Download Report

Transaction Trends
Transaction Advisory Services
1st edition 2015
Norwegian transactions market update
Strong year-end performance driven by
continued appetite from foreign investors
Transaction Trends, published by EY Transaction Advisory Services, is a quarterly
publication that aims to identify trends in the Norwegian transactions market.
Data presented in this newsletter cover all transactions where the 500 largest
companies in Norway have participated as either target, buyer or vendor. This
makes Transaction Trends the most comprehensive transaction newsletter
available for the Norwegian market.
Also in this edition:
• Capital Confidence
Barometer
Last Twelve Months Number of
Transactions by Industry
Source: Mergermarket
Energy
22
Materials
8
Industrials
33
Consumer
Discretionary
14
Consumer
Staples
Healthcare
12
were public has also been notable this quarter,
maintaining average deal size at a relatively high
level.
In this issue, we have included a summary of
EY’s 11th biannual global Capital Confidence
Barometer (“CCB”). The 1,600 respondents
– representing 62 countries and 18 sectors predict healthy growth for M&A globally, which
should take the global market back to pre-crisis
levels.
Public
Public
Private
Private
Public
1
Financials
Number of transactions
5
3
LTM
Source: Mergermarket
Source:
Mergermarket
Source:
Mergermarket
16
Telecom
Private
Number
of transactions
Number
of transactions
9
Information
Technology
Utilities
During the fourth quarter of 2014, the 500
largest Norwegian companies announced a total
of 33 transactions, which is significantly higher
than the previous quarter, and the strongest
fourth quarter since 2010. The number of
transactions over the last 12 months amounted to
123, compared to 115 as of the previous quarter,
which is the highest level since Q4 2011. Among
the top ten deals by value, eight had foreign
buyers. The share of the target companies which
35
33
35
30 35
30
25 30
16
25
20 25
15 20
20
10 15
15
17
5 10
10
0
55
32
34
31
34
34
2925
2828
24 29
26
22
8
26 25
25
25 16
25
25
22 25
24
18
14
24
1616 810
22
22 16
8
16
13
14
14 14
14
17
10
10 11
13
13
14
14 11
14
14
17
11
17
20
25
3333
28
26
16
1717
20
20
25
11
16
16
32
32 29
25
11
16
11
11 11
11
8
16
16
15
10
88
12
15
15
12
10
10
33
140
31
31 120
22
LTM
LTM
33
33
100
25
25
80
11
22
22
18
18
13
14
11
20
12
12
12
12
13
13
14
014
60
11
11
22
22
40
Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414
00
LTM
LTM
LTM
140
140
120
120
100
100
80
80
60
60
40
40
11
11
Q311
Q311Q411
Q411Q112
Q112Q212
Q212Q312
Q312Q412
Q412Q113
Q113Q213
Q213Q313
Q313Q413
Q413Q114
Q114Q214
Q214Q314
Q314Q414
Q414
20
20
00
Key highlights and market outlook
The previous quarter turned out as the best 4th quarter since
2010 with 33 transactions announced among the 500 largest
Norwegian companies despite the turmoil. The notable increase
in deal volume was, however, solely driven by foreign buyers; the
number of deals pursued by Norwegian buyers saw a marginal
decline compared to Q3 2014.
Overall, the Norwegian M&A market has become less predictable
in the near future. With lasting change in fundamental drivers
such as a lower oil price and a weaker Norwegian Krone will
force various industries to rethink their strategies and create
M&A opportunities for both foreign and local investors going
forward.
On 8 December, the global private equity firm Apax Partners
LLP announced a voluntary cash offer to acquire Evry ASA, the
Norwegian listed IT company, at NOK 16 per share, a 7.0% discount
to the closing price the day prior to the announcement date. The
potential transaction will be conducted via Lyngen Bidco AS, a
company indirectly owned by Apax. The offer values the entire
equity, and targeted shares, at NOK 4.27bn, based on 267m
outstanding shares at the offer price. The Board of Directors
unanimously recommended the offer. Shareholders representing
73.9% of shares (Posten Norge AS, Telenor Business Partner Invest
AS, and Folketrygdefondet) have accepted the offer based on
certain conditions. Evry will remain headquartered in Norway posttransaction.
