A mergermarket report on global M&A activity. Monthly M&A Insider

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1 A mergermarket report on global M&A activity FEBRUARY 211

2 CONTENTS Global overview 1 Americas: latin America Nnorth America 14 Asia-Pacific 25 Europe 36 middle east & africa 47 ABOUT MERRILL CORPORATION 57 mergermarket Part of The Mergermarket Group 8 Strand London, WC2R RL United Kingdom t: +44 () f: +44 () sales@mergermarket.com 895 Broadway #4 New York, NY 3 USA t: f: sales.us@mergermarket.com Suite Grand Millennium Plaza 181 Queen s Road, Central Hong Kong t: f: sales.asia@mergermarket.com

3 global overview global overview Global overview 2 was still a tricky year for M&A practitioners the world over aftershocks of the financial crisis were still reverberating throughout the dealmaking community and while the world economies were showing tender green shots of recovery, the challenges that the economic and financial meltdown threw up meant that M&A was NOT back on the agenda for all market participants. That said, global M&A increased by close to 23% in year-onyear comparison, from US$1,72.8bn in 2 to US$2,8.7bn over the course of 2. was also up by 21.3% at 11,719 announced deals compared to 9,662 in 2. Further, 2 finished at US$683.9bn, up 21.2% from 2 when it stood at US$564.5bn, and was the highest quarter since 2 which saw activity valuing US$7.3bn. However, activity continued to remain below the levels reached in what has become known as the heydays of M&A activity, 2-2. Looking at how dealmaking developed in different regions in a year-on-year comparison, leading the pack was the Asia- Pacific region where M&A activity totalled at US$391.5bn in 2, the highest on record for the region. The region was able to power through the crisis on the back of cashrich corporates and government-supported acquisition programmes in some of the most active industries, with the Energy, Mining and Utilities space being a prime example. Performance in Europe was also strong with the of M&A transactions up by 37% and reaching US$629.8bn in 2, compared to US$459.6bn in 2. This was led by a strong economic recovery in key markets, such as Germany, but was complimented by a noticeable uptick in dealmaking in Russia. Meanwhile, the US market is still weaker with only a 3% increase in year-on-year comparison, totalling at US$714.3bn over 2. Nevertheless, the rundown of the biggest deals is still dominated by transactions with a US angle to them. For example, the biggest deal of the year was the US Treasury s close to US$5bn acquisition of a 6% stake in AIG, which positively dwarfed the second biggest deal - America Movil s paying US$28bn for Carso Global Telecom. Other examples of the sway that US businesses still hold, even in more challenging times, is the merger of CenturyLink and Qwest Communications which resulted in a company whose enterprise business will be a significant contributor to its growth which, along with the consumer business, will allow it to offer innovative broadband products and services over its advanced networks. Other interesting developments over the course of 2 were that emerging markets had their best year on record and made up 26.7% of total global M&A and the above mentioned America Movil/Carso Global Telecom is an example of the strength of the emerging market which, according to experts, is a sign of things to come. Cross-border M&A s totalled US$8.4bn in 2, up 7.8% compared to 2 (US$468.5bn) and activity in 2 reached US$273bn, the highest since 2 (US$328.5bn). Cross-border M&A made up 38.3% of all global activity in 2, the highest since 2 (42.4%). The Energy, Mining and Utilities sector aced for US$225.2bn or 28.1%, with Europe the most active cross-border investor in the sector. Finally, 2 also proved to be the comeback year of private equity with the asset class having its strongest year in terms of buyouts since 2. They represented.9% of global M&A activity in 2, up from 7.2% in 2, making it the strongest year for buyouts (as percentage of total M&A activity) since 2 and demonstrate clearly that financial sponsors are back! Head of Research Elias Latsis Editor Rory McNeil For advertising opportunities contact: Erik Wickman Tel: + (1) erik.wickman@mergermarket.com Global overview: Catherine Ford Latin America: Mathew Albert North America: Svetlana Alkayeva and Elizabeth Castro Asia-Pacific: Shansuke Okano, Marco Shek, Debbie Jung, Maggie Cheung, Kendy Suen and Douglas Robinson Europe: Samuel Tedjasukmana and Damien Julliard Middle East & Africa: Yannis Papacostas and Marie-Laure Keyrouz 1

4 2 global overview Trend graphs GLOBAL M&A quarterly trend 2, 4, 6, 8, 1,, 1,2, 1,4, 5 1, 1,5 2, 2,5 3, 3,5 4, 4,5 Number of deals GLOBAL M&A quarterly mid-market trend 2, 4, 6, 8,, 12, 14, 5 1, 1,5 2, Number of deals Moving average trend line

5 Trend graphs global overview GLOBAL M&A quarterly private equity trend 4, 35, 3, 25, 2, 15, Number of deals , 2 5, Global buyouts Global buyouts Global exits Global exits GLOBAL M&A Sector Breakdown YTD 2 1.7% 1.8% 8.8%.6% 2.5%.3% 4.3% 11.4% 14.3% Industrials & Chemicals TMT Business Services Consumer 2.2% 2.9% 3.4% 4.1% 7.7% 1.2%.4% 18.% Industrials & Chemicals TMT Business Services Consumer Energy, Mining & Utilities Energy, Mining & Utilities 14.4% 5.8% Financial Services Pharma, Medical & Biotech.% 14.9% Financial Services Pharma, Medical & Biotech Construction Construction 8.5% Leisure Transportation.9% 12.2% Leisure Transportation 25.6% Real Estate Agriculture 12.1% Real Estate Agriculture Defence Defence 3

6 Trend graphs global overview GLOBAL M&A deal size breakdown , 8, 7, (US$bn) 15 Number of deals 6, 5, 4, 3, 5 2, 1, > US$51m US$251m-US$5m US$1m-US$25m US$15m-US$m US$5m-US$14.9m > US$51m US$251m-US$5m US$1m-US$25m US$15m-US$m US$5m-US$14.9m not disclosed

7 I need to schedule due diligence for 7 people representing 11 companies and 5 ries Where do I start? Keep it simple. You can be ready for due diligence in a matter of hours with Merrill DataSite. Merrill DataSite was designed by dealmakers for dealmakers. It includes a host of built-in tools to help sellers organise and present critical business information to potential buyers all over the world in the best possible way in an astonishingly short amount of time. And you don t have to be an expert. If you re unsure where to begin, Merrill DataSite s experienced project managers are available to help you around the clock. We ve helped clients launch thousands of projects for deals of all sizes valuable experience that we ll put to work for you. At Merrill DataSite, we believe in sharing ideas and best practices that assist companies in expanding and capturing new opportunities. To download our FREE industry survey reports please visit the Merrill DataSite Knowledge Center at M E R R I L L D A T A S I T E datasite.com

