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Emerging market acquirers of emerging market targets, by target

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H1 ‘05 H2 ‘05 H1 ‘06 H2 ‘06 H1 ‘07 H2 ‘07 H1 ‘08 H2 ‘08 H1 ‘09 H2 ‘09 H1 ‘10 H2 ‘10 H1 ‘11

Source: Thomson Reuters SDC; KPMG analysis.

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Brazil CEE Central America & Caribbean China

CIS India Malaysia Middle East & North Africa

Russia South Africa South America Excl. Brazil South & East Asia

Saharan Africa Excl. South Africa

Fluctuating activity between developing countriesThe deal volume between emerging countries has remained broadly flat since 2009. Total E2E transactions remains comparatively low, representing only 11 percent of all the deals featured in the EMIAT.

This number is unsurprising given that organizations in emerging

countries are less likely to develop through acquisition as their organic growth prospects are often so good. The relatively immature state of the emerging markets also means that there are simply fewer companies to buy.

KPMG Global M&A team

The ability to create, enhance, or preserve value is critical in any economy. For many organizations, this means taking advantage of merger or acquisition opportunities. Whether you are on the buy side or sell side we can support you with services that cover the full life cycle of a transaction.

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Publication name: EMIAT – Emerging Markets International Acquisition Tracker; Publication number: 110966; Publication date: October 2011

Continued interest by developed economies

EMIATOctober 2011

*The 15 developed countries or groups are: U.K., U.S., Canada, Spain, France, Germany, Netherlands, Italy, Australia, Singapore, Hong Kong, Japan, Europe (Other), the Offshore Group and Oceania. The 13 emerging economies or groups are: Brazil, Russia excluding Russia/Cyprus transactions, India, China, Central & Eastern Europe, the CIS, Malaysia, Southeast Asia, South Africa, Middle East & North Africa, sub-Saharan Africa, South America (excluding Brazil) and Central America & the Caribbean.

Emerging Markets International Acquisition Tracker

What is KPMG’s EMIAT?This valuable research looks at deal flows between 15 developed economies (or groups of economies) and 13 emerging economies (or groups of economies)*. The Tracker is produced every six months to give an up-to-date picture of cross-border merger and acquisition activity, with the current edition featuring deals between January and June 2011.

Established in 2003, EMIAT includes data from completed transactions where a trade buyer has taken a minimum five percent shareholding in an overseas company. All raw data is sourced from Thomson Reuters SDC and excludes deals backed by government, private equity firms or other financial institutions.

David Simpson Global Head of Mergers & Acquisitions

D2E = 693 deals

Source: Thomson Reuters SDC; KPMG analysis.

E2D = 220 deals

H1 2011 D2E = Developed to emerging economies E2D = Emerging to developed economies

Buyers from the world’s developed countries are still keen to acquire businesses in emerging nations, with the number of transactions at its highest level since the second half of 2008. In contrast, dealmakers in the world’s growing markets have reduced their cross-border activity, in what looks like a downward trend.

Developed country interest in emerging markets has continued to increase, supported by strong corporate balance sheets prepared to pay for attractive opportunities.

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H1 ‘05 H2 ‘05 H1 ‘06 H2 ‘06 H1 ‘07 H2 ‘07 H1 ‘08 H2 ‘08 H1 ‘09 H2 ‘09 H1 ‘10 H2 ‘10 H1 ‘11

Brazil CEE Central America & Caribbean ChinaCIS India Malaysia Middle East & North AfricaRussia South Africa South America Excl. Brazil South & East AsiaSaharan Africa Excl. South Africa

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Developed market acquirers of emerging market targets, by target

Source: Thomson Reuters SDC; KPMG analysis.

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Australia Canada Europe Other FranceHong Kong Italy Japan NetherlandsOffshore Group Singapore Spain United Kingdom

GermanyOceaniaUnited States of America

Developed market acquirers of emerging market targets, by acquirer

Source: Thomson Reuters SDC; KPMG analysis.

