competitive disadvantage, which is going to continue. As the markets brighten up, there will be a move towards structured deleveraging and we’re going to see a lot of new equity situations happening.
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“i Feel it is important that the non-executive team Be an independent third party providing an oBjective analysis.” Robert A. Bartell
Bs: Something to keep in mind is that some major obstacles in German bankruptcy law make it difficult to buy assets out of a distressed firm, or a firm that is in bankruptcy. One thing that we see is that the tax loss going forwards is extremely difficult to get used by other investors. This turns out to be a major obstacle in buying assets or transferring assets out of a bankrupt company in Germany, but that’s just a side effect.
What is the Future oF the lBo market? rB: I would be surprised if there were any mega-buyouts in the near future, since they require significant bank financing. The deal you can get done today is modest compared to before, but the fact of the matter is that even on a modest leverage - so say that one third of an enterprise value is debt financed versus 75% or more two years ago – the expected returns are still very attractive, at around 15%, versus what public indices have done historically. I know that right now many buyout funds and their LPs are thinking, “this should be an asset class that does 25%” and ultimately it will come back to that expectation, but if you actually have very low leverage, getting a 15% or 17% return is still pretty attractive. In addition, the probability of financial distress is much lower and you actually have a balance sheet that allows you to invest in the business and potentially make acquisitions. We may even see an era where companies in the private equity space are held for eight years, rather than three, and they start to pay dividends to their investors. I think the look and feel of how returns are realised may change.
do: In all probability, I don’t think you will see mega-buyouts because of the financing situation, which is very different from the situation in 2006 and 2007. This trend will continue, but I think banks will be more open to make acquisition finance available in a syndicate. The pieces will be small, making it a more burdensome effort to secure the debt. KKR, for example, did collateral bond financing when they purchased a brewery business in Asia. This means you may see very tailor-made financing structures to complete a bigger investment, or portfolio transaction where a private equity sponsor is using the balance sheet of one of its portfolio companies to acquire the business, for instance.
gs: Vendor financing is one deal structure being discussed now. However, there are a number of issues around vendor financing for the seller and, therefore, there has to be a sort
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of special situation that allows that to happen, but by using vendor financing we will see deals getting above the €400-€500m mark. So, there are a number of situations out there where people are looking to see the logic of the deal and find the structures that allow them to do it. But, unless you have a business plan that you can actually really rely on, this should not be attempted due to the complexities and amount of time, and money, that you have to invest.
Bs: We are seeing increasing numbers of small deals and more sophisticated deals, using what I described earlier as instruments designed to bridge the information asymmetries. Having said that, I feel the current major challenge to private equity firms is running their portfolio companies. Not in terms of generating new business, but how to exit. Private equity firms have to face the fact that they are stuck in their portfolio firms and, for as long as they are, they have to somehow get deeper into operating the business. They will have to deal with certain things more directly, really running them. People working for private equity companies come from the financing side and only the minority are directly tied to the operating business.
introduction to Fairness opinions Bs: Fairness opinions were not known in Germany, I believe, until the very end of the 1990s. There are still many people out there who believe that it’s just a new trick of the investment banks to increase fees from their clients.
The breakthrough for fairness opinions came via a regulation implemented in German takeover law and related to the target company’s management making a statement on the fairness of the takeover offer that it received. This was the starting point for fairness opinions becoming a regular tool in capital market transactional communication because, in many of the cases, the manager hired an investment bank, or adviser, to write the fairness opinion that supported the view of the management.