Top transactions
transactionslast
last
quarter
deal
value,
USDm)
Top
quarter
(by(by
deal
value,
USDm)
On 27 November, Oslo based shipping and offshore brokerage and
investment bank RS Platou ASA was acquired by London based
shipping services group Clarkson Plc, for a total consideration of
GBP 281.2m. GBP 210.9 will be paid through issue of Clarkson
common shares, GBP 46.7m will be paid through issue of loan
notes, and GBP 23.5m will be paid in cash. The transaction will
speed up Clarkson’s approach to provide clients with quality
services in all shipping and offshore markets.
On 24 November, Cyprus based investment company Geveran
Trading Co. Ltd., launched a mandatory open offer to acquire the
remaining 62.46% stake in the Norwegian based and listed real
estate company Norwegian Property ASA. A few days prior to the
offer, Geveran Trading had acquired 25,633,104 shares via an onmarket transaction, increasing its total shares to 205,910,242, or
37.5%, and hence had to launch the mandatory offer.
On 29 October, Silk Bidco, a joint venture vehicle indirectly owned
by Home Capital AS (controlled by P. Stordalen), Periscopus AS
(controlled by T. Hegnar) and investment funds managed by TDR
Capital LLP, announced a voluntary public recommended cash
offer to acquire Norway based and listed transport corporation
Hurtigruten ASA. The offer of NOK 7 per share represents a 56%
premium over the closing price the day prior to announcement. On
December 19, Silk announced completion of the offer and intention
to initiate compulsory acquisition of outstanding shares (<2%) and
apply for delisting.
On 24 November, Hong Kong based Bluestar Elkem Investment Co,
a subsidiary of China National Bluestar Group, agreed to acquire the
Oslo listed manufacturer and distributor of solar cells and modules
REC Solar ASA. The offer price of NOK 108.5 per share represents
a 16% premium over the closing price one day prior to the
announcement date, and values the entire equity at NOK 4.34bn.
Source:
Source:Mergermarket
Mergermarket
Ann.
Ann. Date
Date
Oct-14
Oct-14
Nov-14
Nov-14
Dec-14
Dec-14
Dec-14
Dec-14
Oct-14
Oct-14
2
Target
Target
Vendor
Vendor
Buyer Buyer
Deal Dom.
Deal
Target
Deal Dom.
Deal
Target
IndustryIndustry
Value Turnover
Value Turnover
Shah Deniz gas field (15.5% Stake);
Shah Deniz gas field (15.5% Stake);
South Caucasus Pipeline Company
South Caucasus Pipeline Company
Limited (15.5% Stake)
Statoil ASA
Petronas Gas Berhad
Norwegian Property ASA (62.46% Stake)
-
Geveran Trading Co.
Financials
1,908
Ltd. Geveran Trading Co.
Financials
Statoil ASA
Limited (15.5% Stake)
Norwegian Property ASA (62.46% Stake)
DnB NOR Eiendomsinvest I ASA
DnB NOR Eiendomsinvest I ASA
Evry ASA
-
Hurtigruten ASA
| Transaction Trends 1st edition 2015
-
-
Evry ASA
Hurtigruten ASA
-
-
Starwood Global
Financials
Starwood
Opportunity
Fund Global
X
Opportunity Fund X
2,250
1,458
Financials
Information
1,055
Technology
Information
Apax Partners LLP
Silk Bidco AS
-
Energy
Ltd.
Apax Partners LLP
-
Energy
Petronas Gas Berhad
Silk Bidco AS
ConsumerTechnology
773
Discretionary
Consumer
Discretionary
n/a
2,250
127
1,908
n/a
1,458
n/a
127
n/a
2,096
1,055
2,096
540
773
540
Activity Breakdown
In the fourth quarter of 2014, we have observed an increasing
number of foreign investors entering the Norwegian M&A market;
58% of the deals had foreign buyers, compared to 40% in the
previous quarter and 46% over the last 12 months. The share of
foreign buyers is even more significant if we only take the top ten
transactions into account, where only two buyers were domestic.
