european winter update - harris williams & co. · • the outlook for 2014 in transport and...
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www.harriswilliams.com
www.harriswilliams.de
European Winter
Update February 2014
63 Brook Street
London W1K 4HS
United Kingdom
Phone: +44 20 7518 8900
Red Norrie
Managing Director
Julien Darmon
Managing Director
Thierry Monjauze
Managing Director
Jeffery Perkins
Managing Director
Bockenheimer Landstrasse 33-35
60325 Frankfurt am Main
Germany
Phone: +49 69 3650638 00
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(33.3%)
3.0% 10.3%
Quarterly Quick Read
European
Economic
Environment1
European M&A
Deal Volume
Activity9
GDP2 Manufacturing
Confidence3 Consumer Confidence3
+8.7%
Inbound
M&A Deal Volume
to Europe9
Consumer Prices3
+0.1%
M&A
Environment
• Overall European middle market M&A activity decreased by 4.3% in Q4 relative to Q3 with volumes down 18% compared
with Q4 2012
• UK & Eire transactions accounted for the largest share of overall European activity by volume (41%) in the quarter. An
uptick in activity in Spain (up c. 20% on Q3 2013) was more than offset by declining quarterly volumes in France (19%
decline) and DACH (18% decline)
1
European Equity
Market8
Notes: For the purposes of this Quarterly Update, Europe is defined as: United Kingdom, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux
(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); Evolution calculation based on the quarter finishing 31 December, 2013
(1) For the countries based in the EU27; (2) Year-on-year GDP growth for Q3 2013; (3) PMI, CCI and CPI quarterly growth shown for September 2013 - December 2013;
(4) Aerospace, Defence & Government Services; (5) Also includes Building Products and Paper & Packaging; (6) Telecom, Media & Technology; (7) Transportation &
Logistics; Also includes Speciality Distribution; (8) For all listed companies based in the countries mentioned above and with a market cap greater than €50m; (9) Change
from Q3 2013 to Q4 2013
(20.0%)
TMT6 Consumer Industrials5 T&L7 ADG4 Business
Services
Healthcare &
Life Sciences
Energy &
Power
(0.3%)
Sources: Eurostat, Bloomberg, Markit Economics, S&P Capital IQ
(13.1%) (7.1%)
(0.2%)
33.3% (66.7%)
Last Quarter 9.3% 4.7% 3.4% 5.8% (0.4%) 7.5% 8.5% 5.5%
Last Year 33.5% 22.6% 18.5% 27.6% (0.1%) 26.2% 26.5% 28.3%
Last 3 Years 43.6% 30.8% 15.7% 16.2% (10.7%) 7.5% 23.5% 16.1%
(50.0%) (10.5%) (1.4%)
75.0% 16.7% 26.7% (33.3%) (15.8%)
TMT
Consumer
ADG
Energy & Power
Industrials
Business Services
T&L
• Time Warner Cable rejected a $61.3 billion takeover offer from Charter Communications
• European enterprise software spend is expected to total $89.3 billion in 2014 and grow at a CAGR of 5.0% to reach $103.3
billion in 2017, driven by the conferencing, CRM, data integration, SCM and virtualisation infrastructure software segments
• Suntory made an offer to acquire Beam, the makers of Jim Beam and Makers Mark whiskey, for $15.7 billion, representing a
1-month premium of 27.0%
• Medical professionals and campaigners are putting pressure on governmental bodies to legislate for a reduction of sugar in
foods by up to 40% in four years in an effort to reduce the incidence of obesity and diabetes
• Airbus performed strongly in Q4 2013 with 507 aircraft orders, surpassing 332 orders secured by Boeing, while Boeing led
the Dubai Airshow securing twice as many commitments as Airbus
• At the European Council meeting, EU leaders agreed to greater defense cooperation, including joint development of drones,
in-flight re-fuelling aircraft, satellite communications systems and cyber-defense
• The European oilfield service and equipment M&A market remained active in Q4 2013 with several acquisitions by major
European construction, service, and oil and gas companies, including Amec’s offer to acquire US-based Foster Wheeler
• US-based private equity continued to demonstrate strong interest in the sector in Europe, with Wellspring Capital acquiring
Swift Technical Group from UK-based Gresham Private Equity
• In November 2013, seasonally adjusted industrial production grew by 1.8% in the Euro area (EA17) and by 1.5% in the EU27
compared to the previous month, according to estimates from Eurostat
• In December, the Markit Eurozone PMI Composite Index rose to 52.1, its second-highest level during the past two-and-a-half
years
• Growth in the Euro area slowed slightly in December 2013 due to ongoing weakness in certain countries, as growth in
Ireland, Spain and Germany was partly offset by contraction in France and Italy
• The UK services sector continued its expansion in Q4 2013 with the business confidence index at its highest level since
March 2010, driven by rising employment and positive business expectations
• The outlook for 2014 in transport and logistics is positive, with 4% growth expected in logistics and 8% in sea freight,
according to DVZ
• A report prepared for trade union groups concluded that EU postal liberalisation has resulted in declining services and
increased prices
Healthcare & Life
Sciences
• Graphite backed the MBO of domiciliary care provider, City & County Healthcare from Sovereign Capital
• Duke Street announced the acquisition of Air Products’ homecare operations in the UK & Ireland
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European Economic Climate
2
Key Countries % Y-o-Y Growth
Q3 14E Q3 13A
(20%)
(15%)
(10%)
(5%)
0%
5%
10%
(40)
(30)
(20)
(10)
0
10
20
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
Co
nsu
mer
Pri
ce I
nd
ex (
%)
Co
nsu
mer
Co
nfi
den
ce I
nd
ica
tor
CCI CPI Y-o-Y %
40
45
50
55
60
(10%)
(5%)
0%
5%
10%