8 A mergermarket M&A report on LATIN AMERICA LATIN AMERICA THE LATIN AMERICAN DEAL MARKET SAW A RALLY IN BIG-TICKET M&A IN 2 WITH A NUMBER OF TRANSFORMATIONAL TMT AND ENERGY TRANSACTIONS DRIVING ACTIVITY IN THE LARGE-CAP DEAL ARENA. IN TOTAL, THE DEAL COUNT ROSE TO 414 TRANSACTIONS COLLECTIVELY WORTH US$16.72BN, YEAR-ON-YEAR INCREASES OF 12.2% AND 118.8%, RESPECTIVELY. América Móvil, the Mexican fixed line and wireless business headed by the media magnate and world s wealthiest person Carlos Slim Helú, proved one of the most noteworthy movers and shakers in 2. The company brokered the world s second largest acquisition in the year, albeit one surpassed only by the US government s US$48bn recapitalisation of the insurer AIG. In the deal, América Móvil moved to acquire Mexican rival Carso Global Telecom in a US$28.1bn acquisition in January. Concurrently, the firm also brokered the purchase of a 39.3% stake in Telmex Internacional for US$6.53bn to grab full control of the wireless service provider. Slim is not just consolidating his telecoms operations and América Móvil s position in his home market, but has ambitions plans to grow his business throughout Latin America where América Móvil already has an extensive presence. Clearly, for rival telecoms groups such as Telefónica, the largest telco in the Eurozone and a major player in Latin America, this was a call to action. In July, the Spanish group wrestled a 5.% stake in Brasilcel away from Portugal Telecom (PT) in a fraught and drawn out battle that nearly escalated to the courts. But in the end Telefónica won out paying US$9.75bn for PT s half of Brasilcel, a joint venture holding company with a controlling interest in Brazil s largest wireless operator Vivo. The Spanish group is now in the process of merging Vivo with Telesp, its fixed line business in Brazil, to create one of the biggest telecoms companies in the ry. The deal is pending regulatory approval and should complete by mid-211. Telefónica s ambitions in the region are understandable. Latin America has been a key destination for overseas investors seeking to offset sluggish business activity at home while taking advantage of the region s buoyant economic activity and favourable long-term growth prospects. The rich natural resource sectors were also key deal driver of inbound investment in 2. The largest such deal saw China Petroleum & Chemical Corporation (Sinopec) broker a 4.% stake acquisition in Respsol s Brazilian operations for a hefty US$7.11bn deal. It was a landmark transaction for Latin America as the largest Energy deal in over a decade. The second largest Energy deal of the year also saw a Chinese player on the buy-side with Bridas Corporation, an oil and gas company jointly owned by China National Offshore Corporation (CNOOC) and Bridas Corporation Holdings, agree to acquire the remaining 6.% stake in Pan American Energy that it did not already own for US$7.bn from seller BP. Latin America s vast natural resource industries are sure to continue driving inbound investment from Chinese firms looking to secure supplies needed to satiate their incredible raw material needs. In this respect, Brazilian Energy sector is particularly noteworthy after the discovery of expansive offshore oil reserves in recent years, which have ushered in a gush of investment in the sector. Casting a look ahead to prospective deal activity in 211, the Energy, Mining & Utilities sector looks set to continue as the region s most active space for M&A it was the M&A leader by in 2 with around one-fifth of overall deals. Indeed, looking at companies for sale stories tracked by mergermarket over the past six months the sector shows greater deal heat than any other space. These opportunities are mainly concentrated in Brazil, but also in the Andean region. Elsewhere, mergermarket intelligence also suggests that the Mexican Industrials & Chemicals and Transportation sectors will also see strong deal activity over the short-term.

9 DEAL OF THE MONTH Target: Occidental Argentina Exploration & Production Inc. Announced: -Dec- LATIN AMERICA Bidder: China Petrochemical Corporation (Sinopec Group) : US$2.5bn Seller: Occidental Petroleum Corporation nature: Acquisition, Cross-border, Private Description: China Petrochemical Corporation (Sinopec Group), the China-based oil and gas group, has agreed to acquire Occidental Argentina Exploration & Production Inc, the Argentina based oil and gas E&P company, from Occidental Petroleum Corporation, the listed US-based oil and gas group, for a cash consideration of approximately US$2.5bn. Occidental Argentina Exploration & Production Inc s interest in 23 production and exploration concessions, 19 of which are currently operated by Occidental Argentina. Occidental Argentina has proven and probable reserves of up to 393 million barrels of oil equivalent. Advisors Target/Seller Bidder Financial Financial Scotia Capital Legal Vinson & Elkins Legal Andrews Kurth; Alfaro-Abogados

