Acquisition International October 2012 by AI Global Media

October 2012 /

IN THIS ISSUE/

HSK STAKE ACQUISITION

— Mehmet Akuğur talks to Acquisition International about the deal and what his firm brought to the table. / 12

www. ACQUISITION-INTL .com

SECTOR TALK:

DEAL GURU:

SECTOR SPOTLIGHT:

Private Equity-Backed Materials Deals How to Survive Contracting With Contract Research Organizations Q3 Report

KONSALNET ACQUIRES G4S POLSKA

— The Leading Provider of Security Services in Poland Acquires the World’s Leading International Security Solutions Provider / 17

XBT HOLDING ACQUIRES 8 TO INFINITY

— Rajesh Kumar Mishra, Chief Financial Officer at XBT Holding Ltd., discusses the company’s recent acquisition of 8 to Infinity. / 14

CONTENTS:

October 2012

Editors Comment This month saw further developments in the ongoing Xstrata Glencore merger. Glencore Directors and the Independent Xstrata Non-Executive Directors announced in a statement dated 1st October that they have reached agreement on the final terms of a revised recommended all-share merger of equals.

CONTENTS — October 2012

Mick Davis, Xstrata plc Chief Executive Officer commented: “The strategic rationale for combining Xstrata and Glencore remains highly compelling. A merger will fuse the respective strengths of the two companies into a unique, vertically integrated natural resources group. It will also resolve Xstrata’s ownership structure in a way that I believe will create superior shareholder value as part of a larger, more diverse company with an enhanced ability to grow and create value for its owners. “My objective during my time as CEO of the Combined Group will be to preserve and enhance the value Xstrata’s management team has created over the past ten years through a wellplanned integration process and to lay down the foundations for the Combined Group’s success over many decades to come.” However, the announcement was met with criticism from two of Xstrata’s large shareholders – Knight Vinke Asset Management and Threadneedle Investments. “The apparent target fixation on doing a deal has, to our minds, been at the expense of proper consideration being given to the quality and value imbedded in Xstrata and its good prospects as a stand-alone business,” said Iain Richards, head of governance and responsible investment at Threadneedle Investments. October’s Acquisition features a detailed report on merger control with commentary from experts in the field – please turn to page 29 to read more. We also continue our evaluation of Q3 2012, discuss the complexities of doing business in various jurisdictions, and examine the biggest recent deals. Enjoy the Issue, Phil Grainger, Editor phil.grainger@acquisition-intl.com

How to get in touch AI welcomes news and views from it’s readers. Correspondence should be sent to; Address/ Acquisition International, Blakenhall Park, Barton under Needwood, Burton on Trent, DE13 8AJ. Tel/ 0844 809 4788 Email/ reception@acquisition-intl.com Website/ www.acquisition-intl.com

ON THE COVER ACQUISITION OF 70% STAKE IN HSK BY SYSTEMAIR AB: /12

Mehmet Akuğur talks to Acquisition International about the deal and what his firm brought to the table.

NEWS: /04

The latest news stories from around the world.

SECTOR TALK: /10 Private Equity-Backed Materials Deals Powered by Prequin.

DEAL GURU: /18 How to Survive Contracting With Contract Research Organisations

SECTOR SPOTLIGHT: /66 Q3 Report

Find us on/

DEAL DIARY: /72 @acquisition-int

ACQUISITION INTERNATIONAL

The latest M&A from around the world.

DEAL OF THE MONTH: /14

XBT Holding Acquires 8 to Infinity

6/ Hedge Fund News 8/ Appointments 17/ Deal of the Month Konsalnet Acquires G4S Polska 19/ A Lawyer’s Take on Finance Opportunities For Ukrainian Business in 2012 20/ Open Source Software In Mergers & Acquisitions 21/ Secondary Buyouts - Still Booming 22/ Rewriting The Rules on Insolvency 23/ Insurance Due Diligence - An Overlooked Art 25/ Capitalising on MENA Investment Opportunities 26/ Boardroom Trends Effective Corporate Governance 29/ Merger Control - Managing Competition 33/ Doing Business in... 42/ Arbitration The Key to Resolving Corporate Disputes 46/ Mauritius - Offshore Opportunities in 2012 47/ Double Taxation Agreements 49/ Resolving Real Estate Disputes 51/ Mapping Global Gender Equality 54/ Transfer Pricing Issues in Cross-Border M&A 58/ Media & Entertainment Disputes 59/ Resolving Disputes In The Aviation Industry 61/ Business Valuation & Transaction Pricing in M&A 63/ Growing Your Business Through Joint Ventures 64/ Consumer Goods 65/ M&A in the Technology Industry 71/ Meet The Experts

October 2012 /

NEWS:

from around the world

Brad Burkett and J.D. Friedland launch Match Point Partners LLC Brad Burkett and J.D. Friedland has announced the launch of Match Point Partners LLC, a new strategy and financial advisory firm that helps healthcare and technology companies effectively navigate through each phase of growth to maximize longterm value. The firm’s seasoned team includes 12 entrepreneurs and advisors and provides a unique blend of experience that addresses the distinctive growth challenges of middle market and emerging companies, while applying a longer-term lens and financial resources typically available to companies only after a certain growth threshold. “We founded Match Point Partners to provide middle market and emerging companies with a hybrid suite of advisory, operational and banking

services, which typically have not been available to them,” said Brad Burkett, founder and Senior Managing Director of Match Point Partners. “We’ve assembled an exceptional executive team that meshes expertise in strategy and management consulting, operations and financial advisory services, combined with a deep entrepreneurial mind-set that is vital for middle market and emerging companies.” Founded by two veterans with extensive advisory and operating experience, Burkett and Friedland were previously the managing partners at Epsilon Securities LLC, a boutique investment bank focusing on middle-market companies. Prior to Epsilon, Friedland was the head of U.S. healthcare

investment banking for Rothschild North America, while Burkett was the head of healthcare investment banking for Navigant Capital Advisors. Friedland has been providing advisory services to clients in the healthcare and technology sectors since 1994. Burkett has a breadth of operational and advisory experience having served as CEO of numerous companies in healthcare and technology. The broader Match Point team has extensive entrepreneurial, mid-market and Fortune 1000 expertise. In addition to its core services, Match Point brings valuable relationships with strategic and financial experts in the technology and healthcare sectors, as well as capital resources that enable the company to participate as an investor in select opportunities.

NYSE Euronext launches retail matching facility NYSE Euronext (NYX) has launched a Retail Matching Facility (RMF) on its European regulated cash markets, a new service which enables Retail Liquidity Providers to offer price improvements to retail investors. This initiative, which meets all preand post-trade MiFID requirements, will be available as of mid- January 2013. NYSE Euronext member banks and brokers can execute their retail order flow via the Retail Matching Facility (RMF) against new price improving liquidity provided by Retail Liquidity Providers. Furthermore, they will not be required to invest in new connections as they will be able to use their existing access to the European regulated cash markets. The liquidity providers will be required to be present at the

European Best Bid and Offer spread 95% of the trading day. Alicia Suminski, Head of Market and Product Development, European Equity Cash and Derivatives, NYSE Euronext said “The aim of NYSE Euronext’s Retail Matching Facility is to promote a more competitive, transparent environment for retail investors than they currently achieve through bilateral, internal arrangements with intermediaries.” Retail investors’ orders will be eligible to trade with both Retail Liquidity Providers, whose role will be to provide buy and sell quotes in the RMF, and NYSE Euronext’s central order book. The Retail Liquidity Providers will trade with the retail

orders exclusively according to the ordinary pricetime priority principle, in full competition with other Retail Liquidity Providers and the central order book itself. If the Retail Liquidity Providers’ quotes are not competitively placed then the retail investors’ orders will automatically trade with NYSE Euronext’s central order book thus preserving its order flow diversity. All RMF transactions are regulated market transactions and will be identified appropriately. Additionally, in order to be pre-trade transparent, Retail Liquidity Provider quotes will be broadcast. The Retail Liquidity Programme is open to all eligible NYSE Euronext members, ensuring absolute neutrality, and is highly competitive thanks to a selection process.

ICAP and Rapid Ratings launch Credit Derivatives Service ICAP plc, the world’s leading interdealer broker and provider of post trade and information services, has launched a joint credit derivatives rating service with Rapid Ratings, and alternative rating, research and analytics firm. The new product brings together two independent sources of market-leading information to deliver a unique and innovative view of the credit derivatives market. The new pricing service combines pricing data sourced from ICAP’s global interdealer trading platforms and Rapid Ratings’ Financial Health Rating (FHRTM) data for each company entity. FHRs offer a unique insight in the creditworthiness of thousands

/ October 2012

of companies. They apply industry-specific weightings to many more factors than conventional ratings firms, making it easier to compare companies to their peers. As markets lean increasingly towards automation, these fully algorithmic FHRs fulfil the needs of an ever-changing market by requiring no human involvement. Customers can subscribe to this new service directly from ICAP or view via ICAP’s global vendor distribution network. “Partnering with ICAP for this unique view of the credit market will provide transparency and intelligence for

financial market participants who require independent sources of data for valuations, as well as regulatory, accounting and risk management purposes,” said James Gellert, Chairman and CEO of Rapid Ratings. Kevin Taylor, Global Head of ICAP Information Services, said: “In an environment where there is a demand for greater transparency and accuracy, our new service will provide an independent credit pricing solution to financial market participants. This partnership with another provider of unique, independent data shows our continued commitment in expanding our product offering with varied and innovative new solutions that are exclusive to ICAP.”

ACQUISITION INTERNATIONAL

NEWS:

from around the world

Santander pulls out of RBS purchase The Royal Bank of Scotland Group (“RBS”) has received notification from Santander UK that it will be pulling out of its agreed purchase of certain UK branch-based businesses (“the business”). The business includes 316 branches, broadly comprising the RBS branch business in England and Wales, and the NatWest branch business in Scotland, along with certain SME and corporate activities across the UK. The sale of the business was mandated by the European Commission in 2009 as a condition of its approval of state aid provided to RBS as part of the

recapitalisation by the UK Government. Santander agreed to the purchase in August 2010. RBS Group Chief Executive Stephen Hester said: “I can assure all affected customers that there will be no disruption to the service they receive. It is business as usual in all of these branches, and customers don’t need to take any action. “While this is a profitable part of our business that we would rather not part with, RBS has worked hard to ensure it is substantially separate from our UK branch network and corporate business and largely ready to be taken on by a new owner. Much

of the heavy lifting associated with a transfer has already been completed, including separating data for 1.8 million customers and putting in place a standalone management team. “It is of course disappointing that Santander decided to pull out of this transaction, especially for the customers and staff involved. However, RBS’s strong progress in our restructuring plans means we can continue to provide a stable home for this business and its customers pending a further resolution. “RBS will commence a new process of disposal and will provide a further update on this in due course”

Infraredx and Philips Announce Collaboration Infraredx, Inc., a medical device company committed to advancing the diagnosis and management of coronary artery and other vascular diseases, and Royal Philips Electronics (NYSE: PHG, AEX: PHIA have signed a joint development and collaboration agreement that is focused on integrating Infraredx’s true vessel characterization (TVC) Imaging System with Philips’ Allura Xper catheterization (cath) lab imaging systems. This collaboration is intended to enable seamless access to the TVC Imaging System with Philips’ Allura X-ray systems. “Philips is the premier provider of X-ray imaging technology for interventional cardiologists and we are pleased to partner with them on developing this integrated solution,” said Don Southard, president and chief executive officer of Infraredx. “Our goal is to offer physicians easier access to the

TVC Imaging System’s near-infrared spectroscopy and intravascular ultrasound technology for use in determining the true extent of cardiovascular disease, especially the presence of lipid core plaques (LCPs). The TVC Imaging System is experiencing accelerated adoption in the U.S. and Europe. We believe this growth is the result of mounting clinical evidence around the role of LCP and continuous system enhancements.” The joint product development is intended to provide physicians with tableside control of the TVC Imaging System from within the sterile cath lab environment using Allura’s table-mounted Xper module. The TVC Composite Image can be viewed on the Philips’ cath lab monitors, enabling physicians to view the Chemogram and intravascular ultrasound (IVUS) images alongside the coronary angiogram.

This will allow for better visualization of LCPs in a patient’s coronary artery. The automatic sharing and integration of patient demographics and imaging study information between the Allura system and the TVC system will improve workflow efficiency and provide quicker retrieval and review of information. “As the global market leader in cath lab imaging technology, we strive to offer advanced clinical applications that enable interventional procedures to be performed more effectively,” said Bert van Meurs, senior vice president and general manager, Interventional X-ray, Philips Healthcare. “The collaboration with Infraredx supports our commitment to continuously improve the integrated functioning of our cath labs and further enhance the user experience.”

New York Launches Digital Health Accelerator The New York eHealth Collaborative (NYeC) and the Partnership for New York City Fund (Partnership Fund) have revealed the inaugural class of the New York Digital Health Accelerator (NYDHA), a program that will make New York a hub for the emerging digital health technology industry. The partnership is the largest-funded health IT accelerator program in the United States, and the first to provide access to seniorlevel healthcare providers who are committed to the success of the eight growth-stage companies selected. With its initial investment of $4.2 million, the NYDHA program will create approximately 1,500 jobs over five years. In addition, it is expected that the companies will attract upwards of $150 million to $200 million in investment from the venture capital community post-program.

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The program has selected 8 early- and growthstage companies that are developing cutting-edge technology products in care coordination, patient engagement, analytics and message alerts for healthcare providers. The program received 250 applications from companies located in 27 states and 10 countries. Each chosen company is awarded up to $300,000 along with invaluable mentoring from senior-level executives at leading hospitals and other providers in New York for nine months. Each company has committed to opening an office in New York State. Tech companies accepted into the program are receiving direct mentorship and feedback from senior-level executives with the participating providers. Their coaching, testing, and feedback will help these companies create the most efficient

tools that the medical community will want to use to streamline the sharing of electronic medical records and improve coordination of care. In addition, companies have direct access to the technology platform that is connecting electronic health records across New York State, the Statewide Health Information Network of New York (SHIN-NY). The investment capital was provided by a syndicate of investors, including Aetna, Janssen Healthcare Innovation, Milestone Venture Partners, New Leaf Venture Partners, Partnership for New York City Fund, Quaker Partners, Safeguard Scientifics, and UnitedHealth Group. The Empire State Development Corporation, Health Research Inc., and NYeC have provided additional funds to operate the NYDHA.

October 2012 /

HEDGE FUND NEWS: from around the world

Barclay Hedge Fund Index Gains 1.79% in September Hedge funds gained 1.79% in September, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index is up 5.99% year to date. “In spite of news that highlighted continuing economic deterioration in the US, Europe, and China, investors remained in mild risk on mode,” says Sol Waksman, founder and president of BarclayHedge. “Equity prices were higher on the month and the US dollar lost ground against the euro and the yen.”

Overall, 16 of Barclay’s 18 hedge fund indices gained ground in September. The Barclay Emerging Markets Index was up 3.14%, Healthcare & Biotechnology gained 2.86%, Equity Long Bias added 2.64%, Pacific Rim Equities rebounded from two months of losses with a 2.52% gain, and European Equities gained 1.62% Two hedge fund strategies had losses in September. The Equity Short Bias Index fell 4.23%, and the Merger Arbitrage Index was down 0.55%.

Equity Short Bias has lost 16.83% year to date. All other strategies tracked by BarclayHedge have had positive returns in 2012. “Losses in the Equity Short Bias Index are close to surpassing the 18.80 percent drop in 2009, and are approaching the 23.95 percent loss we recorded back in 2003.” The Barclay Fund of Funds Index gained 0.75% in September, and is up 3.19% in 2012.

SS&C Launches GoTrade+ SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, has launched GoTrade+, an advanced, flexible middle-office service for complex investment portfolios. GoTrade+ supports post-trade activities of complex traded transactions including bilateral and cleared OTC derivatives, listed derivatives, loans and other securities. The services can be flexibly fitted into existing client infrastructures to flow seamlessly with current processes. The technology receives trade data from front office systems and delivers post trade life cycle support, valuations, collateral management, cash services, accounting, reporting and data

delivery all wrapped in a personalized relationship management framework. Extensive experience gained through years of servicing highly complex portfolios for hedge funds can now be utilised by asset managers, corporate treasuries, banks, insurance and pension companies for a truly specialised and independent service. Carmine Ricciardi, Mizuho Securities USA Inc. a current client, said, “We leverage SS&C’s GoTrade+ services to manage our OTC collateral processes. This provides us with a transparent, controlled and scalable infrastructure as well as subject matter expertise at a fraction of the cost of building and maintaining it ourselves.”

“Many institutions who use complex trades such as OTC derivatives don’t want to build the infrastructure to handle post-trade activities,” said Jon Anderson, Managing Director, SS&C. “This is where we step in, we share our technology and expertise with our clients to provide comprehensive, independent webbased transparency on traded portfolios.” The services and technology are modular and integrated which allows SS&C to offer all or one service based on the client’s requirements. GoTrade+ uses web based technology to provide clients with real time 24/7 access to their trade data and statuses so that clients can know anything about their trades, anytime and anywhere.

Schroders launches UCITS III hedge fund platform Schroders is launching a new fund platform, Schroder GAIA (Global Alternative Investor Access), a regulated, transparently operated platform for UCITS funds designed to give investors easier access to hedge fund expertise. The platform will bring together the best of the traditional and alternative investment worlds: Schroders’ global distribution network and expertise in managing UCITS products and NewFinance Capital’s knowledge and experience of the hedge fund industry. The Funds available on the platform will be managed by reputable, top quality hedge fund managers with proven track records. The first Fund to be launched through Schroder GAIA is Schroder GAIA Egerton European Equity, managed by Egerton Capital Limited Partnership. Founded

/ October 2012

in 1994 by John Armitage and William Bollinger, Egerton is an independent money management firm, focusing primarily on pan- European equities. Gavin Ralston, Global Head of Product at Schroders, said: “The 2008 financial crisis has led to a seismic change in the asset management industry. With regulators all over the world locked in discussion about the future of unregulated investments, investors in alternatives have begun to look to the UCITS framework as a ready-made regulatory solution. “With the launch of Schroder GAIA, our ambition is to establish ourselves as a market-leading provider of quality hedge funds – accessed through UCITS products. Through Schroder GAIA, we will be able to offer investors a product that combines the return profile of hedge fund strategies with the liquidity, transparency and regulatory stability of UCITS.”

Eric Bertrand, NewFinanceCapital, commented: “The convergence between the management of alternative and traditional investments is something we’ve been talking about for a couple of years now and it is clear that this is now a growing trend in the industry. “The team at NewFinance Capital will be responsible for manager selection, screening the industry for potential partners, using their extensive network of industry contacts and in-depth knowledge of the industry to identify the most suitable candidates. “Once a manager has been added, NewFinance Capital and Schroders will work together to monitor them – Schroders from an operational point of view, and NFC from an investment perspective.”

