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BRIEF
INSIDE
DEALS. Brookfield Property Partners agreed to buy $1.4 billion of shares and warrants in General Growth Properties, boosting its stake to 32 percent. Page 3.

Mergers
NeWs, Analysis and Commentary
By ANgUs WHitley aND DaviD StriNger

11.01.13

FRIDAY

www.bloombergbriefs.com

Asian Promise Feeds Bidding for Australian Dairy


A three-way bidding war for Australian cheese that is already leading to one of Asias most expensive food deals is poised to become even pricier. Saputo Inc. of Montreal offered $425 million for Warrnambool Cheese & Butter Factory Co. last month, beating two bidders with a record premium for a peer in Asia. After Japans Kirin Holdings Co. this week bought about 10 percent of Warrnambool for more than Saputos proposed takeover price, bids may rise even higher, said RBS Morgans Ltd. Warrnambool offers Saputo a springboard into Asias growing markets, while Australian bidders and shareholders Murray Goulburn Co-operative Co. and Bega Cheese Ltd. want to keep out their larger Canadian rival, according to Rivkin Securities Pty. Shares in Australias oldest dairy producer are trading above Saputos A$8-a-share cash proposal, indicating some investors expect a higher offer. Bids may reach A$9, said RBS Morgans. There will be more corporate moves on this, said Graeme Browning, head of Australian transactions at EY. This is a very strategic asset to a whole range of buyers. The 125-yearold WarrnamTakeover Premiums for Asian Food Companies bool, based near Victoria, said that Warrnambool exports account2011 Wakodo ed for 46 percent TableMark 1992 of sales last fiscal year. Its 2006 OZEKI brands include GlaxoSmithKline 2012 Sungold milk. The bidding for Origin Toshu 2009 Warrnambool Arnotts 2007 started when Hsu Fu Chi 2006 Bega, the companys biggest Metcash 1998 investor with 0 10 20 30 40 50 60 70 80 an 18 percent
continued on page 2

IN PLAY. Japans Kirin is interested in buying the approximately 51 percent of the Philippines San Miguel Brewery it doesnt already own if it is approached, a person with knowledge of the matter said. Page 3. MARKET CALLS. The market is saying Jos. A. Bank is going to withdraw their offer [for Mens Wearhouse] and walk away, said Ivan Feinseth of Tigress Financial Partners. Page 3. BUYERS & SELLERS. Time Warner Cable departing CEO Glenn Britt says the Time Inc.-Warner and Time WarnerAOL deals shaped his view of mergers. Plus what Harmony Gold Mining, Luxottica and six other companies said in the past week about their merger strategies. Page4. DEAL ARBITRAGE. Page 6. Q&A. While Chinese and Japanese companies have different agendas, both have reasons to pursue foreign acquisitions, according to Hogan Lovells Hong Kong partner Jamie Barr. Page 7.

Source: Bloomberg

Announced Premium (%)

TODAYS DEALS (includes announced and amended deals to 8:00 a.m. New York time)
TARGEt General Growth Properties Inc H&BC kk United Biomedical Holdings Co Ltd Thin Film Electronics ASA Gibb Tools Ltd 6 associated retail stores Meiho Sangyo KK JALCO Holdings Inc JALCO Holdings Inc Coventry Resources Ontario etc TICKER GGP US 0891403D JP 0891393D TT THIN NO 0891384D LN 0891399D JP 6625 JP 6625 JP SECtOR Financial Consumer, Cyclical Consumer, Non-cyclical Technology Industrial Consumer, Non-cyclical Industrial Industrial -

MA<GO>
TICKER BPY-U CN 6069 JP 1326 TT IVZ US CKN LN MATAS DC 3170 JP CTLYSZ JP CHN AU VALUE VALUE/ ($M) EbItDA 1,400 2.7 30 27 24 15 14 9.1 7.4 662.6 7.1 662.6 7.1 -

ACQUIRER Brookfield Property Partners LP Trenders Inc Formosa Chemicals & Fibre Corp Invesco Ltd Clarkson PLC Matas A/S Aisei Pharmacy Co Ltd Catalyst KK Private Investor Chalice Gold Mines Ltd

