M&A Arab world/ Germany

Towards direct investments to ensure synergies

June 2014

Agenda

2June 2014

Contact details

Prof. Dr. Christian AdersChairman of the Executive Board

P: +49 (0)89 388 790 410M: +49 (0)172 850 4839christian.aders@value-trust.com

Florian StarckSteuerberaterExecutive Board Member

P: +49 (0)89 388 790 420M: +49 (0)172 896 8989florian.starck@value-trust.com

Mehmet ÖzbayManager

P: +49 (0)89 388 790 140M: +49 (0)176 10 30 5774mehmet.oezbay@value-trust.com

ValueTrust Financial Advisors SELeopoldstrasse 8-12

80802 Munich

Germany

www.value-trust.com

Table of Contents

1. German M&A market 3

2. M&A transactions Arab world/ Germany 8

3. Success factors for investors in the German M&A market 14

German M&A market1

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100

200

300

400

500

600

700

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Nu

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Volume (€bn) Total number of transactions

The German M&A market has gained considerable momentum again after the financial crisis

4June 2014

Number of closed deals and transaction volume on German M&A market 2Q04 to 1Q14

Source: CapitalIQ, Mergermarket, ValueTrust analysis.

c. 1,900 p.a.

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

Manufacturing

Retail & wholesale

Finance, insurance & real estate

Other

The main groups of sellers are Mittelstand & Owners, private equity companies and large public corporates

5June 2014

Breakdown of inbound transactions in Germany FY12 – 1Q14

Type of seller

Industry of target

Corporates (private)/ owners/ family

Corporates (public)

Financial sponsors & private equity

Sellers can be private equity companies that regularly exit their investments after several years, family offices, large (public) companies that sell non-core activities or the German Mittelstand/ families, e.g. because there is no succession plan in place

The German transaction market is dominated by private company transactions which itself are driven by the German Mittelstand

Given the structure of the German economy with its strong industrial base, companies in the manufacturing industry account for the largest share of target companies

58.6% 53.9% 48.4%

10.2% 17.2%17.6%

19.4% 18.1%20.9%

11.8% 10.8% 13.2%

Corporates (private)/Owners/ family

Financial sponsors &private equity

Corporates (public)

304 91232

Source: CapitalIQ, Mergermarket, ValueTrust analysis.

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

6June 2014

The German M&A market environment is characterized by fierce competition among investors of various backgrounds who bid for assets “Made in Germany”

Breakdown of inbound transactions in Germany 1Q12 – 1Q14

1. Arab world defined as Gulf Cooperation Council (“GCC” – including Jordan, Yemen and Morocco) plus Turkey and Egypt.Source: CapitalIQ, Mergermarket, ValueTrust analysis.

Germany

Americas

Europe (excl. Germany)

East Asia

Africa

Arab world1

Type of buyer Financial sponsors are constantly on the lookout for

attractive assets and thus compete against traditional corporate buyers in the German transaction market

Private corporates, owners and families representing the German Mittelstand are the most active buyers aiming to increase their market share, diversify their product portfolio or gain access to new technologies/ know-how

With the recovery of the German transaction market after the financial crisis, the number and volume of public takeover offers has reached pre-crisis level

While the majority of transactions are domestic, investors from Europe and the Americas are most active buyers in Germany. Furthermore, Asian investors have continuously been increasing their footprint in the German transaction market

Foreign buyers predominantly invest in German manufacturing companies in order to gain access to German industry know-how and to increase their exposure to the German market

Corporates (private)/ owners/ family

Corporates (public)

Financial sponsors & private equity

Country of buyer

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

7June 2014

Public takeover offers can help to avoid competition in auction processes but the (potential) transaction consideration is regularly challenged by active investors

Public takeovers by type of investor in Germany since 2008

Strategic investors Financial sponsors & private equity

Although the total number of public takeover offers in 2013 was lowest since 2009, the size of transactions has increased in 2013 and a comparable volume is expected to be reached in 2014

In 2013, large takeovers like Kabel Deutschland (€5.6bn), Celesio (€1.0bn) or GSW Immobilien (€ 1.6bn) dominated the market

The development of public takeover activity in Germany correlates with the development of the stock exchanges and general transaction activity, which is contra intuitive

Investment opportunities for buyers with high liquidity arise during crises as transaction activity and competition for assets are lowest in times of crisis

Due to new legislation for delisting – no cash compensation has to be offered – public takeover activity is expected to increase from 2014 onwards for undervalued companies

Total public takeovers (number)

Source: Karl, C., Resch, J., Blättchen, W., Nespethal, U., CORPORATE FINANCE biz: “Öffentliche Übernahmen” börsennotierter Unternehmen in Deutschland, ValueTrust analysis.