ACQUISITION INTERNATIONAL

HEDGE FUND NEWS: from around the world

New PerTrac study shows large hedge funds have performed better than small funds in down years PerTrac, the leading provider of analytics, reporting and communications software for investment professionals, has released the sixth annual version of its analysis of performance trends for hedge funds of different sizes and ages. The study, Impact of Size and Age on Hedge Fund Performance: 1996 - 2011, shows that the average large fund outperformed the average small fund in the negative performance years of 2008 and 2011. During the 41 months since 1996 in which hedge funds of all sizes posted negative performance results, the average large fund lost less than the average small fund in 61% of these monthly periods. The study, which utilizes fifteen leading global hedge databases, including five distinctive dead hedge fund databases to analyse the 2011 hedge fund universe, also shows that the large funds dipped 2.63% on average in 2011, the least when compared to small funds’ 2.78% and mid-size funds’ 2.95% slides. Large funds also maintained

lower annualized volatility statistics relative to small funds. The study defines a fund as “small” if its assets under management (AUM) are less than $100 million, “mid-size” if assets are between $100 and $500 million, and “large” if assets managed exceed $500 million. “The findings suggest that investors interested in exposure to hedge funds and seeking to protect their wealth should examine funds with over $500 million in AUM, since the average large fund has had lower losses in negative performance years and lower annualized deviation figures compared to the average small fund,” said Jed Alpert, Managing Director of Global Marketing at PerTrac. Investors with a higher volatility appetite and seeking to maximize returns should consider funds with less than $100 million in AUM, since the average small

fund has outperformed the average mid-size fund and average large fund in 13 out of the last 16 years. The study also examines the impact of fund age on performance and shows that the cumulative return for the average young fund is 827%, since 1996, nearly double that of the 446% return for mid-age funds and well beyond the 350% posted by tenured funds. The report further shows that it has been an uneven journey. The average young fund has had 144 positive and 48 negative months since 1996, midage funds have had 136 positive and 56 negative, while tenured funds have had 129 positive and 63 negative. The study defines a fund as “young” if its start date was within the last two years, “mid-age” if it commenced within the last two to four years, and “tenured” if it has been operating beyond four years.

The Willis Pension Scheme chooses Towers Watson for hedge funds The Trustees of the £1.5 billion Willis Pension Scheme have chosen Towers Watson to manage a large portion of its hedge fund portfolio on a fiduciary basis, following a competitive tender. The portfolio, which will have an initial value of around £100 million, will be invested in a broad range of hedge fund strategies.

Chris Ford, EMEA head of Investment at Towers Watson, said: “This is a significant development for our business and is part of a trend where more clients and prospects are choosing to delegate all or part of their investment decisions to Towers Watson. Our hedge fund capabilities have grown and changed significantly since we started researching hedge funds over a decade ago.”

Towers Watson has delegated responsibility for over US$56 billion of assets worldwide, of which over US$7 billion are invested in hedge funds.

AIMA announces Middle East initiative The Alternative Investment Management Association (AIMA), the global hedge fund association, has announced the launch of a Middle East initiative. AIMA is seeking to create a network for managers and service providers in the Middle East that can give the local industry a voice in terms of engaging with investors and its relations with policymakers and regulators. The initiative will be spearheaded by former AIMA Chairman and current AIMA EMEA Regional Advisory Council member Sohail Jaffer of FWU Group, who is based in Dubai.

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The focus of AIMA’s Middle East initiative will be investor engagement given the increasing interest in hedge funds from the region’s investors, including sovereign wealth funds, family offices and private clients. A series of educational and networking events are planned in the region, with the first one likely to take place next month. An initial AIMA Middle East group meeting has been held in Dubai.

region’s authorities are also taking a keen interest in hedge funds and are encouraging the growth of the local asset management industry. And of course many investors in the region either have extensive experience of investing in alternative investments or are looking at increasing their allocations in that area. We look forward to working with investors, policymakers and regulators across the region.”

“There is already a significant hedge fund industry community in the Middle East, both in terms of managers and service providers,” said Sohail Jaffer, AIMA’s Middle East representative. “The

“The Middle East is a strategically significant region for the global hedge fund industry,” said Andrew Baker, AIMA’s CEO. “I am delighted that we have a former Chairman of the Association there to take forward this important initiative.”

October 2012 /

APPOINTMENTS:

from around the world

AXA Private Equity appoints Benoît Verbrugghe as executive board member AXA Private Equity, the leading European diversified private equity firm, has appointed Benoît Verbrugghe as a member of its Executive Board. Benoît Verbrugghe will remain Head of the New York office as AXA Private Equity continues to expand its business in North America. Dominique Senequier, CEO of AXA Private Equity, said: “We look forward to bringing Benoît’s insight and experience of the American market to the Executive Board. His elevation is also recognition of his significant contribution to the development of the firm’s deal-making and fund-raising capabilities. Benoît has led the development of the secondaries business across North America and asserted AXA Private Equity’s world leadership in the secondary fund-of-funds space.

Benoît Verbrugghe has played a key role alongside Dominique Senequier and Vincent Gombault in raising AXA Private Equity’s profile in the secondaries market, most notably in the successful raising of US$8 billion from its funds of funds expertise. In June 2011, AXA Private Equity acquired a US$1.7 billion portfolio of limited partnership interests in private equity buyout funds and portfolio of direct stakes in companies of Citigroup. This followed the acquisition in April 2010 of a US$1.9 billion portfolio of private equity funds from Bank of America (NYSE: BAC). Along with Vincent Gombault, Managing Director Fund of Funds, Benoît Verbrugghe was instrumental in both of these acquisitions. Benoît Verbrugghe joins the Executive Board alongside Dominique Senequier, Chief Executive Officer, Dominique Gaillard, Managing Director

Direct Funds, Vincent Gombault, Managing Director Funds of Funds, and Stephan Illenberger, Managing Director. He was appointed Head of the New York office in July 2010. Benoît Verbrugghe, member of the Executive Board and Head of New York office, said: “Our team in New York has worked hard to grow our presence in the North American market. We aim to capitalize on the numerous opportunities we see to expand our offering and reach new investors across the continent.” Benoît Verbrugghe has been at AXA Private Equity for 13 years, having joined the firm in 1999. He began his career at an M&A consulting firm. Since being appointed Head of the New York office, he has overseen the growth of Private Equity’s North American offering and presence in the region.

U.S. Bank appoints Michael S. Millman as Senior Vice President and Wealth Management Advisor U.S. Bank, a leading provider of wealth management and private banking services, has appointed Michael S. Millman as Senior Vice President and Wealth Management Advisor for The Private Client Reserve of U.S. Bank in San Francisco. In this role, Millman will develop and implement customised investment strategies and plans for high net worth individuals and families, drawing upon the full range of resources available through The Private Client Reserve.

Millman brings more than 17 years of private banking, financial planning, and investment management and trust experience to his new post. Before joining The Private Client Reserve, he served as Senior Vice President and Wealth Advisor for Wells Fargo Private Bank. He has held senior-level advisory positions with such firms as Bank of America Private Bank, Fidelity Investments and Charles Schwab & Co. Millman earned a bachelor of science degree in international management from Golden Gate University in San Francisco, Calif., where he graduated magna cum

laude. Millman also holds four nationally- recognized professional industry designations: Certified Financial Planner (CFP®), Chartered Financial Consultant (ChFC®), Chartered Life Underwriter (CLU®), and Accredited Estate Planner (AEP®). He currently serves on the San Francisco Estate Planning Council, the Advisory Board of Foothill College’s Entrepreneur Center in Los Altos, Calif., and for six years was a board member of The California Symphony in Walnut Creek, Calif. He also served as Chairman of the Professional Advisors Council and was a founding member of its Planned Giving Committee.

Morrison & Foerster adds M&A Partner David Bresnick in London David Bresnick has joined Morrison & Foerster’s London office as a partner in the Corporate practice. Mr Bresnick represents technology and telecom companies in mergers and acquisitions, corporate finance, private equity investments and related matters. Mr Bresnick joins the firm from CMS Cameron McKenna’s London office, where he headed the firm’s private equity group and led the firm’s corporate Telecoms, Media and Technology group. His addition, which follows the arrival in London earlier this year of corporate and private equity partner Justin Stock, continues the firm’s strategic expansion of its private equity, M&A and cross-border transactional capabilities in key financial centres.

/ October 2012

“The growth and development of our M&A and other transactional practices, particularly in London, is a core element of the firm’s strategic plan. David continues an important expansion of our M&A and private equity capabilities in business and technology centres such as New York, London, Tokyo, Hong Kong and Silicon Valley,” said Keith Wetmore, Chair of Morrison & Foerster. Ed Lukins, head of the firm’s London Corporate group, added: “David is a terrific enhancement to our London and global private equity and M&A platform. He brings substantial transactional experience working with technology, financial and life sciences clients and bolsters our ability to handle the largest and most complex cross-border deals.”

“I’ve been impressed by MoFo’s strong global M&A and private equity team and, of course, the firm’s leading position in the technology sector,” said Mr. Bresnick. “The firm’s deep capabilities in IP and tech licensing, tax, employment, litigation and other areas provide a wealth of resources for clients with sophisticated transactional needs. I am excited to join MoFo and look forward to contributing to the continued expansion of the London Corporate group.” Mr. Bresnick spent his entire career – more than 20 years – as a corporate M&A lawyer with CMS representing large, mid-sized and emerging tech companies. He earned his law degree from the College of Law in Chester and an LLB from Queen Mary and Westfield College in London. He is ranked in Chambers UK for Private Equity: Venture Capital Investment and in Legal 500 for Venture Capital.

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APPOINTMENTS:

from around the world

CVC appoints James Schiro as Senior Advisor CVC Capital Partners (“CVC”), a leading global private equity firm, has appointed James (“Jim”) Schiro as a senior advisor to the firm. Mr. Schiro will become a member of CVC’s U.S. and Global Financial Institutions Advisory Boards to support CVC’s investment activities in the US and in the financial services sector globally. Mr. Schiro has extensive experience in the financial services industry, having held management positions at a number of large, global organizations. From 2002 to 2009, Mr. Schiro served as Chairman of the Group Management Board and Chief Executive Officer of Zurich Financial Services AG. Prior to joining Zurich Financial Services, Mr. Schiro served as Chief Executive Officer of PricewaterhouseCoopers LLP.

He began at Pricewaterhouse in 1967 and during his tenure there held a number of senior roles.

assessing a number of recent opportunities, and we look forward to his continued involvement.”

Mr. Schiro currently serves as Lead Director of The Goldman Sachs Group, Inc., Presiding Director of PepsiCo, Inc, and Vice Chairman of the Supervisory Board of Royal Philips Electronics. He also serves on the Board of Directors of REVA Medical, Inc. and is actively involved as a Board Trustee at St. John’s University and the Institute for Advanced Study.

Kamil Salame, Partner and head of CVC’s US Financial Institutions Team, added, “Jim is an extraordinarily talented and accomplished executive who has successfully led some of the world’s largest and most complex financial services firms through periods of great change. His experience and wisdom will be incredibly valuable to CVC’s global financial services investment effort.”

Christopher Stadler, Managing Partner and head of CVC’s US Office, commented, “We are very excited to officially welcome Jim to CVC. His distinguished career makes him uniquely qualified to assist us in our investment activities. He has supported us in

CVC currently has approximately $6 billion of uninvested equity capital, making the firm one of the top five sources of available private equity funds in the world.

Michael Mount appointed as Managing Director, Coutts International, UK Michael Mount has been appointed as Managing Director within Coutts’ international business in the UK. Michael joins from HSBC where he held several senior positions in the private banking division. In this new role, Michael will lead Coutts’ Asia, Africa and NRI teams in London. Michael has 27 years’ experience in international markets, having most recently worked as Managing Director, Global South Asian Diaspora, Europe & Americas to the HSBC’s private banking business in the UK. In previous roles, Michael led business development at HSBC Private Bank UK and served as Chief Executive for HSBC Investment Bank’s International Private Banking operation in London.

He started his career in the international private banking operations of Credit Lyonnais and Barclays. Michael will be integral in enhancing the links between Coutts’ Asian and UK operations and driving the business’s global NRI strategy in the UK. He will be based in London and have a dual reporting line to Stephen Fletcher, Chief Operating Officer for Coutts & Co. and to Ranjit Khanna, Head of South East Asia and Global NRI. Michael joins with immediate effect. Ranjit Khanna, Head of South East Asia and Global NRI commented: “Michael’s appointment is significant to the business as he will further develop the links between Coutts NRI business in the UK and

our key markets. Coutts’ NRI operation has grown significantly over the last year, and Michael’s vast experience in cross border wealth management will help continue this growth and ensure that we achieve our ambitions in the markets in which Coutts operates. We are delighted to welcome Michael to Coutts.” Michael Morley, Chief Executive of Coutts & Co. added: “With an increasing amount of UK wealth deriving from international locations, Coutts’ International Desk in London continues to be of significant importance to the business. Michael’s extensive experience will enable us to maximise the opportunities within this market.”

New Silk Route adds Senior Operating Advisor New Silk Route, a leading Asia-focused private equity and growth capital firm founded in 2006 with $1.4 billion under management, has appointed seasoned professional William I. Campbell to the firm’s Leadership Team as Senior Operating Advisor. Bill has held leadership roles at the many of the world’s largest companies. His new role at New Silk Route will involve identifying global opportunities for the firm’s robust portfolio of investments. Parag Saxena, Founder and CEO of New Silk Route said, “We are fortunate to have someone of Bill’s stature at NSR. His experience leading global businesses, such as Citicorp’s global retail franchise

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and Philip Morris’ packaged goods business in Asia, will be helpful to NSR’s portfolio companies.” “I am pleased to be joining the talented team at New Silk Route,” said Bill Campbell. “Having spent the bulk of my career focused on growing leading businesses on a global scale I can attest to the significant potential of India and the Indian consumer. New Silk Route has a strong portfolio of investments that have the potential to attract international investors and companies looking to take advantage of India’s growth potential.” Bill is the former Chairman of the Card Services Unit of JPMorgan Chase, where he was most

recently a senior advisor to the Chairman and CEO. From 2005 to 2007 he served as Chairman of Visa International, leading the organization to its IPO in 2008. Prior to his executive roles at JPMorgan Chase and its predecessors, Bill oversaw Citigroup’s Global Consumer Business and also spent 28 years at Philip Morris where he served as Chief Executive Officer of Philip Morris USA and President of Philip Morris Asia Pacific. He currently serves as President of Sanoch Management, a consulting and investment firm. He also serves as a Senior Advisor to JPMorgan Chase. Bill earned a Bachelor’s Degree in Economics from the University of Alberta and a Master’s Degree in Business Administration from the University of Western Ontario.

October 2012 /

SECTOR TALK:

Private Equity-Backed Materials Deals

Private Equity-Backed Materials Deals â&#x20AC;&#x201D; Powered by l The materials sector comprises companies operating in materials, chemicals, mining, natural resources, production and timber. Globally, this industry sector has witnessed 367 private equity-backed buyout deals since 2006, with an aggregate value of over $62bn.

Number and Aggregate Value of Private Equity-Backed Materials Buyouts Globally:

H1 2006 - H2 2012 (As at 30-Sep-2012) No. of Deals

Aggregate Value of Deals ($bn)

H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 ytd

16 29 30 30 20 25 18 23 18 30 33 26 45 24

3.8 13.6 3.2 8.0 6.1 4.1 0.5 1.5 2.9 5.6 7.6 2.5 1.8 1.6

Number and Aggregate Value of Private Equity-Backed Materials Buyouts Globally: H1 2006 - H2 2012 (As at 30 September 2012) 50

16.0

14.0

12.0

No. of Deals

35 30

10.0

8.0

6.0

4.0

2.0

0.0

0 H1 2006

H2 2006

H1 2007

2006 2007 2008 2009 2010 2011 2012 YTD 19 24 17

20 12 13

22 7 12

30 8 10

28 20 11

37 15 17

2006 2007 2008 2009 2010 2011 2012 YTD

10 / October 2012

44% 27% 29%

H1 2009

H2 2009

H1 2010

H2 2010

H1 2011

H2 2011

H1 2012

H2 2012 YTD (30/09/12)

Aggregate Deal Value ($bn)

Breakdown of Private Equity-Backed Materials Deals by Region: 2006 - 2012 YTD (As at 30 September 2012)

54% 63% 17% 17% 29% 21%

47% 34% 19%

54% 22% 25%

Proportion of Total

2006 - 2012 YTD (As at 30-Sep-2012)

North America 47% 32% Europe 27% 40% Asia & ROW 27% 28%

H2 2008

During the next few years, aggregate deal value in the materials sector made a notable recovery, returning to levels similar to those witnessed in H2 2007, which was coupled with the greatest number of deals witnessed in the materials sector since 2006. In the following year, from H1 2011 to H1 2012, the aggregate value fell to $1.8bn worth of deals. However, H1 2012 witnessed the largest number of materials buyouts since 2006, which can be explained by the rising importance of small-cap materials deals in the first half of 2012. It is likely that this high level of deals in the materials sector will persist, as so far in H2 2012 (as of 30 September 2012) 24 materials deals valued at $1.6bn have been announced.

Breakdown of Private Equity-Backed Materials Deals by Region: Region

H1 2008

The aggregate value of materials deals peaked in the second half of 2006, with 29 private equity-backed buyout deals valued at $13.6bn at the height of the buyout boom era. This aggregate deal value plummeted to $3.2bn in H1 2007 but the number of buyouts remained at a sustained level compared to H2 2006. Aggregate deal value in the materials sector made a slight recovery in the following six-month period, with $8bn worth of deals witnessed in H2 2007. Mirroring the overall buyout sector, buyout activity in the materials sector was hit by the onset of the financial crisis, with aggregate value and number of deals falling by 98% and 40% respectively from H2 2007 to H1 2009, reaching a low of 18 deals valued at $0.5bn in H1 2009.

2006 - 2012 YTD (As at 30-Sep-2012)

North America 21 Europe 12 Asia & ROW 12

H2 2007

No. of Deals

Number of Private Equity-Backed Materials Deals by Region: Region

Aggregate Deal Value ($bn)

Period

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

27%

28%

29%

21% 17%

27%

47%

2006

40%

32% 2007 North America

17%

27%

54%

44%

2008

2009

Europe

63%

2010

19%

25%

34%

22%

47%

54%

2011

2012 YTD

Asia and Rest of World

ACQUISITION INTERNATIONAL

SECTOR TALK:

Private Equity-Backed Materials Deals

Aggregate Vaue ($bn) of Private Equity-

By region, North America is the most prominent area of activity for materials deals, with an average of 50% of all materials deals between 2006 and 2012 YTD based in the region. During 2012 YTD (as of 30 September 2012), there have been 37 materials deals in North America valued at $1.4bn, representing 54% of all deals globally. Before the financial crisis in 2008, Europe was the second most prominent area of materials deal activity, with between 27-40% of all global deals taking place in the region. During 2009 and 2010, it became the least popular region for buyout investment, with only 17% of materials buyout deals occurring in this region. European buyout materials deals made a resurgence in 2011, with 20 buyout deals valued at $7.4bn. The proportion of materials deals in the Asia and Rest of World region currently stands at a quarter of buyouts in 2012 to date (as of 30 September 2012). The proportion of global deals based in Asia and Rest of World has remained between about 20-30% from 2006 to 2012 YTD.