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AUSTRaLIaN DaIRY
continued from previous page

stake, made a stock-and-cash proposal that was valued at A$5.78 a share when it was announced Sept. 12. The next month, Saputo offered A$7 a share and Murray Goulburn, which owns 17 percent of Warrnambool, bid A$7.50. Then Saputo, Canadas largest dairy processor, agreed to pay A$8 on Oct. 25. This week, Kirins food and drinks unit in Australia, Lion, said it acquired 9.99 percent of Warrnambool. According to exchange filings, it bought the shares on Oct. 29, when they were trading above Saputos latest bid. Warrnambool has agreements to supply as much as 20,000 metric tons of cheddar each year for Lions Coon and Cracker Barrel cheese brands, according to an April presentation. The purchase of a stake in Warrnambool was a strengthening of this relationship, Lion said. Kirin has bought itself an ability to influence the outcome, said Browning, head of Oceania Transactions Advisory at EY. It almost ups the stakes for the previous three bidders. They each now have to deal with Kirin. Kirin is concerned its supply deal with Warrnambool will be at risk under Saputos ownership, said Shannon Rivkinm, director at Rivkin Securities. Lions stake makes it tougher for Saputo, which has said it must own more than 50 percent of Warrnambool to proceed with its bid, he said. Its a very expensive seat at the table, Rivkin said. Saputos position is not as good. Warrnambool closed at A$8.27 in Sydney trading. That reflected some expectations of a higher bid, Rivkin said. A deal with Warrnambool would result in substantial cost savings for Bega and

closely held Murray Goulburn, and they could both potentially offer more, said Belinda Moore, an analyst at RBS Morgans. For Saputo, the target is a means to tap Chinas dairy boom and thats tough to value, she said. Will the next bid be at A$8.50? Thats a high possibility, Moore said. If thats either Bega or Murray Goulburn, does Saputo then come in and trounce them with A$9? That could be likely. Bega, based in New South Wales, won approval yesterday from Australias competition regulator to proceed with its bid. Begas directors will meet next week to consider raising the offer, Chairman Barry Irvin said. Bids are already pretty big, he said. Bega shares today jumped 9.5 percent to A$4.83 after New Zealands Fonterra Cooperative Group Ltd. said today it bought a 6 percent stake in Bega. The gain swelled the value of Begas cash-and-stock offer to A$7.80 for each Warrnambool share. Murray Goulburn remains committed to buying Warrnambool, the Melbournebased company said. Saputos current bid is compelling, CEO Lino Saputo said. We also have the financial capacity to deliver on this, he said. Warrnambool last year posted its lowest profit since 2009 and its stock fetched as little as A$3.89 in June. Saputos A$8-a-share offer was 80 percent higher than the stocks average price in the 20 days before bidding started. Thats a record premium for a takeover of a food company in Asia with a market value of more than $200 million.
Terminal users can subscribe to Real M&A alerts by entering: SALT REALMNA<GO>.

Bloomberg Brief Mergers Newsletter Ted Merz Executive Editor tmerz@bloomberg.net +1-212-617-2309 Bloomberg News Katherine Snyder Managing Editor ksnyder@bloomberg.net +1-212-617-5212 Mergers Editors John E. Morris jmorris89@bloomberg.net +1-212-617-0628 Scott Johnson sjohnson166@bloomberg.net +852-2977-4678 Reporter Will Robinson wrobinson11@bloomberg.net +1-212-617-5327 Contributing Jill Lewandosky Data Editors jlewandosky@bloomberg.net +1-212-617-4414 Salih Yilmaz syilmaz6@bloomberg.net +44-20-3525-4256 Eshani Gupte egupte@bloomberg.net +1-212-617-5969 Newsletter Nick Ferris Business Manager nferris2@bloomberg.net +1-212-617-6975 Advertising Jeff Maniatty jmaniatty@bloomberg.net +1-203-550-2446 Reprints & Lori Husted Permissions lori.husted@theygsgroup.com +1-717-505-9701 To subscribe via the Bloomberg terminal type BRIEF <GO> or on the web at www.bloombergbriefs.com 2013 Bloomberg LP . All rights reserved. This newsletter and its contents may not be forwarded or redistributed without the prior consent of Bloomberg. Please contact our reprints and permissions group listed above for more information.