Up until 2005/2006, many fairness opinions were written by small advising companies, or advisers with no clear standards about the content; the disclosure rules; or how to deal with conflicts of interest, since often the provider of the fairness opinions were also involved in the transaction and sometimes got a fee that depended on the success of the transaction. As a
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consequence, the German Association of Financial Analysts set up an expert group and we developed guidelines and standards to address the issues of conflicts of interest and disclosure rules. One of the initial ideas was a recommendation that any adviser involved in the transaction should not be allowed to provide a fairness opinion. However, after some discussion, we came to a more moderate view, saying that such a relationship should be disclosed along with the fee structure and the fee depended on the success of the transaction. We now annually evaluate the disclosure quality of the fairness opinions and we see that the quality is getting into the standards that we developed.
are Fairness opinions just a tool to make more money For investment Banks?rB: Relative to the size of the fee that big firms get, the fairness opinion fee is a rounding error for many, so I do not buy into the view that fairness opinions are being promoted to increase revenues. They are instead intended to be delivered and relied upon by the board of directors or the supervisory board, not management. I feel it is important that the non-executive team be an independent third party providing an objective analysis. In many places, regulations have already been adopted, even if they are not legally required. For example, in the US the Financial Industry Regulatory Authority (FINRA), formerly the National Association of Securities Dealers (NASD), has specific requirements of investment banks issuing fairness opinions necessitating them to disclose their fee structure and all relations with the company. They have to specifically list out all their assumptions, but most importantly, they also need to have a different internal fairness opinion committee that accepts the engagement and reviews it separately from the deal team that works on it. Having said that, there are situations right now in which it may be reasonable to sell a company at four times EBITDA when comparables trade at six; similarly, there are situations in which a public company has a takeover offer and the premium isn’t 50%, which is obviously easier for a board to recommend to its shareholders. In each of these cases, there is an underlying story that has not been told that could be explored more in fairness opinions.
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is there a correlation BetWeen having had a Fairness opinion and the success oF the deal? gs: In my opinion, fairness opinions are a strategy for management or supervisory boards and not really a driver within deals. I feel that they are a necessary tick-the-box action, but I do not think they will become a formal requirement since they have become more or less best practice in situations in which you actually need them. I do not see any kind of extra deal certainty stemming from them.
Bs: It is difficult to judge because in most of the cases these fairness opinions are not published, so we cannot see differences between deals which have had a fairness opinion and those that have not. The cases I mentioned earlier are the rare ones in which fairness opinion actually became public because the management referred to, and attached it in, a subsequent statement. I believe, however, that an increasing portion of deals will have a fairness opinion attached to the statement due to the legal protection that a fairness opinion can offer.
do: Fairness opinions are linked to people seeing risk materialise where they never expected it to and so they are trying to protect themselves more. There is a greater willingness to spend some money on protecting oneself against risk than there used to be, this could lead to an increase in fairness opinions.
Will the importance oF Fairness opinions change as We come out oF the Financial crisis? could they Become a mandatory part oF an m&a transaction? Bs: Our strategy when developing these standards was actually to hope for the regulators to make it a legal standard. However, even without it being a legal requirement for an M&A transaction, as transactions become riskier, informational asymmetries are becoming more serious and as the liability and risk of shareholder litigation increases, managers will be drawn to this instrument. Government support would be nice to have, but I believe that we will in fact not need it in order to make fairness opinions the common standard in Germany.
gs: I do not believe there is any sense in the market that this is something that is on the radar for the regulators and I think as long as best practices are established, there will be no need. It is one of those areas where unless there is some sort of scandal, or crisis, I cannot imagine it coming on the radar.
rB: I think there is more potential regulation in the form of a solvency opinion. In the UK, for example, there is already a great emphasis on this, with pension trustees involved and having some protection. This ensures that the company’s post structure is able to make its contributions. I believe there should be scrutiny of the reasonableness of the projections to ensure that dividends, demergers or assets sales do not impair unsecured creditors, pensions, landlords and passive minority interest type creditors that are greatly harmed once a buyout does not work. The protection of creditors in general is something that’s going to be focussed on in the next wave of transactions.
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Where the deBt BreaksRobert A. Bartell, CFA (Managing Director, London) and Dr. Christian Aders (Managing Director, Munich)
income approach The income approach faces limitations in the current economic environment, including:
• Challenges in estimating the Cost of Capital - Which risk-free rate should be used?
- What is the proper equity risk premium? - How did the collapse in the financial industry affect my firm’s beta?