H1 ‘05 H2 ‘05 H1 ‘06 H2 ‘06 H1 ‘07 H2 ‘07 H1 ‘08 H2 ‘08 H1 ‘09 H2 ‘09 H1 ‘10 H2 ‘10 H1 ‘110

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Developed economies still hungry for deals

D2E E2D E2E

EMIAT deal volume in H1 2011

117

220

693

Source: Thomson Reuters SDC; KPMG analysis.

Deal volume between the developed and emerging economies analyzed in the EMIAT has remained fairly constant, with 913 transactions in H1 2011 compared with 926 at year end 2010 and 922 a year ago. Despite being down on the heights of 2008 (1095 transactions in H1), the latest figures are over 26% up on the low of 2009. David Simpson, Global Head of M&A at KPMG, commented: “Developed country interest in emerging markets has continued to increase, supported by strong corporate balance sheets prepared to pay for attractive

Emerging markets remain a highly attractive target for trade buyers from the developed regions, with the number of deals rising for the fourth consecutive half-year. In the six months to 30 June 2011, completed purchases totaled 693. Despite the upward trend, this is still 16 percent below the peak of 2008.

There were over three times as many D2E (developed to emerging) deals as E2D (emerging to developed) deals. E2E (emerging to emerging) deals are running at just over half of E2D and are at their lowest level since 2006.

opportunities. The opposite flow, from emerging countries to developed markets, has suffered from concerns about economic conditions. The short-term outlook is unclear but the continuing rise of the major emerging markets will fuel many more deals over time”

Buyers from developed economies have continued to focus on Brazil, the rest of South America and South East Asia – with transactions in these geographies at record levels.

US and UK buyers have shown renewed interest in the developing markets in 2011, each continuing to rise with volume levels back at their six year average. Japan, Germany, Australia and Canada continue to rise and are at or above previous levels – Japan and Canada at 61 and 82 deals respectively, have hit their highest ever level in the eight years of the EMIAT.

After a short-lived surge in the first half of 2010, deals from E2D have dropped by 15 percent over the past year and are now back to 2006 levels. It’s possible that buyers in these markets

have been deterred by the financial problems in the Eurozone, as the number of deals with the smaller European countries (defined as a single group) has plummeted from 40 to 13 in just six

months. However, Italy, Spain and France reported flat volume levels and Germany and the Netherlands showed increases.

As usual, US companies proved the most popular targets, accounting for 21 percent of all E2D transactions. The United

Kingdom showed a slight increase.

Indian purchasers have, not for the first time, overtaken their Chinese counterparts in clinching the highest number of acquisitions

in developed markets. The other emerging countries or regions which increased their cross-border purchases were Russia, South Africa,

South East Asia, Central America and the Caribbean.

Emerging market acquirers of developed market targets, by target

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H1 ‘05 H2 ‘05 H1 ‘06 H2 ‘06 H1 ‘07 H2 ‘07 H1 ‘08 H2 ‘08 H1 ‘09 H2 ‘09 H1 ‘10 H2 ‘10 H1 ‘110

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Australia Canada Europe Other France Germany

Hong Kong Italy Japan Netherlands Oceania

Offshore Group Singapore Spain United Kingdom United States of America

Source: Thomson Reuters SDC; KPMG analysis.

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Emerging market acquirers of developed market targets, by acquirer

H1 ‘05 H2 ‘05 H1 ‘06 H2 ‘06 H1 ‘07 H2 ‘07 H1 ‘08 H2 ‘08 H1 ‘09 H2 ‘09 H1 ‘10 H2 ‘10 H1 ‘110

50

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Brazil CEE Central America & Caribbean ChinaCIS India Malaysia Middle East & North AfricaRussia South Africa South America Excl. Brazil South & East AsiaSaharan Africa Excl. South Africa

Source: Thomson Reuters SDC; KPMG analysis.

Indian organizations made the greatest number of acquisitions in developed markets.

Emerging markets yet to make their mark