YEStERDAYS DEALS
TARGEt Alliance Oil Co Ltd Cold rolled manufacturing business unit Mivisa Envases SAU Taiwan Life Insurance Co Ltd Banco Industrial e Comercial SA Fujian Hongshan Thermal Electric Co etc Tokyo Star Bank Ltd/The Viko Elektrik Ve Elektronik Endustri etc Alexander Mann Solutions Ltd OAS Oleo e Gas TICKER AOIL SS 0883539D KS 55640Z SM 2833 TT BICB4 BZ 8384 JP 6113719Z TI 1527562Z LN 0891164D BZ SECtOR Energy Industrial Industrial Financial Financial Financial Industrial Consumer, Non-cyclical Energy ACQUIRER Alliance Group OJSC Hyundai Steel Co Crown Holdings Inc CTBC Financial Holding Co Ltd China Construction Bank Corp Fujian Nanfang Textile Co Ltd CTBC Financial Holding Co Ltd Panasonic Corp New Mountain Capital LLC FI-FGTS TICKER 1059486Z UZ 004020 KS CCK US 2891 TT 939 HK 600483 CH 2891 TT 6752 JP 161147Z US 3082624Z BZ VALUE EV/LTM ($M) EbItDA 2,957 5.5 2,514 1,632 908 725 714 529 460 417 358 -

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THE WIRE
Brookfield Property Boosts General Growth Stake to 32%
Brookfield Property Partners LP has agreed to acquire $1.4 billion of shares and warrants in General Growth Properties Inc., boosting its stake in of the No. 2 U.S. mall owner to 32 percent. This transaction provides Brookfield Property Partners with the opportunity to increase its exposure to one of the highest quality shopping center portfolios in the world at an attractive valuation, Ric Clark, chief executive officer of Brookfield Property Group, said today in a statement. The acquisition will be funded partly through the issuance of $435 million of equity in Brookfield Property Partners to the Investment Corporation of Dubai and other institutional investors, New Yorkbased Brookfield said in the statement. The company will also issue $995 million of equity in a subsidiary of Brookfield Property Partners to Brookfield Asset Management Inc. The return on the investment may exceed the 15 percent target that Brookfield Property has estimated, Clark said in the statement. As part of the deal, Brookfield will also boost to about 39 percent its ownership stake in Rouse Properties Inc., a retail landlord spun off from General Growth.
Oshrat Carmiel

MARKET CALLS

Buying Vodafone seems like an easy decision for AT&T given the value of their stock and the still-low interest rates, said Walt Piecyk, an analyst with BTIG LLC in New York, after Bloomberg News reported that AT&T Inc. executives were mapping a strategy to acquire the U.K.-based wireless carrier. Still, while Europe might offer some expansion opportunities, AT&T cant afford to take its eye off the U.S. market where competition is heating up, Piecyk said.

Jos. A. Bank Clothiers Inc. closed down 3.8 percent at $47 .95 yesterday in New York, while Mens Wearhouse Inc. slid 3.2 percent to $42.30 after Jos. A. Bank said its willing to consider raising its $TK per share offer for Mens Wearhouse. The market is saying Jos. A. Bank is going to withdraw their offer and walk away, Ivan Feinseth, chief investment officer at Tigress Financial Partners LLC in New York, said in a telephone interview yesterday. Jos. A. Bank is trying to publicly force Mens Wearhouse directors to engage in talks as the acquisition attempt already is unfriendly, Mark Montagna, an analyst for Avondale Partners LLC in Nashville, Tennessee, said in a phone interview. This really tells you the likelihood of this happening is a lot less than it was before simply because Mens Wearhouse has not spoken to them, and they only have to hold out for two weeks and not talk to them, Montagna said. Ultimately, Mens Wearhouse has to pick up the phone.
Matthew Campbell, Jeffrey McCracken and Lindsey Rupp