Total public takeovers (volume in €bn)

16.6

1.1

9.5

16.4

3.1

12.0

2008 2009 2010 2011 2012 2013

22

10

1922

11

1512

4 47

16

6

2008 2009 2010 2011 2012 2013

M&A transactions Arab world/ Germany2

-

2

4

6

8

10

12

14

16

18

20

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Q1

Nu

mb

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Vo

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€m

Volume inbound (€m) Volume outbound (€m) Total number of inbound transactions Total number of outbound transactions

During the last ten years, Arab investors1 only averaged six acquisitions p.a. in Germany while the total number of acquisitions amounted to c. 1,900 p.a.

9June 2014

Number of closed deals and transaction volume between Germany and the Arab world since 2004

1. “Arab investors” refers to investors from Gulf Cooperation Council countries (“GCC” – including Jordan, Yemen and Morocco) plus Turkey and Egypt.Note: “inbound” refers to Arab investors’ investments in Germany, while “outbound” transactions reflect the investments of German companies in the Arab world.Source: CapitalIQ, Mergermarket, ValueTrust analysis.

6 p.a.

9 p.a.

10June 2014

From 1Q12 until 1Q14, companies from the Arab world only invested in 15 German target companies…

Source: CapitalIQ, Mergermarket, ValueTrust analysis.

Details of closed German inbound transactions from 1Q12 until 1Q14

Buyer/ Investor Buyer country Target company Period Majority Target industry

Amira Nature Foods Ltd. UAE Basmati Rice GmbH Q1-14 Agricultural Products

Oman Oil Company S.A.O.C. Oman OXEA GmbH Q4-13 Commodity Chemicals

Al Faisal Holding Company LLC Qatar Office Space in Berlin-Mitte Q2-13 Real Estate

Al Rayan Tourism & Investment Comp. Qatar Grand Hyatt Berlin GmbH Q2-13 Hotels and Resorts

Compass Ocean Logistics UAE KIESERLING Holding GmbH Q1-13 Trucking

Al Rayan Tourism & Investment Comp. Qatar Maritim Hotel Berlin Q4-12 Hotels and Resorts

Etihad Airways P.J.S.C. UAE topbonus Limited Q4-12 Advertising

Max Prestige General Trading UAE Hansa Group, Chemicals Trading Business Q3-12 Specialty Chemicals

Euro Yatirim Menkul Degerler A.S. Turkey Gries & Heissel Bankiers AG Q3-12 Regional Bank

Banque Misr Egypt Misr Bank - Europe GmbH Q3-12 Commercial Bank

Infinity Investment SA UAE Open Grid Europe GmbH Q3-12 Oil & Gas Storage & Transport

Doha Insurance Company Q.S.C. Qatar Siemens Aktiengesellschaft Q2-12 Industrial Conglomerates

Microsol International LL FZE UAE SOLON Energy GmbH Q1-12 Photovoltaic

EKC international FZE UAE EKC Europe GmbH Q1-12 Industrial Machinery

Mox Telecom Arabia FZ-LLC UAE Mox Deals AG Q1-12 Internet Software

11June 2014

…while over the same period, German companies invested in 30 companies in the Arab world with a strong focus on Turkey

1. GAZPROM Germania acquired 11% in Bosphorus Gaz Corporation A.S. to increase its stake to 51% and subsequently acquired another 20% to increase its stake to 71%.Source: CapitalIQ, Mergermarket, ValueTrust analysis.