• Assessing the reasonableness of financial projections - Are the projections aggressive or conservative given the
current environment? - How do we treat the Net Operating Losses, a tax asset, of a company? - What is the amount of “new money” necessary for a company to achieve its business plan?
market multiple approachThe market multiple approach has a multitude of questions as well:
• Should a valuation use current, historical or projected multiples?
• Is the current EBITDA appropriate for applying to the multiple?
• Will the historical peak-to-trough cycle of a company match the future peak-to-trough?
Valuation-driving market multiple selections are even more critical if the value falls within the ‘Red Zone’ in which slight adjustments could dramatically affect a conclusion.
Senior Debt Second Lien Term Loan / Mezzanine Debt Enterprise Value
The “Red Zone”
Positive Equity Value
Low Multiple High Multiple
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To assess the financial viability of a company, long-term projected performance needs to be reviewed in conjunction with the current situation. Companies that look solvent today may not be solvent tomorrow. A simple example comparing two companies with similar free cash flow but different capital structures demonstrates the importance of not only measuring the current health of a company but also estimating its future strength.
Which company is in a Better position?
step 1: Balance sheet assessing Where the debt BreaksIs enterprise value greater than outstanding debt?
step 2: cash Flows assess company liquidityCan cash flows pay debt obligations?
step 3: conclude Which company is in Better position?
In the first scenario, Company 1’s enterprise value exceeds the outstanding debt but Company 1 may not have the ability to refinance in the current environment.
In the second scenario, Company 2’s enterprise value is less than the outstanding debt but Company 2 should have the ability to service upcoming payments.
solvency testsBalance Sheet: passCash Flow: Fail
solvency testsBalance Sheet: FailCash Flow: pass
Duff & Phelps is well positioned to provide a debtor, creditor or security trustee an independent going concern business enterprise value and expert testimony. We are confident in assessing and defending ‘where the debt breaks’ in connection with negotiations amongst various stakeholders.
(€ in 000s)
company 1
Enterprise Value €300,000
debt securities Senior Debt (125,000)
Second Lien Term Loan / Mezzanine Debt (100,000)
Aggregate Equity Value Surplus/(Deficit) €75,000
(€ in 000s)
company 2
Enterprise Value €140,000
debt securities Senior Debt (125,000)
Second Lien Term Loan / Mezzanine Debt (100,000)
Aggregate Equity Value Surplus/(Deficit) -€85,000
EBITDA 250Capex: 10Taxes 25FCF1 215
Principle Due: 200Interest Due: 85Total Fixed Charges 285
Fixed Charge Coverage Ratio2: 0.75x
EBITDA 250Capex: 10Taxes 25FCF1 215
Principle Due: 100Interest Due: 85Total Fixed Charges 185
Fixed Charge Coverage Ratio2: 1.16x
1 Free Cash Flow “FCF” = EBITDA - Cash Taxes - Capital Expenditures2 Fixed Charge Coverage Ratio = FCF/Fixed Charges
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Foreign investments under closer scrutiny – recent changes to the german Foreign trade act and the german Foreign trade regulationDr. Dirk Oberbracht and Dr. Wilhelm Reinhardt
BackgroundOn 6 March 2009, the German Federal Council (Bundesrat) approved the amendments to the German Federal Trade Act (Außenwirtschaftsgesetz – AWG) and the German Foreign Trade Regulation (Außenwirtschaftsverordnung – AWV) and were adopted by the German Parliament. The new law will allow stricter control of the acquisition of German companies by foreign investors.
current legal situationCurrently, legal transactions and acts in foreign trade may be restricted to guarantee vital security interests of the Federal Republic of Germany; to prevent a disturbance of the peaceful coexistence between nations; or to prevent a major disruption of the foreign relations of the Federal Republic of Germany, e.g. restrictions on the import and export of weapons and military equipment. The acquisition of, or participation of, a German company that produces certain types of military and intelligence products by a non-resident investor has to be reported to the Federal Ministry of Economics and Technology (Bundesministerium für Wirtschaft und Technologie – BMWi). The BMWi may prohibit the acquisition where necessary in order to safeguard the security interests of the Federal Republic of Germany.
the amendments to the aWg and aWvThe recent amendments broaden the scope of the AWG and the AWV. The BMWi is entitled to examine the acquisition of holdings in German companies by foreign investors, regardless of the industry sector in which the target company is active and to prohibit the acquisition or issue formal directives. Foreign investments may be restricted if the public safety and order within the meaning of Articles 46 and 58 (1) of the EC Treaty are threatened by the acquisition.