China Construction Bank to Buy Majority of Brazils BicBanco


China Construction Bank Corp., the nations second-biggest lender by assets, agreed to pay 1.62 billion reais ($723 million) for a majority of Brazils Banco Industrial & Comercial SA. The 72 percent stake will include 157.4 million voting shares and 24.7 million preferred shares, which Construction Bank plans to buy for 8.9017 reais each, BicBanco, as the Sao Paulo-based firm is known, said yesterday in a filing. The price values the entire Brazilian bank at 1.16 times its book value as of June 30, according to data compiled by Bloomberg. The Chinese lender will make an offer to buy the remaining stock within 30 days after completion of the deal, which needs approval by regulators in Brazil, China

and the Cayman Islands. BicBanco specializes in loans to midsized companies. Acquiring a lender is the easiest way for Beijing-based Construction Bank to obtain a license in Brazil as it follows customers to the nation, a person with direct knowledge of the matter told Bloomberg News earlier this week. Construction Bank, which added operations in countries including Russia, Dubai and Japan this year, now has 17 subsidiaries with assets of about $120 billion in 15 nations, according to a statement on the opening of its Luxembourg unit on Oct. 31.
Cristiane Lucchesi, Dakin Campbell and Giulia Camillo

Kirin Said Interested in Buying Remainder of San Miguel


Kirin Holdings Co. is interested in buying the rest of San Miguel Brewery Inc. if approached, a person with knowledge of the matter said, after the Philippine beermaker revealed several bidders are vying for the shares. Kirin, which holds about 48 percent of

the brewer and is Japans biggest drinks maker, isnt in talks with co-owner San Miguel Corp., said the person, who asked not to be identified because the deliberations are private. The Japanese company would consider a deal should San Miguel offer to sell its 51 percent stake to Kirin, the person said. A valuation of about 20 times Ebitda is now normal for deals in the industry, San Miguel President Ramon Ang said via text message today. That multiple implies a $5.9 billion price for the stake, based on the brewers Ebitda last year, data compiled by Bloomberg show. Other major international brewers such as InBev and SABMiller would definitely be interested, said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo. Its possible that the price skyrockets. The brewery is almost a monopoly in the Philippines. Kan Yamamoto, a spokesman for Kirin, declined to comment. The media relations departments of Anheuser-Busch InBev NV and SABMiller Plc couldnt immediately be reached.
Yuki Yamaguchi and Cecilia Yap

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BUYERS AND SELLERS


CompileD by JoHN E. Morris aND Will RobiNsoN

What companies are saying about acquisitions and divestitures

Time Warner Cable Inc.


Chief Executive Officer Glenn Britt, 64, is set to retire at year-end and told employees last month he has cancer, reflected on the value and pitfalls of mergers in his last conference call as CEO yesterday. Britt started with Time Inc. in 1972. His company, the Glenn Britt second-largest U.S. cable operator, agreed to buy DukeNet Communications LLC for $600 million in October. Last year it completed its largest acquisition since it was partially spun off from Time Warner Inc. in 2008: a $3 billion takeover of the Insight Communications Co. cable system in Kentucky, Ohio and Indiana. Bloomberg News reported in June that Liberty Media Corp. and its chairman John Mallone were studying how Liberty and Charter Communications Inc., in which Liberty holds a stake, might acquire Time Warner Cable. Britts remarks have been edited and condensed.

Britt: Let me finish with a couple of comments on M&A. I read in the press, sometimes directly and sometimes by innuendo, that I am not interested in consolidation and that after I retire Time Warner Cable might have a more enlightened attitude. The implication is that somehow Ive been interested in entrenching myself and my colleagues. If you think about it, that is obviously absurd. We have demonstrated repeatedly that our job is to make money for our owners and in M&A we are open to deals that do exactly that. I personally have a great deal of my net worth tied up in Time Warner Cable stock, and after December 31, I wont be the CEO anymore. I care a whole lot about maximizing value. Rob and Artie can speak for themselves, but I believe they share my motivation. My perspective has also been shaped by two very large corporate mergers in the past: the merger of Time Inc. with