Backed Materials Deals by Region:

2006 - 2012 YTD (As at 30-Sep-2012) Region

2006 2007 2008 2009 2010 2011 2012 YTD

North America 10.6 Europe 6.2 Asia & ROW 0.5

5.4 1.2 4.5

0.2 7.9 2.1

1.2 0.1 0.7

6.7 0.2 1.6

2.3 7.4 0.4

1.4 0.1 1.9

Number and Value of PE-backed Materials Deals by Type:

2006 - 2012 YTD (As at 30-Sep-2012) Type

No. of Deals

Aggregate Deal Value ($bn)

Buyout Add-on Growth Capital Public to Private

207 80 46 34

48.2 3.2 1.5 9.8

Of the 367 materials deals announced from 2006 to 2012 to date, 56% of the number and 77% of the value of these deals were leveraged buyouts. Add-ons accounted for 22% of global deals by number, yet only represented 5% of aggregate value of global materials deals. Thirteen percent of all materials deals in this time period have been growth capital injections, while 9% of the number of deals have been public to private acquisitions. The largest materials deal recorded between 2006 and 2012 to date has been the â&#x201A;Ź3bn secondary buyout of Brentagg. Bain Capital sold Brentagg to Goldman Sachs and BC Partners, with Bain Capital retaining a minority stake in the company.

Breakdown of PE-backed Materials Deals by Type:

Breakdown of PE-backed Materials Deals by Type: 2006 - 2012 YTD (as at 30/09/2012) 100%

2006 - 2012 YTD (As at 30-Sep-2012)

90%

Buyout Add-on Growth Capital Public to Private

No. of Deals 56% 22% 13% 9%

Proportion of Total

80%

Type

Aggregate Deal Value 77% 5% 2% 16%

16% 2% 5%

13%

70%

22%

60% 50% 40%

77%

30%

56%

20% 10% 0%

No. of Deals Buyout

Add-on

Aggregate Deal Value ($bn) Growth Capital

Public To Private

10 Largest Materials Buyouts Globally:

2006 - 2012 YTD (As at 30-Sep-2012) Firm

Investment Type

Deal Date

Deal Size (mn)

Investors

Bought From/ Exiting Company

Primary Industry

Location

Brenntag

Buyout

Jul-06

3,000 EUR

Bain Capital

Chemicals

Germany

GE Advanced Materials Evonik Industries Aleris International, Inc Xella

Buyout

Sep-06

3,800 USD

Bain Capital, BC Partners, Goldman Sachs Apollo Global Management

Materials

Buyout Public To Private

Jun-08 Aug-06

2,400 EUR 3,300 USD

CVC Capital Partners TPG

RAG Foundation -

Chemicals Production

Germany US

Buyout

Jul-08

1.600 EUR

Haniel Group

Materials

Germany

Berry Plastics

Buyout

Jun-06

2.250 USD

Buyout

Oct-07

250.000 JPY

Goldman Sachs Private Equity Group, JPMorgan Partners Olympus Capital Holdings Asia

Materials

Arysta LifeScience

Chemicals

Japan

Univar Inc. Elkem Univar Inc.

Public To Private Add-on Buyout

Jul-07 Jan-11 Sep-10

1.500 EUR 2.000 USD 1.785 USD

Goldman Sachs Merchant Banking Division, PAI Partners Apollo Global Management, Graham Partners Industrial Equity Investments Limited, Permira CVC Capital Partners, Parcom Capital Blackstone Group, Bluestar Clayton Dubilier & Rice

Orkla ASA CVC Capital Partners

Chemicals Materials Chemicals

US Norway US

ACQUISITION INTERNATIONAL

October 2012 /

LEAD MANDATE:

Acquisition of 70% stake in HSK by Systemair AB

ACQUISITION OF 70% STAKE IN HSK BY SYSTEMAIR AB l Mr. Mehmet Akugur, esq. is the Managing Partner of Akugur Law Firm in Istanbul. The firm recently assisted in the acquisition of a 70% stake in Havalandırma Endüstri Sanayi ve Ticaret A.S.(HSK) by Systemair AB. Mr. Akugur talks to Acquisition International about the deal and what his firm brought to the table. Bosphorus bridge in Istanbul / Turkey

Mr. Mehmet Akugur, esq. is the Managing Partner of Akugur Law Firm in Istanbul. The firm recently assisted in the acquisition of a 70% stake in Havalandırma Endüstri Sanayi ve Ticaret A.S.(HSK) by Systemair AB. Mr. Akugur talks to Acquisition International about the deal and what his firm brought to the table. Akugur Law Firm, founded in 2006 by Mehmet Akugur, renders best quality legal and consultancy services through its professional team, its commitment to perfection in client services and with its extending business potential as well as its expertise in the various disciplines of law. For the purpose of the reinforcement of the quality of its services; our Law Firm makes an efficient use of its high ranked expertise, particularly on M&A Transactions and Restructuring Projects where on the other hand it receives consultancy supports from highly distinguished professionals who are renown and who have achieved superior academic degrees in basic area of law, such as Commercial Law, Law of Obligations and Civil Law. Akugur Law Firm is providing legal and consultancy services to major international, domestic and multinational companies on a wide range of legal issues that have an impact on their operations. The Firm has taken a prestigious place in the legal market together with its coordinated and integrated professional

/ October 2012

approach, advanced experience and introduces preventive and guiding legal services by transforming the existing and potential risks of clients into business decision support services and therefore creating an essential added value for its clients. In August 2012, Systemair AB, leading Swedish ventilation manufacturer with operations in 44 countries, acquired a majority stake of 70% in HSK, one of the major players in HVAC market in Turkey especially in the manufacturing of air handling units. Akugur Law acted as legal advisor for vendor. There is an agreement between the companies for Systemair AB to acquire the remaining shares of HSK in the following years. “We assisted HSK in preparation of physical data room and conduct of legal due diligence processes, as well as negotiation, reviewing and commenting on the Transaction Documents including Memorandum of Understanding, Share Purchase Agreement, Shareholders Agreement, Management Contract and other relevant documents. Furthermore, on the Closing, we have realised the general assembly of HSK ensuring that the new shareholding structure is reflected in the Company’s Articles of Association and signatory authorities.” This acquisition is in line with the enlargement strategy of Systemair AB having with operations in 44 countries in Europe, North & South America,

the Middle East, Asia, Africa and Australia. HSK and Systemair AB shall combine their strength for expanding their range of production for the air conditioning and ventilation industry in Turkey. In this deal, Akugur emphasised on establishment of a transaction mechanism which has tax advantages and which enables Systemair AB’s further acquisitions of HSK shares during the following years. Thanks to its experience in M&A transactions reaching over an amount of $7 billion Akugur Law has been able to establish a user-friendly mechanism protecting the benefits of both parties in respect of future acquisitions in question.

Company: Akugur Law Firm Name: Mehmet Akugur Email: mehmeta@akugurlaw.com Web: www.akugurlaw.com Address: Levent Mah. Cilekli Cad. No.10 Levent Besiktas- ISTANBUL/TURKEY Telephone: +902122864828

ACQUISITION INTERNATIONAL

October 2012 /

DEAL OF THE MONTH:

XBT Holding acquires 8 to Infinity

XBT HOLDING ACQUIRES 8 TO INFINITY l Rajesh Kumar Mishra, Chief Financial Officer at XBT Holding Ltd., discusses the company’s recent acquisition of 8 to Infinity.

XBT Holding Ltd.

The Company’s current brands include:

XBT Holding Ltd. (“Company” or “XBT”), is a rapidly growing global Infrastructure-as-a-Service (IaaS) business, with operations in US, Europe, and Asia.

•

Managing over 10,000 servers and growing, the Company serves enterprise, medium and small sized businesses. It offers a full portfolio of services which include: co-location; managed servers; cloud computing; high-performance managed network services; and value-added services, including Software as a Service (SaaS), storage, security and business continuity services.

•

The Company utilises over 1000 racks across three tier III data centre facilities, located in Dallas, TX, The Netherlands, and Singapore.

Given the current data centre footprint, the Company is in the process of building two facilities in both Amsterdam and Dallas ranging between 25-40k sqft.

/ October 2012

•

• • •

Webzilla.com (Dedicated Servers, a USA based company); IPTransit.com (Global Bandwidth Provider, a USA based company); UCDN.com (Universal Content Delivery Network, a USA based company); Fozzy.com (Shared Hosting and VPS, a USA based company); 8.to (Managed Hosting, a Singapore based company); Server.lu (Managed Hosting, a Luxembourg based company).

The Company has grown dramatically, growing 92% in 2011, finishing the year with over $32M in revenue and $9M of EBITDA (audited by KPMG); and has 2012 projections of over $35M in revenue and $11.3M in EBITDA. The Company sees roughly half of its revenue coming from the US and half from Europe, while the strategy remains to focus on the underserved European and Asian IaaS markets. Gartner forecasts the IaaS market will generate $24.4B in revenue in 2016 from $5.6B in revenue in 2011 and IaaS is expected to grow by over $20B with a CAGR of 41.7% in the forecast period globally. In addition to organic growth, XBT has been actively acquiring strategic businesses, including the largest

ACQUISITION INTERNATIONAL

DEAL OF THE MONTH:

XBT Holding acquires 8 to Infinity IaaS players in both Luxembourg (Root SA) and Singapore (8 to Infinity), both in Q2 2012. The aim of XBT Holding Ltd. is to create business with turnover of $200M per year by the end of 2015. This aim can be achieved through organic growth and acquisitions in developing countries with a good prospect for occupying a sensible share of the market in those emerging regions. XBT concentrates on developing business clients and offering them as a one-stop-shop the whole portfolio of services to meet their requirements in all sectors, so there is no need to choose other partners for their business needs. The long-term four year target is to achieve listing on the US or other stock exchange markets or involve into strategic merger with one of the leading public listed Internet infrastructure business companies. Differentiating Factors According to Mr Mishra, XBT Holding differentiates itself by having the broadest presence in emerging growth countries, and by bringing the same service quality, reliability and state-of-the-art advanced technology and systems in the emerging growth countries that are available to business customers in the US and Europe. “All of XBT Holding’s data centre facilities will soon not only be independently certified as Tier III facilities but will also be certified for best operating practices, security and compliance with industry regulatory requirements,” he explained. “XBT Holding offers one-stop-shopping to meet the global service needs of its multinational customers managed by a global sales team.” The 8 to Infinity Acquisition Commenting on the strategic reasoning behind the acquisition of 8 to Infinity, Mr Mishra explained that XBT went through a list of target companies based in Singapore. He noted that the region was selected due to its stable political situation and the fact that Singapore is a well-known business hub for the Asian market represented by the major international financial institution. “The hosting business is not yet organised or operated by the big players,” said Mr Mishra. “XBT Holding started to consolidate the hosting business and to bring our international expertise and IP networks to become a big player in this geographical arena.” 8 to Infinity is one of the long-established hosting companies on the Singapore market. Since 1997 it has been performing hosting services for the Asian region. Mr Mishra noted that throughout its fifteen years in business the company has accumulated a sizeable customer base and extensive experience, and created a solid infrastructure. “This is why it was decided to acquire 8 to Infinity and to build up on its experience a solid base for the Holding’s regional strategic expansion which would cover such countries as India, Indonesia, Hong Kong, Thailand and Vietnam,” he said. The transaction took six months to complete. XBT’s internal due diligence team went through negotiation

ACQUISITION INTERNATIONAL

with 10 companies which fall under its target. The criteria that were observed throughout the selection process are outlined by the XBT acquisition strategy. These criteria are as follows:

XBT’s integration team will integrate 8 to Infinity into the organisation, allowing an optimisation of costs due to XBT’s global contracts with most of the suppliers.

•

“Within six months of the deal we can see revenue has grown more than 35% and EBITDA 60% compared to pre-deal six months,” said Mr Mishra.

Annualized revenue run rate: > 1M / year in emerging growth countries. • Potential annual revenue growth rate: 20% or more. • EBITDA Margin: > 22.5% of revenue with potential to grow more than 35%. • Customer Base: Business Customers. • Other Criteria: - Quality and cultural fit of the current management team of the acquisition. - Quality, age and expansion potential of the current Data Center facility. - Availability of additional synergistic “tuck-in” acquisitions in the target country or regions in order to maximize exit options and value. The company is currently looking for more acquisitions in emerging growth countries, i.e.: India; Hong Kong; Indonesia; Thailand; and Vietnam. Commenting on how the acquisition will affect 8 to Infinity, Mr Mishra stated that customers will get flexibility growing more aggressively in the Asian market, similar to suppliers who will have a global contract with the company.

“We are building up our own IP network in Singapore and IDC of about 5000 square metres. This will bring a big part of the revenue and attraction for global customer’s reliability,” he concluded.

Company: XBT Holding Ltd. Name: Rajesh Kumar Mishra Web: www.xbt.com Address: 28th Oktovriou str. 319, Kanika Business Center 2nd Floor, 3105 Limassol, Cyprus Telephone: +357 253 45 346

October 2012 /

DEAL OF THE MONTH:

Konsalnet acquires G4S Polska

KONSALNET ACQUIRES G4S POLSKA l Konsalnet, the leading provider of security services in Poland, has acquired the Polish operations of G4S Security, the world’s leading international security solutions provider. Konsalnet was established in 1994 and is the largest security company in Poland, providing a full range of security services – manned guarding; cash handling; monitoring; and technology-based security systems – as well as additional, specialist services, such as medical rescue, chemical emergency services or fire fighting. G4S Polska is the Polish business unit of G4S International. The company provides cash handling and security services, including guarding, monitoring and technical solutions. Adam Pawłowicz, President and CEO of Konsalnet, explained that the company saw this deal as an interesting opportunity as the G4S acquisition provided substantial growth in the scale of operations in Poland, especially in cash handling, allowing Konsalnet to not only gain substantial market share but also improve profitability through increased operational leverage. “Before the transaction we were already a leader in the cash handling part of our business in Poland,” said Mr Pawłowicz. “The acquisition of G4S gave us much bigger scale so we could use a big operational leverage on transportation and especially on cash processing.” Konsalnet started negotiations in November 2011, and the deal was completed as of August this year. It was partially funded by Konsalnet shareholders and partially by Konsalnet itself. The deal is the biggest takeover ever in the security industry in Poland, and has changed the whole security market in the country. Konsalnet became the number one player on the domestic market, strengthened its number one position in the cash handling sector, and gained the number one position in manned guarding – the key markets in the industry. Konsalnet’s revenue before the transaction was approximately PLN 560 million; G4S’ revenue in Poland was approximately PLN 200 million. The integration of G4S Polska into Konsalnet is already under way and consists of two stages. The first stage, which is to be completed by the end of the year, is the legal merger of the legal entities operating in certain business areas – cash handling, cash processing and transportation, manned guarding and the holding companies. As a result, at the end of this year there will be a unified legal structure, with the holding company holding 100% of shares in daughter companies responsible for certain business units. In parallel, there is an on-going process of integration of the back office functions. This has been started and will also be completed by the end of the year.

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We want all the operations to be performed in a unified way in the same locations under the same management,” explained Mr Pawłowicz. “As a result of that we should achieve operational efficiency which will lead to the increased profitability of the business. The second stage of the integration, which focuses on increasing efficiency and operational unification, will be performed until the middle of next year. It has already begun, but the implementation will be faster after completion of the merger. The management teams of G4S and Konsalnet have already been unified; however there are still separate operational teams lower down in the structure. This is due to restrictions on unification without the completion of a merger, particularly in areas such as cash handling. As soon as the merger is completed the operational integration will be implemented and the regional cash centres will be allocated. “We want all the operations to be performed in a unified way in the same locations under the same management,” explained Mr Pawłowicz. “As a result of that we should achieve operational efficiency which will lead to the increased profitability of the business.” In the last three years Konsalnet has acquired 11 other companies, including: Skorpion Security – the largest takeover in the industry in Poland at the time; LAAM – specialising in providing security services to the trade sector; Mobitel – provider of GPS monitoring of mobile objects; AD – manned guarding and emergency services; and multiple other companies. Konsalnet is not looking for any further acquisitions in the short term, instead focussing on the completion of the G4S integration and delivering the assumed synergies. Presuming the integration goes ahead according to plan, the company will be ready to start looking at the market in the second half of next year. Konsalnet will target other large companies in Poland which will give them scale and synergies, such as in cash handling or monitoring, particularly in the PLN 100 million+ turnover range. “Of course there might be other companies of a smaller scale which might be interesting from other perspectives, operating in certain niches in which you cannot enter without acquisition,” said Mr Pawłowicz.

Mr Pawłowicz explained that the G4S deal came as a result of Konsalnet’s analysis of previous acquisitions in mid-2011. The company evaluated its acquisition focus and limited its interest to the big tickets. “I believe this transaction will be successful because we are going in line with our budget and our schedule,” said Mr Pawłowicz. “This is due to the fact that we conducted proper due diligence; not only financial and tax, but also operational. It is also due to the fact that we are using an advisor, Deloitte, to develop and implement the integration plan. The whole team is highly devoted to the integration – people on both sides are highly involved and highly motivated. We think it will be a big success for us.” As the leader in the market, Konsalnet will be able to use its scale to deliver better profitability and will have the ability to offer a better quality of service to its clients. This is particularly valuable as the market has been in a downturn for the last two years, with prices and margins decreasing heavily. A significant element of the deal was the fact that it was initiated end executed by Konsalnet itself. “Our main shareholder is a private equity fund and it will exit in a few years from this investment. I think the ability of the company to grow and to perform complicated transactions will be highly evaluated by the potential investors,” concluded Mr Pawłowicz.

Company: Konsalnet Name: Adam Pawłowicz Email: a.pawlowicz@konsalnet.pl Web: www.konsalnet.pl Address: 01-756 Warszawa, ul. Przasnyska 6a Telephone: +48 (22) 560 50 00

October 2012 /

DEAL GURU:

How to Survive Contracting With Contract Research Organizations

DEAL GURU l Few biotech companies know the pitfalls of contracting with contract research organizations. Here’s a crash-course on how to survive it! Small biotech companies with limited in-house staff rely heavily on outsourcing. Consequently, clinical trials - and in many cases thereby the destiny of the company are handed over to vendors. When problems emerge, big pharma can pull business back in house. Small biotechs don’t share this luxury, and cannot cope internally with the unfinished tasks or mobilize sufficient resources to relocate tasks to alternative CROs. “Believing the contract will rescue you in case of issues with your CRO may be the worst mistake you can make. Unless – you took the time to seriously consider how to compose and execute the contract spending hours, days, or even months on a contract that you hope will never have to come into action” This is a major challenge to small biotechs which do not have their own outsourcing or procurement groups, and whose limited staff is working hard to keep all plates running. Understanding the DNA of the Contracting Parties CROs and biotechs have different focus, and their employees are measured on different deliverables. Biotechs’ goal is first and foremost to quickly capitalize drug candidates. Failure in this respect may be lethal. CROs need to make a profit from their services or they will not remain long in business. The common goal for both companies is to complete successful trials. However, delayed timelines increase the gain for CROs - and the pain for biotechs. Contracting – Time vs. Risk Biotech companies are typically tempted to rush ahead and ‘figure out the details later’ – an approach which rarely pays off. Not uncommonly, CROs start performing services under “Letters of Intent” (“LoI”) before a contract is properly negotiated. The window of opportunity to move risks to the CRO is often closed unless the budget is increased, if details are only negotiated after execution of LoIs. This approach cannot be recommended since it leaves sponsor on an uneven, slippery negotiation platform, where the de facto award of the contract to the CRO sets the scene. The Devil is in the Detail The closing of a detailed service agreement and statements of work prior to services being rendered is a necessity if biotech is to keep the upper hand in the execution of the trial. Hence, CRO proposals should be procured on basis of biotech drafted tenders and not on basis of individual CRO offers, which are seldom comparable. By carefully considering and communicating the required CRO services the risk of emerging out-of-scope activities triggering expensive change orders is mitigated. By doing your homework before CRO selection, the number of headaches and budget constraining conflicts are likely to be reduced. Delegation Even if the trial is fully outsourced to a CRO, sponsors always retain the ultimate responsibility for the quality and validity of trial data. However, sponsor should require the CRO to remedy defaults relating to duties and functions assigned in writing to the CRO. The trial activities to be assumed, performed, checked and/or supervised by CRO must therefore be carefully specified in writing. The risks of additional costs or quality problems emerging as result of unforeseen activities or conflicts are minimized if roles and responsibilities are clearly defined.