1. Which transactions are aFFected?Affected are transactions by which a non-EU resident investor acquires a direct or indirect holding in a resident company, provided that the holding presents at least 25% of the voting rights in such a company.
a) resident company and non-eu investorA resident company is a company with its registered office or seat of management in the territory of the Federal Republic of Germany.
A non-EU investor is an investor with its registered office or seat of management outside the European Communities. Branch offices and places of business in the EU of such investors are also considered as non-EU offices. On the other hand, non-EU investors from member states of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland) are treated as EU investors.
The BMWi may also examine the acquisition of a holding in a resident company by an EU investor, if a non-EU investor owns at least 25% of the voting rights in the EU investor and there are indications that an abusive structure or a bypass transaction was undertaken to avoid an examination.
Conversely, this means that acquisitions by EU investors that are majority-owned by non-EU investors, in principle, should not be under examination. This should also apply to private equity investors, which often use acquisition vehicles with registered seats in the Netherlands or Luxembourg that are owned by non-EU entities. This structure is often chosen for tax reasons and not to avoid an examination pursuant to the AWG.
b) investment threshold Investments may only be examined, if the non-EU investor holds 25% or more of the voting rights in the resident company after the acquisition of the holding. Not only is the acquisition of a direct holding subject to the new regulation, but also indirect acquisitions. An indirect holding exists, for example, when a non-EU investor acquires a resident company, which holds shares in another resident company. Also, transactions outside Germany - similar to merger control according to anti-trust law - may fall under the new regulation, e.g. the acquisition of a US
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company holding more than 25% of the voting rights in a German company. As such, a transaction is usually subject to foreign law and it is doubtful whether the prohibition of the transaction by the BMWi will lead to the nullity of the transaction and whether the BMWi may enforce the reversal of the transaction. At least, the BMWi should be able to install measures such as to restrict the exercise of voting rights in the resident company in order to enforce the prohibition. Similar cases are known in anti-trust law.
Furthermore, in calculating whether the non-EU investor reaches the relevant 25% voting rights threshold, voting rights in a resident company held by a third company are attributed to the non-EU investor, if the investor owns 25% or more of the voting rights in such other company or, if the non-EU investor has entered into an agreement on the joint exercise of voting rights with such other company.
c) public safety and orderA transaction may only be prohibited if it poses a threat to public safety and order. In addition, such threat has to be factual and significant enough to affect a basic interest of the society. According to the German legislator’s explanation, the terms public safety and order are to be construed narrowly and each individual situation needs to be reviewed carefully taking into consideration the case law of the European Court of Justice (ECJ). In order to meet concerns that the new rules may violate European law, in particular free movement of capital and freedom of establishment, a reference to Articles 46 and 58 (1) of the EC Treaty was incorporated in the new Section 7 (1) no. 4 AWG late in the drafting process, thereby making reference to the ECJ case law with respect to Articles 46 and 58 (1) of the EC Treaty. So far, the ECJ has ruled that public order may be affected in the areas of telecommunication and electricity, or the guarantee of services with strategic importance.
2. examination procedurea) competency and review periodThe BMWi has the right to choose to examine a transaction and to prohibit the acquisition. There is no requirement for the investor to notify the BMWi of a planned acquisition. However, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) and the German Federal Cartel Office will transmit information on transactions with which they are concerned to the BMWi. The BMWi will inform the acquirer via an administrative act of the decision to
examine the transaction within a period of three months from the execution of the share purchase agreement or, in takeover cases, the publication of the announcement to make a public tender offer or of the acquisition of control. Should the BMWi not exercise this right within the three month period, it is excluded from a prohibition or issuance of formal directives under the AWG/AWV at a later point in time.