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
PM
I In
dex
Va
lue
Ch
an
ge in
PM
I (M
-o-M
)
Change (M-o-M %) Eurozone PMI
(6%)
(4%)
(2%)
0%
2%
4%
6%
Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13E Q2 14E Q4 14E Q2 15E Q4 15E Q2 16E
Source: Eurostat, latest available data as of January 20th, 2014
Sources: Bloomberg, Markit Economics, S&P Capital IQ
Notes: (1) Purchasing Managers’ Index – A figure above 50 indicates economic growth, and below 50 indicates decline; (2) European Commission Consumer
Confidence Index Eurozone; (3) Consumer Price Index
Quarterly Real GDP Growth (% Y-o-Y for EU-28)
European Manufacturing Confidence European Consumer Confidence
• EU-28 GDP grew by 0.2% Q-o-Q in Q3 2013 and by 0.1% on a Y-o-Y basis, according to the latest figures
available from Eurostat
• The latest estimates from the National Institute of Economic and Social Research indicate that the UK
economy grew by 0.7% in Q4 2013, suggesting annual economic growth of 1.9% for the year
• The Eurozone economy is expected to return to growth in 2014, with increased activity driving economic
growth of 1.1% for the year, according to the latest estimates from the European Commission
• The Eurozone Composite Purchasing Managers Index remained stable at 52.1 in December, in line with
activity levels recorded in September and maintaining levels indicating growth (>50)
• Industrial production in the Eurozone grew by 1.8% in November compared to October, rising at the fastest
monthly pace in more than three years
• Consumer confidence continued to improve in December with the Eurozone Consumer Confidence Indicator
increasing by 0.9 points relative to September
• Eurozone inflation fell to 0.7% in October, the first time it had dropped below 1.0% since February 2010,
prompting the ECB to cut the interest rate to a record low of 0.25%
• At 0.8%, inflation remained below 1.0% in December, however, the ECB stated there were no signs of
deflation or an urgent need for another rate cut
• The Eurozone unemployment rate remained flat at 12.1% in November, with youth unemployment increasing
by 0.5% compared with August to reach 24.2%
(1) (2) (3)
UK +1.9% +2.6%
Germany +0.6% +2.1%
France +0.2% +0.6%
Spain (0.7)% +0.3%
Italy (1.8)% (0.2)%
Netherlands (0.4)% +0.5%
Sweden +0.7% +1.9%
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38% 41%
18% 15%
15% 14%
11%10%
7%8%
6% 8%
4% 5%
0%
20%
40%
60%
80%
100%
Q3-13 Q4-13
Italy
Spain
Benelux
France
Scandinavia
DACH
UK & Eire
0
300
600
900
1,200
1,500
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ra
nsa
cti
on
s
ADG
Energy & Power
Transportation & Logistics
Healthcare
Business Services
Industrials
Consumer
TMT
87%
13%
Strategics Financials
European M&A Environment
Market Observations
• European middle market M&A activity contracted 18% Q-o-Q in Q4 2013, contributing to an overall decline in
volume for the full year of c. 28% relative to 2012. The full year decline in activity impacted all sectors. TMT
and Consumer were the two most active sectors, together accounting for over 50% of total annual volume
• Senior loan volume for European LBOs in Q4 2013 increased to circa €9.1 billion, up from €6.4 billion during
the same period in 2012
• In 2013 the average purchase price multiple (TTM EBITDA basis) for European LBOs with an Enterprise
Value of €250m or less was 7.0x, 0.4x lower than for the full year 2012
• Equity contribution1 in European LBOs averaged 42% during 2013, compared to 52% during 2012,
demonstrating the continued strength of debt markets and healthy lending appetite
Transactions by Target Country2 Buyer Segmentation Q4 20131
783
Middle Market
Transactions
Source: S&P Capital IQ
Notes: (1) Strategic buyers may include portfolio companies of private equity groups; (2) By volume; (3) Benelux defined as Belgium, the Netherlands and
Luxembourg; (4) DACH defined as Germany, Austria, Switzerland; (5) Scandinavia defined as Denmark, Norway, Sweden and Finland
Source: S&P Capital IQ
Note: Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m – €650m, within United Kingdom, Eire, France,
DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland)
Q4 - 13
Sector
Breakdown
0.6%
2.2%
5.1%
9.3%
15.1%
14.9%
Change of
Q4 - 13 over
Q4 - 12
22.1%
Middle Market M&A Activity – By Sector
3
30.7%
100.0% Total
Source: S&P Leveraged Commentary & Data
Notes: (1) Equity contribution including retained equity/vendor financing and contributed equity
4
3
5
66.7%
6.3%
(45.2%)
14.1%
(12.6%)
(23.1%)
(25.9%)
(13.0%)
(17.6%)
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0
2,000
4,000
6,000
8,000
10,000
0
50
100
150
200
Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Dea
l V
alu
e (
€m
)
Nu
mb
er o
f T
ra
nsa
cti
on
s
International Activity by Number International Activity by Value
North America81%
South America4%
China3%
Asia (excl. China & India)8%
Africa & Middle East4%
European
Inbound M&A Environment
Acquisitions by Non-European Buyers1,2
Non-European Buyers by Country Q4 131,2
Non-European Buyers as a Percentage of Sector Deal Volume1,2,3
4
Market Observations
• International inbound M&A volume into Europe was broadly consistent in Q4 compared to Q3 2013, with
116 closed transactions
• The ADG and TMT sectors attracted the highest level of international inbound M&A investment, with
international acquirers accounting for 40% and 20% of completed transactions in the quarter, respectively
• The Business Services, Transportation & Logistics and Consumer sectors recorded the greatest increases in
inbound M&A volume
• North American groups continued to dominate non-European buyers, closing 94 transactions in the quarter.