/ October 2012

Take Control and Contract Directly As sponsor you need to take control of your trial. Specify monitoring and audit rights and consider proactively the consequences of e.g. changes in CRO staff, training issues, quality procedures and study delay provisions. A fairly common pitfall is to allow the CRO to be the contracting party with investigators, sites and sub-contractors. However, your business with sites and other vendors should not be compromised or put at risk if your business with the CRO comes to a premature end. To secure a relatively smooth and uninterrupted continuation of the trial you should contract directly with third parties (e.g. vendors, investigators and sites) or ensure that the CRO signs as sponsor representative, and not in its own right. Remedies The CRO services comprise generation of valid data required for registration purposes. Non-achievement of this goal for reasons due to the CRO should imply that the CRO loses compensation entitlements and assume liability preferably on a liquidated damage basis, as concrete losses are difficult to prove. The project is not safeguarded by such measures, but at least the biotech company may be in a position to have a second go. Protect Ownership Proper protection of intellectual property rights, documents and data must be a top priority. Ownership of e.g. research data and technologies developed during the trial must be clearly outlined in all contracts. Insolvency CROs may be unable to deliver for financial reasons. Often the contracts define such situation as breach entitling sponsor to terminate. However, in a number of jurisdictions such clause is rendered void allowing the estate administrator to assign the contract to another CRO or otherwise commercialize the contract to the benefit of creditors. To mitigate the insolvency, sponsor must at all times retain access to documents and data and on a current basis pursue its IP rights.

• • •

Protect your IP ownership Ensure a way out of the contract Stay in control!

Company: Nordic Trial Operations ApS Name: Jane Arce Email: info@nordictrialoperations.dk Web: www.nordictrialoperations.dk Address: Søvej 100, DK-2791 Dragør Telephone: +45 22434023 Bio: Jane Arce joined the pharmaceutical industry 18 years ago, and during this period worked both with medium sized pharmaceutical companies and within the CRO world. 4 years ago she started up Nordic Trial Operations providing clinical operations services that primarily supports the biotech industry.

Company: Jusmedico Advokatanpartsselskab Name: Jan Bjerrum Bach Email: jbb@jusmedico.com Web: www.jusmedico.com Address: Kongevejen 371, DK-2840 Holte Telephone: +45 4548 4448 Bio: Jan Bjerrum Bach is attorney-at-law admitted to practise and appear before the High Court in Denmark. From 1991-1999 he served as general counsel of the Lundbeck group, from 1999-2004 as executive vice president of Danish Re and since 2004 as founder and proprietor of Jusmedico representing leading Danish biotech companies.

Build a Way Out Despite time invested in profound CRO selection and mapping of the road ahead, things may not work out. The financial consequences of termination, unrelated to breach, should be defined and agreed beforehand. Remember that the CRO should only be entitled to terminate in case of breach by sponsor. Termination provisions are not necessarily the answer to even major problems, as switching CRO in the middle of the trial may well take sponsor out of the frying pan, but into the fire. Less is Not More In contract terms – less is not more. To survive you will need to: • Be comprehensive and detailed • Allocate time and resources for contracting • Assess vendors thoroughly • Define your requirements; quality, time, money, milestones, liabilities, remedies

Company: Symphogen A/S Name: Mimi Folden Flensburg Email: mif@symphogen.com Web: www.symphogen.com Address: Elektrovej Building 375, 2800 Lyngby, Denmark Telephone: +45 4526 5050 Bio: Mimi Folden Flensburg has successfully managed all aspects of global phase I-III clinical trials for biotech companies for the past +8 years, and among other things been responsible for setting up the Phase I-III clinical trials with Arzerra®, which brought the product from Phase I to FDA approval in 5 years

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SECTOR SPOTLIGHT:

A Lawyer’s Take on Finance Opportunities for Ukrainian Business in 2012

A LAWYER’S TAKE ON FINANCE OPPORTUNITIES FOR UKRAINIAN BUSINESS IN 2012 l Finance is the bloodstream for growth of any business. Cut it and, unless a business sits on a big pile of cash, growth is significantly curtailed. The second half of 2011 and most of 2012 were not particularly impressive with opportunities for Ukrainian businesses to raise finance. Showing some life in 2011, international capital markets completely closed down for Ukrainian businesses and banks lost or significantly restricted their appetite for Ukrainian risk in 2012. However, excessive dwelling on the negative side of things, particularly those beyond one’s control, is counterproductive. This article discusses what has been going on the corporate finance market from the perspective of what we can all learn from this. We will also look at some of the positive legal developments that have occurred during the past year and give some suggestions for changes to help Ukrainian companies get better access to financing in the future. M&A – Private Equity In 2011, the M&A/private equity side of corporate finance has seen a slight upward shift, but the ‘second wave’ of the global financial crisis in 2012 brought some downward correction. Although there have not been any large scale M&A deals, there were many small and medium size deals. From our perspective, agricultural and food processing sectors were among the leaders. Most of the deals were part of the overall trend of asset consolidation and, on the other hand, selling off non-core assets. Recently, we have noticed a new trend in commercial real estate with the selling of business and commercial centres being on the rise. We are also seeing some of the notable exits of some foreign banks who entered when Ukrainian banking market at the top.

Ukrainian Securities Commission and other regulators continue working on improving Ukrainian corporate legislation as well on removing some of the unnecessary red tape (eg, simplification of registration and winding-up procedures, use of corporate seal, etc.). It is definitely a welcoming fact that these efforts are taken and we hope that many of these positive developments will see the light of day later this year. Bank Lending Currently, Ukrainian borrowers have limited access to banking and credit facilities due to the situation in the global financial markets and the sovereign debt crisis in Europe, resulting in European banks being very cautious about taking credit risks, and a lack of readily available local money supply from Ukrainian banks. Only Ukrainian companies who are leaders in their respective sectors and have positive credit history were able to get access to bank lending last and this year.

Ukraine offers high return on investment (with high risk, however) and a lot of companies with high growth potential. Some companies, which did not succeed to attract capital through IPOs or Eurobonds in 2011 but which continue to experience the need for additional capital, consider entering into joint venture arrangements with prospective investors, more with private equity fund and fewer with strategic investors.

One of the most active segments of bank lending for the past two years was and continues to be the ECA-backed export financing. On the one hand, in light of the ongoing recession in some of the EU countries, European manufacturers are looking for new markets to export their technology. On the other hand, Ukrainian businesses are very keen on upgrading their outdated technologies to continue growth but often lack readily available cash to do that. ECA-backed loans are relatively small, usually of up to EUR20 million. At the same time, such loans are sometimes more preferable to Ukrainian borrowers because lenders of such loans are willing to accept less stringent security package requirements (usually only a suretyship) compared with those in syndicated lendings. In 2011-2012, international financial institutions (such as EBRD and IFC) remained active suppliers of debt financing (or a combination of debt and equity financing) to Ukrainian businesses and we hope this trend will continue.

Though Ukrainian corporate law has made a significant step forward with the adoption of the new law on joint stock companies and implementing regulations, as before, most of Ukrainian M&A deals continue to be done under English law. English law gives a choice of legal instruments that are currently unavailable (or not easily adaptable) in Ukraine. English law also offers both, flexibility because it encompasses virtually every business situation, and stability as it is not prone to complete overhaul or abrupt changes of rules that have worked perfectly well for many years. English courts and arbitration tribunals also offer the highest standards for dispute resolution, whereas for Ukrainian courts this is still a long-term goal to be aspired to.

In recent years, many of Ukrainian borrowers have faced problems with compliance with certain currency control requirements particularly with the maximum interest limitation. Maximum interest rates that are currently established by the NBU are too low and do not properly reflect difficult market conditions. The cost of credit increased globally, let alone for Ukrainian companies, yet maximum interest rate limitations set by the NBU remain the same. Because of this hurdle, structures of many deals had to be changed in order to make interest rate and other payments that exceed these limitations payable offshore. As a result, borrowers have to incur additional time and financial expenses. It is therefore recommended that the NBU periodically revises the

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maximum interest rates limitations against at least coupons of Ukrainian sovereign bonds. On a positive note, the NBU’s recent activity resulted in easing some currency control regulations. One of the most important recent developments is the revision of rules for registration of cross-border loan agreements, which starting from 9 November 2012 will become simpler. Last year, the NBU clarified certain issues with individual licensing requirement for payments under suretyship agreements. Conclusion The second wave of the global financial crisis cut most of the opportunities for Ukrainian businesses to raise finance abroad. However, despite that Ukrainian companies continue to show resilient desire for growth and continue searching for various opportunities to finance it. It is important that Ukrainian regulators recognise this fact and do everything possible to help Ukrainian business by removing the unnecessary obstacles with no significant policy rationale. We hope that this positive trend will continue as the situation globally and at home slowly but steadily improves for the better.

Company: Avellum Partners Name: Glib Bondar Email: gbondar@avellum.com Web: www.avellum.com Address: Leonardo Business Center,19-21 Bohdana Khmelnytskoho Str., 11th floor, 01030, Kyiv, Ukraine Telephone: +380 44 220 0335

Company: Avellum Partners Name: Artem Shyrkozhukhov Email: ashyrkozhukhov@avellum.com Web: www.avellum.com Address: Leonardo Business Center,19-21 Bohdana Khmelnytskoho Str., 11th floor, 01030, Kyiv, Ukraine Telephone: +380 44 220 0335

October 2012 /

SECTOR SPOTLIGHT:

Open Source Software in Mergers and Acquisitions

OPEN SOURCE SOFTWARE IN MERGERS AND ACQUISITIONS — Careful OSS planning and record-keeping will pay off when an M&A is at hand OSS licenses are categorized in two groups: •

•

-----------------------------------------------------------------------Haim Ravia, Adv. Is Partner and Chair of the Internet, IT & Copyright Group at Pearl Cohen Zedek Latzer. ------------------------------------------------------------------------

Open Source Software (OSS) is a vital part of business’s technology platforms. Businesses use OSS either for their own operations, to run their computer servers (mostly through Linux, BSD or Solaris operating systems), or to develop proprietary software for commercial sale (through the use of the GCC compiler, debuggers and other software tools). Indeed, surveys find that more than 50% of Fortune 500 companies rely upon OSS in their operations. The use of OSS is prominent in high tech companies, particularly startups. They incorporate OSS in the products they distribute or offer: software, embedded systems, and Software as a Service (SaaS). OSS permits technology companies to shorten their development cycles, allowing them to focus on what they do best instead of writing all software from scratch. In addition, with OSS, technology companies benefit from well-proven - indeed, sometimes industrystandard - software, avoid vendor lock-in, and take advantage of free community support. Significantly for cash-strapped start-up companies, use of OSS reduces licensing expenses to practically zero. Yet OSS does not come without costs. In the memorable words of Richard M. Stallman, a founder of the Free Software movement, OSS is free as in “free speech, not free as in free beer”. With OSS, one gets access to the software’s source code in exchange for obligations imposed upon him by the OSS license.

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Some of them permit free use, modification and distribution of the software they cover. Such Permissive Licenses are often referred to as Academic Licenses. The limitations they pose are usually few and easy to follow. Typical examples of such licenses include the BSD, MIT and Apache 2.0 licenses; Others require the user to maintain the terms of the license when the user distributes OSS further. Hence, distributing the OSS down the stream must include access to its source code and retain all rights provided by the license. These are called Reciprocity Licenses and often referred to also as “Copyleft” licenses. Some apply their provisions only to the original code and to its modifications, a doctrine known as “Weak Reciprocity”. The Mozilla Public License is a good example of a Weak Reciprocity license. Others apply to any combination of OSS with proprietary code. The GNU General Public License is the most widely used and best example of these “Strong Reciprocity” licenses. Strong Reciprocity licenses may apply to code that companies want to keep as a commercial secret to preserve a competitive edge.

When a start-up company reaches its exit point, it can no longer ignore the costs associated with OSS. A potential acquirer’s due diligence process would require the target company to list all OSS components it uses and their respective licenses. A typical representation in an acquisition or merger agreement is “As of the Closing Date, no OSS that is or has been incorporated or otherwise integrated into, aggregated or compiled with the Company Proprietary Software is licensed to subject to the terms of, or on terms substantially similar to” certain OSS licenses. What seem to be a simple task – providing a list of OSS components and their respective licenses - may be the most daunting of all due diligence burdens, one that may delay the closing for weeks or, even worst, cause the potential acquirer to walk away. The reason lies in companies’ poor control and management of their OSS: They either don’t have a comprehensive list of OSS they utilize, or they have an insufficient and incomprehensive one (poorly maintained Excel sheets tend to be the favorite choice). In that respect developers tend to forget that even if they maintain a list of OSS, the components they incorporate in their software rely upon other OSS components in order to function. A fully detailed list may include dozens, hundreds and even thousands of OSS libraries and programs.

In the heat of development, when reaching the market is management’s top priority, the legal nittygritty is often neglected. This neglect can later blow up in the face of the start-up company’s management, angering investors and potentially scuttling deals. Controlling the use of OSS, is therefore of the outmost importance. The benefits are clear: deciding in advance what OSS to use and how to use it reduces legal risks involved with OSS and paves the way for a smooth exit. In order to achieve such control, organizations need both an OSS Compliance Policy and a repository of its OSS: •

A solid OSS Policy requires that no use of OSS is made unless it is approved in advance. Approval may be given by single OSS Office (in the case of a newly born start-up), by an Open Source Board that will typically include representatives of the company’s IT, IP and Legal departments (if a more mature company is involved) – or otherwise as may be provided by the Policy. The challenge is to draft an approval process that not only meets the legal standard of care, but also provides an answer as fast as the developments process requires (usually, much faster than lawyers tend to believe…)

•

The Repository of OSS is best created and marinated automatically. This is achieved through industry standard yet expensive tools such as Black Duck– or through the use of other tools that have become available lately, some of which are OSS themselves.

Investing in a reliable OSS policy and maintaining a comprehensive list of OSS will definitely payoff when a long-awaited acquirer knocks upon a company’s door.

Company: Pearl Cohen Zedek Latzer Name: Haim Ravia Email: haimr@pczlaw.com Web: www.pczlaw.com Address: 1500 Broadway, 12th Floor, New York, New York 10036, USA Telephone: +972-9-972-8083 jpeg

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SECTOR SPOTLIGHT:

Secondary Buyouts – Still Booming

SECONDARY BUYOUTS

— Still Booming In Europe, the first two quarters of 2012 have shown a steep decline in the number of exits by private equity investors. Unlike IPO exits, which have been hindered by the chaotic state of capital markets, secondary buyouts (i.e. sales to other private equity investors), as well as trade sales (i.e. sales to corporate buyers), remain two of the most favoured exit routes for private equity houses. For the larger portfolio companies, it is also increasingly common for sellers to follow a dual-track (sale and IPO) or even a triple-track (the above plus refinancing, for example by means of a high yield bond issue, as an additional option) process in order to maximise the chances of success of their exit. Although there seems to have been a marked increase of secondaries in the US and the UK in the past years, in Continental Europe, trade sales have become more common than secondary buyouts in the first two quarters of 2012. This is due in part to the fact that the gap between the price expectations of private equity sellers, who are under pressure to realise their profit and upstream the proceeds to their LPs, and cash-rich industrials is narrowing. Also, more than in the past, industrial buyers have learned to move fast. On the one hand, secondary buyouts are an easier option for private equity sellers: the buyer and the seller speak the same language and it will easily be accepted that no warranty coverage will be offered. Moreover, it is also attractive for buyers: the management is already used to the dynamics of the relationship with a financial sponsor, and a buyand-build strategy has often already been (partially) implemented. On the other hand, secondary buyouts are typically more complex to structure than trade sales. In the same way as primary buyouts, the acquisition is usually completed through one or several vehicles incorporated for that purpose (each a “Newco”), often in tax-efficient jurisdictions such as Luxembourg or the Netherlands, in which the private equity sponsors hold a majority stake (while the management team of the target is invited to invest in a minority stake). Secondary buyouts have an additional layer of complexity because the buyer needs to take into account the structure put in place by the previous owner, usually in order to perform a debt push-down, i.e., shifting as much as possible of the debt from the holding company to the operational level. When financial sponsors seek to exit, auction processes are still common practice, even for relatively small investments. As a consequence of debt being more difficult to raise in current market circumstances, private equity sponsors and banks tend to put more emphasis on robust due diligence

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reports, as opposed to the previously traditional “exception only” approach, knowing that the due diligence reports (and the reputation of the external advisers who prepared them) are an important element in the banks’ credit committee approval process. Private equity houses are under increased pressure to exit the portfolio companies that they acquired in the boom years of buyouts, often with a significant level of leverage and at high multiples of EBITDA. A successful exit will often depend on the degree of preparation put into it and the additional concessions the seller is prepared to make, such as roll-over of his equity investment or vendor financing. As many private equity buyers believe that they can create more value than the previous owner (through specific industry knowledge, expected bolt-on acquisitions, etc.), one can expect to see more secondary buyouts in the months to come. Linklaters In Europe, Linklaters’ private equity team consists of about 115 partners and associates operating from several offices including London, Paris, Munich, Luxembourg, Brussels, Antwerp, Madrid, Stockholm and Warsaw. The assignments that the firm handles include not only a broad variety of buy-outs and (trade, secondary and IPO) exit transactions and related acquisition finance mandates, but also cover portfolio companies’ restructurings. The private equity team benefits from the support of specialists in antitrust, employment, litigation, IP, energy and environment. Linklaters is ranked number one among legal advisers to European buy-outs (August 2011-August 2012) by Private Equity News. Recently, the firm has been involved in numerous major private equity transactions in Europe including advising on the acquisition of the German long-distance gas transmission network “Open Grid Europe” from E.ON by a consortium including Macquarie, British Columbia Investment Management and Abu Dhabi Investment Authority; on the sale of Bravida by Triton to Bain Capital; on the sale of privately owned Actavis to Watson Pharmaceuticals Inc.; on the sale of Taminco by CVC; and on the sale of Numericable Belgium and Luxembourg by Carlyle, Cinven and Altice. Jean-Pierre Blumberg is Regional Managing Partner for Europe and member of the Executive Committee at Linklaters. He is a senior member of the Corporate and M&A practice group at Linklaters in Belgium. He is a graduate of the Universities of Antwerp (1977), Louvain (1980) and Cambridge (1981),

a lecturer at the University of Antwerp (UA) in comparative law and a regular lecturer at the Antwerp University School of Management (UAMS) on M&A and public takeovers. He is also a visiting lecturer at the University of Louvain (KUL) where he teaches a course on cross-border public takeovers in the LL.M programme. He has published a series of articles on selected topics relating to company law, mergers and acquisitions as well as financial law. He is a member of various editorial boards and an independent director in listed companies. He is a member of the Board of Trustees of the Belgian Governance Institute GUBERNA and of other professional organisations. Arnaud Coibion specialises primarily in M&A and private equity transactions. He has been practising at Linklaters since 1999 (in Brussels, in London and in Luxembourg) and became a partner in 2009. He has had a lead role in many buyouts and exits by private equity houses (through IPOs, sales or refinancings). His clients include private equity houses, investment banks and large corporate groups, giving him insight into the priorities and inner workings of both private equity investors and industrial players. He also has extensive experience in energy sector deals and is co - leader of Linklaters’ global energy sector. Arnaud is a member of the Brussels bar and a solicitor of the Senior Courts of England and Wales. He graduated from the University of Louvain (UCL) and holds an LL.M. from Cambridge University. He is also a lecturer in company law and M&A at the Louvain School of Management (University of Louvain).