The examination procedure has two phases: (1) In a first step, the BMWi decides to exercise its examination right within three months from the execution of the purchase agreement or, in takeover cases, the publication of the announcement to make a public tender offer or of the acquisition of control. (2) In case the BMWi decides to examine the transaction within this period, the BMWi will notify the acquirer who is then obliged to submit a complete documentation regarding the acquisition. Which documents will have to be provided is to be published by a circular form placed by the BMWi in the German Federal Gazette (Bundesanzeiger). Within two months from the submission of the complete documentation, the BMWi will decide whether it prohibits the acquisition or issues formal directives, to the extent that this is necessary in order to guarantee public safety and order in the Federal Republic of Germany. In any case, the prohibition or issuance of formal directives requires the consent of the German Federal Government.
b) voluntary applicationIn order to have legal certainty at an earlier point in time, the acquirer may apply for a clearance certificate from the BMWi stating that the acquisition poses no concerns. In the application for the planned acquisition, the acquirer and its field of business have to be described in general terms. The clearance certificate is deemed as having been issued if the BMWi does not open the examination procedure within one month from receipt of the application. It is to be expected that the closing of M&A transactions will often be made subject to the condition precedent that such a clearance certificate has been issued.
3. legal conseQuencesTransactions that may be subject to an examination procedure can be executed. The underlying contracts are valid, but remain subject to a subsequent condition until the expiration of the examination procedure. In case of a prohibition, the transaction has to be reversed which means that the acquired participation has to be retransferred to the seller.
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Violations of the prohibition or formal directives may be punished by a fine of up to €500,000.
4. issuance oF Formal directivesIn order to enforce a prohibition, the BMWi may order the necessary measures. In particular, the BMWi may restrict the exercise of voting rights by the acquirer in the acquired company, or nominate a trustee for the reversal of the transaction.
conclusionIn comparison to the original draft, the final version of the amendments has materially been mitigated. Originally, investments by any foreign investor, including EU investors, could have been subject to an examination.
Given the final version of the amendments, it can be expected that the BMWi will only examine transactions in a few cases. In any case, the bar for a prohibition of a transaction is set quite high. Also, investors face only little administrative efforts due to the amendments of the AWG, as acquisitions do not have to be notified to authorities and the formalities of the application for a clearance certificate should be manageable and similar to the documentation provided in connection with an application for merger control clearance. It is a major improvement that investors can now achieve transaction security within one month in straightforward cases. This tool may also be useful for sellers in an auction process in order to select the bidders.
As regards to transaction documentation, it is recommended that the share purchase agreements or public takeover offers provide for the condition precedent that the clearance certificate has been issued; or is deemed to have been issued; or that the relevant examination periods have expired. Furthermore, the agreements could contain detailed provisions on the reversal of the transaction in cases where the transaction has been prohibited.