10 Top deals & expected deals LATIN AMERICA Top 15 LATIN AMERICAN announced deals for 31-dec- Announced Status Target company Sector Bidder company Seller company Exit multiples (x) Bid premia Revenue EBITDA P/E 1-day before 13-Jan- C Carso Global Telecom SAB de CV TMT America Movil SA de CV % 28,5 28-Jul- C Barsilcel NV (5% stake) TMT Telefonica SA Portugal Telecom - 9,746 SGPS SA 11-Jan- C FEMSA Cerveza SA de CV Consumer Heineken NV Fomento Economico Mexicano SAB de CV - 7,692 1-Oct- P Repsol Brazil (4% Stake) Energy, Mining & Utilities 28-Nov- P Pan American Energy LLC (6% stake) 13-Jan- C Telmex Internacional SAB de CV (39.3% stake) 2-May- P Alumina do Norte do Brasil SA (57% stake); Aluminio Brasileiro SA (51% stake); Companhia de Alumina do Para (61% stake); and Paragominas bauxite mine (6% stake) 22-Jan- C Polibutenos SA Industrias Quimicas (33.33% stake); Quattor Participacoes SA (6% stake); and Unipar Comercial e Distribuidora SA 27-Jan- C Bunge Participacoes e Investimentos SA 14-Mar- C Bridas Corporation (5% stake) -May- P Nossa Caixa Seguros e Previdencia; Mapfre Vera Cruz Seguradora; Mapfre Vera Cruz Vida e Previdencia; Mares - Mapfre Riscos Especiais; Mapfre Seguradora de Garantias e Credito e Vida Seguradora; Brasilveiculos Companhia de Seguros SA Energy, Mining & Utilities TMT Industrials & Chemicals Industrials & Chemicals Industrials & Chemicals Energy, Mining & Utilities Financial Services -Aug- P NET Servicos de Comunicacao S.A. (58.% stake) TMT -Nov- C Minera Frisco, S.A.B. de C.V. Energy, Mining & Utilities -Nov- C Inmuebles Carso, S.A.B. de C.V. -Dec- C Occidental Argentina Exploration & Production Inc Construction Energy, Mining & Utilities -Jun- P Grupo Financiero Financial Services C = Completed; P = Pending; L = Lapsed China Petroleum & Chemical Corporation Repsol YPF SA - 7,9 Bridas Corporation BP plc - 7,9 America Movil SA de CV % 6,533 Norsk Hydro ASA Vale SA - 4,9 Braskem SA Uniao de Industrias Petroquimicas SA - 4,238 Vale SA Bunge Limited - 3,8 CNOOC International Limited BB Seguros Participacoes SA/ Mapfre SA Joint Venture Embratel Participacoes SA Grupo Carso, S.A.B. de C.V. (Shareholders) Grupo Carso, S.A.B. de C.V. (Shareholders) China Petrochemical Corporation Banco Santander Bridas Energy Holdings Ltd BB Seguros Participacoes SA; Mafre SA Grupo Carso SA de CV Grupo Carso SA de CV Occidental Petroleum Corporation Bank of America Corporation - 3, 2, % 2, , , ,5 n/a n/a - 2,5

11 Top deals & expected deals LATIN AMERICA Top 5 Latin American announced deals of the month (JAN-11) Announced Status Target company Sector Bidder company Seller company Exit multiples (x) Bid premia Revenue EBITDA P/E 1-day before 19-Jan-11 P TAM SA Transportation LAN Airlines SA % 7, Jan-11 P Telemar Participacoes SA (22.38% stake) 19-Jan-11 P Elektro Eletricidade e Servicos SA 24-Jan-11 C Grupo Continental, SAB 19-Jan-11 P Promigas S.A. E.S.P. (52.13% stake) C = Completed; P = Pending; L = Lapsed TMT Energy, Mining & Utilities Consumer Energy, Mining & Utilities Portugal Telecom, SGPS, SA 4,963 Iberdrola, SA AEI % 2,897 Embotelladoras Arca SA de CV Empresa de Energia de Bogota SA ESP; Corredores Asociados SA; Corporacion Financiera Colombiana SA; Correval S.A % 2,124 AEI 79

12 Top deals & expected deals LATIN AMERICA Pipeline of expected deals Situation Target company Sector Potential bidder company Rumoured takeover target Expected Rumoured takeover target Financial adviser to bidder (B); target (T); seller (S) Seller company Market cap/est. Comments JBS SA Agriculture Minerva SA N/A JBS, the world's largest meatpacker, may sell its Carceres slaughtering plant located in the state of Mato Grosso, said a company officer and an industry source. Tempo Participacoes SA AleSat Combustiveis SA Pharma, Medical & Biotech Services Auction Aguas Nuevas Energy, Mining & Utilities ; Amil Participacoes SA; Bradesco Saude S.A; Carlyle Global Financial Services Partners Fund; Louis Dreyfus SAS; Bunge Limited, Petroleo Brasileiro SA; Ultrapar Participaceoes SA; Cosan Limited; Macquarie Capital, Morgan Stanley Infrastructure or Marubeni Rothschild GP Investments Limited Darby Overseas Investments, Ltd. Banco Santander N/A On 15 October 2, Tempo Participacoes (TEMP3) made public a relevant fact, explaining it is being advised by Pactual BTG and UBS Securities and it is evaluating the merger or disposal of its various businesses. No more details were disclosed. 3,5 AleSat Combustiveis SA, a privately held Brazilian chain of about 1,7 gas stations, is holding talks to sell itself in what is being seen as the last sizeable M&A deal in the ongoing consolidation of Brazil s fuel-distribution industry, said two sources familiar with the matter. The company has estimated annual sales of US$3.5bn. 35 Banco Santander is negotiating with a few buyers on the sale of Aguas Nuevas, the Chilean utility, and it is close to sealing a deal, said a source close to the situation. In February, Banco Santander sent out an information memorandum on Aguas Nuevas and bids were expected the following month, as previously reported by this news service. Likely buyers are infrastructure funds such as Macquarie Capital and Morgan Stanley Infrastructure, also previously reported. A published report in December 2 tagged Japanese conglomerate Marubeni as a potential buyer. The source could not comment on a potential deal, but it has been reported that Aguas Nuevas could be worth US$35m. The utility has 356, customers and an 8.8% share of the Chilean water market.santander Infrastructure Fund II, which specializes in infrastructure assets, acquired the Chilean utility last year from Grupo Solari.