Warner Communications in 1990 and the Time Warner AOL merger in 2000. Despite widely touted strategic and industry merits, both deals were very lopsided in favor of one set of shareholders. So you shouldnt be surprised that we are focused on making money for you rather than just on some fuzzy notion of industry consolidation. Consolidation can be a good thing but the terms really matter. Over the years Ive been in this business, there has been a steady consolidation from many cable companies to few. The deals that work have always been driven by one of a few reasons. For example, sometimes families decide its time to sell because the children have no interest in the business. Another example for smaller companies with few economies of scale, its often possible for a larger company to pay them a price much higher than the economics they can realize by continuing on their own, but yet less than the larger companys valuation.
continued on next page

SECtOR OIL FOOD MINING FINANCIAL SOFTWARE CONSUMER AEROSPACE INDUSTRIAL

DAtE Oct. 31 Oct. 31 Oct. 31 Oct. 30 Oct. 29 Oct. 29 Oct. 29 Oct. 25

COmpANY Royal Dutch Shell Plc Hillshire Brands Co. Harmony Gold Mining Co. First Reserve Corp. DeNA Co. Luxottica Group SpA Saab AB OC Oerlikon Corp.

WhAt It SAID Europe's biggest oil company plans to sell downstream and shale assets plus assets in Nigeria, its CFO said on a conference call. Shell will accelerate divestitures starting next year. Link to transcript: NSN MVJGV76S973E <GO> The Chicago-based maker of hot dogs and sausages expects to evaluate acquisition opportunities, its management said on a conference call. Link: NSN MVJGFL6KLVS5 <GO> The South African gold miner is looking for distressed assets to buy, its CEO said, according to Business Day newspaper. Link: NSN MVIPEZ6S972L <GO> The energy-focused private equity firm is studying oil M&A options in Brazil and seeking more investments in the country, a managing director said. Link: NSN MVHENX6KLVSR <GO> The Tokyo-based mobile gaming software company is mulling acquisition opportunities to expand its e-commerce and mobile entertainment businesses, its CEO said in an interview. Link: NSN MVFGMY6JTSEQ <GO> The world's largest maker of eyeglasses has about $1.4 billion available for acquisitions and may seek purchases next year, its CEO said in an interview. Link: NSN MVFWKP6S972Z <GO> The Swedish maker of Gripen fighter jets would take on net debt for the right acquisition, its CEO said. Link: NSN MVFCKW6S972T <GO> The Swiss maker of textile machinery could add a new division through M&A, its chairman said at a presentation. The right deal is the best way to create shareholder value, its interim CEO said. Link: NSN MV7TMO6K50XX <GO>

Looking for M&A Activity in the S&P 500? Try the new MA!
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BUYERS aNd SELLERS


continued from previous page

These are true win-win deals, and theres been many of them. Other companies in the past, including some large ones, that practiced lumpy capital spending and then leveraged themselves to the hilt have found that they could not finance the next capital cycle and so they had to sell. In some cases, those sellers were able to earn spectacular returns on their original investments, although you can always debate what would have happened if they had stayed in the business and if theyd been more conservatively financed. Theres also been a few examples of companies that got into serious financial trouble because of being overly aggressive in the acquisition market. Delphi and Charter both come to mind in that category.

We certainly believe there are benefits to consolidation. However, we also believe that those benefits are pretty finite and easily knowable.
Glenn Britt, CEO of Time Warner Cable

When we first spun off from Time Warner, I think there was a widespread expectation that we would go on an acquisition spree and consolidate the

industry so the eventual structure would be two large cable companies. So far I guess we have disappointed who believed that particular story. And why is that? Well, we certainly believe there are benefits to consolidation. However, we also believe that those benefits are pretty finite and easily knowable. Among the large companies that you are aware of and that you follow, the managements and boards are sophisticated and they are well aware of those finite benefits. The reality is that they only wanted to do deals in which they receive all of those benefits. But those win-lose deals would not be good deals. To state the obvious, win-win deals are good deals, and I expect that over time we will see more of those.