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“as transactions Become riskier, inFormational asymmetries are Becoming more serious and as the liaBility and risk oF shareholder litigation increases, managers Will Be draWn to [Fairness opinions]”
Prof. Dr. Bernhard Schwetzler
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ranking announced date
status target company target sector
target country
Bidder company
Bidder country
seller company
seller country
deal value (€m)
1 Jun-09 C Hypo Real Estate Holding AG (81.00% stake)
Financial Services
Germany SoFFin Germany 2,960
2 Mar-09 C Daimler AG (9.10% stake) Industrials & Chemicals
Germany Aabar Investment PJSC United Arab Emirates
1,954
3 Jan-09 C Commerzbank AG (25.00% stake)
Financial Services
Germany SoFFin Germany 1,770
4 May-09 P VNG-Verbundnetz Gas AG (47.90% stake)
Energy, Mining & Utilities
Germany EnBW Energie Baden-Wuerttemberg AG
Germany EWE AG Germany 1,200
5 Jun-09 P E.ON AG (13 hydro power plants in Bavaria)
Energy, Mining & Utilities
Germany Oesterreichische Elektrizitaetswirtschaft AG
Austria E.ON AG Germany 1,000
6 Jan-09 C RWE Westfalen Weser Ems AG (20.03% stake)
Energy, Mining & Utilities
Germany RWE AG Germany Municipal communities (Germany)
Germany 800
7 Feb-09 C Danisco Sugar A/S (Anklam factory)
Consumer Germany Suiker Unie Netherlands Nordzucker AG Germany 730
8 Feb-09 C Mitteldeutsche Braunkohlengesellschaft mbH
Energy, Mining & Utilities
Germany J&T Finance Group AS; Severoceske Doly
Czech Republic
NRG Energy Inc; URS Corporation
USA 404
9 Jul-09 C IDS Scheer AG TMT Germany Software AG Germany 40110 Aug-09 C Deutsche Schiffsbank AG
(12.00% stake)Financial Services
Germany Commerzbank AG Germany HypoVereinsbank AG
Germany 400
11 Aug-09 C Porsche Automobil Holding SE (5.00% stake)
Industrials & Chemicals
Germany Qatar Holding LLC Qatar Piech family (private investors); Porsche family (private investors)
Germany 390
12 Apr-09 P Stadtwerke Bremen AG (25.90% stake)
Energy, Mining & Utilities
Germany EWE AG Germany Freie Hansestadt Bremen (City of Bremen)
Germany 360
13 Apr-09 C DAWAG Real Estate Germany Meravis Wohnungsbau- und Immobilien GmbH
Germany Vereinte Dienstleist-ungsgewerkschaft
Germany 360
14 Sep-09 C BRAHMS AG Pharma, Medical & Biotech
Germany Thermo Fisher Scientific Inc
USA HBM BioVentures AG
Switzerland 330
15 Jun-09 P Stadtwerke Bremen AG (25.10% stake)
Energy, Mining & Utilities
Germany EWE AG Germany Freie Hansestadt Bremen (City of Bremen)
Germany 320
16 Sep-09 P Easycash GmbH Business Services
Germany Ingenico SA France Warburg Pincus LLC
USA 290
17 Jun-09 C RMG Group Industrials & Chemicals
Germany Honeywell International Inc
USA Triton Partners United Kingdom
286
18 Feb-09 C Hanseatische Verlags-Beteiligungs AG (23.00% stake); Kieler Nachrichten (24.50% stake); Leipziger Verlags-und Druckerei GmbH & Co. KG (44.90% stake); Luebecker Nachrichten GmbH (49.00% stake)
TMT Germany Verlagsgesellschaft Madsack GmbH & Co KG
Germany Axel Springer AG Germany 263
19 Jul-09 P Infineon Technologies AG (Wireline Communications business)
TMT Germany Golden Gate Capital USA Infineon Technologies AG
Germany 250
20 Aug-09 C Kalle GmbH Industrials & Chemicals
Germany Silverfleet Capital Partners LLP
United Kingdom
Montagu Private Equity GmbH
Germany 213
top 20 german m&a transactions, Q1-Q3 2009
historical data
C = Completed; P = Pending; L = Lapsed