13 League tables LATIN AMERICA Top 15 financial advisors LATIN AMERICA 31-Dec- 1 Credit Suisse 76, Citigroup 53, Santander Global Banking and Markets 44, Bank of America Merrill Lynch 25, BTG Pactual 19, JPMorgan 19, Morgan Stanley 19, Goldman Sachs 18, Banco Itau BBA 12,71 18 Rothschild 12, Credit Agricole CIB 11, Caixa Banco de Investimento 11, UBS Investment Bank, Banco Espirito Santo de Investimento, Scotia Capital 9, Dec- 1 BTG Pactual 19, Credit Suisse 76, Santander Global Banking and Markets 44, JPMorgan 19, Banco Itau BBA 12, Bank of America Merrill Lynch 25, Goldman Sachs 18, Citigroup 53, Rothschild 12, Morgan Stanley 19, BR Partners 4, Banco Espirito Santo de Investimento, UBS Investment Bank, Credit Agricole CIB 11, Deutsche Bank 7,275 7 The financial advisor league tables by and have been run from 1-Jan- to 31-Dec- and exclude lapsed and withdrawn deals. The tables cover all sectors and are based on the geography of either the target, bidder or seller being Latin American. Top 15 legal advisors LATIN AMERICA 31-Dec- 1 Cleary Gottlieb Steen & Hamilton 53, Dewey & LeBoeuf 34, Mayer Brown 28, Robles Miaja Abogados 28,5 1 5 Skadden Arps Slate Meagher & Flom 22, Freshfields Bruckhaus Deringer 2, Souza, Cescon, Barrieu & Flesch 18 18,773 Advogados 8 Allen & Overy 16, Machado Meyer Sendacz e Opice 16, Latham & Watkins 14, Tozzini Freire Teixeira E Silva Advogados 13, Uria Menendez 13, Baker & McKenzie 12, Demarest e Almeida 12, Vinson & Elkins, Dec- 1 Mattos Filho, Veiga Filho, Marrey Jr. e 8, Quiroga Advogados 2 Pinheiro Neto Advogados 8, Barbosa, Mussnich & Aragao, Machado Meyer Sendacz e Opice 16, Demarest e Almeida 12, Baker & McKenzie 12, Tozzini Freire Teixeira E Silva Advogados 13, Souza, Cescon, Barrieu & Flesch 18, Advogados 9 Estudio Muniz, Ramirez, Perez-Taiman 1,23 15 & Olaya Abogados Skadden Arps Slate Meagher & Flom 22, Cleary Gottlieb Steen & Hamilton 53, Linklaters 5, Azevedo Sette Advogados 3, Prieto & Carrizosa 1, Latham & Watkins 14,5 11 The legal advisor league tables by and have been run from 1-Jan- to 31-Dec- and include lapsed and withdrawn deals. The tables cover all sectors and are based on the geography of either the target, bidder or seller being Latin American. 11

14 12 LATIN AMERICA Trend graphs LATIN American M&A quarterly trend, 2, 3, 4, 5, 6, 7, Number of deals Moving average trend line LATIN American M&A quarterly mid-market trend 1, 2, 3, 4, 5, 6, Number of deals

15 Trend graphs LATIN AMERICA LATIN American M&A quarterly private equity trend 3,5 15 3, 12 2,5 2, 1,5 Number of deals 9 6 1, 3 5 Latin American buyouts Latin American buyouts Latin American exits Latin American exits LATIN American M&A Sector Breakdown 2 2.1% 2.7% 1.7%.4% 2.3% <2.1% 28.7% Energy, Mining & Utilities Consumer Industrials & Chemicals 4.4% 3.8% 4.% 3.% 2.1% 19.% Energy, Mining & Utilities Consumer Industrials & Chemicals 3.3% Business Services Financial Services TMT Pharma, Medical & Biotech 5.5% 9.1% 15.% Business Services Financial Services TMT Pharma, Medical & Biotech 8.% Transport Agriculture Transport Agriculture 11.1% 2.5% 8.5% Leisure Construction Real Estate.1% 11.4% 12.7% Leisure Construction Real Estate 13

16 A mergermarket M&A report on NORTH AMERICA NORTH AMERICA US FINANCIAL SERVICES M&A DRIVEN BY CONTINUED REGIONAL BANKING CONSOLIDATION M&A activity in the US financial services sector continues to be strongest against M&A in other sectors. In 211 so far, the US has seen 351 deals worth roughly US$122.2bn, and 4 deals worth roughly US$15.2bn fall in the financial services sector. More than half of these financial services deals fall in the banking subsector, where US based banks are rapidly consolidating to create larger branch networks, gain customers and expand geographically in their respective regions. Banking consolidation in pockets of the US This month, Bridgehampton National Bank agreed to acquire Hamptons State Bank for US$6m, valuing the target at 136% of its book, in a deal aimed at enhancing Bridge Bancorp s the acquirer s holding company franchise in eastern Long Island. The combined entity will boast a network of 2 branches and will have approximately US$1bn under management and the same amount in deposits. Also this month, Ocean City Home Bank, under Ocean Shore Holding Co., acquired Select Bank for US$12m in a deal aimed at expanding Ocean City s presence into other New Jersey ies. The combined entity will have more than US$1bn of assets under management and a total of 12 branches. Other banks assets under management fall below the US$1bn mark. In Southern California, Pacific Premier Bancorp this month agreed to acquire Canyon National Bank, which had US$211m in assets as of September, for an undisclosed amount. The target in this case had gone under FDIC receivership, and the transaction is in line with the Pacific Premier Bancorp s strategy of expanding into Los Angeles, Orange and San Bernardino Counties, as 38 of the target s branches re-opened as Pacific Premier. Meanwhile, in Michigan, Peoples State Bank, another insolvent bank under FDIC receivership managing roughly US$43m in assets as of September, was this month acquired by First Michigan Bank for an undisclosed amount. Post acquisition, ten branches of Peoples State Bank reopened as First Michigan Bank. Another deal concentrates on Southeast Florida: in January PNC Bank agreed to acquire 19 branches (with an estimated US$359m in deposits) of BankAtlantic for an undisclosed amount, expanding into the Tampa and St. Petersburg areas of Florida and bringing its total branch to 79. Larger deals s appear to be returning to the market. Comparing 2 to 2, deals in the US$5m+ range increased from 18 to 32, while deals in the US$25m to US$5m range tripled from eight to 24. This is happening on a larger scale as well. In a US$436m merger announced last month, Massachusetts-based Danvers Bancorp (DNBK) agreed to be acquired by Connecticut-based People s United Financial (PBCT), which has US$25bn and nearly 34 branches in Connecticut, Vermont, New York, New Hampshire, Maine and Massachusetts and provides consumer, commercial and wealth management services, also a Delaware corporation. For its part, Danvers offers a range of commercial and retail banking services, including commercial and real estate loans, and manages approximately US$2.6bn in assets. Meanwhile, last month in the Northeast, Pennsylvania-based acquired Susquehanna Bancshares for US$273m, aiming for a wide extension of branches and additional growth capital by increasing its lending activity in Philadelphia. The combined entity US$15bn in assets with US$bn in loans and deposits each, and all of Abington s Philadelphia branches will merge into Susquehanna s 221 branches across Pennsylvania, New Jersey, Maryland and West Virginia. Sun Bancorp, another New Jersey-based holding bank, the second largest in the state with US$3.5bn under management, is exploring opportunities in the state, focusing on targets with between US$25m and US$1bn assets under management. As the second largest community bank headquartered in New Jersey, Sun has the advantage to acquire such targets because larger buyers are working through market dislocation. 14