Company: Linklaters Web: www.linklaters.com Name: Jean-Pierre Blumberg Email: jean-pierre.blumberg@linklaters.com Telephone: +32 3 203 63 13 Name: Arnaud Coibion Email: arnaud.coibion@linklaters.com Telephone: +32 2 501 90 18

October 2012 /

SECTOR SPOTLIGHT:

Rewriting the Rules on Insolvency

REWRITING THE RULES ON INSOLVENCY l There are currently some 21 junior barristers and 19 Queen’s Counsel at South Square. South Square is well known as the leading set of Barristers’ Chambers for insolvency and restructuring work in England and Wales. Our members work across the field of commercial practice – with specialisms in banking, financial services, civil fraud, and commercial litigation, but will most often be called in because insolvency presents some sort of complicating factor. That may be because the challenge is how best to preserve the enterprise value of a trading or investment group, or because technical questions or disputes arise after a formal insolvency process has commenced, or because there is a question mark about prospective asset recovery or the enforcement of arbitration awards or judgments. Members of South Square have been involved in every major collapse in the UK in recent years, as well as many of the significant European and Caribbean ones (not forgetting those US cases with an English dimension). This means we are at the cutting edge of legal developments in our area. As a result South Square has unparalleled expertise in complex multinational and cross-border insolvencies and associated litigation. Our members regularly appear in cases in the United States, across Europe, and in the Caribbean, both as advocates and experts. Much of our work has an international or offshore element, particularly in the common law jurisdictions. As barristers, we are each self-employed, operating from the same address and generally with shared infrastructure, but with strict professional rules in place to protect client confidentiality. One aspect of being self-employed which is sometimes not well understood is that we can and frequently do appear against each other in the same case. There is no conflict, because we do not share any financial interest in the outcome. And because of our strength and depth, we can assemble a team with suitable experience for the requirements of any particular case. Most of us are also involved in the development of substantive insolvency legislation, as formal or informal consultees and/or as members of various professional or statutory bodies. For example both William Trower QC and Glen Davis QC have both recently completed the maximum 10-year period as members of the Insolvency Rules Committee, which is the consultative body that advises on new secondary legislation in the form of rules to give effect to the Insolvency Act. Felicity Toube QC sits as a lay member on the Disciplinary Committee of the Insolvency Practitioners Association, and was also a member of two of the consultative bodies advising the Government before the implementation of the European insolvency regulation (ECIR) since 2002 and the UNCITRAL Model Law. Although it is possible under certain circumstances to instruct a barrister directly, in most of our larger cases, and certainly those involving English court

22 / October 2012

proceedings, we are instructed by a solicitor, and we work with all the major firms and the leading niche practices worldwide. Our lay clients would include banks, investment funds, professional trustees and insolvency practitioners, and companies, partnerships and individuals of all kinds. We act for domestic and foreign Governments, and for regulators such as the Financial Services Authority and the SEC. We also act for the SFO and the Department of Justice. Of course, our involvement and advice is often entirely confidential, and only becomes public on those occasions when we appear in open court for a particular client. The financial crisis has raised multiple issues on which barristers from South Square have led the way in solving problems and developing arguments: from interpretation of ISDA agreements to consumer bankruptcies; from schemes of multinational companies to tracing the assets of an international fraudster; and from the treatment of multiple billions of pension deficits to recovering debts due from an individual. One question which is particularly live at the moment is how far the English courts should go in recognising and assisting an insolvency in another jurisdiction, and what is the effect of such recognition? In this area, barristers in South Square have been involved in making submissions in all courts from county courts to the Supreme Court. Much of the legal debate, both in domestic courts and the European court, has to date centered to a large extent on how and when we are to identify the centre of main interest of companies and individuals. Members of Chambers, including those who have authored this article, have appeared in every leading case in this area. A more recent concern relates to what relief should be granted to foreign office-holders and what effect foreign insolvency processes should have. Historically a contract governed by English law can only be discharged under its proper law. There are many examples in modern international commerce where English law and either court jurisdiction or expert arbitration in London are the choices of sophisticated parties at the time of entry into significant contracts, although none of the parties may have any other connection with this jurisdiction. We commonly encounter this in large infrastructure contracts, in swap and derivatives contracts on ISDA terms, and in charterparties and other shipping contracts. Issues are now arising as to the effect of foreign insolvency processes on those commercial documents. Members of Chambers are also currently involved in all the cases relating to the new Investment Bank Special Administration Regime, and are currently addressing knotty issues of “client money” such as those arising in Lehman, MF Global, and Worldspreads.

Other areas of particular interest arise when Hedge Funds become insolvent. Issues can relate to the treatment of the most recent subscribers and attempted redemptions in the twilight zone. This in an area where members of Chambers have led the way with innovative arguments and solutions. Finally tricky legal questions have been raised by the use of Companies Act schemes for foreign companies. Again, this is an area where members have been particularly active, both as scheme draftsmen and as advocates for all parties, whether company, creditors, or investors.

Chambers: South Square Name: William Trower QC Email: williamtrower@southsquare.com Web: www.southsquare.com Address: 3-4 South Square, Gray’s Inn, London, WC1R 5HP, United Kingdom Telephone: +44 (0)20 7696 9900

Chambers: South Square Name: Glen Davis QC Email: glendavis@southsquare.com Web: www.southsquare.com Address: 3-4 South Square, Gray’s Inn, London, WC1R 5HP, United Kingdom Telephone: +44 (0)20 7696 9900

Chambers: South Square Name: Felicity Toube QC Email: felicitytoube@southsquare.com Web: www.southsquare.com Address: 3-4 South Square, Gray’s Inn, London, WC1R 5HP, United Kingdom Telephone: +44 (0)20 7696 9900

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SECTOR SPOTLIGHT:

Insurance Due Diligence – An Overlooked Art

INSURANCE DUE DILIGENCE

— An Overlooked Art

examination, that the party giving the undertaking has never actually seen the agreement in question let alone understood what it required! There is a need to look backwards when carrying out a full IDD project. An analysis of past claims experience can throw up some trends that might influence a decision to proceed with the deal, or at least the price. The current cover may look fine, possibly as a result of some prudent vendor due-diligence. But the past cannot be changed. The cover provided by public and employers liability insurance - for damages and legal costs resulting from claims for personal injury and property damage - is on a claims occurring basis. The policy in force when the incident happened is the one that responds, rather than the one in force when the claim is notified. It is therefore vitally important to check that there is a full history of past insurance covering the period for which the purchaser may be assuming liability. Failing that, it might be necessary to arrange some retroactive cover. -----------------------------------------------------------------------Bill Gloyn is a European Real Estate and Construction Partner at JLT Specialty Limited. ------------------------------------------------------------------------

The object of insurance due diligence (IDD) is to look back - on past risk exposures, coverage and claims experience; to look at the present - at insurance in force and compliance with any obligations imposed on the client, including a comparison with best practice; and to the future - to assess if there are any foreseeable factors that might affect the availability or price of insurance which, in turn, might skew the viability of the transaction. All of this is done against the backdrop of the insurance requirements contained in the sale & purchase and loan agreements, together with other relevant contracts - the benchmarks against which adequacy of the cover must be measured to provide the comfort that fiduciary duties have been met. Insurance is often left until the last stages of the transaction and then causes delays. In those circumstances it can become very difficult to obtain the protection that the purchaser or its bank understandably seeks, making it impossible to meet timetables for completion - much to the frustration of all involved. Even if the IDD is done in good time, it seems to be common practice to delay dealing with insurance issues that require rectification until the last minute - when sometimes it is too late. A bank’s requirements often require specific amendment to the existing insurance or, in extreme cases, even the arrangement of replacement cover that is compliant with the requirements of the funding agreement. Signing off on compliance with these is an important part of the overall IDD process - especially if the client is a bank!

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When considering a loan secured on real estate, there will be a requirement to insure the building against “all risks” for its reinstatement value together with loss of rent, or other income, that would result if damage renders the property uninhabitable. The loan agreement will demand that the bank is an insured party in its own right - a composite insured providing parallel cover that is not affected by any act or omission of the primary or other insured parties. The bank will also want direct protection of its financial interest with a loss payee clause that provides that claims proceeds, usually above a specified amount, are paid only to the bank – avoiding the risk that a borrower might be able to siphon off claims monies rather than use them for reinstatement. There will normally be a requirement for the borrower, or even the insurers, to give notification of changes and nonpayment of premiums - allowing a set period for the bank to pay to keep the cover in place. The insurers must be of sound financial status – needed to support the credit rating of the loan. Fundamental to undertaking any DD role is the availability of reliable documentation. Unfortunately, what are often delivered are brief summaries of the policies – generally with no reference to the special requirements of the loan agreement. Copies of the actual policy documents - with full schedules and up-to-date endorsements, together with the reinstatement valuations and accurate rent schedules – should be vetted. Anything less should only be given a qualified sign-off as documents prepared by other parties cannot be relied upon. This is particularly important where a third party is arranging the cover. There are too many examples of documents confirming compliance with the terms of a loan agreement only to find out, upon detailed

Questions should be asked about any outstanding insurer required risk improvement measures. The spectre of the costs involved might be the catalyst for selling a property. They can equally destroy the financial viability of the deal. The vendor should be asked if it has any reason to suppose that the current insurance could not be maintained in the future. Notice of cancellation - perhaps from the next renewal - might already have been given by the current insurers and make arranging cover after completion impossible. Insurance is a vital ingredient of any successful commercial transaction. Detailed and expert consideration of it during the due diligence process will lead to a more secure outcome, helping to avoid some of the problems that so often follow the completion of a dream deal that turns into a nightmare. Bill is Chairman of the British Property Federation insurance committee; Treasurer and Past President of the City Property Association and a member of the RICS insurance forum steering group. He has recently led the JLT team advising on the acquisition of an interest in the Meadowhall Shopping Centre.

Company: JLT Specialty Limited Name: Bill Gloyn Email: bill_gloyn@jltgroup.com Web: www.jltgroup.com Address: 6 Crutched Friars, London, EC3N 2PH Telephone: +44 (0)20 7528 4646

October 2012 /

SECTOR SPOTLIGHT:

Capitalising on MENA Investment Opportunities

CAPITALISING ON MENA INVESTMENT OPPORTUNITIES — The ‘MUST’ markets of the MENA region -----------------------------------------------------------------------Karim A. Souaid, Esq., Managing Partner of Keystone Equity Partners the General Manager of GrowthGate Capital Corporation. ------------------------------------------------------------------------

periods till an investment reaches its optimal value. PE interacts with all facets of the local economy from regulators to labour unions, tax collectors and banks. PE cannot, in times of crises, hastily divest its holdings as opposed to investors in listed securities.

Ever since the acronym ‘BRICs’ was coined to depict a group of emerging markets with highest signs of growth, alternative asset class managers have devised strategies to capture the anticipated opportunities. In the aftermath of the Arab Spring, we are proposing to coin ‘MUST’ as the MENA region’s most attractive investment destinations. A select number of regional markets have risen above their peers. They form amongst them the most craved markets for both institutional and individual investors especially for private equity (PE). These markets are namely, Morocco, United Arab Emirates, Saudi and Turkey (‘MUST’).

More than a mere capital allocation is at stake for a PE firm when deciding on an emerging market destination. PE investors have significantly vested interests in the longevity and the regulatory frameworks of their target markets. In this regard multiple factors, at varying degrees, bring the MUST markets closer and render them prime destinations for PE investors.

Countries that were most affected by the Arab Spring namely, Libya, Yemen, Tunis, Egypt and Syria had much more in common than mere geography or language. Striking similarities included iron-fisted leaders, subservient security services, and rubber-stamp institutions. Each also thrived on crony capitalism where a close circle of protégés controlled vast sectors of the economy from manufacturing to services. It mattered not whether said countries were resource-rich (Libya) or demographically rising (Egypt). In the final hours, it was the unsustainable political structures and the rigged business environments that did them away. The nemesis of PE is not risk but instability and unlevelled playing fields. Unlike other asset classes, PE is a ‘sticky’ business in terms of long holding

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Sustainable (not ideal) structures: forms of governing that are most adaptable to change will survive in this age of nanotechnologies and information superhighways. Morocco and Turkey have managed delicate transitions from military rule and absolute monarchy, to a middle ground that fosters stability. Saudi and the United Arab Emirates enjoy strong legitimacies in their ruling systems; and a social protocol that has remained unbroken. Nationals from all classes are encouraged to enter all business sectors, gain education, travel freely and count on their institutions for support in dire times. The rising middle classes in all MUST markets are only proof of these policies. Growing domestic economies: economic growth is defined as the increase in the amount of goods and services produced over time. It is measured as the percent rate of increase in real GDP. Economic growth is chiefly attributed to: population growth,

accumulation of capital and increased productivity. Over the period 2006 to 2011 the real GDP of the MUST markets have steadily risen. For instance Morocco and Saudi have registered an average GDP growth of 4.2% and 3.5%, respectively in the past 5 years (2007-2011), according to the World Bank. In contrast, ex-MUST markets such as Tunis and Yemen have recorded an average GDP growth of 3% and 1.6%, respectively during the reviewed period. Sound regulations and attractive incentives program: at varying degrees all the MUST markets have adopted legislations that are favourable to investors in terms of tax incentives, free-zones, foreign ownership levels, and the enforcement of contractual obligations. Saudi Arabia General Investment Authority is the most striking example of such forward leap in cutting red tape and enticing foreign investors without the need for a local sponsor. These frameworks are key for increased levels of capital flows, for heightened M&A activity and for encouraging long-term investments by nationals and foreigners alike. The 2012 UNCTAD World Investment Report ranks Turkey, Saudi, and the United Arab Emirates, in 7th, 15th, and 19th positions in the world economy in terms of inward FDI potential in 2011. Syria ranked 55th. ‘MUST’ markets in MENA cannot sustain an upward curve, at all times, irrespective of their regional context; however they will continue to act in the foreseeable future as lightning rods for PE investors and as model markets for neighbouring countries.

October 2012 /

SECTOR SPOTLIGHT:

Boardroom Trends – Effective Corporate Governance

BOARDROOM TRENDS — Effective Corporate Governance

l Over recent years corporate accountability and governance risks faced by boards of directors have increased significantly. This has been particularly highlighted by the global financial crisis and regulators have focussed on changes to practices which aim to enhance transparency, increase director accountability, and give a greater voice to shareholders over critical boardroom decisions. The best performing global companies take these governance issues seriously and regulate their management with a well implemented system of corporate governance, which leads in turn to efficiency, productivity and stability. These systems, although vital, are not necessarily the forte of the board thus often external legal teams are brought in to counsel senior management how best to achieve their business objectives within the framework of best practices. Acquisition International discusses the latest boardroom trends with some of the world’s leading corporate governance teams.

-----------------------------------------------------------------------Abel Sequeira Ferreira is the Executive Director at AEM, the Portuguese Issuers Association. ------------------------------------------------------------------------

time, allows for a collective assessment of the Portuguese listed companies and will make possible to determine, in the future, its evolution in this domain.

AEM represents the companies listed on the Portuguese Index PSI 20, as well as the majority of other issuing companies, and, as the representative voice of the Portuguese Issuers, values all subjects related to the governance of companies.

Knowing that a significant part of the investment carried out in the Portuguese Exchange is currently originating from abroad, the Report adopted a methodology where compliance is evaluated according to international benchmarks, namely, (i) The recommendations and rules arising from European Law; (ii) the OCDE principles on Corporate Governance; (iii) the UK Corporate Governance Code.

In Portugal, listed companies are subject to the obligation of annually informing on compliance with the Corporate Governance Code (a set of recommendations issued by the supervisory authority (CMVM) which also took on the task of monitoring the compliance with the Code. In 2011, however, AEM presented its first “Report on the Degree of Compliance with Corporate Governance”, a major contribution to the debate and reform of the Portuguese legal system for corporate governance, carried out by Católica-Lisbon University. This was a pioneer study because of the introduction of a Corporate Governance Index and a Corporate Governance Rating, which, published for the first

26 / October 2012

The Report shows that, even in the adverse environment of an excessive level of recommendatory density, heavier than the compared international benchmarks, the degree of compliance with the corporate governance recommendations by the national listed companies is remarkably high. Indeed, for the companies listed on the PSI 20, the median values were above average, 9.425, in a maximum of 10.000, and 72.8% of the listed companies recorded ratings ranging from AAA to A. Such results are consistent with the positive assessment carried out by OCDE (OECD/ Corporate

Governance Committee, Peer Review. Board Practices: Incentives and Governing Risks, (2011)) and the World Bank’s Doing Business reports showing that investor protection in Portugal is higher than the average on OCDE’s member states. Overall, and even if there is a number of difficult reforms to be implemented in Portugal, with very high levels of corporate governance compliance and business strategies already adapted to the new world trade order, Portuguese listed companies are a trade and investment opportunity for the long term.

Company: AEM, the Portuguese Issuers Association Name: Abel Sequeira Ferreira Email: abel.ferreira@aem-portugal.com Web: www.emitentes.pt Address: Largo do Carmo, n.º 4, 1.º Dto., 1200-092 Lisboa Telephone: + 351 21 820 49 70

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SECTOR SPOTLIGHT:

Boardroom Trends – Effective Corporate Governance -----------------------------------------------------------------------Anders Pettersson is the owner of Magnum Opus Consultancy, a company dedicated to corporate governance and general management. He is a member of the Brazilian Institute of Corporate Governance (IBGC) since 2003 and a Certified Board Member. He is also a member of the Swedish Academy of Board Directors and has more than 12 years’ experience as General Manager / CEO for several companies, both public and private in Brazil. ------------------------------------------------------------------------

WHAT ARE THE PRIMARY SOURCES OF LAW, REGULATION AND PRACTICE CONCERNING CORPORATE GOVERNANCE IN YOUR JURISDICTION? Brazil has a complex set of laws and regulations depending on size of company and ownership structure. Listed companies answer under the Brazilian Comissão de Valores Mobiliários (CVM) equivalent to the American SEC. There are relatively few publicly held companies. Audit is not mandatory for non-listed companies.

TOWARDS RESPONSIBILITY BY THE BOARD AND CORPORATE CONTROL? Yes, definitely. Since the new Civil Code, the board’s responsibility has increased the last few years where they can be held legally and financially liable for malpractices committed by the company they represent. RECENT SURVEYS HAVE DISCUSSED A ‘TRUST DEFICIT’, HOW DO YOU THINK THE CURRENT ECONOMIC ENVIRONMENT HAS CHANGED PERCEPTIONS OF TRUST BETWEEN BUSINESS LEADERS, THE PUBLIC AND EXTERNAL SHAREHOLDERS? Trust is an ongoing process which takes time to develop but quickly evaporates if transparency is not respected. External shareholders and stakeholders are demanding and rewarding companies that abide to solid corporate governance practices.