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DEAL ARBITRAGE
TARGEt Belo Corp Berry Petroleum Co BlackBerry Ltd ACQUIRER Gannett Co Inc LinnCo LLC Fairfax Financial Holdings Ltd EXpECtED DEAL COmpLEtION SIZE (M) DAtE 2,028 4,174 1,427 4,804 2,238 1,877 9,846 2,898 2,242 2,341 2,265 2,461 7,527 3,838 4,060 3,861 15,901 1,351 2,275 3,322 10,366 10,310 1,512 1,305 5,629 2,702 1,278 13,558 1,863 1,379 12/31/13 03/31/14 11/05/13 06/30/14 12/31/13 11/01/13 12/31/13 03/31/14 12/31/13 02/28/14 03/31/14 12/31/14 12/31/13 12/31/13 03/31/14 11/05/13 12/31/13 02/28/14 06/30/14 12/31/13 OffER PER ShARE 13.75 36.86 9.00 19.23 13.26 8.50 14.16 24.50 11.00 35.00 13.50 49.38 13.53 9.46 15.00 34.99 76.00 30.00 48.00 38.50 23.75 44.09 15.04 22.79 26.00 16.00 23.25 61.62 29.53 13.25 TARGEt PRICE 13.73 47.75 7.95 18.68 13.08 8.50 14.20 24.37 10.68 26.01 13.55 49.32 12.82 8.98 16.10 34.52 75.29 29.81 42.30 38.63 23.74 44.02 14.98 22.78 26.19 15.99 23.18 60.92 28.96 13.20 OffER TYpE Cash Stk Cash C/S C&S Cash C/S Cash Cash Cash Cash Cash C&S Stk Cash C&S Cash Cash Cash Cash Cash C/S Stk Stk Stk Cash Cash C/S C&S Cash PROJECtED 1D MAJOR SpREAD ANNUALIZED % ChANGE mOvE* REtURN IN SpREAD 0.1% -22.8% 13.2% 2.9% 1.4% 0.0% -0.3% 0.5% 3.0% 34.6% -0.4% 0.1% 5.5% 5.3% -6.8% 1.4% 0.9% 0.6% 13.5% -0.3% 0.0% 0.2% 0.4% 0.0% -0.7% 0.1% 0.3% 1.1% 2.0% 0.4% 0.9% 3.4% 0.0% -0.4% 206.8% -134.7% 0.7% 13.4% 8.1% -1.0% 0.1% 0.1% 2.3% 0.3% -1.8% 4.6% 1.8% 3.5% 3.0% 2.3% -0.4% -1.6% 3.2% 0.1% -0.2% 0.1% -0.4% 0.2% 0.6% 0.7% -0.1% 0.0% 0.2% 0.1% 0.5% 0.1% 0.0% 0.0% 3.3% -0.1% -0.1% 0.1% 0.3% 0.2% -1.8% 0.0% 0.1% -0.1% -0.2% 0.2%

Brookfield Office Properties Inc Brookfield Property Partners LP CapitalSource Inc CapLease Inc Cole Real Estate Investment Inc CommonWealth REIT Compuware Corp Cooper Tire & Rubber Co Dole Food Co Inc PacWest Bancorp American Realty Capital Properties Inc American Realty Capital Properties Inc Corvex Mgmt, Related Funds Mgmt Elliott Management Corp. Apollo Tyres Ltd David Murdock

Harris Teeter Supermarkets Inc Kroger Co/The Health Management Associates Inc Hudson City Bancorp Inc Community Health Systems Inc M&T Bank Corp

Leap Wireless International Inc AT&T Inc Lender Processing Services Inc Fidelity National Financial Inc Life Technologies Corp MAKO Surgical Corp Mens Wearhouse Inc/The Molex Inc NV Energy Inc NYSE Euronext OfficeMax Inc PAA Natural Gas Storage LP PVR Partners LP Saks Inc SHFL Entertainment Inc Shoppers Drug Mart Corp Sterling Financial Corp/WA Stewart Enterprises Inc Thermo Fisher Scientific Inc Stryker Corp Jos A Bank Clothiers Inc Koch Industries Inc Berkshire Hathaway Inc IntercontinentalExchange Inc Office Depot Inc Plains All American Pipeline LP Regency Energy Partners LP Hudsons Bay Co Bally Technologies Inc Loblaw Cos Ltd Umpqua Holdings Corp Service Corp International/US

Source: Bloomberg MARB<GO>North American deals *Spread moved by more than 2% of target price: = up, =down

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Q&A
Chinese Buyers Aim to Move Up the Value Chain With Mergers, Says Hogan Lovells Barr
While Chinese and Japanese companies have different agendas, both have reasons to pursue foreign acquisitions, according to Jamie Barr, head of Hogan Lovells Asia corporate practice. He spoke with Bloomberg Briefs Scott Johnson about a global survey of 240 C-suite executives his law firm conducted this summer.