17 NORTH AMERICA NORTH AMERICA Outlook Going forward, banks with less US$1bn in assets under management could be at the forefront of M&A activity. According to mergermarket intelligence published, limits on what a bank can earn from payment cards and overdraft fees under the Dodd-Frank Act, combined with the extra cost of complying with new regulations, means that banks with under US$1bn in assets will need merger partners to survive. mergermarket intelligence highlights NorCal Community Bancorp, the holding company of Bank of Alameda, as a potential target. Sources told this news service that a sale was a possibility and highlighted a private placement from FIG Capital. Private equity players are also buying stakes in banks like NorCal at the ground floor, in the hope that the bank becomes an attractive takeover target later, the source said, referring to a US$7.4m private placement in NorCal last November. Bank of Alameda expects to regain the franchise it lost during the downturn in about one to two years, said the source. The bank suffered from severe asset quality issues, which peaked in June. Those issues have abated after the bank shrunk in size from US$275m to US$25m in assets, and after its private placement led by FIG Partners. 15

18 DEAL OF THE MONTH Target: American International Group Inc Announced: -Dec- NORTH AMERICA Bidder: United States Department of the Treasury : US$48.bn Seller: - nature: Recommended, Acquisition, Domestic, Private STRUCTURE: American International Group, Inc. (AIG) has signed a definitive recapitalisation agreement with the United States Department of the Treasury (the Treasury Department) for a consideration of US$48bn. AIG, the listed US-based company headquartered in New York, is an insurance and financial services group providing financial, retirement savings, and asset management services. The Treasury Department, the US-based government institution headquartered in Washington, DC, is reponsible for managing federal finances and acs, supervising national banking organizations, and collecting taxes. TERMS: The Treasury Department will convert its 4, AIG Series E fixed rate non-cumulative perpetual preferred shares into 924,546,133 AIG common shares and its 3, AIG Series F preferred shares into 167,623,733 AIG common shares (in addition to newly issued AIG Series G preferred shares and AIG s special purpose vehicles (SPVs ) preferred interests), for a total of 1,2,169,866 AIG common shares. After the conversion, the 1,2,169,866 common shares will correspond to a 6.8% stake in the target company. The implied equity of the transaction is approximately US$78,948.8m. AIG s outstanding warrants held by the Treasury Department will remain outstanding after the recapitalization, and no adjustment will be made to the terms of the warrants. The parties may terminate the recapitalization agreement if the transaction is not completed by 15 March 211. DEAL STRUCTURE: Repay and terminate the Federal Reserve Bank of New York (FRBNY) credit facility in the amount of US$2bn. The first step in the current transaction is for AIG to repay the US$2bn in senior secured debt to FRBNY, the US based organization responsible for supervising and regulating financial institutions in the United States. To repay the debt, AIG plans to use its existing cash resources, as well as the proceeds from the sale of its several assets, including the IPO of American International Assurance Company Ltd. (AIA), AIG s Hong Kong based insurance unit, and the sale of American Life Insurance Company (ALICO), the US based provider of life and health insurance products, to MetLife, Inc., the listed US based provider of insurance, employee benefits, and other financial services. Provide for the exit of US Government s interests in two Special Purpose Vehicles (SPVs) holding AIA and ALICO. FRBNY owns preferred shares in two SPV s that are related to AIG for a total of US$26bn. Pursuant to the terms of the current transaction, AIG will draw down up to US$22bn of undrawn Series F funds that are available to AIG under the Troubled Asset Relief Program (TARP) and will use these funds to buy FRBNY s interests in the SPVs. AIG will immediately transfer these preferred interests to the Treasury Department to repay the Series F funds. To finance the remaining US$4bn of the US$26bn, as well as to retire the Treasury Department s preferred interests in the SPVs, AIG will use the proceeds from the aforementioned assets disposals. Retire AIG s remaining TARP support and Series C preferred shares. The final step in the transaction is to retire the remaining debt owed to the Treasury Department under the TARP programme. As a part of this plan, the Treasury 16

19 DEAL OF THE MONTH NORTH AMERICA Department will convert its AIG Series E and Series F preferred shares into AIG common stock. The Treasury Department will also convert its AIG Series C preferred shares, which were previously considered as converted for voting rights purposes and which corresponded to a 8% stake in AIG, into target s common shares. As a result of the transaction, the Treasury Department will hold a total of 1,655,37,962 AIG common shares. Given that the issue of the shares will dilute the existing number of AIG common shares (equal to 14,29,2 shares as of 3 November 2), AIG will issue up to 75 million warrants with a strike price of US$45 per share to the existing common shareholders. This third step in the deal will be executed only if the FRBNY credit facility is repaid in full. RATIONALE: This transaction is consistent with AIG s strategy of repaying the debts owed to the FRBNY and the Treasury Department and to transition AIG from a government-owned company to an independent entity. EXPECTED COMPLETION: The transaction is expected to close in the first quarter of 211 after AIG has repaid and terminated the FRBNY credit facility and FRBNY has exited interests in SPVs holding AIA and ALICO. CONDITIONS: Subject to the FRBNY no longer holding preferred interests in AIG special purpose vehicles (SPVs) with an aggregate liquidation preference in excess of US$2bn immediately after the closing of the transaction. Subject to the financial condition of AIG being acceptable to the parties involved in the transaction. Subject to AIG having all the necessary third-party financing commitments. Subject to AIG achieving its year-end 2 targets for the de-risking of AIG Financial Products Corp. Regulatory approvals in Australia, New Zealand, and Hong Kong. Other customary closing conditions. BACKGROUND: The Treasury Department nationalized AIG in September of 2, when AIG was about to go bankrupt. At the time, the Treasury Department provided AIG with an emergency loan and acquired, Series C preferred shares in the target, which were treated as converted and corresponded to an 8% stake in AIG. The Series C shares will be converted into 562,868,6 common shares under the current transaction and will correspond to a 31.33% stake in AIG. With the conversion of Series F and Series E preferred shares into a 6.8% stake in the target, the Treasury Department will hold a 92.1% stake in AIG after the transaction is completed. Advisors Target/Seller Bidder Financial Bank of America Merrill Lynch Financial Morgan Stanley Citigroup Rothschild Legal Sullivan & Cromwell Legal Davis Polk & Wardwell 17