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top 20 private eQuity Buyout and exit transactions, Q1-Q3 2009ranking announced
datestatus target company target
sectortarget country
Bidder company
Bidder country
seller company
seller country
deal value (€m)
1 Sep-09 C BRAHMS AG Medical, Pharma & Biotech
Germany Thermo Fisher Scientific Inc
USA HBM BioVentures AG
Switzerland 330
2 Sep-09 P Easycash GmbH Business Services
Germany Ingenico SA France Warburg Pincus LLC
USA 290
3 Jun-09 C RMG Group Industrials & Chemicals
Germany Honeywell International Inc
USA Triton Partners United Kingdom
286
4 Jul-09 P Infineon Technologies AG (Wireline Communications business)
TMT Germany Golden Gate Capital USA Infineon Technologies AG
Germany 250
5 Aug-09 C Kalle GmbH Industrials & Chemicals
Germany Silverfleet Capital Partners LLP
United Kingdom
Montagu Private Equity GmbH
Germany 213
6 Aug-09 P Aleo Solar AG Industrials & Chemicals
Germany Robert Bosch GmbH Germany HANNOVER Finanz GmbH; Marius Eriksen (private investor)
Germany 192
7 Jul-09 C LEWA GmbH Industrials & Chemicals
Germany Nikkiso Co Ltd Japan Deutsche Beteiligungs AG; Quadriga Capital Services GmbH
Germany 172
8 Jun-09 P Neumayer Tekfor GmbH Industrials & Chemicals
Germany AXA Private Equity; Barclays Private Equity Ltd; Fifth Third Bancorp; Gartmore Direct Fund II Scottish LP; ING; Landesbank Baden-Wuerttemberg; Nationwide Private Equity Fund LLC; NIBC Bank NV
USA 172
9 Apr-09 P TMD Friction Holdings GmbH
Industrials & Chemicals
Germany Pamplona Capital Management LLP
United Kingdom
TMD Friction Luxembourg Sarl
Luxembourg 100
10 Aug-09 C Actebis Holding GmbH Business Services
Germany Droege Capital GmbH Germany ARQUES Industries AG
Germany 93
11 Jul-09 C CeDo Folien und Haushaltsprodukte GmbH
TMT Germany Rutland Fund II United Kingdom
Delton AG Germany 61
12 Jan-09 C ddp Deutscher Depeschendienst GmbH; Evotape S.p.A; Rohner AG; The BEA Group
Industrials & Chemicals
Germany BLUO SICAV SIF Luxembourg ARQUES Industries AG
Germany 30
13 Aug-09 P Hallhuber GmbH Consumer Germany Change Capital Fund II LP Inc
United Kingdom
Stefanel GmbH Italy 25
14 Apr-09 C Heinrich Berndes Haushaltstechnik GmbH & Co. KG (34.30% stake)
Consumer Germany Palace Park Investments Ltd
United Kingdom
CFC Industrie Beteiligungen GmbH & Co KGaA
Germany 23
15 Jul-09 C Samas GmbH & Co KG (94.00% stake)
Consumer Germany Innovation Change GmbH; Samas GmbH & Co KG (MBO Vehicle)
Germany Samas NV Netherlands 20
16 Mar-09 C innovatis AG Pharma, Medical & Biotech
Germany Roche Diagnostics Ltd Switzerland Ventizz Capital Partners Advisory AG
Germany 15
17 Feb-09 C Integrata AG (91.04% stake)
Business Services
Germany Cornerstone Equity Investors
USA Logica plc United Kingdom
15
18 Sep-09 P EliteMedianet GmbH (36.93% stake)
TMT Germany Tomorrow Focus AG Germany Burda Digital Ventures GmbH; EliteMedianet Beteiligungs GbR
Germany 13
19 Mar-09 C Pro2 Anlagentechnik GmbH
Industrials & Chemicals
Germany Deutsche KWK-Gesellschaft mbH
USA Alkane Energy plc United Kingdom
9
20 Jan-09 C Meade Instruments Europe GmbH & Co. KG
Consumer Germany Bresser GmbH Germany Meade Instruments Corporation
USA 9
C = Completed; P = Pending; L= Lapsed
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29%
16%
12%
12%
9%
9%
6%
2%
2% 2%
<1%
<1%
<1%
German M&A sector split by volume, Q1 2004-Q3 2009
Industrials
Consumer
Business Services
TMT
Energy, Mining & Utilities
Financial Services