Q: We have a global recovery that still hasnt gained traction in several major economies. How do Asian companies view this environment? A: The global findings are entirely consistent with what we see here in Asia. The general overview is that the markets are still going to be shaky for the next couple of years. There is some emerging optimism, but nonetheless the general mood is conservative. Two out of three of the respondents anticipate that a major focus for them is going to be organic growth, largely in their existing markets, and in their existing range of products. Q: Does that preclude M&A? A: It doesnt preclude M&A at all. But I think the standout response from this survey is that two out of three of the respondents expect that strategic alliances are going to be underpinning their development plans. Q: Are strategic alliances becoming more attractive in this region? A: Theyve always been quite important. In China, in particular, there are certain industries you cant enter. There are some industries where you can only take a certain interest. There are many other countries around the region which have restricted industries. Commonly youre looking at industries where there is a dominant local player, and therefore to get a credible foothold in that market you need to have a relationship with that dominant local player. Many of those dominant players are family controlled. Typically, to build a relationship with a family business, it requires a strategic alliance. Over time, you may well find that that family, as the generations pass, ceases to be quite so interested in that area of business, and they may sell up. But initially it does require that sort of alliance.

Q: Where are Asian buyers looking for acquisitions? A: There are two major outbound investors in the region: China and Japan. Japan has historically been a major outbound investor pretty much to all destinations, and in all market sectors. Talking to Japanese corporates among our clients, whereas historically theyve been looking at intercontinental investment, many of them feel theyve done that, and theyre looking much more at Asia, because they see increasing wealth in the region, and an increasing population. China seems to be looking at life differently. Youre seeing far less investment in Southeast Asia, and I think partly thats because you can service it with products from China. But to China, which has been a big resources investor, there is now a very palpable shift in outbound investment, particularly if you look into Europe. In 2005, Chinese investment into the European Union was worth $800 million. In 2011, that reached $10 billion, and that is not a resources play. There, the Chinese are looking at securing access to technology but also establishing manufacturing plants in the European Union. Were seeing that particularly in Poland and Czech Republic. I think Japan will continue to be a very strong outbound investor. Its outstripped China over the last three or four years, partly because theres less to invest in at home. They have an aging population and low growth. China has rising wealth and a large, growing middle class. China is going to undoubtedly spend more on its domestic economy, and seems to be then

servicing international markets as well. Its interesting seeing that inbound investment into Japan this year is the highest its been since 2007. It suggests that there is appetite for investment into Japan. Q: Has hostility toward Chinese takeovers in some countries affected the appetite of Chinese companies for deals? A: Yes, clearly. Its interesting. In America, CFIUS [the Committee on Foreign Investment in the United States] essentially vets inbound investments. For the Japanese, thats just one of those things. You just handle it. In China, it seems to be a much bigger obstacle. I think that there has been a lot of nervousness about Chinese investment in the United States, which is becoming less significant, but it is perceived in China as a major hurdle. You go to Europe, and again, there is some discomfort about Chinese investors, simply because people just arent familiar with them. Q: Chinas economy is forecast to slow longer term. Does this make companies, domestic or foreign, more reluctant to do deals in China? A: No, I dont think so at all. One of the key drivers for corporates in China is going to be that theres an enormous amount of production capacity in China, but to differentiate themselves, they cant necessarily do it on price any longer. Theyve got to do it on quality and value-add. That, I think, is one of the reasons they are interested in acquiring that know-how overseas. Its a recognition that they do need to move up the value chain.

Based in: Hong Kong Home town: Warwick, England Career history: After legal training, spent six years as an investment banker in London. Has practiced law in Hong Kong for 14 years Degrees: Merton College, University of Oxford, MA Favorite restaurant: Ristorante La Loggetta, Cortona, Italy Hobbies/favorite pastimes: Hobby playing tennis badly; Pastime fantasizing about playing tennis well.

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