The increase in foreign buyers is largely due to more buyers from
Europe and the Americas, whereas the share of buyers from the
Nordics and Asia-Pacific has remained stable.
Buyer Region
Source: Mergermarket
LTM
Q4 2014
12%
42%
19%
24%
0%
9%
Industrials is still the largest sector with 33 deals over the last
12 months, with Energy coming in second, with 22. It is worth
noticing, however, that the gap between the two has more than
doubled to 11 deals, from five in the previous quarter (33 vs 25 in
industrials and energy, respectively).
13%
54%
1% 10%
4%
12%
Norway
Americas
Nordics (excl. Norway)
Asia-Pacific
Europe (excl. Nordics)
Other
Transaction Type
Transaction
Type
Source: Mergermarket
Source:
Mergermarket
2008 - 2014
2008
- 2014
Domestic
Domestic
CrossCross
BorderBorder
46%
54%
46%
LTM
43%
57%
Q4 2014
42%
58%
43%
LTM
42%
Q4 2014
54%
57%
58%
Activity by
byindustry
industry
Activity
Source:Mergermarket
Mergermarket
Source:
Number
of Transactions
Number
of Transactions
Industry
Industry
Energy
Energy
Materials
Materials
Industrials
Industrials
Consumer Discretionary
Consumer Discretionary
Consumer Staples
Consumer Staples
Healthcare
Healthcare
Financials
Financials
Information Technology
Information Technology
Telecom
Telecom
Utilities
Utilities
Deal value not reported (across industries)
Deal value not reported
Total
(across industries)
Total
3
DealDeal
Value
(USDm)
Value
0$0
– 100
- $100 m
100+
> $100 m
0$0
– 100
- $100 m
100+
> $100 m
0 – 100
$0 - $100 m
100+
> $100 m
0 – 100
$0 - $100 m
100+
0>–$100
100 m
$0 - $100 m
100+
0>–$100
100 m
$0 - $100 m
100+
0>–$100
100 m
$0 - $100 m
100+
0>–$100
100 m
$0 - $100 m
100+
0>–$100
100 m
100+
$0 - $100 m
0>–$100
100 m
100+
$0 - $100 m
> $100 m
| Transaction Trends 1st edition 2015
Q4 2014
Q1 2014
2
2
3
3
1
2
1
2
2
1
-
3
2
2
2
2
2
2
3
2
1
-
12
15 33
34
LTM LTM
7
9
6
1
7
4
5
3
6
2
3
7
1
3
-
6
9
3
1
10
6
6
4
2
5
4
6
4
3
2
52
48 123
112
2008 –2008
2013– 2014
29
52
16
19
62
37
33
21
25
24
6
6
23
13
41
12
9
14
3
11
23
42
13
18
52
31
27
17
23
19
6
6
23
9
35
8
9
11
3
9
297
246
724
630
Activity Breakdown
Deal volume saw a notable increase in Q4 compared to the previous
quarter, from 25 to 33 transactions, driven solely by foreign
investors; the number of deals with Norwegian buyers decreased
to 14 in Q4 compared to 15 in Q3. It should also be noted that a
significant share of the deals, 67% or 22 out of 33 deals in total,
involved listed companies. This is the highest share in the history of
Transaction Trends with the exception of Q1 2013, where the share
was 68% (17 of 25 deals in total).
Although the average deal size has declined from its record high in
the previous quarter, the number of deals valued over USD 100m
has seen an increase. This is connected with a notable share of the
targets being public companies, which are often larger by nature.
Note that part of the decline in average deal size, denominated in
USD, is also driven by a strong depreciation of the NOK in Q4, as
NOK is the denomination currency for a significant share of the
transactions covered in this newsletter.
Deal value by range (est.)
USD 0-100 m
Source: Mergermarket & EY
22
> USD 100 m
Target Region
Source: Mergermarket
Q4 2014
LTM
14%
15%
9%
64%
5%
1% 4%
Norway
Americas
Nordics (excl. Norway)
Asia-Pacific
Europe (excl. Nordics)
Other
Averagedeal
dealsize
size(est.)
(est.)