South American buyers closed 5 transactions in Q4 2013, representing their most active quarter since Q4
2011
Source: S&P Capital IQ
Notes: (1) Includes closed M&A transactions of majority stakes only, where deal value was undisclosed or between €25m – €650m, within United Kingdom, Eire,
France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and
Finland); (2) International buyer defined as from outside Europe; (3) By volume
% of Total Deal Volume Q 4-11 Q 1-12 Q2-12 Q 3-12 Q 4-12 Q1-13 Q 2-13 Q 3-13 Q 4-13
ADG 23% 0% 29% 25% 67% 50% 13% 30% 40%
Business Services 9% 10% 8% 5% 10% 10% 15% 11% 18%
Consumer 8% 9% 9% 6% 8% 8% 8% 8% 11%
Industrials 10% 8% 11% 10% 9% 11% 12% 10% 12%
Energy & Power 23% 19% 8% 7% 13% 18% 36% 16% 0%
Healthcare 9% 15% 16% 14% 6% 9% 11% 20% 14%
TMT 17% 16% 18% 21% 18% 20% 17% 24% 20%
Transportation & Logistics 7% 5% 5% 10% 3% 0% 9% 6% 10%
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Aerospace, Defence & Government
Services
5
European ADG Equity Markets1
European ADG Middle Market M&A Activity
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 2.1% 10.9% 0.7% NA 24.5% 20.5% 11.7%
Cash on Balance Sheet (€ bn) 6.5 5.0 0.3 NA 1.0 5.3 0.1
Net Debt / LTM EBITDA Multiple 1.3x 1.1x 0.6x NA NM NM NM
LTM EBITDA Multiple 9.5x 14.1x 8.5x NA 7.9x 17.1x 10.4x
Change since last quarter 0.1x 0.7x (0.6x) NA 1.6x 9.3x 3.5x
LTM EBITDA Margin 13.0% 8.7% 9.5% NA 7.0% 7.5% 9.0%
Consensus 2Yr Fwd Revenue Growth (p.a.) 3.9% 2.6% 8.0% NA (2.2%) 4.3% 8.0%
0
1
2
3
4
5
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
North America Asia (excl. China & India) China
India South America Africa & Middle East
0
2
4
6
8
10
12
14
16
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
Source: S&P CapitalIQ
Notes: (1) Based on HW&Co. indices including the most relevant Aerospace, Defence, & Government Services companies for each country; (2) Includes transactions
with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland),
Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO,
CFO or Chairman
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
Selected European ADG M&A
Market Observations
• Airbus performed strongly in Q4 2013 with 507 aircraft orders, surpassing 332 orders secured by Boeing. In
2013, Airbus secured 1,619 jet orders compared to Boeing’s 1,355
• However, the Dubai Airshow in November saw Boeing secure orders and commitments worth $101.5bn, more
than double that of Airbus
• The global air travel market expanded by 5.1% during the first 11 months of 2013 compared to the same period
in 2012, while European air travel grew by 3.7% over the same period
• The global commercial airline industry is forecast to generate net profit of $12.9bn in 2013, up from $7.4bn
in 2012
• At the European Council meeting, EU leaders agreed to greater defense cooperation, including joint
development of drones, in-flight re-fuelling aircraft, satellite communications systems and cyber-defense. The
last defense summit in 2008 resulted in a commitment for defense spending of 2% of GDP, but EU military
spending has fallen by 10% since then
• Finmeccanica, Safran and Airbus Group are looking to bid for Avio's space division, Avio Spazio, which could
be worth €300m
Target Country Acquirer Country Sub Sector EV (€m)
Thermal Engineering Senior A&D Components 34
PGA Electronic Astronics Corporation Avionics and Electronics 27
Composystem Carbures Europe A&D Components NA
TRAC Group Chromalloy Gas Turbine A&D Components NA
GAVAP RUAG Holding Defense Electronics NA
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Business Services
6
European Business Services Equity Markets1
European Business Services Middle Market M&A Activity
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 6.2% 0.9% 0.2% NM 15.9% 13.0% 4.7%
Cash on Balance Sheet (€ bn) 4.4 7.4 3.5 0.2 0.0 1.2 NM
Net Debt / LTM EBITDA Multiple 1.6x 1.7x 1.4x 10.0x 11.0x 3.0x 2.1x
LTM EBITDA Multiple 11.3x 7.0x 10.7x NM 8.9x 11.6x 10.6x
Change since last quarter 0.9x 0.4x 0.9x NM (0.3x) (0.3x) 0.1x
LTM EBITDA Margin 10.3% 9.5% 6.4% 7.3% 4.0% 3.5% 8.6%
Consensus 2Yr Fwd Revenue Growth (p.a.) 5.6% 3.7% 2.7% (3.1%) 1.3% 6.3% 2.1%
Target Country Acquirer Country Sub Sector EV (€m)
mergermarket BC Partners Professional Services 460
Norland Managed Services CBRE Facility Management 356
Alexander Mann Group New Mountain Capital Staffing Services 307
Busy Bees Childcare Teachers' Private Capital Childcare Services 264
Bestinvest Permira Advisers Professional Services 53
Alpha Financial Markets Consulting Baird Capital Partners Europe Consulting Services 33
Millbrook Proving Ground Rutland Partners Testing Services NA
CMO Global Inflexion Private Equity Partners Software Services NA
Leasedrive Group HgCapital Support Services NA
London Offshore Consultants Bridgepoint Development Capital Consulting Services NA
Europa Support Services Bilfinger Facility Management NA
Conquaestor KPMG Advisory Consulting Services NA
0
5
10
15
20
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
North America Asia (excl. China & India) China
India South America Africa & Middle East