Details of closed German outbound transactions from 1Q12 until 1Q14

Buyer/ investor Target company Target country Period Majority Target industry

BSH Bosch und Siemens Hausgeräte GmbH BSH Ev Aletleri Sanayi ve Ticaret AS Turkey Q1-14 Household Appliances

Carl Zeiss Meditec AG Optronik A.S. Turkey Q4-13 Healthcare Equipment

Wuppermann AG Galva Metal A.S. Turkey Q4-13 Trading Company & Distributors

Allianz SE Yapi Kredi Sigorta Turkey Q4-13 Multi-line Insurance

Globtec Energy AG Unit Investments SA, Bagistas II Turkey Q3-13 Renewable Electricity

STILL GmbH Still Arser Is Makineleri Servis ve Ticaret A.S. Turkey Q3-13 Automotive Retail

Allianz SE Yapi Kredi Sigorta Turkey Q3-13 Multi-line Insurance

Kervansaray Hotel Verwaltungs GmbH MMC Sanayi ve Ticari Yatirimlar Anonim Sirketi Turkey Q3-13 Air Freight and Logistics

Triton Water AG Future Technologies L.L.C. UAE Q2-13 Industrial Machinery

Aquila Hydropower Invest Karasular Enerji Uretimi ve Ticaret Turkey Q2-13 Energy

DB Mobility Logistics AG Salem Freight International UAE Q2-13 Air-Freight and Logistics

E.ON SE Enerjisa Enerji A.S. Turkey Q2-13 Electric Utilities

Döhler GmbH Delta Aromatic Egypt Q1-13 Packaged Foods and Meats

Beiersdorf AG Eczacibasi-Beiersdorf Turkey Q4-12 Personal Products

ORAFOL Europe GmbH ORAFOL Turkey Turkey Q4-12 Trading Company

Aquila Hydropower Invest Karasular Enerji Uretimi ve Ticaret Turkey Q4-12 Energy

Aquila AgrarInvest Investitions GmbH Akfen HES Yatirimlari ve Enerji Uretim Turkey Q3-12 Financial Investor

Allgeier SE Oxygen Consultancy Turkey Q3-12 HR & Employment Services

HOYER GmbH Aktifsped Uluslararasi Nakliyat Ve Ticaret Turkey Q3-12 Trucking

Air Berlin OLC & Co. Luftverkehrs KG IHY Izmir Havayollari AS Turkey Q3-12 Airline

itelligence AG Elsys Consulting Services A.S. Turkey Q3-12 IT Consulting

Carl Zeiss Vision International GmbH Altin Optik A.S. and CemFa Optik Sptik Turkey Q3-12 Medical

The Resource Development Group, Inc. SYAT Holding Ltd. Turkey Q3-12 Environmental & facility Services

VHV Vermögensverwaltung NART Sigorta ve Reasurans Brokerligi A.S Turkey Q3-12 Life and Health Insurance

FUJIFILM Europe GmbH FUJIFILM Dis Ticaret A.S. Turkey Q2-12 Distributor

Johnson Controls Hybrid and Recycling GmbH Karat Guc Sistemleri San ve Tic AS Turkey Q2-12 Distributors

GAZPROM Germania GmbH1

Bosphorus Gaz Corporation A.S. Turkey Q2-12 Gas utilities

GAZPROM Germania GmbH1

Bosphorus Gaz Corporation A.S. Turkey Q2-12 Gas utilities

madvertise Mobile Advertising GmbH Mobilike Mobil Reklam Turkey Q2-12 Advertising

Konica Minolta Business Solutions Europe GmbH Transteknik Teknoloji A.S. Turkey Q1-12 Distributor

DEKRA e.V. Palme Group Turkey Q1-12 Research and Consulting Services

80%

20%

Investors seek to acquire a majority share in the target company to gain access to German industry know-how and facilitate the realization of synergies

Investors seek to acquire majority shares in German target companies to gain control over the target company and thus ensure the leveraging of potential synergies

Although only a very limited number of investors from the Arab world invested in German assets, most investors acquired a majority share in the target company

Acquisitions in the manufacturing industry provide access to production capabilities and know-how and support the transfer of knowledge

12

Majority vs. minority inbound transactions in Germany from Arab and other investors

Majority investments

Minority investments

June 2014

Source: CapitalIQ, Mergermarket, ValueTrust analysis.