Average
Source:Mergermarket
Mergermarket&&EY
EY
Source:
Dealvalue
value(USDm)
(USDm)
Deal
949
949
16
10
18
15
496
496
9
268
268
Q114
62%
9%
0%
21
12
15%
3%
Q214
Q314
Q414
Q114
Q114
336
336
Q214
Q214
Q314
Q314
Transaction
TransactionArena
Arena
Source:
Mergermarket
Source:
Mergermarket
2008
- 2014
2008
- 2014
LTM
LTM
Q42014
2014
Q4
4
| Transaction Trends 1st edition 2015
Public
Public
Private
Private
56%
56%
44%44%
59%
59%
67%
67%
41%41%
33%33%
Q414
Q414
Public Market Update
With five new listings in the fourth quarter, all on Oslo Stock
Exchange, 2014 finished off as the best year for IPOs in Norway
since 2010, and the best year for listings on Oslo Stock Exchange
since 2007. Scatec Solar ASA, XXL ASA, and Entra ASA listed in
October, whereas RAK Petroleum plc and RenoNorden ASA listed in
November and December, respectively.
One of the most high-profiled IPO of the quarter was EQT’s listing
of XXL, which completed the initial public offering with a share
price of NOK 58, valuing the company at NOK 8bn, or about USD
1.1bn. Bookbuilding was completed four days prior to the original
estimated closing day following a heavy over-subscription. After the
IPO, EQT remains one of the main owners with 28% of
the shares.
New listings
Source: Oslo Stock Exchange
24
16
16
8
8
10
4
0
Private
Public
Employee
33.749
30.000
20.000
25.093
17.326 18.245
13.182
10
2009
2010
9
2011
2009
2010
2011
2012
2013
OBX Index
2012
2013
2014
IPO
Private
Public
4.000
Employee
3.000
2.440
2.228
1.810
1.810
1.228
4% 0
5%
2008
2009
1.150
2010
2011
2012
2013
4,4
3,8
3,5
4,4
4,5
EV/EBITDA
500
400
P/B
300
2014
2013
2012
1,5
1,5
1,5
1,7
1,7
2011
2010
200
P/E
100
0
2012
2014
Source: S&P Capital IQ
600
5
2014
Avg. OBX multiples
Source: S&P Capital IQ
2011
7
4
5.115
1.000
2008
7
1
5.000
2.000
10.000
0
4%
5%
3
0
3
8
6.000
IPO
40.000
12
NOKm
50.813
50.000
12
4
Source: Oslo Stock Exchange
59.709
60.000
13
Issues by value, Oslo Axess
Source: Oslo Stock Exchange
NOKm
11
6
12
2008
Issues by value, Oslo Stock Exchange
Oslo Stock Exchange
19
Oslo Axess
21
20
2013
| Transaction Trends 1st edition 2015
2014
7,3
9,0
8,4
9,3
10,6
Capital Confidence Barometer
Middle-market deals to fuel M&A rebound globally
In October 2014, EY published its 11th edition of Capital
Confidence Barometer (“CCB”), a semi-annual survey gauging
corporate confidence in the economic outlook and trends in how
companies manage their Capital Agenda. The 1,600 respondents –
representing 62 countries and 18 sectors - predict healthy growth
for M&A globally, which should take the market back to pre-crisis
levels. After a period with a high number of mega deals, focusing
on optimization and core will fuel more middle-market deals in the
upcoming year. The biggest indicator of positive deal sentiment is
pipeline, which has increased by 30% since April, and additionally,
two thirds of executives expect pipelines to expand further over the
next 12 months.
Macroeconomic environment
Despite a continuation of disruptive external influences, greater
confidence in global economic stability lays the foundation for
future M&A. The number of executives that view the global
economy as stable has almost doubled in the past 12 months, and
the same is true for the level of confidence in corporate earnings,
where the confidence score increased from 43% to 77% from
October 2013 to October 2014. Confidence has also boosted in all
other measures compared to both April 2014 and October 2013,
including short-term market stability (64%), credit availability (58%),
and equity valuations/stock market outlook (54%).
What is your perspective on the state of the global economy
today?