0
50
100
150
200
250
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
Selected European Business Services M&A
Market Observations
• Growth in the Euro area slowed in December 2013 due to ongoing weakness in certain countries. The Markit
Services Business Activity Index fell slightly to 51.0 in December, compared to 51.2 in November, as growth
in Ireland, Spain and Germany was partly offset by contraction in France and Italy
• The UK services sector continued its expansion in Q4 2013 with the business confidence index at its highest
level since March 2010, driven by rising employment and positive business expectations
• In October, the EU proposed a new directive which would give governments the opportunity to blacklist
outsourcing service providers who fall below the required quality standard when serving the public sector, as
concerns over cases such as G4S and Serco were raised
• Bureau Veritas, the French testing services company, made four acquisitions in Q4 2013, acquiring businesses
in Canada (two), South Africa and Singapore, to grow its market share globally
• Management moves3: Bureau Veritas, Capita, Clifford Chance, Michael Page, Serco Group
Source: S&P CapitalIQ
Notes: (1) Based on HW&Co. indices including the most relevant Business Services companies for each country; (2) Includes transactions with a deal value between
€25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,
The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman
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0
5
10
15
20
25
30
35
Q3-11 Q1-12 Q3-12 Q1-13 Q3-13
Nu
mb
er o
f T
ran
sact
ion
s
North America Asia (excl. China & India) China
India South America Africa & Middle East
0
50
100
150
200
250
300
350
400
Q3-11 Q1-12 Q3-12 Q1-13 Q3-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
Consumer
European Consumer Equity Markets1
European Consumer Middle Market M&A Activity
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
7
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 4.4% 1.4% 2.2% 4.8% 9.6% 1.5% 2.9%
Cash on Balance Sheet (€ bn) 29.0 35.6 22.8 4.2 4.3 NM NM
Net Debt / LTM EBITDA Multiple 1.9x 1.8x 1.3x 2.0x 2.4x 1.8x 2.1x
LTM EBITDA Multiple 10.4x 8.2x 8.8x 10.2x 9.0x 9.3x 9.8x
Change since last quarter 0.2x 0.1x 0.4x 0.9x 0.6x (0.3x) (0.3x)
LTM EBITDA Margin 13.0% 10.8% 10.4% 15.4% 10.5% 11.7% 10.0%
Consensus 2Yr Fwd Revenue Growth (p.a.) 4.3% 4.0% 4.1% 2.6% 4.0% 2.0% 4.3%
Sources: S&P CapitalIQ, Bloomberg, Retail Gazette, Food and Drink Europe, Company Press Releases
Notes: (1) Based on HW&Co. indices including the most relevant Consumer companies for each country; (2) Includes transactions with a deal value between €25m and
€650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The
Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman
Selected European Consumer M&A Deals
• Suntory made an offer to acquire Beam, the makers of Jim Beam and Makers Mark whiskey, for $15.7 billion,
representing a 1-month premium of 27.0%
• Sysco acquired US Foods, the foodservice distributor, for $3.5 billion
• Premier Foods is nearing the sale of its Hovis business unit to the Gores Group following a competitive process
• Sports Direct acquired a 4.6% stake in Debenhams stating it wishes to work with the department store and
explore options at an operational level
• Medical professionals and campaigners are putting pressure on governmental bodies to legislate for a reduction
of sugar in foods by up to 40% in four years in an effort to reduce the incidence of obesity and diabetes
• The UK retail sector is expected to grow 2.4% to £324 billion in 2014 as recent signs of economic recovery
bolster consumer confidence
• Management moves3: Cineworld, Debenhams, ICA Gruppen, Orkla, Lookers, Rémy Cointreau, Sports Direct,
Valora
Market Observations
Target Country Acquirer Country Sub Sector EV (€m)
Campofrio Food Group Sigma Alimentos Processed Food 675
Basic Fit 3i Group Leisure 275
Tilda Hain Celestial Processed Food 261
Cambridge Education Group Bridgepoint Education 222
Park Holidays (UK) Caledonia Investments Leisure 206
Byron Hamburgers Hutton Collins Restaurants 120
Virgin Wines Mobeus Equity and Connection Capital Online Retail 19
Burton's Foods Ontario Teacher's Pension Plan Processed Food NA
Empire World Trade Univeg Katope Distribution NA
Snacks International Apax Partners France Processed Food NA
Arena Italia Capvis Equity Partners Apparel NA
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Industrials
European Industrials Equity Markets1
European Industrials Middle Market M&A Activity
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
Selected European Industrials M&A
Market Observations
• GDP rose by 0.1% in the Euro area (EA17) and by 0.2% in the EU27 during the third quarter of 2013,
compared with the previous quarter
• In November 2013, seasonally adjusted industrial production grew by 1.8% in the Euro area (EA17) and by
1.5% in the EU27 compared to the previous month, according to estimates from Eurostat