Type of transactions Q1 2012 – Q1 2014 (Arab investors)

90%

10%

Type of transactions Q1 2012 – Q1 2014 (All investors)

Majority investments

Minority investments

For successful Arab investors, important strategic objectives include transfer of know-how and build up of local production capabilities, extension of their value chain as well as access to new markets

13June 2014

Oman Oil Company (OOC)/ OXEA GmbH

Transaction details: In Dec-13, OOC acquired Germany based

OXEA GmbH, one of the largest global manufacturers of Oxo chemicals from Advent International

Strategic rationale: With the acquisition of OXEA, OCC seizes the

opportunity to form an integrated chemical platform in Oman from its current investments in the chemicals industry

OXEA brings its technology and expertise to Oman, and OCC enables OXEA to source cheaper supplies of its main raw material polypropylene

The acquisition also contributes to OXEA’s expansion strategy into growth markets while OOC benefits from OXEA’s reach into European and North American markets

Samih Sawiris/ FTI and Raiffeisen Touristik

Transaction details: In Mar-14, Samih Sawiris announced the

acquisition of shares in RT/ Raiffeisen Touristik Group GmbH, a leading and independent German travel agency group, and of FTI, the fourth-largest travel operator in Germany

Strategic rationale: Sawiris is founder of and majority

shareholder in the Swiss-based OrascomDevelopment Holding which owns more than 35 hotels, holiday homes and apartments across eight countries

Sawiris gains access to German travel agency distribution network and at the same time enters the tour operator business

Together, the acquisitions form an ideal complement to the existing business of Orascom Development Holding

Qatar Solar/ SolarWorld

Transaction details: In Mar-10, Qatar1 (71% shareholding) and

Solar World (29%) founded the joint venture Qatar Solar Technologies (QSTec) for the production of polysilicon (8,000 tons p.a.). The project is valued at US$1bn, production facilities are to be operational by 2H14

As part of the financial restructuring of SolarWorld in Jun-13, Qatar Solar acquired a 29% equity stake in the financially reformulated company. Additionally, the joint venture granted a loan of €50m

Strategic rationale: QSTec is Qatar Solar‘s first investment into

the solar industry. QSTec aims to become a fully integrated solar energy company covering the whole value chain while catering to both local and global demand

In Mar-14, SolarWorld reaffirmed its intention to support Qatar in ramping up the production of solar modules in Qatar after its restructuring process

Selected case studies of successful Arab-German transactions

1. Qatar Solar holds a 70% share while the remaining 1% share is held by Qatar Development Bank.Source: Company information, press, research.

Success factors for investors in the German M&A market

3

To generate a high deal flow, an investor needs to have access to investment banks, corporate finance advisors and law firms that act as gatekeepers on behalf of the seller.

In Germany, especially large target companies are almost exclusively sold via an auction process that is coordinated by investment banks or corporate finance advisors on behalf of the seller

An investor needs to be “on the radar” of sellers and their advisors in order to be contacted regarding a target company for sale because the intention to sell an asset is often kept as confidential as possible

While the seller makes the ultimate decisions, its advisors act as gate keepers and (main) points of contact towards potential buyers. Successful bidders therefore need to build superior relationships with these gatekeepers or tap their advisors’ network

Foreign investors need to have their own local network of advisors

Based on a broad contact base, it is essential to get access to sellers before official sales processes/ auctions are started

15June 2014

The intermediary role of advisors between seller and buyers

appoints

exchange information

Seller

Private Equity / Large Corporate Group / Mittelstand / Family Office

Investor Potential Buyer 2

Advisor of potential Buyer 2

appoints

coordinate auction process

Advisor of Seller

Investment bank / Corporate Finance Advisor / Lawyer

Advisor of Buyer

Advisors

Auction processes require investors to assess the investment opportunity professionally and to make fast decisions with regards to contract negotiations and deal making

A typical transaction process lasts about six months and generally follows pre-defined steps. However, if the market perceives the asset to be very attractive, the process might also be faster

To successfully close a deal, besides conducting a rigorous assessment of the opportunity, investors need to act and decide fast.