53%
Improving
Stable
24%
3%
Declining
31%
60%
65%
44%
9%
11%
Corporate Strategy
Oct-14
Apr-14
Oct-13
In line with their growing confidence in global economic stability,
more companies are expanding their core business by changing
their mix of products and services and increasing product
introductions; our survey shows a threefold increase in the number
of companies adopting both of these strategies. The growth
focus is tempered by a disciplined approach to cost reduction and
operational efficiency, as executives remain mindful over lessons
6
| Transaction Trends 1st edition 2015
Expectations to pursue an acquisition
50%
40%
35%
40%
29%
30%
31%
25%
20%
10%
okt.12
apr.13
okt.13
apr.14
okt.14
learned during the financial crisis. A negligeable share of companies
are preoccupied with survival.
M&A outlook
Companies’ appetite to do M&A is at a three-year high, with 40% of
executives expecting to pursue acquisitions the next 12 months.
This is a clear signal of intent to look at deals as a route to growth.
Despite the high appetite, dealmaking challenges still persist; just
under half of executives (44%) are confident in the likelihood of
closing acquisitions, which may be due to increasing rigor in search
of strategically aligned assets, more thorough due diligence, or
greater competition.
Executives see an accelerating M&A market in the near term, with
almost two thirds expecting deal volume to increase further in the
next 12 months – even after a relatively positive 2014 for M&A.
2014 saw a rise in multibillion dollar deals, which are having a
significant ripple effect on the remaining M&A market, which
has seen increased confidence and triggered transaction activity
further down the deal chain. With the appetite to acquire at its
highest for three years, we now expect a new wave of M&A globally,
with much more focus on mid-market size deals. The new middlemarket momentum should lift M&A activity as companies seek to
strengthen and expand their core business.
The majority of deals swelling pipelines globally are focused
on strengthening the core business, by boosting market share,
managing costs, and improving margin growth.
What is the maximum single deal value expected
over the next 12 months?
okt.14
apr.14
okt.13
50%
23%
31%
30%
27%
20%
31%
10% 4%5%
15%
23%
12%
14%
Less than $50m
$50m – $249.9m
$250m – $499.9m
Greater than $1b
$500m – $999.9m
5%
The climate remains favorable for large acquisitions, however,
the growth of M&A should be defined by the major shift in focus
towards deals valued at USD 250m and lower, and with more focus
on the core sectors.
The number of companies that have more than five deals in pipeline
has increased significantly, from 15% in April to 23% in October.
The number of deals being considered by our respondents has also
substantially increased, with the aggregate up by 30% since April
2014.
A further sign of growing momentum is that almost two thirds, or
66%, expect M&A pipelines to expand further over the next year –
more than double the number expecting increases six months ago.
In addition to more transactions in pipeline and expectations of
an increase in these, a modest valuation gap among our survey
respondents and confidence in asset prices further underpin
positive deal sentiments. Half of executives think the valuation
gap is less than 10%; the number of respondents considering
the valuation gap higher that 25% is down to only 7%. 74% of
executives also expect the valuation gap to remain unchanged
in the next 12 months, and these factors combined will further
encourage dealmaking in the near term.
M&A plans center on boosting core, as the majority of companies
are focusing on acquiring businesses in their core sectors (73%),
with an eye to boosting market share, managing costs, and
improving margin growth. 63% of respondents reported that
their planned M&A activity will mostly be bolt-on acquisitions,
and over one third of respondents have indicated that access to
new technology or intellectual property is one of their main three
drivers impacting their company’s M&A strategy.
Leverage has declined since the global financial crisis, mainly
explained by increases in equity value. According to the S&P Global
Broad Market Index, the value of average market capitalization has
increased by 60% since October 2009, whereas total debt rose by
19% only.
Nearly half of executives expect their companies’ debt-to-capital
ratios to increase over the next 12 months, indicating a willingness
to take on more debt to fund growth ambitions.
The 11th CCB survey clearly points out optimism among the
world’s top executives. With strong pipelines, acquisition appetite
at a three-year high, solid balance sheets, and low valuation gaps,
the momentum of 2014 M&A is expected to continue on in the
near future, however, with a shift towards middle-market driven
rather than mega deal driven market. After years of contraction
and stagnation, global deal activity looks set to return to pre-crisis
levels.