• In December, the Markit Eurozone PMI Composite Index rose to 52.1, its second-highest level during the past
two-and-a-half years
• In December, the Economic Sentiment Indicator (ESI) increased by 1.6 points in the Euro area (to 100.0) and
1.4 points in the EU (to 103.5). Sentiment in the Euro area is thus back to its long-term average for the first
time since July 2011
• In October, The Marmon Group agreed to acquire the beverage dispensing and merchandising business of IMI
plc for $1.1 billion
• Management moves3: Digital Barriers, Edwards Group, Hexagon Composites, Indutrade, Infratek, Koninklijke
Philips, Marshalls, Monberg & Thorsen, Obrascon Huarte Lain, OC Oerlikon, Rational, Rosenbauer,
Schweiter, Serco Group, SGL Carbon, Siemens, Solar, Speedy Hire, Spirax-Sarco, Travis Perkins, TTS Group,
Volvo, WABCO, Waterlogic, Westag & Getalit
Source: S&P CapitalIQ
Notes: (1) Based on HW&Co. indices including the most relevant Industrials companies for each country; (2) Includes transactions with a deal value between €25m
and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium, The
Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman 8
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 7.3% 6.2% 5.3% 3.9% 24.0% 8.9% 4.1%
Cash on Balance Sheet (€ bn) 7.5 26.0 33.0 9.7 5.7 5.6 NM
Net Debt / LTM EBITDA Multiple 1.3x 2.0x 1.4x 5.4x 3.0x 2.4x 2.2x
LTM EBITDA Multiple 10.6x 8.1x 9.1x 9.7x 9.0x 10.0x 11.0x
Change since last quarter 0.6x 0.5x 0.4x 0.8x 0.9x 0.7x 0.1x
LTM EBITDA Margin 11.2% 9.7% 9.0% 11.4% 10.2% 9.0% 9.1%
Consensus 2Yr Fwd Revenue Growth (p.a.) 4.5% 1.9% 3.9% (0.2%) 2.8% 4.5% 3.3%
0
50
100
150
200
250
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
0
5
10
15
20
25
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er
of
Tra
nsa
ctio
ns
North America Asia (excl. China & India) China
India South America Africa & Middle East
Target Country Acquirer Country Sub Sector EV (€m)
Acciai Speciali Terni and Outokumpu VDM ThyssenKrupp Steel 1,269
Ansaldo Energia Fondo Strategico Italiano Energy & Power Services 1,198
IMI, Beverage Dispense and Merchandising Divisions Marmon Holdings Industrial Machinery 814
OFD Holding Yara International Chemicals (Fertilizer) 314
Stream MRC Global Flow Control 190
Allied Glass Containers CBPE Capital Packaging 156
TLT-Turbo China Power Construction Industrial Machinery NA
Swift Technical Services Wellspring Capital Management Oil & Gas Services NA
Valvitalia Group Fondo Strategico Italiano Industrial Machinery NA
VAT Capvis Equity Partners Industrial Machinery NA
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Energy & Power
European Energy & Power Equity Markets1
9
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter (3.9%) (0.5%) (1.3%) 10.6% 7.1% 2.9% (0.2%)
Cash on Balance Sheet (€ bn) 31.7 35.7 14.4 16.7 20.6 14.7 14.6
Net Debt / LTM EBITDA Multiple 0.9x 1.9x 1.5x 3.7x 3.3x 5.8x 2.4x
LTM EBITDA Multiple 7.3x 5.6x 8.0x 7.6x 7.0x 11.9x 8.2x
Change since last quarter 0.0x 0.0x 0.7x (0.5x) 0.6x 0.3x 0.4x
LTM EBITDA Margin 18.0% 19.4% 14.1% 18.7% 13.3% 33.8% 32.2%
Consensus 2Yr Fwd Revenue Growth (p.a.) 13.0% 7.9% 0.9% 1.0% (3.6%) 2.0% 5.8%
European Energy & Power Equity Markets1
European Energy & Power Middle Market M&A Activity
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
Selected European Energy & Power M&A3
Market Observations
• The European oilfield service and equipment M&A market remained active in Q4 2013 with several
acquisitions by major European construction, service, and oil and gas companies, including Amec’s offer to
acquire US-based Foster Wheeler
• US-based private equity continued to demonstrate strong interest in the sector in Europe, with Wellspring
Capital acquiring Swift Technical Group from UK-based Gresham Private Equity
• Following the acquisition of Ampelmann Operations in Q3, 2013, IK Investment Partners have completed the
first add-on acquisition with the takeover of Offshore Solutions, the Dutch supplier of Motion Compensated
Gangway (MCG) systems to the offshore energy sector
• Management moves4: Fortum Oyj. Anglo Pacific Group, Crudecorp, Sevan Drilling, Ensco, Saipem, Enteq
Upstream, Bowleven, Ruspetro, Bergen Group
Source: S&P CapitalIQ
Notes: (1) Based on HW&Co. indices including the most relevant Energy & Power companies for each country
(2) Includes transactions with a deal value between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany,
Austria, Switzerland), Spain, Italy, Benelux (Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Includes
acquisitions of majority stakes only (4) Resignation or appointment of CEO, CFO or Chairman
0
5
10
15
20
25
30
35
40
45
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er
of
Tra
nsa
ctio
ns
UK & Eire Scandinavia DACH France Benelux Spain Italy
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter (3.9%) (0.5%) (1.3%) 10.6% 7.1% 2.9% (0.2%)
Cash on Balance Sheet (€ bn) 31.7 35.7 14.4 16.7 20.6 14.7 14.6
Net Debt / LTM EBITDA Multiple 0.9x 1.9x 1.5x 3.7x 3.3x 5.8x 2.4x
LTM EBITDA Multiple 7.3x 5.6x 8.0x 7.6x 7.0x 11.9x 8.2x
Change since last quarter 0.0x 0.0x 0.7x (0.5x) 0.6x 0.3x 0.4x
