Select 2016 M&A the current state of play. Tom Brassington, Partner Richard Ufland, Partner 13 October 2016

Transcription

1 Select 2016 M&A the current state of play Tom Brassington, Partner Richard Ufland, Partner 13 October 2016

2 Overview Activity levels Current trends Public M&A Private M&A Looking ahead Hogan Lovells 2

3 European M&A : Steady recovery and development Year Volume Cumulative Value ( bn) , , , , * 10,305/15, /785 * (to August 27 / full year projected figures) Hogan Lovells 3

4 European M&A volume by target geography Geography (% of total) 2014 (% of total) 2015 (% of total) H (% of total) UK and Ireland Nordics Germany France Benelux Italy Iberia CEE Included in Included in Included in Austria and Switzerland 5 Germany Germany Germany SEE 3 No data No data No data Russia and Ukraine 5 4 Included in CEE Included in CEE Other No data Hogan Lovells 4

5 European M&A value by target geography Geography (% of total) 2014 (% of total) 2015 (% of total) H (% of total) UK and Ireland France Nordics Benelux Germany Iberia Austria and Switzerland 7 in Germany in Germany in Germany Italy Russia and Ukraine 13 3 in CEE in CEE CEE SEE 5 No data No data No data Other No data Hogan Lovells 5

6 Public M&A in the UK Recent case studies Royal Dutch Shell plc offer for BG Group plc (2015/16) Anheuser-Busch InBev SA/NV offer for SABMiller plc (2015/16) J Sainsbury plc offer for Home Retail Group plc Groupe Fnac S.A. offer for Darty plc McCormick & Company, Inc. possible offer for Premier Foods plc (withdrawn) Steinhoff International Holdings N.V. offer for Poundland Group Plc SoftBank Group Corp. offer for ARM Holdings plc Deutsche Börse AG merger with London Stock Exchange Group plc HarbourVest Partners, LLC offer for SVG Capital PLC Avnet, Inc. offer for Premier Farnell plc Hogan Lovells 6

7 Public M&A in the UK Recent trends More complex deals increased willingness to transact notwithstanding significant regulatory hurdles extended timetables issues with fixing deal terms so far in advance of completion Increased target shareholder engagement Competing bids/activist investors how can a bidder protect against them? Non-UK bidders dominate no more tax inversions? possibility of increased protectionism? Sterling devaluation Return of the contractual offer? Hogan Lovells 7

8 Private M&A in the UK Recent trends MAE/MAC clauses Caps and survival periods Warranties and indemnities insurance Price adjustment Hogan Lovells 8

9 Brexit Impact on UK M&A Will it effect the "nuts and bolts" of deal making? Increased protectionism? Choice of governing law Changes to the Takeover Code EU cross-border merger regulations Effect on deal volumes? Hogan Lovells 9

10 A move towards UK protectionism? Theresa May - create a proper industrial strategy that would be capable of defending important UK business sectors BEIS - reforms to the Government s approach to the ownership and control of critical infrastructure will include a review of the public interest regime in the Enterprise Act 2002 changes will bring Britain s policy framework for the ownership and control of critical infrastructure into line with other major economies will allow the UK Government to introduce a consistent approach to considering the national security implications of all significant investments in critical infrastructure while the UK will remain one of the most open economies in the world, the public can be confident that foreign direct investment works in the country s best interests Hogan Lovells 10

11 What might heightened protectionism look like? Increased use of post offer undertakings under Rule 19.5 of the Code? Softbank/ARM BEIS The investor wants to grow the number of jobs in the UK and keep its headquarters in Cambridge, the government wants to see the companies work together to make sure these commitments are binding. first use of a post offer undertaking Employee representation at Board level? Other models US - Committee on Foreign Investment in the US (CFIUS) Australia Canada Hogan Lovells 11

12 H sailing into headwinds Key drivers have caused uncertainty to the M&A market in Europe in H and may have a dragging effect going forward: 1. The Brexit referendum per se and its outcome 2. Political and institutional uncertainty in several key regions: U.S., Turkey, Spain, Austria, France, Italy, Brazil 3. Insufficient global demand, potentially slowing growth in Asia, and low commodity prices To what effect? Economic, political, and institutional uncertainty is projected to have a negative global macroeconomic consequence, including on European economies: The global outlook for has worsened, with baseline global growth revised down by 0.1% for each year; The UK's baseline growth forecast for 2016 and 2017 was revised down by 0.2% and 0.9%, respectively, the largest reduction of all the advance economies. H M&A value in Europe has dropped compared to H1 2015, although we continue to see strong deal flow in certain key jurisdictions such as France and Germany More significant drop in M&A value and volume in the UK Hogan Lovells 12

13 Longer-term - reasons for optimism? The UK retains strong fundamentals that are conducive to M&A: High levels of know how and skills; Developed infrastructure; Consumer confidence holding up (for the time being at least); Legal predictability (Brexit aside); Improved financing conditions in bank and capital markets; General availability of corporate cash reserves; Rising investment in investment funds; and Strong equity performance. Strong fundamentals may triumph over emotion. Hogan Lovells 13

14 Speaker Richard Ufland Partner, London Richard Ufland is a London partner specialising in a wide range of corporate transactions and advisory work including mergers and acquisitions and securities issues. Richard is one of Hogan Lovells senior corporate finance partners and regularly appears as a recommended individual for high-end mergers and acquisitions in Chambers and Legal 500 and in other directories. Richard is also former chairman of the Law Society Company Law Committee. Representative Experience Heroux Devtek Inc., a Canadian listed company, on its acquisition of U.K.-based APPH Limited and U.S.-based APPH Wichita, Inc., subsidiaries of BBA Aviation Plc Credit Suisse and Barclays on the sale of the multinational Ionbond group to IHI Corporation WSP Global Inc. - on the acquisition from Balfour Beatty plc of the entities comprising the business of Parsons Brinckerhoff Group Inc. the professional services division of Balfour Beatty, for an enterprise value of US$1,242,500,000. Lloyds Banking Group - on the sale of their equity stakes in housebuilders Miller Group, Cala Homes and Keepmoat by way of three separate transactions. Christian Salvesen on its public takeover T richard.ufland@hoganlovells.com Areas of Focus Corporate (transactional) Equity Capital Markets Corporate Governance Private Equity Education Downing College, Cambridge - MA Hogan Lovells 14

15 Speaker Tom Brassington Partner, London Tom is a partner in the firm's corporate practice. He has experience of a wide variety of work comprising public and private M&A, joint ventures, restructurings, private equity and equity capital markets. Whilst Tom is a generalist M&A practitioner, he regularly acts for clients in the Life Sciences and TMT sectors. Tom is based in London and has also practiced in both Dubai and Hong. Representative Experience Advising News Corporation on the acquisitions of Shine and Unruly. Advising McCormick & Company, Inc. on its possible offer for Premier Foods plc (withdrawn). Advising Lockheed Martin on its participation in new joint-venture company in the United Arab Emirates focused on advanced machining technology. Advising Intrexon Corporation on the acquisition of Oxitec Ltd., a pioneer in biological insect control solutions. Advising Google on a variety of corporate transactions in the UK. Advising Johnson and Johnson on transactions including acquisitions of Spectrum Vision; OTC brands of JB Chemicals & Pharmaceuticals Limited; and Finsbury Orthopaedics on business disposal. T tom.brassington@hoganlovells.com Areas of Focus Corporate (transactional) Equity Capital Markets Corporate Governance Private Equity Education Nottingham University Hogan Lovells 15

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