HAVE YOU SEEN ANY EVIDENCE IN YOUR JURISDICTION OF AN OVERALL SHIFT

THERE HAS BEEN A LOT OF TALK ABOUT DIVERSITY IN THE BOARDROOM, HAVE YOU

-----------------------------------------------------------------------ACME Corp was founded in 1994 by Dr. El Mostafa Higazy; currently to become – an EMENA region leading strategic Advisory and Investment Management Corporation. ------------------------------------------------------------------------

development, which is accounted for as a unique methodology of Corporate & Institutional Strategic Emergence & Development.

ACME Corp was founded as the socio-economic arm of practice through which NASAQ Foundation’s (ACME Corp affiliated Think Tank) philosophical, Strategic and developmental models are enlivened. ACME Corp is committed to creating and fostering the strategic paradigm of institutional and individual clients. The ‘ACME Approach’ is the practical methodology in use. ACME Corp is a holding entity for several strategic business units, prominent among which are ACME Advisors and ACME Investments. ACME Corp brings to bear 23 years of comprehensive experience in Sustainability Strategy Advisory, Public & Corporate Governance Advocacy, Investment Management, Organizational Psychology and Institutional Sustainable Development. All pillared upon the ACME Approach for sustainable

-----------------------------------------------------------------------Claus Ezinger has been in international business consultancy for more than 25 years. He is the owner of KEY ACCOUNTS INTERNATIONAL – Claus Ezinger, a business consultancy specialized in Audit Committee | Supervisory Board and Directors Board working principles. ------------------------------------------------------------------------

HAVE YOU SEEN ANY EVIDENCE IN YOUR JURISDICTION OF AN OVERALL SHIFT TOWARDS RESPONSIBILITY BY THE BOARD AND CORPORATE CONTROL? In Austria all ATX companies are highly recommended to comply with the Austrian Corporate Governance Codex. In the annual report companies have to present their efforts in Corporate Governance issues such as gender | internationality | age – diversity in the company’s management and professional controlling structures. Salaries should mirror the engagement of the manager and the possibilities of the company, to name just a few of the

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The evolution of the ACME Approach was fostered at NASAQ Foundation for Humanistic Thinking; ACME Corp’s affiliated Think Tank. In his capacity as Founder and President of ACME Corp-Global; Dr. Higazy chairs the Corporate Board of Directors & that of its SBUs namely, ACME Advisors, ACME Investments, Millennium HC&IP and P&S Consultants. Dr. Higazy is the author for the Corporate Governance manual for family business. ACME is considered accordingly an authority in regulating corporate governance for private sector in EMEA region. Geographically, ACME Corp covers North America, Western cluster of the European Union and an extended presence in the MENA region. The Strategic Advisory& Investment Management practice of ACME Corp, catered for Public & Private Sector

82 L, C and R regulations as offered in the Austrian Corporate Governance Codex. HOW IMPORTANT IS CORPORATE DISCLOSURE AND TRANSPARENCY IN TODAY’S CORPORATE SOCIETY? Especially in the field of gender diversity in management and fair salaries for women the efforts of the companies are very much followed by women’s rights and support organisations. In Austria, as in many other countries, women are still paid significantly lower salaries than men. There was never a fair reason for that neither in the past nor nowadays but with the focus on justice, based in the Corporate Governance Codex now very much is and can be done to solve this problem. As it is the case with a lot of other problems for example heavy overpaid manager salaries, corruption issues, just to name a few. Corporate Governance can help improve a lot of things in the future. And the most interesting thing in it is

SEEN ANY EVIDENCE OF THE NUMBER OF WOMEN ELECTED TO BOARDS IN YOUR REGION INCREASING? DO YOU THINK IT REALLY MAKES A DIFFERENCE? Diversity has not reached a mature level at most boardrooms. Unfortunately women are still a minority, although some minor changes have taken place. Utilization of women’s competence is still an opportunity not seized by most organizations.

Company: Magnum Opus Consultoria Name: Anders Pettersson Email: magnum.opus@uol.com.br Telephone: +55-11-991851449

entities with a special emphasis on Family Businesses, Semi-Government Organizations (PPPs), NGOs & NPOs. Oil & Gas, Real-Estate, Retail & Distribution, Industrial Development, governmental sectors of Trading & Infrastructure along with Financial sector.

Company: ACME Corp Name: El Mostafa Higazy Email: info@acmestrategies.com Web: www.acmestrategies.com Address: 16 Mahmoud Ashry, St.,# 2, Heliopolis, Cairo 11361, Egypt Telephone: (202) 2415 1883 / (202) 2415 1885 / (002) 0122 9300 332

that Corporate Governance is based on virtues. Losing virtues has caused most of the sociological problems in the world. Corporate Governance is working to reinstall virtues and honesty in today’s companies and eliminate corruption and injustice as much as possible.

Company: KEY ACCOUNTS INTERNATIONAL Name: Claus Ezinger, MAS Email: information@keyaccountsinternational.com Web: www.keyaccountsinternational.com Address: Prielaustrasse 7, AT-5700 Zell am See, Austria Telephone: +43699-19.19.19.95

October 2012 /

SECTOR SPOTLIGHT:

Merger Control: Managing Competition

MERGER CONTROL — Managing Competition

l Without appropriate legislation M&A transactions have the potential to create a noticeable change in the market; a merger can very quickly strengthen a position of market power and raise serious competition concerns. It wasn’t that long ago that merger control was simply a box-ticking exercise in the M&A process, compared to the lengthy and complex procedure it is today. Nowadays, firms and individuals involved in cross-border transactions have far more to consider and submitting a case to the competition authorities can be a complex process; from the basic assessment to coordinating filing strategies and reviewing process timetables. Acquisition International investigates the approach to merger control in some of the world’s most active M&A regions.

-----------------------------------------------------------------------Suleyman Cengiz is the Senior Competition Law Advisor in Herguner Bilgen Ozeke Attorney Partnership. ------------------------------------------------------------------------

AS WE KNOW, THE INTERNATIONAL M&A COMMUNITY IS TAKING MERGER CONTROL MORE SERIOUSLY THAN EVER; HAVE YOU EXPERIENCED MAJOR REFORM? IF SO, WHAT BROUGHT ABOUT THIS CHANGE IN YOUR JURISDICTION? The TCA issued a new Merger Communique at the end of 2010, which entered into force at the beginning of 2011, replacing the previous Communique of 1997. With the new Communique, the TCA changed the threshold system substantially by abolishing the market share thresholds and creating a two-part turnover threshold system, which is more in line with the European Union regulations. Furthermore, the new Communique also introduced a new merger notification form, which requires the transacting parties to submit more market-related information. This new system

ACQUISITION INTERNATIONAL

aims to provide a more objective and transparent merger scrutiny procedure. ARE THERE ANY STATUTES AND REGULATIONS CONCERNING MERGER CONTROL THAT ARE UNIQUE TO YOUR JURISDICTION? DOES THIS CREATE/PREVENT ANY OPPORTUNITIES?

competition concerns through commitments instead of total prohibition. The commitments may either be structural or behavioral depending on the level of the competition concerns raised. We are unaware of any transaction that has been subjected to a complete prohibition by the TCA to date.

Turkish Competition Law closely follows the EU Merger Control Regime. Although there are some local differences in the secondary legislation and in its interpretation, there are no substantial peculiarities unique to the Turkish regime. WHAT PERCENTAGE OF M&AS ARE PREVENTED BY MERGER CONTROL REGULATION IN YOUR JURISDICTION? WHAT ARE THE MAJOR OBSTACLES? Pursuant to the relevant legislation, transactions that create or strengthen a dominant position in the relevant markets are to be prohibited. Nevertheless, the TCA prefers to cure transactions that raise

Company: Herguner Bilgen Ozeke Attorney Partnership Name: Suleyman Cengiz Email: scengiz@herguner.av.tr Web: www.herguner.av.tr Address: Suleyman Seba Caddesi Siraevler 55 Akaretler 34357 Besiktas Istanbul Turkey Telephone: +90 212 3101843

October 2012 /

SECTOR SPOTLIGHT:

Merger Control: Managing Competition is still at its nascent stage and as it develops it would borrow from precedents and practices in foreign jurisdictions. A high-level committee constituted by the Ministry of Corporate Affairs (“MCA”), has reportedly already submitted a comprehensive report to the Ministry recommending certain amendments to the merger control provisions under the Competition Act to bring them in line with other jurisdictions and current needs on the economy. WHAT ARE THE PRIMARY MERGER CONTROL ISSUES IN YOUR JURISDICTION? HOW CAN THESE BE OVERCOME IN ORDER TO BRING A TRANSACTION TO A SUCCESSFUL CLOSE? There are a number of ambiguities in the language as well as in the interpretation of various provisions of the Competition Act and Combination Regulations which are yet to be clarified by the CCI. For instance, there are no guidelines/guidance note provided under the Competition Act or the Combination Regulations for notifying parties on the calculation of assets or turnover while determining whether a transaction needs notification to the CCI or not. Another instance of such ambiguity is the language used in Schedule I, paragraph (10) of the Combination Regulations which exempts combinations taking place entirely outside India, “with insignificant local nexus and effects” on markets in India. If global transaction already meets the India nexus turnover/asset thresholds prescribed under the Competition Act, it is unclear as to what additional factors will be considered by the CCI in determining the ‘local nexus’ of a transaction.

THE INTERNATIONAL M&A COMMUNITY IS TAKING MERGER CONTROL MORE SERIOUSLY THAN EVER; HAVE YOU EXPERIENCED MAJOR REFORM? IF SO, WHAT BROUGHT ABOUT THIS CHANGE IN YOUR JURISDICTION? Nearly a decade after the Competition Act was first introduced into the statute books, the Government of India finally decided last year, that it was time to operationalize the provisions relating to merger control. In doing so, India has joined the ranks of several jurisdictions across the globe that require all big-ticket M&As to be cleared by a competition regulator who assesses whether the transaction is good or bad for competitive conditions in the marketplace. Accordingly, in May 2011, the Competition Commission of India (“CCI”) notified the Competition Commission of India (procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (“Combination Regulations”) which effectively contain the nuts and bolts of the merger control regime and prescribe the “what”, “when” and “how” of the merger approval process. In the next few months that followed, the CCI was inundated with a barrage of comments from the Indian as well as international business community, stake holders and other competition regulators regarding issues pertaining to the nascent merger control regime in India. Clearly, there were a number of ambiguities in the merger control provisions which created a great deal of confusion amongst

30 / October 2012

the notifying parties. For instance, the Combination Regulations exempted acquisitions within a group from the requirement of prior notification to and approval from the CCI on the grounds that such an intra-group restructuring is not likely to have an appreciable adverse effect on competition in India. However, from a plain reading of the regulation, it was not clear whether such exemptions would equally apply to intra-group mergers and amalgamations. Therefore, in an attempt to address some of the outstanding issues in the merger control regime, the CCI amended its merger regulations in February 2012. There is little doubt that some of these amendments have adequately allayed some of the concerns and uncertainty that the industry faced during the first 9 months of the enforcement of the merger control provisions in India. ARE THERE ANY STATUTES AND REGULATIONS CONCERNING MERGER CONTROL THAT ARE UNIQUE TO YOUR JURISDICTION? While the CCI has made a conscious effort to make the Indian merger control rules in line with other mature jurisdiction, there are certain provisions, which are unique to the jurisdiction. For instance, under most merger control regimes, for calculating the turnover or assets of the parties in a transaction involving a business division of a company, the assets and turnover of the buyer and target business are considered. However, under the Indian merger control regime, instead of considering the assets and turnover of the target business division, the assets and turnover of the entire enterprise (seller) which owns that business division is to be considered. Having said that, it is pertinent to note that the Indian law

Further, in the absence of precise details of why the CCI has adopted certain interpretations in its clearances till date, filing parties are quite likely to adopt a cautious and conservative approach when deciding whether they need to make a merger filing. The risk of incurring a penalty for failure to file, coupled with the possibility that the CCI might unscramble the merger up to a year after its completion will probably lead filing parties to adopt a “file first, ask later” approach which is turn increases the possibility of a huge number of unnecessary merger filings at the CCI. Apart from additional cost for merging parties, this may also be an added burden on the CCI which is already facing a manpower crunch. Sooner rather than later, the CCI is likely to be forced into considering the several ambiguities contained in the Competition Act and the Regulations and will need to look beyond the plain language used, into the object and purpose of the provisions in order to provide logical and predictable outcomes for filing parties. Further, as more complex transactions are notified to the CCI, it has to overcome its manpower crunch and ensure bench strength to conduct rigorous economic analysis to market effects of more complex transaction and give its approval within the 180 day best effort time-limit.

Company: AZB & Partners Name: Samir Gandhi Email: samir.gandhi@azbpartners.com Address: AZB & Partners, Plot no. 48, Sector 4, Noida, U.P. 201301, India Telephone: +91 120 417 9999

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SECTOR SPOTLIGHT:

Merger Control: Managing Competition

— U.S. Merger Control: A Discussion with V&E About Process and Current Trends -----------------------------------------------------------------------By William Vigdor and Dionne Lomax ------------------------------------------------------------------------

While the U.S. was an early leader in applying antitrust concepts, it continues to be a leader in applying the most modern technology and economics to merger control. U.S. merger control operates very differently than outside the U.S. because the American filing process is much more predictable than the non-U.S. process and the investigatory process is much more document and data intensive than outside of the U.S. We also note that the process is plagued with inefficiencies and burdensome information requests. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) is the statute that governs merger control in the United States. A filing is required and parties must observe the applicable waiting period if the size of transaction is greater than $272.8 million (all of the statutory thresholds are adjusted annually). Transactions between $68.2 million and $272.8 million are reportable if one party has $136.4 million in net sales or assets and the other party has $13.6 million in net sales or assets. The waiting period is 30 days (15 days in bankruptcy and cash tender offer). If the antitrust authorities require an investigation, they issue a request for additional information and documentary material (“Second Request”). The parties cannot close until 30 days (10 days in bankruptcy and cash tender offer) after they comply with a Second Request. The process is standard, well established and predictable. Filing parties, the ultimate parent entities of the buyer and seller, must submit, among other things, a transaction description, specific information regarding the revenues of the buyer and target classifying the information using the North American Industrial Classification System (NAICS). In addition, filing parties must provide certain documents, called 4(c) and 4(d) documents. These documents are prepared by or for any officer(s) or director(s) and by investment bankers, consultants or other third party advisors retained for the transaction for the purpose of evaluating or analyzing the proposed acquisition with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into products or geographic markets. Also, any studies, surveys, analyses and reports evaluating or analyzing synergies and/or efficiencies prepared by or for any officer or director for the purpose of evaluating or analyzing the transaction and confidential information memoranda prepared in connection with the transaction must be submitted. The search for 4(c) and 4(d) documents is potentially the most difficult and unpredictable part of the filing. Private equity and hedge funds may also find it difficult to report revenues for companies in which they hold 5% interest. Unlike outside of the U.S., there is no process for submitting a draft and engaging in prefiling discussions. Rather, the submission of a filing containing all of the information begins the waiting period. Submitting an incomplete filing may subject the filing parties to civil penalties up to $16,000 per day for each day they are in violation of the HSR Act. Very few mergers are actually prevented in the U.S. as compared to the number of HSR filings that occur each

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year. For example, in fiscal year 2011, 1,450 transactions were reported under the HSR Act. The Department of Justice Antitrust Division challenged 20 merger transactions – 13 in U.S. District Courts and 7 others were resolved by the parties either abandoning or restructuring their proposed transaction or changing their conduct to avoid competitive problems. Of the 13 merger challenges brought in U.S. District Court, the Division successfully litigated one, resulting in a permanent injunction against the merger, one was dismissed after the parties abandoned the transaction, and eleven were resolved by consent decrees. Similarly, the Federal Trade Commission challenged 17 transactions, leading to nine consent orders, three administrative complaints (along with attendant requests for preliminary injunctions in federal district courts), and five transactions that were abandoned or restructured after the parties learned of the Commission’s concerns. The extent to which the agencies challenge a transaction and the remedies sought to resolve competitive concerns depends on the facts and circumstances of each case and the structure of the specific industry and relevant product markets involved. Notably, the DOJ and FTC issued Second Requests (explained below) in a small percentage of the transactions, 4.1%. The DOJ and FTC combined issued 58 Second Requests during fiscal year 2011 (24 issued by the FTC and 34 issued by the DOJ). Each industry presents its own challenges to the competition analysis. For example, when industries go through rapid expansion or decline, the competition analysis can be more challenging than when industries are stable. Another challenge to the merger analysis is when consolidation presents both benefits of synergies and risks of anticompetitive pricing. This is one of the difficulties faced by federal agencies today in the U.S. healthcare industry. Further, the merger of firms producing complementary products in the technology industry presents challenges. Such mergers raise questions of the pro- and anticompetitive effects of vertical integration, rapid technological change and the implication of patent protection in the industry. Related to this is the growing focus on the competitive effects on the acquisition of intellectual property rights, particularly patent rights. The key issue plaguing U.S. merger control continues to be the size, cost and complexity of responding to government requests for information. If after the initial 30 day waiting period, the antitrust

agencies are not persuaded a merger does not have anticompetitive effects, they issue a request for additional information and documentary material, generally called a Second Request. The expansive nature of the Second Request is driven by two factors in our view. First, as merger analysis has become less reliant on presumptions and more fact intensive, the agencies want to gather more information to undertake the required analysis. The second factor is that the federal agencies only have one chance to request information and when parties substantially comply with the Second Request, they need to complete their review in 30 days. Many agency leaders have tried to develop and have implemented systems and processes to streamline the Second Request process, but the review process continues to be dogged by this enormous burden.

Company: Vinson & Elkins LLP Name: William R. Vigdor Email: wvigdor@velaw.com Web: www.velaw.com Address: 2200 Pennsylvania Avenue, NW, Suite 500 West Washington, D.C. 20037-1701 Telephone: +1 (202) 639 6737

Company: Vinson & Elkins LLP Name: Dionne C. Lomax Email: dlomax@velaw.com Web: www.velaw.com Address: 2200 Pennsylvania Avenue, NW, Suite 500 West Washington, D.C. 20037-1701 Telephone: +1 (202) 639 6610

October 2012 /

SECTOR SPOTLIGHT:

Doing Business in the South East

DOING BUSINESS l

Acquisition International’s comprehensive guide to doing business around the world.

-----------------------------------------------------------------------Jackie Maguire is the CEO of Coller IP. ------------------------------------------------------------------------

The South East continues to be a growing market for innovation. Coller IP has worked with many companies in the region over the past decade, assisting them through times of growth and more recently in surviving the recession. Investment, M&A and insolvency activities have equally called on our services as we provide professional intellectual property services to help clients manage, value and monetise their assets. Many of our clients require something different. Their circumstances range widely and our team is able to respond with a combination of technical, legal and commercial expertise to cater for all IP needs. We work across all industries from chemical engineering, to software and from to biotechnology to consumer goods and retail. Several companies in the Thames Valley have appointed us to work as their “in-house” IP managers -----------------------------------------------------------------------Simon Turner is the Managing Director of Seymour Taylor. ------------------------------------------------------------------------

Seymour Taylor, originally established in 1917, features as one of the top independent firms of Chartered Accountants and Business Advisors in Buckinghamshire and the surrounding area. With offices in High Wycombe and London we act for, and with, owner managed businesses throughout the whole of the Thames Valley. We are, at present, looking to expand and grow in the current climate. Whilst many businesses are struggling, there are also some very strong signs coming from our owner managed businesses, and in my own area of expertise - UK subsidiaries, we are seeing some strong growth. Some of these factors have come from entrepreneurs making investments and taking calculated risks when others were reducing budgets and spend. In my opinion, SME’s really need the help from government to enable them to run their businesses and take the entrepreneurial decisions rather than getting caught in red tape.