Moreover, to be eligible and admitted to the final round, sellers look for credible and trustworthy buyers

16June 2014

Preparation

Elaborate defendable business plan

Draft marketing material, e.g. teaser, information package

Prepare vendor due diligence reports

Set up data room

Agree long list and short list of investors

Marketing

Approach investors

Educate investors on investment opportunity through sharing of marketing material and pre-meetings

Receive non-binding offers from interested investors

Admit relevant investors to next phase

Due Diligence

Provide selected investors with access to data room disclosing extensive additional company information

Organize site visits, management presentation, expert meetings and Q&A process

Receive binding bids

Negotiation

Determine preferred bidder(s)

Negotiate sale & purchase agreement with preferred bidder

Carry out confirmatory due diligence

Signing of transaction

Closing of transaction

Overview of typical sell side (M&A) process Comments

Value for Buyer 1

Stand alone value

Stand alone value

Price range for Best Buyer

Maximum price Best Buyer

Minimum transaction price

Value for Buyer 2

Stand alone valueRevenue synergies

Cost synergies

Maximum price buyer 2

Value for Best Buyer

To successfully outbid the strong competition for German assets, investors need to be best positioned with regards to expected synergies to be able to pay the best price while still realizing a satisfying return

The final transaction price is determined by the stand alone value of the asset as well as additional value for the investor from realizing synergies

The higher the competition for the asset, the higher the willingness of buyers to pay for synergy potential

In such a situation, only the buyer with the highest expected synergies can outbid all other competitors without sacrificing investment return objectives

Synergies can best be realized if

the buyer gains full control over the transaction object

the transaction object is of strategic interest to the buyer (e.g. focus industry)

17June 2014

Buyer 2

Best

Buyer

Determinants of transaction prices for buyers

Buyer 1

Synergies

Fin

anci

al

syn

erg

ies

In summary, based on a strong initial strategic fit, there is a clear roadmap for investors to successfully close more transactions in the German market and to avoid falling behind in the competition for German assets

18June 2014

Roadmap to successful deal making for investors in the German market

Post-acquisition value managementand controlling of target

Strong initial strategic fit

Access to deal flow For generating a high deal flow, an investor needs to have access to investment

banks, corporate finance advisors and law firms that act as gatekeepers on behalf of the sellers

Defining a clear investment and PR strategy while at the same time mandating a well-connected and locally present financial advisor to become known as a credible and trustworthy buyer in the market. This will help to appear and stay “on the radar” of sellers and their advisors in order to be contacted regarding a target company for sale

Fast and professional decision making with knowledge about local M&A sale process Transaction processes in Germany are highly standardized and coordinated by

professional advisors Due to the high competition in an auction process, investors are required to assess the

investment opportunity thoroughly but at the same time need to make fast decisions with regards to pricing, contract negotiations and deal making

Synergy based pricing Advisors of sellers use an auction process to ensure the highest transaction price

for the seller Investors can only position themselves as best buyer with a competitive pricing in

case of an advantage over other bidders (e.g. (higher) synergy potential due to focus industry). Synergies can best be realized via majority investments and resulting control over the target

Given the intense competition on the German transaction market, investors have to be ready to pay synergy-based premiums

Contact details

19June 2014

Prof. Dr. Christian Aders, CEFA, CVAChairman of the Executive Board

ValueTrust Financial AdvisorsLeopoldstrasse 8-1280802 Munich, Germany+49 89 388 790 100+49 172 850 4839christian.aders@value-trust.com

Florian StarckSteuerberaterExecutive Board Member

ValueTrust Financial AdvisorsLeopoldstrasse 8-1280802 Munich, Germany+49 89 388 790 200+49 172 896 8989florian.starck@value-trust.com

Mehmet ÖzbayManager

ValueTrust Financial AdvisorsLeopoldstrasse 8-1280802 Munich, Germany+49 89 388 790 140+49 176 10 30 5774mehmet.oezbay@value-trust.com

www.value-trust.com