LTM EBITDA Margin 18.0% 19.4% 14.1% 18.7% 13.3% 33.8% 32.2%
Consensus 2Yr Fwd Revenue Growth (p.a.) 13.0% 7.9% 0.9% 1.0% (3.6%) 2.0% 5.8%
Target Country Acquirer Country Sub Sector EV (€m)
Well Intervention Services Business EQT Partners Oilfield Services 486
DONG Energy, Severn Power Station Macquarie Infrastructure Utility 417
AGR Seabed Intervention Marin Group Oilfield Equipment NA
Mentor IMC Group VINCI Energies Oilfield Services NA
Vryhof Anchors HitecVision Offshore Equipment NA
Offshore Solutions Ampelmann Operations Offshore Equipment NA
Promet AS Wepco; Habu; Nord Kapital. Oilfield Equipment NA
Swift Technical Group Wellspring Capital Oilfield Services NA
0
1
2
3
4
5
6
7
8
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
North America Asia (excl. China & India) China
India South America Africa & Middle East
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Healthcare & Life Sciences
10
European Healthcare & Life Sciences Equity Markets1
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 9.8% 7.7% 6.8% 14.5% 17.8% 5.0% 4.9%
Cash on Balance Sheet (€ bn) 13.9 2.0 14.7 0.6 0.5 1.1 NM
Net Debt / LTM EBITDA Multiple 1.1x 1.4x 1.8x 1.9x 0.6x 1.5x 1.4x
LTM EBITDA Multiple 12.6x 10.9x 12.0x 17.4x 9.7x 15.2x 14.9x
Change since last quarter 1.4x 1.3x 1.1x 3.0x 0.7x 1.3x 0.1x
LTM EBITDA Margin 19.0% 11.1% 15.3% 14.0% 15.9% 13.8% 13.6%
Consensus 2Yr Fwd Revenue Growth (p.a.) 8.6% 10.3% 5.8% 5.9% 11.0% 5.0% 7.4%
European Healthcare & Life Sciences Middle Market M&A Activity
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
Selected European Healthcare & Life Sciences M&A
Market Observations
0
20
40
60
80
100
120
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
0
2
4
6
8
10
12
14
16
18
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
North America Asia (excl. China & India) China
India South America Africa & Middle East
Source: S&P CapitalIQ
Notes: (1) Based on HW&Co. indices including the most relevant Healthcare & Life Sciences companies for each country; (2) Includes transactions with a deal value
between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux
(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman
• Graphite backed the MBO of domiciliary care provider, City & County Healthcare from Sovereign Capital
• Ravelstone Care Homes, an August Equity portfolio company, acquired Anglia Retirement Homes, expanding
the footprint of the group in the South East of England
• Duke Street announced the acquisition of Air Products’ homecare operations in the UK & Ireland. Duke Street
financed the deal with the support of the family office of Stagecoach founder, Sir Brian Souter
• Shire acquired the US rare disease specialist ViroPharma for $4.2 billion
• Johnson & Johnson sold its Ortho Clinical Diagnostics unit, a provider of solutions for screening and monitoring
diseases, to Carlyle for approximately $4.1 billion
• Madison Dearborn Partners acquired a majority stake in Ikaria, a provider of innovative therapies for critical care
units in hospitals, for approximately $1.6 billion
• Permira acquired Atrium Innovations, a health and nutrition products specialist, for $789 million
• Management moves3: Amarin Corporation, AstraZeneca, Meda AB, Optos, Probi AB and SkyePharma
Target Country Acquirer Country Sub Sector EV (€m)
Gentium Jazz Pharmaceuticals Italy Biotechnology 630
Laboratorios Indas Domtar Pharmaceuticals 425
Acino Holding Nordic Capital Pharmaceuticals 424
Spirogen MedImmune Biotechnology 326
Centro Medico Teknon Grupo Hospitalario Quirón Healthcare Services 225
Andor Technology Oxford Instruments Healthcare Equipment 174
Medipsy Ramsay Santé Healthcare Services 152
PULSION Medical Systems Getinge Healthcare Equipment 140
Biotech International Wright Medical Group Healthcare Equipment 59
Quotient Clinical Bridgepoint Development Capital Pharmaceuticals 37
City & County Healthcare Group Graphite Capital Healthcare Services NA
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Technology, Media & Telecom
11
European Technology, Media & Telecom Equity Markets1
European Technology, Media & Telecom Middle Market M&A Activity
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
0
50
100
150
200
250
300
350
400
Q3-11 Q1-12 Q3-12 Q1-13 Q3-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
0
10
20
30
40
50
60
70
80
Q3-11 Q1-12 Q3-12 Q1-13 Q3-13
Nu
mb
er o
f T
ran
sact
ion
s
North America Asia (excl. China & India) China
India South America Africa & Middle East
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 9.2% 9.4% 7.6% 14.2% 18.5% 8.8% 4.2%
Cash on Balance Sheet (€ bn) 19.6 20.0 18.2 10.3 6.7 14.7 NM
Net Debt / LTM EBITDA Multiple 1.5x 1.5x 1.4x 4.0x 3.3x 1.9x 1.5x
LTM EBITDA Multiple 12.1x 8.3x 11.3x 13.3x 9.6x 10.6x 9.5x
Change since last quarter 1.2x 0.9x 1.6x 1.0x 3.5x 0.9x 0.2x
LTM EBITDA Margin 16.4% 11.4% 10.2% 7.3% 9.1% 19.5% 11.3%
Consensus 2Yr Fwd Revenue Growth (p.a.) 5.8% 3.7% 5.1% 3.2% 2.7% 2.8% 3.1%
Selected European Technology, Media & Telecom M&A
Market Observations
• Time Warner Cable rejected a $61.3 billion takeover offer from Charter Communications