ACQUISITION INTERNATIONAL

so that they gain access to a full range of expertise when they need it, rather than incurring the costs of permanent recruitment. Recognising the quality of advice that we can provide, Government sponsored intermediaries such as the innovation and growth teams have appointed us in the region. We offer a very different approach to most other IP Advisors. With us, you can be sure that you have a firm view as the basis for your business decisions whether you are planning to invest in an enterprise, sell it, develop a product, or prepare for a major event such as an IPO or insolvency. For investors who need to understand the key IP issues within a business proposition, we provide objective views on the robustness and market attractiveness of the IP portfolio in question. We offer evaluation of IP at all levels from initial assessment through to full due diligence and formal independent valuation. We offer not only commercial

We have recently appointed two new Associate Directors. Andrew Green, is a highly regarded tax specialist who has many years’ experience heading up successful, growth driven UK and international tax practices. Andrew’s appointment will enable Seymour Taylor to provide high level UK corporation and international tax advice to a wide range of SME and mid-market businesses and to our large insurance client base. Rachel Pugh has been appointed Director of Operations and will initially work closely with myself and the executive team to help Seymour Taylor with its growth and expansion plans whilst focusing on client service and office efficiencies. The South East and the Thames Valley area in particular, is a great place to do business as there are strong transport links by road, rail and air for both UK and overseas clients. We believe that fully understanding our clients business and strategy is the most important part of our job. We can then help these businesses grow and develop whilst keeping their objectives in mind.

evaluation of intellectual property but also provide firm professional opinion as to its legal and commercial robustness. Our opinions are clearly stated; our clients are not left to interpret legal jargon, particularly important in times of uncertainty and change.

Company: Coller IP Name: Jackie Maguire Email: jackie.maguire@collerip.com Web: www.collerip.com Address: Fugro House, Hithercroft Road, Wallingford, OXON, OX10 9RB Telephone: +44 870 402 1616 Fax: +44 870 402 1659

Seymour Taylor is part of the Hampden Group and a member of MGI the global alliance of audit, tax, accounting and consulting firms. The Hampden Group recently came second in The Times International Track 200 list of privately owned companies with the fastest growing international sales.

Company: Seymour Taylor Name: Simon Turner Email: simon.turner@stca.co.uk Web: www.stca.co.uk Address: 57 London Road, High Wycombe, Buckinghamshire HP11 1BS Telephone: +44 (0) 1494 552100

October 2012 /

SECTOR SPOTLIGHT:

Doing Business in the South West & West Midlands -----------------------------------------------------------------------Richard Spink is a Corporate Finance Partner at leading UK law firm Burges Salmon LLP. ------------------------------------------------------------------------

Operating out of offices in Bristol and London, Burges Salmon provides high quality legal and business advice to clients across the UK and, through an international network of like-minded law firms, in other jurisdictions. HOW WOULD YOU DESCRIBE THE CURRENT BUSINESS ENVIRONMENT IN THE SOUTH WEST AND THE RISKS IT FACES IN 2012? The climate is certainly challenging and is likely to continue to be so for the foreseeable future. Continuing difficulties in the Eurozone and lack of business confidence are likely to give rise to difficult trading conditions for the rest of this year and well into the next. Despite this, there are definitely grounds for optimism in the South West. Bristol itself continues to have one of the strongest economies outside London in terms of GDP. Enhanced government investment and development of Local Enterprise Zones should also provide a boost to the economy. -----------------------------------------------------------------------Morgan James Morgan is Head of Corporate Commercial at Dyne Drewett. ------------------------------------------------------------------------

PLEASE PROVIDE A BRIEF HISTORY OF YOUR FIRM AND OUTLINE YOUR MAIN PRACTICE AREAS. Dyne Drewett is an established law firm based in the South West of England which has developed into a dynamic and thriving practice. We provide the full spectrum of legal services to businesses in the area with our teams of specialist lawyers in corporate, commercial, employment and dispute resolution law. Our clients range from agri-businesses to high-tech manufacturers. HOW WOULD YOU DESCRIBE THE CURRENT BUSINESS ENVIRONMENT IN THE SOUTH WEST AND THE RISKS IT FACES IN 2012? Firms in the South West are used to the new normal of low growth and have adapted their business plans to deal with this. Whilst there is always the risk of further external shocks to the local economy, there is -----------------------------------------------------------------------Jeff Taylor is a Partner and Head of Corporate Services at solicitors Thomas Horton LLP. ------------------------------------------------------------------------

Thomas Horton LLP is a multi-service law firm serving both private clients and businesses from its 3 Worcestershire offices. The firm’s ethos is to combine traditional values with no-nonsense, forward thinking solutions to its client’s legal issues. Thomas Horton is ranked in the top 10 law firms in its region by Legal 500 for Corporate work. HOW WOULD YOU DESCRIBE THE CURRENT BUSINESS ENVIRONMENT IN THE WEST MIDLANDS? After a difficult few years our commercial clients are at last reporting that business is starting to pick up again across the region. This is certainly good news and is backed up by the latest figures. September’s Lloyds TSB West Midlands PMI showed that the activity rate in the West Midlands was above the UK average and the region has been in growth for the last 39 months.

34 / October 2012

In the longer term, we do expect to see the South West recover and develop. The region has a mix of high quality public and private companies, including high growth and entrepreneurial businesses and, whilst there will be significant regional variances, the South West should, with better access and infrastructure, become an increasingly popular place to do business. Businesses such as Gooch & Housego, Renishaw and Avon Rubber are great examples of some of those based in the region who have demonstrated the ability to succeed in a global market. WHICH SECTORS WILL CONTRIBUTE LASTING GROWTH IN THE REGION?

end has increased relative to the rest of the market as access to debt for larger transactions remains difficult for all but the highest quality transactions. The ICAEW’s latest Business Confidence Monitor shows falling confidence among South West businesses prompted by a weak economic climate. However, employment conditions have strengthened and expectations for future growth are rising, so there is still cause for optimism as we look ahead.

As a firm we have seen growth coming from areas including energy, particularly marine and offshore wind as well as biomass, together with transport and public private partnerships. Transactional activity in areas such as insurance, renewables, food and drink, software services and leisure has also gathered pace. Activity at the SME

also a cautious optimism and a belief that the worst is behind us. HOW SUCCESSFUL DO YOU THINK THE GOVERNMENT’S INVESTMENT PLANS IN AREAS SUCH AS INFRASTRUCTURE PROJECTS AND THE RURAL ECONOMY WILL BE? Outside of the large cities there is real need for investment in digital infrastructure, the economies of small towns and rural areas are increasingly dependent on fast and reliable links to the internet. Central and local government will I hope do everything they can to facilitate the development and rapid set-up of high speed networks for these areas. WHICH SECTORS WILL CONTRIBUTE TO LASTING GROWTH IN THE REGION? HOW DOES THIS COMPARE WITH THE REST OF THE UK? Growth by small and medium sized enterprises is the key to growth in the South West of England.

Employment figures in Worcestershire are also promising. The Worcestershire private sector saw an increase in employment for a tenth consecutive month in September. Our region has a strong history and reputation for innovative manufacturing using advanced materials and processes. We have found that it is these companies that are growing and who benefitting from moving into international markets. A strengthening automotive sector also offers renewed opportunities for the second tier suppliers across the region, many of whom are reporting strong sales. Access to finance remains a major barrier to growth in the region. Encouragingly the government seems at last to be taking action over these concerns and have begun to set up initiatives which are broadly welcomed by our clients. These include the Enterprise Guarantee which over 3 years has supported £2 billion of sub £1m loans to around 20,000 businesses. Other strategies include establishing Regional Growth Funds, Local Enterprise Partnerships, and the Funding for Lending scheme which is hoped will free up cheaper business credit by allowing banks to borrow from the Bank of England against their existing loan books. Fragile confidence across

Company: Burges Salmon LLP Name: Richard Spink Email: richard.spink@burges-salmon.com Web: www.burges-salmon.com Address: One Glass Wharf, Bristol, BS2 0ZX Telephone: +44 (0) 117 939 2218

Businesses of this size have proved themselves time and time again as the best generators of wealth and employment. The South West is an area rich in entrepreneurial talent and has a high rate of new business starts. At Dyne Drewett we specialise in providing excellent value legal services to the innovators and risk takers who are building these businesses and looking to the future.

Company: Dyne Drewett Name: Morgan James Morgan Email: mjmorgan@dynedrewett.com Web: www.dynedrewett.com Telephone: 01935 813691

the region may well continue to stifle growth, even if credit becomes more freely available. DO YOU EXPECT TO SEE A PROSPEROUS WEST MIDLANDS AND BRITAIN IN FIVE YEARS’ TIME? Many say that the austerity measures in the UK may last until 2018. Nevertheless, I think the signs are encouraging in the West Midlands region and that our region will be more prosperous in five years’ time.

Company: Thomas Horton LLP Name: Jeff Taylor Email: jrt@thomashorton.co.uk Web: www.thomashorton.co.uk Address: Strand House, 70 The Strand, Bromsgrove, Worcestershire, B61 8DQ Telephone: +44 (0)1527 871641

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business in Wales & Scotland -----------------------------------------------------------------------Emma Waddingham is the Business Development Director as Civitas Law (Civil & Public Law Barristers). ------------------------------------------------------------------------

HOW WOULD YOU DESCRIBE THE CURRENT BUSINESS ENVIRONMENT IN WALES AND THE RISKS IT FACES IN 2012? Wales has a strong business environment with a high number of SMEs – particularly new startups, thanks to the recession. While it has the advantage over other regions of the Welsh Government support and initiatives, more needs to be done to market ‘brand Wales’ internationally and across the bridge into the rest of the UK. Having said that, there are real opportunities for growth in light of the new Planning Bill for Wales – providing more scope for developments - as well as the proposed City Regions. These are set for South Wales (Cardiff & Swansea) and will focus on core economic growth areas such as aviation, manufacturing and legal and professional

services. The Welsh Government has also recently appointed a series of consultants charged with helping to develop core sector areas in Wales and help attract funding for growth.

into the English Market – particularly if they are set up in a designated support area (the Welsh Government provides support for Enterprise Zone projects ) in one of the nine economical support panel industries.

WHAT FACTORS HAVE CONTRIBUTED TO WALES LAGGING BEHIND THE UK AVERAGE FOR ECONOMIC ACTIVITY? Transport is a key factor. While the electrification of the South Wales rail lines from London are expected, it still takes far too long to travel into London from Swansea and West Wales. There is also a significant challenge for those businesses in South Wales to attract work in North Wales due to transportation issues. It takes over 5 hours to get from Cardiff to Llandudno, so businesses in the North West have greater selling power to North Wales. This limits internal growth pan-Wales but does however provide opportunities for new businesses in North Wales to get

Company: Civitas Law Name: Emma Waddingham Email: emma.waddingham@civitaslaw.com Web: www.civitaslaw.com Address: Global Reach, Celtic Gateway, Cardiff CF11 0SN Telephone: +44 (0) 845 0713 007

Holyhead Bridge / Wales

Company: Jeffrey Soal & Associates Name: Jeffrey Soal Email: jeffsoal@jsacorporate.com Web: www.jsacorporate.com Address: Rosemount House, Gain Road, Annathill, ML5 2QG Telephone: +233 302 220516

ACQUISITION INTERNATIONAL

October 2012 /

SECTOR SPOTLIGHT:

Doing Business in Latin America

— Nationalisation Risk in Latin America President of Venezuela Hugo Chavez / Mark III Photonics / Shutterstock.com

“Some multinationals with assets and operations in Latin America have taken out confiscation, expropriation and nationalisation, or CEN, insurance, which is a good idea. But the best protection, after already having made the decision to invest in one of these riskier jurisdictions and having assumed the risks, is to ensure that an adequate strategy is in place to monitor the risks and in turn to act upon the early warning signs. At LatinIQ we’ve recently been asked by several clients to keep tabs on developments in certain countries that might affect their assets or lead to nationalisation. It can be a complex task because you have to understand not only what a government’s ideological priorities are, but also comprehend a range of economic, political and social factors.” HAVE THE RECENT NATIONALISATIONS AFFECTED LATIN AMERICA’S ATTRACTIVENESS TO FOREIGN INVESTORS?

-----------------------------------------------------------------------Andy Webb-Vidal is CEO of Latin-IQ Corporation, a boutique business intelligence and risk consultancy specialised in Latin America. ------------------------------------------------------------------------

PLEASE PROVIDE A BRIEF HISTORY OF YOUR FIRM AND OUTLINE YOUR MAIN PRACTICE AREAS. “Latin-IQ is the leading provider of bespoke business intelligence in Latin America, we’re the only firm that has an in-depth and exclusive understanding of the region. Latin-IQ offers a range of services, including political risk analysis and corporate investigations, as well as reputational due diligence, background searches, and market entry analyses.” IN YOUR OPINION, ARE THE RECENT NATIONALISATIONS IN LATIN AMERICA ISOLATED INCIDENTS OR INDICATORS OF A DEVELOPING TREND? “The view we hold at Latin-IQ is that the nationalisations in recent months in the energy and mining sectors of Argentina and Bolivia were driven by internal economic and political factors rather than by ideology. In Argentina, President Cristina Fernández nationalised, or more accurately re-nationalised, the local operations of Repsol-YPF with the implicit intention of capturing the company’s revenue stream for her own political ends. In Bolivia, President Evo Morales’ decision to revoke Glencore’s concession to operate the Colquiri mine was a response to pressure from the mine’s unionised workers, who had been engaged in conflict with informal mining co-operatives. These actions are only tenuously linked to the wider trend of resource nationalism that we have seen in Latin America in recent years. As commodity prices climbed in the early 2000s, a number of governments sought to snatch a bigger share of the windfall accruing to privatelyowned natural resources companies and multinationals operating within their jurisdictions. While some did this with the minimum of fuss by reforming royalty rates or renegotiating contracts, others did so in a much more antagonistic fashion. The best example of the latter has of course been President Hugo Chávez,

36 / October 2012

who made a noisy song and dance of increasing state control over Venezuela’s energy and power sectors in the mid-2000s. While some other leaders in Latin America attempted to follow suit, such as President Rafael Correa in Ecuador, none have done so with as much vehemence as Chávez. Resource nationalism will continue while commodity prices remain high, although as they decline, governments will soon shy away. But in the short term we are expecting to see some more nationalisations and takeovers in the region.” WHAT RISK FACTORS ARE ASSOCIATED WITH THESE NATIONALISATIONS, AND HOW DO THEY VARY BETWEEN THE DIFFERENT COUNTRIES? “From what we have seen at Latin-IQ, the key issue that multinationals worry about when assessing the risks associated with nationalisation in high-risk jurisdictions in Latin America such as Argentina, Bolivia or Venezuela, is not so much whether or not it could happen, but what are their chances of receiving compensation if it does occur. We’ve advised clients that once a government has publicly announced a nationalisation, it essentially means that a sovereign decision has been made and that there’s no going back. That means, for example, that reacting angrily and publicly, threatening legal action or taking the issue to international arbitration courts significantly reduces the chances of receiving prompt and fair compensation. Curiously, and contrary to some perceptions, after most significant nationalisations that have taken place in these countries governments have in fact paid fair compensation to the former owners of the assets after a period of time, and that’s certainly been the case in Bolivia and Venezuela, although there have of course been some discrepancies over what constitutes fair compensation. The main exceptions so far have been ExxonMobil in Venezuela, and the current case of Repsol-YPF in Argentina, where the Fernandez government has so far balked at settling a sum with the Spanish multinational. We very rarely see expropriation or outright confiscation.” WHAT STEPS ARE COMPANIES TAKING TO PROTECT THEMSELVES FROM THE RISK OF NATIONALISATION?

“The recent nationalisations and takeovers in Argentina and Bolivia, and previous ones in Venezuela and Ecuador, have certainly made these countries less attractive to investors. The financial rewards in these jurisdictions have to be really quite attractive to offset the risks to an investor. But beyond simplistic, knee-jerk reactions, these recent nationalisations in Argentina and Bolivia have had no negative impact on other countries such as Brazil, Colombia, Mexico and Peru. In fact, probably the reverse, they have helped these latter countries distinguish and present themselves as safer and more attractive magnets for foreign investors.” WHAT IMPACT DO YOU THINK THE RESULT OF THE ELECTION IN VENEZUELA WILL HAVE ON THE COUNTRY, AND LATIN AMERICA AS A WHOLE? “It wasn’t a surprise to us at Latin-IQ that Chávez was re-elected on 7 October because after almost 14 years in power, among other reasons, he had accumulated a range of unfair advantages. But it was a big disappointment to the political opposition because Henrique Capriles was by far the most appealing challenger Venezuelans have seen to Chávez’s rule, and expectations were running very high. Chávez adopted a conciliatory tone after his victory, but we doubt it will last. Venezuela faces major economic problems, as well as crime and corruption. Chávez realises he now really has to deal with them effectively, but whether he will be able to or not is another matter. At the regional level, Chávez’s re-election for another six years will give a boost to like-minded leaders like Fernández in Argentina and Morales in Bolivia, and very likely encourage them to seek their own re-elections, too.”

Company: Latin-IQ Name: Andy Webb-Vidal Email: awv@latin-iq.com Web: www.latin-iq.com Address: 16th Floor, Plaza 2000, 50th Street, Panama City, Panama Telephone: +44 (0) 845 680 8026

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business in Portugal, The Netherlands & Mexico -----------------------------------------------------------------------Francisco Gama Lobo Xavier is a Lawyer and Senior Partner of GLX LTM AND ASSOCIATES. ------------------------------------------------------------------------

CAN YOU PLEASE DEFINE THE CURRENT BUSINESS ENVIRONMENT WITHIN THE JURISDICTION? We do feel intensively the international scenario; on the other hand there are a lot of companies and people with benchmark activity and aspirations. Financing is a major issue as local banks are unable, by technical guidelines, and perhaps an over conservative approach how to finance the economy. It is a time of boldness and opportunities but it’s also a time of fear and uncertainty. HOW WILL PORTUGAL BE AFFECTED BY ECONOMIC SLOWDOWN EXPECTED THIS YEAR AND WHAT ARE THE KEY REASONS FOR THE STAGNATED GROWTH? On our personal view, there was a wake-up call on the country as a whole and the public policies and institutions in particular; Portugal went on spending what they simply could not. -----------------------------------------------------------------------Hugo Peek is head of corporate finance and capital markets at ABN AMRO. ------------------------------------------------------------------------

According to Mr Peek, the Netherlands has a stable and transparent legal and political system combined with a friendly fiscal climate. This ensures an excellent business climate, as witnessed in a recent survey where the Netherlands is considered a topfive nation worldwide in which to do business. Mr Peek highlighted the services sector as a particularly attractive area for investment, noting the Netherlands’ highly qualified and educated workforce. Another attractive opportunity is the logistics sector, due to the good infrastructure providing excellent channels to the European hinterland and as a transfer route. He also noted the energy sector and the IT sector. Mr Peek believes that, as with most countries in Europe, Basel III will lead to more stringent capital requirements on banks, as Solvency II will with insurers.