To read the full Capital Confidence Barometer report,
please click here.
On which of the following capital management issues is your company
placing the greatest attention and resources today?
okt.14
33%
apr.14
23%
52%
The Capital
Agenda
66%
Increase
29%
okt.14
29%
No
change
62%
5%
9%
Oct-14
Apr-14
7
15%
okt.13
14%
How do you expect your deal pipeline to change over the next
12 months?
Decrease
apr.14
28%
okt.13
okt.14
| Transaction Trends 1st edition 2015
0%
okt.14
apr.14
3%
apr.14
okt.13
5%
okt.13
52%
46%
29%
EY
Services- -Norway
NorwayContacts
Contacts
EYTransaction
Transaction Advisory
Advisory Services
Vegard Stevning
Head of Transaction Advisory
Services, Transaction Support
[email protected]
+47 916 83 692
Oslo
[email protected]
+47 917 97 625
Oslo
[email protected]
+47 970 25 021
Oslo
[email protected]
+47 905 66 778
Oslo
[email protected]
+47 982 06 499
Bergen
[email protected]
+47 971 66 567
Oslo
Paul M. Larsen
Transaction Support
Bjørn Tore Foss
Transaction Support
Erik Haagensen
Transaction Support
Merete Skage
Transaction Support
Nils Kristian Bø
Valuation & Business Modeling
Bjarne Møller
Valuation & Business Modeling
[email protected]
+47 917 86 481
Bergen
[email protected]
+47 982 06 678
Stavanger
[email protected]
+47 928 02 095
Stavanger
[email protected]
+47 971 16 869
Oslo
[email protected]
+47 913 47 741
Oslo
[email protected]
+47 917 86 479
Oslo
[email protected]
+47 954 52 441
Oslo
Kjell Stenersen
Corporate Finance
Espen Norheim
Corporate Finance
Ole Conrad Siem
Corporate Finance
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax,
transaction and advisory services. The
insights and quality services we deliver
help build trust and confidence in the
capital markets and in economies the
world over. We develop outstanding
leaders who team to deliver on our
promises to all of our stakeholders. In so
doing, we play a critical role in building a
better working world for our people, for
our clients and for our communities.
EY refers to the global organization,
and may refer to one or more, of the
member firms of Ernst & Young Global
Limited, each of which is a separate legal
entity. Ernst & Young Global Limited, a
UK company limited by guarantee, does
not provide services to clients. For more
information about our organization, please
visit ey.com.
Helge Fredheim
Operational Transactions Services
Henning Raa
Transaction Tax
Hanne Fritzsønn
Transaction Tax
About this publication
Transaction Trends is a quarterly publication that aims to identify trends in the Norwegian
transactions market. Transactions covered in this publication are public and private
transactions announced by the 500 largest Norwegian companies (DN500), defined as
a transaction where either the buyer, target or vendor company is a Norwegian based
company. Public transactions are defined as transactions where either the buyer, target
or vendor company is listed on a public stock exchange. All other transactions have been
classified as private. Domestic transactions are defined as transactions conducted within
a national boundary, i.e. deals involving two or more incumbent nationals, while cross
border transactions involve companies from at least two different nationalities. Deal Value
is taken as the sum of the consideration paid by the acquirer for the equity stake in the
target plus the value of the net debt in the target, where applicable. Inclusion of net debt
in the deal value will depend on the stake acquired or the target company type.
Transaction Statistics are based on mergermarket/EY data. Public market data are
sourced from S&P Capital IQ and Oslo Stock Exchange.
Transaction Trends is published by EY Transaction Advisory Services.
For further enquiries, or to add your name to the mailing list for this publication, please
send an e-mail to [email protected].
Contact information
Bjørn Tore Foss
Tel.: +47 970 25 021
E-mail: [email protected]
© 2015 EYGM Limited.
All Rights Reserved.
This material has been prepared for general
informational purposes only and is not intended to be
relied upon as accounting, tax, or other professional
advice. Please refer to your advisors for specific advice.
ey.com