20 Top deals & Expected deals NORTH AMERICA Top 15 North American announced deals for 31-DEC- Announced Status Target company Sector Bidder company Seller company Exit multiples (x) Bid premia Revenue EBITDA P/E 1-day before -Dec- C American International Group Inc (6.8% stake) Financial Services United States Department of the Treasury n/a n/a - 48,1 18-Aug- L Potash Corporation of Saskatchewan Inc 22-Apr- C Qwest Communications International Inc 4-Oct- P Genzyme Corporation Pharma, Medical & Biotech 8-Mar- C American Life Insurance Company Industrials & BHP Billiton Ltd [Loss] 41,9 Chemicals TMT CenturyLink % 22,153 Financial Services 25-Feb- C Coca-Cola Enterprises Inc (North American operations) Consumer 21-Feb- C Smith International Inc Energy, Mining & Utilities 19-Jan- C The Williams Companies Inc (certain gas pipeline and domestic midstream businesses) 7-Sep- C Enterprise GP Holdings LP Energy, Mining & Utilities Energy, Mining & Utilities 11-Feb- P Allegheny Energy Inc Energy, Mining & Utilities 15-Nov- P Bucyrus International Inc Industrials & Chemicals 9-Mar- P Merial Limited; and Intervet/Schering-Plough Animal Health Pharma, Medical & Biotech 28-Apr- C E.ON US LLC Energy, Mining & Utilities 11-Feb- P Airgas Inc Industrials & Chemicals 11-Mar- C Devon Energy Corporation (Assets in the deepwater Gulf of Mexico, Brazil and Azerbaijan) C = Completed; P = Pending; L = Lapsed Energy, Mining & Utilities Sanofi-Aventis SA [Loss] 17,864 MetLife The Coca-Cola Company Schlumberger Limited Williams Partners American International Group Coca-Cola Enterprises The Williams Companies n/a n/a - 15,544-12, % 12,198-11,75 Enterprise Products % 9,121 Partners LP FirstEnergy Corp % 8,96 Caterpillar Inc % 8,6 Merial-Intervet Merck & Co; and Sanofi-Aventis SA - 8,25 PPL Corporation E.ON AG - 7,625 Air Products & Chemicals BP Plc Devon Energy Corporation % 7,372-7, Top 5 North American announced deals of the month (JAN-11) Announced Status Target company Sector Bidder company Seller company Exit multiples (x) Bid premia Revenue EBITDA P/E 1-day before -Jan-11 P Progress Energy Inc Energy, Mining & Duke Energy ,825 Utilities Corporation 31-Jan-11 P ProLogis Real Estate AMB Property Corporation. 16, Jan-11 P The Mosaic Company (23.98% stake) 29-Jan-11 P Massey Energy Company 11-Jan-11 P Consolidated Thompson Iron Mines Ltd C = Completed; P = Pending; L = Lapsed Industrials & Chemicals Energy, Mining & Utilities Energy, Mining & Utilities Cargill, Inc (debt holders) Alpha Natural Resources Inc Cliffs Natural Resources Inc Cargill Inc , ,1.3 4,349 18

21 Top deals & Expected deals NORTH AMERICA Pipeline of North American expected deals Situation Target company Sector Potential bidder company Expected Novell TMT Elliott Associates Expected Expected Expected Dollar Thrifty Automotive Group Mediacom Communications Corporation California Pizza Kitchen Industrials & Chemicals TMT Leisure Expected Galleon Energy Energy, Mining & Utilities Avis Budget Group, Media's founder, Chairman and CEO, Rocco B. Commisso Undisclosed Bidder Undisclosed Bidder Expected Playboy Enterprise Media The Hefner Family Financial advisor to bidder (B); target (T); seller (S) Seller company Market cap/ est. Comments (T)JPMorgan 2,4 Elliott Associates, (together with funds under common management), a significant institutional stockholder of Novell, offered to purchase the entire company for US$5.75 per share in cash, which implies an enterprise net of cash of US$1.bn. The firm sent a letter to the Board of Directors of the Company explaining its offer. (B)Citigroup 1,281 Avis Budget Group would like to make a substantially higher offer to acquire Dollar Thrifty. Dollar Thrifty had recently signed a definitive agreement to be acquired by Hertz for approximately US$41 per share. (B) Bank of American Merrill Lynch, (B) JP Morgan Securities, (T) Barclays Capital (B)Moelis & Company Expected deals are based on confirmed announcements by companies involved. (T)Cormark Securities, GMP Securities, Macquarie Capital Markets Canada 475 Mediacom Communications Corporation's Board of Directors received a non-binding proposal from Mediacom s founder, Chairman and Chief Executive Officer, Rocco B. Commisso, for a going private transaction. The proposal contemplates the acquisition of all of the Class A and Class B shares of Mediacom common stock not already beneficially owned by Mr. Commisso at a price of US$6. per share in cash. 439 California Pizza Kitchen announced that its Board of Directors has authorized management to consider a wide range of financial and strategic alternatives to enhance shareholder. The Company has engaged Moelis & Company, a global investment bank, to be its exclusive financial advisor in this review. California Pizza Kitchen, a US-based company headquartered in LA, CA, is a casual dining restaurant chain with a particular focus on the pizza segment. 4 Galleon Energy s (TSE: GO) financial advisors are already talking with potential buyers. Galleon announced it had retained GMP Securities, Cormark and Macquarie Capital to review strategic alternatives, which will lude a number of options, luding an outright sale or disposal of a material portion of its assets. 187 Playboy Enterprises, Inc. announced that its board of directors has formed a special committee consisting of Sol Rosenthal and Shing Tao to evaluate and determine the company's response to the proposal made by Hugh M. Hefner on July 9, 2 to acquire all of the outstanding shares of Class A and Class B common stock of PEI not currently owned by Hefner for US$5.5 per share in cash. 19