• Liberty Media acquired the remaining stake in Sirius XM, the provider of radio services, for $10.4 billion
• Google acquired Nest Labs, the developer of connected home monitoring products, for $3.2 billion
• Alcatel-Lucent’s enterprise business is valued up to €250 million and is attracting interest from a number of
investors as it focuses on higher margin mobile network contracts
• European enterprise software spend is expected to total $89.3 billion in 2014 and grow at a CAGR of 5.0% to
reach $103.3 billion in 2017, driven by the conferencing, CRM, data integration, SCM and virtualisation
infrastructure software segments
• European cloud services spend is expected to be $36.0 billion in 2014 and grow at a CAGR of 13.3% to reach
$52.4 billion in 2017, driven by cloud application and system infrastructure management services and strong
uptake in Western Europe, especially in the UK, by far the largest user of cloud services in Europe
• Management moves3: Belgacom, Deutsche Telekom, Havas, Kabel Deutschland, SAP, Sage Group,
Swisscom, TeliaSonera, Vimpelcom, Vivendi
Sources: S&P CapitalIQ, Gartner, Company Press Releases
Notes: (1) Based on HW&Co. indices including the most relevant Technology, Media & Telecom companies for each country; (2) Includes transactions with a deal value
between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux
(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman
Target Country Acquirer Country Sub Sector EV (€m)
Supercell SoftBank and GungHo Online Entertainment Media c.2,250
Scout24 Hellman & Friedman Media c.2,000
Unit4 Advent International Software 1,279
Personal & Informatik HgCapital Software 438
Deepmind Technologies Google Software 242
Total Specific Solutions Constellation Software Software c.240
Delcam Autodesk Software 194
Realtime Technology Dassault Systemes Software 177
The Property Software Group LDC Software 21
Shutl eBay Internet NA
CableCom Networking Inflexion Private Equity Telecoms NA
NextiraOne Management Dimension Data IT Services NA
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Transportation & Logistics
European Transportation & Logistics Equity Markets1
12
UK and Eire France DACH Spain Italy Benelux Scandinavia
Price Change since last quarter 6.7% 5.5% 5.1% 10.1% 4.3% 2.9% 2.4%
Cash on Balance Sheet (€ bn) 4.9 28.9 60.0 9.3 21.9 1.4 NM
Net Debt / LTM EBITDA Multiple 2.5x 3.0x 3.3x 4.8x 2.7x 4.2x 2.9x
LTM EBITDA Multiple 8.3x 8.9x 9.8x 9.8x 10.0x 11.1x 8.9x
Change since last quarter 0.5x (0.4x) 1.2x (0.8x) (0.3x) (0.0x) 0.8x
LTM EBITDA Margin 10.9% 7.7% 14.8% 42.4% 20.2% 8.2% 9.1%
Consensus 2Yr Fwd Revenue Growth (p.a.) 3.6% 4.1% 2.6% 5.4% 2.1% 1.2% 3.1%
0
1
2
3
4
5
6
7
8
9
10
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er
of
Tra
nsa
ctio
ns
North America Asia (excl. China & India) China
India South America Africa & Middle East
0
20
40
60
80
100
120
Q4-11 Q2-12 Q4-12 Q2-13 Q4-13
Nu
mb
er o
f T
ran
sact
ion
s
UK & Eire Scandinavia DACH France Benelux Spain Italy
European Transportation & Logistics Middle Market M&A Activity
M&A Deals by Country of Target2 Acquisitions by Non-European Buyers2
Selected European Transportation & Logistics M&A
Market Observations
• The outlook for 2014 in transport and logistics is positive, with 4% growth expected in logistics and 8% in sea
freight, according to DVZ
• According to a new report produced for trade union groups, the EU postal liberalisation has led to “declining
services, increasing prices”. Fifteen years of European countries opening up their postal markets to full
competition has had an “overwhelmingly negative” result
• Following the investments of retailer Müller Holding and Amazon into intra-logistic providers, Hong-Kong
based Alibaba has formed a JV with Goodaymart, a subsidiary of Haier, to increase penetration in rural areas
in China. The investment totals $360m
• Management moves3: Belgian Post (remains in office until successor is found)
Source: S&P CapitalIQ
Notes: (1) Based on HW&Co. indices including the most relevant Transportation & Logistics companies for each country; (2) Includes transactions with a deal value
between €25m and €650m and all non disclosed value deals with target based in the UK, Eire, France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux
(Belgium, The Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and Finland); (3) Resignation or appointment of CEO, CFO or Chairman
Target Country Acquirer Country Sub Sector EV (€m)
Far Freight Gebrüder Weiss Freight forwarding NA
Deben Group Industries Avocet Capital Distributor NA
Retailo Blackhawk Network Distributor 50
R. Geist Spedition Clipper Logistics Group Logistics NA
Fleet Care Services arwe Service Mobility services NA
Logent Adelis Equity Partners Logistics NA
QEF Global Park-Ohio Holdings Supply chain optimisation NA
West Cargo Vårgårda Bring Express Norge Cargo services NA
Hofmeister & Meincke Wilhelm Fricke Distributor NA
ACi Transport & Spedition Blue Water Shipping Freight forwarding NA
Neptumar Scand. Shipping & Logistics Freight shipping NA