Pharma, Medical & Biotech
Construction
Leisure
Transportation
Real Estate
Defence
Agriculture
german m&a trends
period volume value(€m) avg. deal size (€m)
Q1 2004 132 11,591 88Q2 2004 157 16,455 105Q3 2004 140 10,359 74Q4 2004 183 19,066 104Q1 2005 134 14,810 111Q2 2005 149 38,950 261Q3 2005 183 13,670 75Q4 2005 196 26,740 136Q1 2006 155 26,375 170Q2 2006 151 10,428 69Q3 2006 177 18,720 106Q4 2006 198 27,641 140Q1 2007 173 14,693 85Q2 2007 156 31,450 202Q3 2007 174 24,943 143Q4 2007 174 12,215 70Q1 2008 143 4,983 35Q2 2008 154 16,886 110Q3 2008 155 48,384 312Q4 2008 113 14,271 126Q1 2009 115 6,616 58Q2 2009 96 7,411 77Q3 2009 92 3,662 40total 3,500 420,319
period volume value(€m) avg. deal size (€m)
Q1 2004 12 3,322 277Q2 2004 9 3,325 369Q3 2004 15 1,397 93Q4 2004 17 3,240 191Q1 2005 18 4,329 241Q2 2005 16 1,708 107Q3 2005 16 3,995 250Q4 2005 16 3,211 201Q1 2006 16 847 53Q2 2006 15 3,185 212Q3 2006 19 3,571 188Q4 2006 29 7,617 263Q1 2007 25 7,203 288Q2 2007 26 7,647 294Q3 2007 21 5,502 262Q4 2007 23 3,253 141Q1 2008 11 1,348 123Q2 2008 24 4,088 170Q3 2008 20 2,045 102Q4 2008 5 147 29Q1 2009 9 52 6Q2 2009 10 317 32Q3 2009 10 1,303 130total 382 72,652
period volume value(€m) avg. deal size (€m)
Q1 2004 22 1,276 58Q2 2004 28 6,886 246Q3 2004 28 5,806 207Q4 2004 40 5,250 131Q1 2005 25 2,596 104Q2 2005 33 8,293 251Q3 2005 40 5,702 143Q4 2005 44 8,911 203Q1 2006 41 2,178 53Q2 2006 44 4,663 106Q3 2006 40 5,609 140Q4 2006 58 14,605 252Q1 2007 38 6,213 164Q2 2007 35 7,124 204Q3 2007 38 4,058 107Q4 2007 39 2,105 54Q1 2008 34 1,566 46Q2 2008 48 10,831 226Q3 2008 37 3,242 88Q4 2008 17 193 11Q1 2009 16 63 4Q2 2009 17 303 18Q3 2009 17 662 39total 779 108,135
sector value(€m)
sector volume
Financial Services 5,489 Industrials 90Energy, Mining & Utilities 4,530 Consumer 47Industrials 3,601 Business Services 36Consumer 1,115 TMT 35TMT 969 Energy, Mining & Utilities 27Business Services 968 Financial Services 26Pharma, Medical & Biotech 462 Pharma, Medical & Biotech 19Real Estate 393 Construction 7Construction 142 Leisure 6Defence 20 Transportation 6Leisure Real Estate 2Transportation Defence 1Agriculture Agriculture 1total 17,689 303
All German M&A
German exits
German buyouts
german m&a all sector analysis ytd 30 septemBer 2009
notes:Based on announced deals, excluding lapsed and withdrawn bidsBased on dominant geography of target being GermanyBased on dominant sector of targetYTD 2009 is from 01 January to 30 September
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29%
16%
12%
12%
9%
9%
6%
2%
2% 2%
<1%
<1%
<1%
German M&A sector split by volume, Q1 2004-Q3 2009
Industrials
Consumer
Business Services
TMT
Energy, Mining & Utilities
Financial Services
Pharma, Medical & Biotech
Construction
Leisure
Transportation
Real Estate
Defence
Agriculture
32%
26%
20%
6%
5%
5% 3%
2% <1% <1%
German M&A sector split by value, Q1 2004-Q3 200
Financial Services
Energy, Mining & Utilities
Industrials
Consumer
TMT
Business Services
Pharma, Medical & Biotech
Real Estate
Construction
Defence
fesgusfgs
0
10,000
20,000
30,000
40,000
50,000
60,000
0
50
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German private equity buyout trends
volume value( m)
german m&a trends
german private eQuity exit trends
german private eQuity Buyout trends
german m&a sector split By volume, Q1 2004-Q3 2009
german m&a sector split By value, Q1 2004-Q3 2009
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