22 League tables NORTH AMERICA Top 2 financial advisors NORTH AMERICA 31-Dec- 1 Goldman Sachs 372, Morgan Stanley 32, JPMorgan 32, Credit Suisse 254, Bank of America Merrill Lynch 246, Barclays Capital 237, Citigroup 211, Deutsche Bank 176, Lazard 133,854 8 UBS Investment Bank 12, RBC Capital Markets 9, Rothschild 8, Blackstone Group Holdings 75, TD Securities 69, BNP Paribas 65, HSBC Bank plc 64, Nomura Holdings 58, Perella Weinberg Partners 57, Royal Bank of Scotland Group plc 47, Evercore Partners 47, Dec- The financial adviser league tables by and have been run from 1-Jan- to 31-Dec- and exclude lapsed and withdrawn deals. The tables cover all sectors and are based on the geography of either the target, bidder or seller being US or Canadian. 1 Goldman Sachs 372, Morgan Stanley 32, Credit Suisse 254, Bank of America Merrill Lynch 246, JPMorgan 32, Barclays Capital 237, UBS Investment Bank 12, Lazard 133, RBC Capital Markets 9, Deutsche Bank 176, Jefferies & Company 39, Citigroup 211, Houlihan Lokey 12, Rothschild 8, KPMG 5, TD Securities 69, Macquarie Group Limited 12, Harris Williams & Co 3, Keefe, Bruyette & Woods 1, Deloitte 6, Top 2 legal advisors NORTH AMERICA 31-Dec- 1 Simpson Thacher & Bartlett 237, Skadden Arps Slate Meagher & Flom 23, Sullivan & Cromwell 222, Latham & Watkins 195, Davis Polk & Wardwell 162, Cleary Gottlieb Steen & Hamilton 162, Blake, Cassels & Graydon 131, Weil Gotshal & Manges 126, Wachtell, Lipton, Rosen & Katz 122,74 6 Slaughter and May 111, Cravath Swaine & Moore 2, Freshfields Bruckhaus Deringer 1, Dewey & LeBoeuf 98, Debevoise & Plimpton 96, Jones Day 96, Fried Frank Harris Shriver & Jacobson 85, Shearman & Sterling 83, Stikeman Elliott 82, Vinson & Elkins 79, Gibson Dunn & Crutcher 75, Dec- 1 Latham & Watkins 195, Jones Day 96, Kirkland & Ellis 52, DLA Piper 13, Skadden Arps Slate Meagher & Flom 23, Simpson Thacher & Bartlett 237, Sullivan & Cromwell 222, Weil Gotshal & Manges 126, Blake, Cassels & Graydon 131,186 7 K&L Gates 16, Gibson Dunn & Crutcher 75, Baker & McKenzie 27, Hogan Lovells 19, Stikeman Elliott 82, Morgan Lewis & Bockius 14, Paul Hastings Janofsky & Walker 25, Dewey & LeBoeuf 98, Shearman & Sterling 83, Wilson Sonsini Goodrich & Rosati P.C. 2, 82 2 Osler, Hoskin & Harcourt 47, The legal adviser league tables by and have been run from 1-Jan- to 31-Dec- and exclude lapsed and withdrawn deals. The tables cover all sectors and are based on the geography of either the target, bidder or seller being US or Canadian. 2

23 League tables NORTH AMERICA TOP 5 private equity firms by North American buyouts 31-Dec- 1 The Carlyle Group, LLC 18, TPG Capital, L.P. 14, Kohlberg Kravis Roberts & Co. 11, Bain Capital LLC 9, Blackstone Group Holdings LLC 8, Dec- 1 The Carlyle Group 18, TPG Capital 14, The Riverside Company Kohlberg Kravis Roberts & Co 11, Warburg Pincus 5, The private equity buyout activity tables by and are based on private equity firms advising the bidder on buyout deals where the dominant geography of the target company is US or Canadian. The tables by and have been run from 1-Jan- to 31-Dec- and exclude lapsed and withdrawn deals. TOP 5 private equity firms BY North American exits 31-Dec- 1 Cerberus Capital Management 11, The Carlyle Group 9,349 3 Kohlberg Kravis Roberts & Co 8, Welsh, Carson, Anderson & Stowe 7, TPG Capital 6, Dec- 1 The Riverside Company Intel Capital The Carlyle Group 9,349 4 TPG Capital 6,911 5 Draper Fisher Jurvetson 257 The private equity exit activity tables by and are based on private equity firms advising the vendor on exit deals where the dominant geography of the target company is US or Canadian. The tables by and have been run from 1-Jan- to 31-Dec- and exclude lapsed and withdrawn deals. 21

24 22 NORTH AMERICA Trend graphs North American M&A quarterly trend, 2, 3, 4, 5, 6, Q , 1,2 1,4 Number of deals North American M&A quarterly mid-market trend 5,, 15, 2, 25, 3, 35, 4, Number of deals Moving average trend line

25 Trend graphs NORTH AMERICA North American M&A quarterly private equity trend 225, 2, 175, 15, 125,, Number of deals , 5, 25, Q Q North American buyouts North American buyouts North American exits North American exits North American M&A Sector Breakdown 2 1.4% 1.9% 12.2%.1%.8% 1.5%.6% 8.8% 14.3% Industrials & Chemicals Financial Services Business Services Consumer 8.3% 1.% 1.3% 3.% 3.1%.7%.5% 19.% TMT Industrials & Chemicals Business Services Energy, Mining & Utilities Energy, Mining & Utilities.2% Financial Services 13.4% 8.3% TMT Leisure 15.% Pharma, Medical & Biotech Consumer Transportation Leisure 7.9% Pharma, Medical & Biotech 11.% Construction 28.8% Construction Agriculture Real Estate 12.8% 14.2% Transportation Real Estate Defence Defence Agriculture 23

26 Trend graphs NORTH AMERICA North American M&A deal size breakdown 1, 9 8 3, 2,5 (US$bn) Number of deals 2, 1,5 1, 2 5 > US$51m US$251m-US$5m US$1m-US$25m US$15m-US$m US$5m-US$14.9m > US$51m US$251m-US$5m US$1m-US$25m US$15m-US$m US$5m-US$14.9m not disclosed 24