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13 13
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2012 2013
Nu
mb
er o
f T
ra
nsa
cti
on
s
India
China
Africa & Middle East
South-America
Asia (excl. China & India)
Europe
North-America
0
1,000
2,000
3,000
4,000
5,000
2012 2013
Nu
mb
er o
f T
ra
nsa
cti
on
s
ADG
Energy & Power
Transportation & Logistics
Healthcare
Business Services
Industrials
Consumer
TMT
Featured Theme
“Review of 2013 European M&A”
• With 3,287 deals, down from 4,589 in 2012, European middle market M&A fell 28% by volume in 2013, a
sharper decline than the 14% drop seen globally
− Europe represented 29% of global middle market M&A in 2013 against 35% in 2012
− With more stable overall deal volume in 2013, North America increased its share of the global market
to 55%
• A closer look at the sector breakdown demonstrates that none were spared in 2013, with no significant
change in relative deal activity by sector. TMT, Consumer and Industrials were the most active sectors
• HW&Co. closed 15 deals during the last quarter of 2013, and our momentum continues in 2014, with a
record deal pipeline suggesting a positive outlook for middle market M&A activity in 2014
• European inbound M&A remained strong overall in 2013, representing 14% of total deals compared to
12% in 2012. Inbound activity continued to be dominated by North America which accounted for 83% of
acquisitions in Europe in 2013, compared to 76% in 2012
• A more positive outlook in the financing markets in 2013 resulted in private equity activity accounting for
13% of European transactions in 2013, up from 11% in 2012
European Deals by Sector Global Deals by Region
Selected HW&Co. 2013 Transactions
Source: S&P Capital IQ
Note: Includes closed M&A transactions of majority stakes only, where deal value
was undisclosed or between €25m – €650m, within the United Kingdom, Eire,
France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,
the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and
Finland)
29%
25%
15%
13%
8%
7% 2% 1%
30%
23%
15%
14%
8% 6% 2% 1%
4,589 deals 3,287 deals 13,270 deals 11,349 deals
Source: S&P Capital IQ
Note: Includes closed M&A transactions of majority stakes only, where deal value
was undisclosed or between €25m – €650m, within the United Kingdom, Eire,
France, DACH (Germany, Austria, Switzerland), Spain, Italy, Benelux (Belgium,
the Netherlands, Luxembourg) and Scandinavia (Denmark, Norway, Sweden and
Finland), North-America, South-America, Asia and Africa & Middle East
35%
51%
3%
1% 1%
7%
2%
29%
55%
3% 1% 1%
8% 2%
has been acquired by
a portfolio company of
&
a portfolio company of
has been acquired by
a division of
a portfolio company of
has been acquired by
has been acquired by
a subsidiary of
a portfolio company of
has been acquired by has been acquired by
a portfolio company of
has been acquired by
a portfolio company of
and
a portfolio company of
agrees to be acquired by has been acquired by
a portfolio company of
has been acquired by
a portfolio company of
has been acquired by
and
a portfolio company of
has been acquired by
a portfolio company of
has been acquired by
a portfolio company of
has been acquired by
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Contacts and Disclosures
Thierry Monjauze
Managing Director
63 Brook Street
London W1K 4HS
United Kingdom
Phone: +44 20 7518 8901
Julien Darmon
Managing Director
63 Brook Street
London W1K 4HS
United Kingdom
Phone: +44 20 7518 8905
Red Norrie
Managing Director
63 Brook Street
London W1K 4HS
United Kingdom
Phone: +44 20 7518 8906
Jeffery Perkins
Managing Director
Bockenheimer Landstr. 33-35
60325 Frankfurt
Germany
Phone: +49 69 3550638 00
www.harriswilliams.com
www.harriswilliams.de
Harris Williams & Co. is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep
industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side
and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.
Harris Williams & Co. Ltd is a private limited company incorporated under English law having its registered office at 5 th floor , 6 St.
Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number
7078852. Directors: Mr. Christopher Williams, Mr. Ned Valentine, Mr. Paul Poggi and Mr. Thierry Monjauze, authorised and regulated by
the Financial Conduct Authority.
Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the
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Niederlassung: Mr. Jeffery H. Perkins.
THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS
OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD PARTY INFORMATION PROVIDERS IS
ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE
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banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees
may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein.
Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The
financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions
using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.
Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by
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