27 A mergermarket M&A report on ASIA-pacific ASIA-Pacific India 2: summary for private equity investments With continuous high GDP growth of above 8% and being a part of the BRIC, India has attracted more attention in both the M&A and Private Equity space. In 2, 285 deals were announced in India, with the TOTALLING to US$51bn. Out of this, there were 59 buyout deals worth US$2.4bn, and 15 exit deals worth US$1.9bn. The numbers may not seem significant at first glance, but in fact buyout activities have increased 4.5% in and 9.7% in compared to the statistics of 2, where 42 buyout deals were announced with a total of US$1.3bn. The most popular sector for buyout activities were in Business Services, with 12 deals announced with US$143m in 2. This came to no surprise given India s high reputation for its efficiency in IT-related business process outsourcing. The sector that attracted the highest amount of funding was Energy, Mining & Utilities, where US$82m was invested in 8 deals. The amount of investment in energy related companies in India had been a major part for overall M&A also, with 16 deals valuing US$12bn in total, which was driven by the increasing demand of energy required for infrastructure and urban development for its rapidly emerging economy. It is interesting to note that most of the buyout did not involve the private equity firm taking entire control of the target company. There were only 2 Indian IBO deals in 2, while others are mostly minority stake acquisitions. Reason for this may be the obstacles experienced in regulatory issues for foreign ownership and the fact that many of private equity investments in India are venture capital investing in pioneering stages for the company. With one of the fastest growing economy in the world, it is certainly expected for more private equity firms looking into investment opportunities into India in the coming year. Buyout without private equity funding in Japan In the general declining trend of the M&A activity targeting domestic companies, Japan is seeing a surge in the number of buyout deals this year. As of 11 February, a total of 8 buyout deals worth US$2673m have already been announced, acing for about one fifth of deals in Japan so far this year. A rare characteristic of Japanese buyout is that many of these transactions do not have backing of the private equity firms. The buyout of Culture Convenience Club, a DVD/CD rental shop franchise operator, is expected to cost the bidder JPY7bn (US$84m), and will be financed by the loan from Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation. Art Corporation, a moving company with the enterprise of JPY33.5bn (US$4m), is also being acquired by the management with the loan from Sumitomo Trust & Banking for a total of JPY28.6bn (US$342m). Despite the size of large acquisitions, the management seems to prefer loans to private equity funding to finance the transactions. This could be a trend or merely a one-time event, but while the deal flow remains stagnant, the size of buyout deals this year stands out in the quiet Japanese market. By, buyout deals announced this year already surpassed the total announced in 2. 25

28 DEAL OF THE MONTH xx Target: PLUS Expressways Berhad Announced: 21-Dec- ASIA-PACIFIC Bidder: Jelas Ulung Sdn Bhd : US$.73bn nature: Recommended Jelas Ulung Sdn Bhd, a special purpose vehicle set up by Tan Sri Dato Ibrahim Mohd Zain and Dato Ghazali Bin mat Ariff, has made a competing offer for all shares of PLUS Expressways Berhad (52), a Malaysia listed expressway operation services provider. STRUCTURE: The transaction will be conducted via an all cash public offer. TERMS: MYR5.2 per PLUS Expressways share. It s the entire share capital at MYR26bn (US$ 8.34bn, using the closing exchange rate of US$3:11825 MYR on 2-Dec-). The offer represents a premium of 19.3% to the closing price of the PLUS shares on Bursa Malaysia of MYR4.36 on previous trading day of the announcement and a premium of 16.6% to the closing price of MYR4.46 prior to the initial announcement on 15-Oct-. The competing offer represents a premium of 13% over initial offer price of MYR4.6 from Consortium of Employees Provident Fund and UEM Group Bhd on 15-Oct-. PLUS Expressways Berhad does not have outstanding convertible bonds. SUBSTANTIAL SHAREHOLDERS: UEM Group Berhad, Khazanah Nasional Berhad and Employees Provident Fund Board own 38.48%, 15.2% and 11.16% of PLUS Expressways Berhad, respectively. Tan Sri Dato Ibrahim Mohd Zain and Dato Ghazali Bin Mat Ariff are the directors of Jelas Ulung Sdn Bhd. BACKGROUND: Consortium of Employees Provident Fund and UEM Group Bhd made an offer of MYR4.6 per share on 15-Oct-. The initial offer d the entire share capital at MYR23bn (US$7.47bn, using the closing exchange rate of US$:3.839 MYR on 15-Oct-). Both bidders have intention to dispose of the PLUS Expressways business. CONDITIONS: Approval from shareholders for the disposal of the PLUS Expressways business. Approval from the creditors of PLUS Expressways Berhad. Approval from Securities Commission of Malaysia (SC). No Material Adverse Change including disposal or acquisition of business or assets with consideration of more than 1% of the consolidated shareholders funds of PLUS Expressways and its subsidiaries. FINANCING: Assuming full acceptances, the consortium will require MYR26bn (US$8.34bn, using the closing exchange rate of US$: MYR on 2-Dec-). BOCI Asia Limited will be supporting the financing of the purchase consideration. Minimum Debt Service Coverage Ratio of the bidder will be maintained at 2.x as a result of debt funding for the offer. 26

29 DEAL OF THE MONTH Exit multiples 31-Dec- Premium analysis ASIA-PACIFIC Multiples Offer price per share 1.67 Revenue 11.4x day before 19.44% EBITDA 14.x month before 17.3% EBIT 16.7x day after 13.3% Earnings 23.8x. Pre-rumour n/a Advisers Target/Seller Bidder Financial Goldman Sachs; RHB Investment Bank Financial - Legal - Legal - PR - PR - mergermarket/dealreporter Intelligence 21-Dec- 29-Dec- 14-Jan-11 PLUS Expressways: Jelas Ulung sounded out some shareholders prior to offer launch PLUS Expressways: Jelas Ulung not intending to submit deposit until further clarity Jelas Ulung offered PLUS Expressways EB Timetable and expected events Regulatory Date Completed Notes Securities Commission ref Securities Commission of Malaysia approval Offer Timetable Date Completed Notes High Court of Malaya Conditions Period Effective Date Settlement End Date approval on the disposal of business from company; indicative 8 months from acceptance of offer latest 14 trading day after completion of all conditions; indicative 8 months Conditions Period, from company variable, subject to completion of all conditions and approval from High Court latest 4 months after Condition Period expires, from company Company Events Acceptance period commences PLUS Expressways ex- EGM rights 21-Dec- Y from company; target shareholders to express their acceptance or refusal of the disposal proposal and to be presented at the EGM 16-Feb-11 from company; postponed; refer last day to acquire PLUS Expressways share and be entitled to vote at EGM, 2 trading day from record date, record date is normally 3 trading day from the EGM date PLUS Expressways 2 EGM 23-Feb-11 from company; postponed, from 23 December 2; approval on disposal of the business Close of acceptances 18-Mar-11 from company; last day for target shareholders to express their acceptance or refusal of the disposal proposal and to be presented at the EGM Creditors approval approval on disposal of the business 27