We joined the Euro on 2002 but missed out that Germans or French had at least double our income, so we artificially lived as if that was possible (prices went sky high on days’ notice) so we went into a borough spiral. Our growth (or lack of it) has everything to do with the reality of international status quo. We depend on exporting and on a lower scale on tourism and income from Portuguese emigrants all over the world. Spain, Italy, France, UK and even US stopped buying from us, on the other hand on strategic economical clusters, like textiles, shoe fabric and industrial fishing, the UE policy simply did not help, opening the market to the far east. That was Portugal´s mercy coup. CAN YOU PLEASE EXPLAIN AND HIGHLIGHT THE KEY POINTS OF THE AUSTERITY PROGRAMME WHICH IS CURRENTLY BEING IMPLEMENTED AND HOW THIS IS LIKELY TO SLOW GROWTH? Many major adjustments were and are being made. All of them imply less liquidity to people and

“The influence of this is likely to be in more attention on alternative financing sources next to the banking market. I expect that it will continue to be a relatively tight credit market, but it’s been like that for a while now and it hasn’t really hampered the competitiveness of Holland.” Mr Peek acknowledges that there is a lot of foreign investment in Holland, however he refutes the idea that corporate Holland is for sale. He noted that there are no more takeovers happening now then there were 10 years ago, and out of an average of 350 taking place each year only 100 or so are foreign takeovers. “That’s relatively steady – we don’t see a huge change in the pattern. In fact if we compare the number of takeovers that Dutch companies do abroad with the number of takeovers foreign companies do in Holland, then net it’s about level.” The liberal VVD party claimed victory in the recent Netherlands elections, with centre-left labour coming a close second. Mr Peek believes that such a clear outcome can only lead to further stability in Holland.

companies. Public investment came to stand still; on the other hand banks simply are not lending money and injecting liquidity into the economy. A Super Tax policy is asphyxiating the economy and it’s not working as results are far lower than the government and the Troika expected. It is time to carry on the adjustments but mitigate some of its fundamentalist consequences.

Company: Gama Lobo Xavier, Luis Teixeira e Melo, Sociedade de Advogados, RL Name: Francisco Gama Lobo Xavier Email: franciscoglobo@gamalobomelo.com Web: www.gamalobomelo.com Address: Av. General Humberto Delgado, 181, 4800-158 Guimaraes, Portugal Telephone: +351 253 421 600

“We don’t expect a major shift in terms of taxation, austerity, or fiscal stimuli. We think that the path that was already embarked upon by the previous government will be continued and the austerity measures that have been taken are widely supported in government. I think that puts Holland on a stable course - I’m relatively optimistic,” he concluded.

AA_fullcolourC.eps ABN AMRO full-colour for coated paper

Company: ABN AMRO Name: Hugo Peek Email: hugo.peek@nl.abnamro.com Web: www.abnamro.com Address: Gustav Mahlerlaan 10, 1082 PP Amsterdam, The Netherlands, HQ9111 Telephone: +31(0)20 628 04 09 Width shield: 20 mm Overlap: 0,05 mm

Company: Rivadeneyra, Treviño & de Campo Name: Fernando E. Rivadeneyra Email: frivadeneyra@rtydc.com Web: www.rtydc.com Address: Montecito No. 38, Piso 29 Oficina 15 Col. Nápoles | Del. Benito Juárez, México, D.F. | C.P. 03810 Telephone: +52 (55) 90-00-2332

ACQUISITION INTERNATIONAL

October 2012 /

SECTOR SPOTLIGHT:

Doing Business in a Transcontinental Country - Azerbaijan & Georgia -----------------------------------------------------------------------Micro Finance Organisation (MFO) Rico Express Ltd. has been operating profitably in the Georgian financial market since 1997. ------------------------------------------------------------------------

The organisation competes with credit unions and commercial banks but has a unique position, as an MFO by law is only permitted to offer loans limited to a maximum of $30,000 to one individual or entity. MFO Rico Express Ltd. is better capitalised than a majority of banks operating in Georgia. All loans granted are 100% collateralised with either real estate or gold, 35% and 65% respectively. It is highly regulated and is governed and registered by the National Bank of Georgia and the Law of Micro Finance of 2007. The company also does international money transfers worldwide to and from Georgia and foreign currency exchanges at each branch throughout Georgia.

-----------------------------------------------------------------------ENCOTEC is an International Company with Head Quarters in Baku, Azerbaijan ------------------------------------------------------------------------

ENCOTEC delivers multi discipline design engineering, procurement, construction, project management and commissioning services to Companies in various industry sectors, with an emphasis on the Oil and Gas sector. The company was founded in 2001 by Mr. Faik Rzayev, ENCOTEC’s General Director. The company has grown steadily within 10 years and now comprises 150 professional and skilled support staff. In 2006 and 2009 the company expanded into Georgia and Kazakhstan respectively, opening fully accredited offices in Tbilisi and Aktau. Our client base is wide. In the O&G sector we seek to provide services to both regional national as well as foreign operating companies, including major companies such as BP. We have supported foreign

The company has 12 branch offices in the capital Tbilisi, one in Rustavi, two in Kutaisi, and one in Batumi, the Black Sea resort. 14 of the 16 branch office locations are wholly company owned real estate. They also have a branch office in Athens, Greece that serves the needs of the Georgian community in Greece. The June 26, 2012 issue of Sarke Daily Business News stated: “Rico reported net profit of 7.8 million Lari for 2011, increasing the volume 3.2 times year on year.” The Georgian Lari has held steady for the last three years at 1.65 GEL per $US. MFO Rico Express offers investors a full 18% return on deposits in $US or Georgia Lari. Recently they have started offering the same opportunity to investors outside of Georgia. Starley Roehl has joined Rico and will be spearheading the efforts to let the US and world community know of the return on investment opportunity that

companies to establish infrastructure as well as advise foreign government organisations in need of local expertise. Our current work load includes project management and full detailed design of the new $350 million Baku Shipyard facility.

is available at Rico. MFO Rico Express is a solid company and a sound investment in a stable EU and US friendly country. The ROI that they are offering cannot be found in the US or EU.

Company: MFO Rico Express Ltd. Name: Starley Roehl Email: starley@ricocredit.com Web: www.rico.ge Address: 70 Chavchavadze Ave., Tbilisi, Georgia Telephone: +995322 282828 ext. 1007 Toll Free: 1-855-NOW-RICO, 1-855-669-7426 Direct US Phone: 1-770-853-8172

and fully in accord with international standards, using the latest computer aided engineering support. We are equally competent at operating in English, Russian or Azeri languages both for technical documentation and verbal project interaction.

ENCOTEC considers the quality of our services to be paramount; therefore we developed our QMS and were rewarded with accreditation to ISO 9001-2008 and ISO 29001-2010, both by DNV. ENCOTEC has established a reputation for providing clients with innovative design and management solutions, and have affirmed ourselves as a leading, national engineering and project management company in the Caspian region. Our services range from feasibility studies and FEED design, through to construction and commissioning supervision. We provide high quality, cost effective and sustainable solutions, tailored to our clients needs

Faik Rzayev is General Director of ENCOTEC. Company: Encotec Email: encotec@encotec.az Web: www.encotec.az Address: Europe Business Center, 1025/30 Moscow avenue, AZ1078, Baku, Azerbaijan Telephone: +994 12 497 80 88, +994 12 497 80 80

Bridge of Peace - Tblisi, Georgia / Gelia / Shutterstock.com

Company: Easy Cred Georgia LLC Name: Kakhaber Kakhiani Email: k_kakhiani@easycred.ge Web: www.easycred.ge Address: 64, Mitskevich Street, 0194 Tbilisi, Georgia Telephone: (995 32) 2 196 196; 38 66 6580 80

38 / October 2012

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business in Canada jurisdiction in a low-growth world means we are now competing at a whole new level against new entrants that are much hungrier and more competitive. It also means we need to shift paradigm, to step out of our complacency, to seek new markets, and to innovate — among other priorities.

Edmonton Skyline / Canada

HOW DO YOU SEE EDMONTON’S ECONOMY DEVELOPING IN THE FUTURE AND WHAT NEW INDUSTRIES DO YOU SEE RISING IN THE COMING YEARS?

-----------------------------------------------------------------------Brad Ferguson is the President and CEO of Edmonton Economic Development Corporation. ------------------------------------------------------------------------

Created in 1993, EEDC provides leadership in economic development, markets Edmonton as a must-see destination, manages the Shaw Conference Centre and Edmonton Research Park, and acts as a stakeholder in TEC Edmonton, a joint venture with the University of Alberta. WHAT GIVES YOU AN ADVANTAGE OVER LOCAL AND GLOBAL COMPETITORS IN YOUR AREAS OF EXPERTISE? The strength of our people and networks allows us to accelerate the speed at which business can be done in Edmonton and Northern Alberta, and our tax structure allows us to attract entrepreneurs and investment capital from around the globe. -----------------------------------------------------------------------Anders Bruun, J.D., practices law as a sole practitioner under the firm name of Anders Bruun, Barrister & Solicitor. ------------------------------------------------------------------------

WHAT FACTORS HAVE CONTRIBUTED TO CANADA’S STRENGTH AND CONTINUED GROWTH DESPITE THE GLOBAL ECONOMIC SLOWDOWN? Canadas strength arises from several factors; its banks are considered the world’s strongest, it has vast natural resource wealth and we have strong connections to our neighbour, the United States.

HOW IS EDMONTON FAIRING SO FAR IN TERMS OF OUTPERFORMING OTHER ECONOMIC JURISDICTIONS IN NORTH AMERICA? HOW DO YOU BENCHMARK EDMONTON TODAY? Edmonton’s current economic performance is among the best in North America. GDP growth was highest among major Canadian cities in 2011; Edmonton and Calgary are forecast to lead Canada in GDP growth until at least 2016. Edmonton had the second-lowest unemployment rate among major Canadian cities in September 2012. From 2006-2011, Edmonton was the fastest-growing major city in Canada, with 11.2% population growth. Our vision is that we outperform every regional economy in North America over the next 20 years. However, we face a tight labour market and, as a result, the need to streamline immigration and accreditation procedures. Being a high-growth

Chinese economies. There does not appear to be any significant internal risk factor at play at this time. WHAT HAS BEEN THE EFFECT OF THE BUSINESS TAX REFORM IN RECENT YEARS? HOW CAN THE TAX SYSTEM BE MADE MORE NEUTRAL AND LESS DISTORTIONARY ACROSS SECTORS AND PROVINCES?

HOW STRONG IS CANADA’S EXPORT MARKET AT THE MOMENT AND HOW IS THIS SUPPORTING THE ECONOMY?

Canadas system of taxation and tax levels for business are not particularily burdensome. Recent reductions were naturally welcome. There is some variation in levels across the provinces but other factors such as cost of living tend to even out any differences that exist. Canada has very favourable tax treatment for innovation and technological development.

The Canadian dollar has appreciated substantially against most major currencies since 2008 which has affected the return from exports though the volume of exports remains strong.

THE RECENT FRASER INSTITUTE REPORT RANKS CANADA AS FIFTH IN THE WORLD FOR ECONOMIC FREEDOM. WHAT STEPS CAN BE TAKEN TO IMPROVE THIS RATING?

WHAT ARE THE MAIN RISKS CURRENTLY FACED BY CANADA?

Canadas level of economic freedom, which is already very high, can most easily be improved by a greater coordination between the Federal Government and the Provinces on regulatory matters affecting businesses.

The main risks facing Canadas economy appear to be the uncertainty facing the American, European and

ACQUISITION INTERNATIONAL

In the future, the oil sands will start to move from a building phase to an operations and maintenance phase, with sustained capital spending required to keep operations running smoothly. With strengths in oilfield services, manufacturing, and environmental remediation, Edmonton is well-poised to continue growth in the future. Edmonton’s economy will continue to diversify based on our strengths in energy and reduce our dependency on energy, as we leverage those strengths into other fields. Healthcare will be an increasingly important industry to Edmonton, encompassing healthcare services, medical research, and medical device manufacturing — as will environmental services, life sciences, agri-foods and cold climate technologies.

Company: Edmonton Economic Development Corporation Name: Brad Ferguson Email: bferguson@edmonton.com Web: www.edmonton.com Address: World Trade Centre Edmonton, 3rd floor – 9990 Jasper Avenue, Edmonton, Alberta, Canada T5J 1P7 Telephone: +1-780-424-9191

WHAT IS CANADA CURRENTLY DOING TO IMPROVE ITS BUSINESS ENVIRONMENT IN 2012 AND 2013? HAVE ANY METHODS OR INCENTIVES BEEN PUT IN PLACE BY THE GOVERNMENT TO ATTRACT FOREIGN INVESTORS? At the present time Canada appears to have some concern over the acquisition of major companies in sensitive sectors, such as energy, by foreign investors. However foreign investment in the manufacturing, agriculture and food sectors is viewed very favourably.

ANDERS BRUUN J.D. Barrister & Solicitor

Company: Anders Bruun, Barrister & Solicitor Name: Anders Bruun Email: anders@andersbruun.ca Web: www.andersbruun.ca Address: Suite 8, 39 Balmoral Street, Winnipeg, Manitoba, Canada, R3C 1X3 Telephone: +1 204-416-3562

October 2012 /

SECTOR SPOTLIGHT:

Doing Business in Uganda Virunga Mountains / Uganda

MEDIUM ENTERPRISES SECTOR, AND HOW CAN THE HIGH MORTALITY RATE FOR BUSINESSES BE ADDRESSED?

Company: Bitangaro & Co. Advocates Name: Sam Bitangaro Email: kazze40@hotmail.com

These sectors can be substantively boosted by embarking on a variety of infrastructure development such as roads, railways, ports, the provision of access to cheaper finance, issuance of guarantee funds to specific primary sectors, arrangement of incentives, subsidies and government aided cooperation for these businesses. On the second arm of the question, the high mortality rate for businesses can be addressed by encouraging a dynamic and robust skills training mechanism with specific emphasis to vocational or blue-collar skills. Finding ways of reducing the cost of capital, which is presently high, reduction of hidden costs and the removal or reduction of supply chain bottlenecks. WHAT ARE THE KEY OBSTACLES TO CONTINUED GROWTH IN THE COUNTRY? The key obstacles to continued growth in the country include inadequate transport and power infrastructure, hidden costs, a lack of access to affordable loan finance, a high fertility rate of 6.7 births per woman and a high dependency ratio, with 110 dependants for every person of working age. WHAT MEASURES ARE BEING IMPLEMENTED BY THE GOVERNMENT TO OVERCOME THESE CHALLENGES? HOW SUCCESSFUL DO YOU THINK THEY WILL BE?

-----------------------------------------------------------------------Brian Kaggwa is the Senior Partner of Impala Legal, Advocates & Consultants. -----------------------------------------------------------------------WHAT GIVES YOU AN ADVANTAGE OVER LOCAL AND GLOBAL COMPETITORS IN YOUR AREAS OF EXPERTISE? Impala Legal is a law firm that provides solutions. We represent more than our clients’ views; we champion their causes in passionately providing result oriented and cutting edge solutions, with unparalleled service. The team of lawyers has the ability to integrate a commendable understanding of the law and give practical well-reasoned solutions. This has helped us build a trusted brand of services having found consistency in giving solutions that advance client’s business priorities in a variety of scenarios. HOW WOULD YOU DESCRIBE THE CURRENT BUSINESS ENVIRONMENT IN UGANDA? Uganda has enjoyed peace, political stability and economic growth for nearly three decades. This has encouraged foreign businesses to set up operations in Uganda, particularly in value added manufacturing, agro processing and the recent oil and gas together with a variety of minerals making it an ideal destination for these kinds of business. Strong macroeconomic stability and in particular the control of inflation have benefited the country’s economic growth during the global financial meltdown. The Central Bank introduced an inflation targeting lite monetary policy framework that employs a policy interest rate to influence demand in the economy, which has brought about disinflation and manage any such shocks. There are indicators of quick recovery and great optimism about changing fortunes. WHAT FACTORS HAVE CONTRIBUTED TO UGANDA’S HIGH LEVELS OF FOREIGN DIRECT INVESTMENT? For the last over two decades, Uganda has recorded robust economic growth averaging about seven percent per annum in real terms. As a result, the size of the economy has in

40 / October 2012

real terms quadrupled since the early 1990’s. The income per capita has doubled in this period although because of population growth rates have exceeded three per centum. Sustaining rapid economic growth consistently over two decades is an impressive achievement only comparable to developing countries in East Asia and South America. Uganda is the natural geographical hub of the region and it has an open climate for foreign investment, creating a level playing field for foreign and domestic firms and providing attractive incentives for medium and long term foreign investors. Uganda has recently been listed as one of the freest economies in sub-Saharan Africa based on factors such as the ease of doing business, openness to trade, political stability, property rights and fiscal and monetary policy (with a free movement of capital regime). IN WHICH SECTORS DO THE OPPORTUNITIES FOR INVESTORS LIE?

GREATEST

Uganda’s present comparative advantage lies in the oil and gas, minerals and agro processing sectors. The Ugandan economy is on the threshold of the second stage of development where industries such as food processing, construction materials, financial services, telecommunications, tourism (it is the Pearl of Africa), modern and high productivity industries have potential to set up and expand.

Owing to the high costs required in the development of infrastructure Government has made an initiative to increase Public Private Partnership for transport and power. Government has also made efforts to fast track power investments and made provision for subsidised agro processing finance. There has also been effort to curb corruption with the setup of anti-corruption courts. There is also need to curb the fertility rate by strengthening female education, improving maternal and child health care, providing contraceptives and through public campaigns to promote smaller families. The measures will be successful if Government sets the right policies on a merit criteria and discipline to achieve them. DO YOU EXPECT TO SEE A PROSPEROUS UGANDA IN 5 YEARS’ TIME? Absolutely, the next five years are likely to be a period of transition for the economy. Firstly, the transition in which non-renewable natural resources such as oil and minerals could make a substantial contribution to the export earnings and Government revenues. Secondly, the economy is likely to become progressively more integrated into the regional economy, with the implementation of the common market and customs union in the East African Community whose combined GDP is nearly US$90billion. Thirdly, the dimension of the transition from an economy which is predominately factor driven, based on its endowment of natural resources and unskilled labour, to one whose economic growth is driven by improvements in factor efficiency such as by growth in productivity.

HOW HAS THE UGANDAN GOVERNMENT RESPONDED TO THE GLOBAL ECONOMIC DOWNTURN AND ENSURED CONTINUED GROWTH? In this endeavour, the Government has deployed a variety of macroeconomic measures through the Central Bank intervention using monetary policy tools, treasury bills, bank interest rates and tight financial institutions regulation. The Government has also sought to provide subsidised financing for the agricultural sector, which is a key sector in Uganda, but fiscal policy will continue to be an even more important tool of maintaining macroeconomic stability. HOW CAN THE GOVERNMENT BOOST COMPETITIVENESS IN THE MICRO, SMALL AND

Company: Impala Legal, Advocates & Consultants Name: Brian Kaggwa Email: bkaggwa@impalalegal.com Web: www.impalalegal.com Address: Impala Chambers, 6 Kanjokya Street Kololo Hill, Kampala, Uganda Telephone: +256 414 234519 +256 414 598667 +256 312 371690

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Arbitration - the Key to Resolving Corporate Disputes

ARBITRATION

— the Key to Resolving Corporate Disputes l Over the past couple of years arbitration has boomed and as a result many countries have gone through, and indeed are still going through a complete overhaul of the rules and regulations governing the industry. These transformations have sought to mend weaknesses in former regimes and to accommodate the global economy as disputes become more international and more complex than ever. Arbitration experts from around the world give Acquisition International their views on the dispute resolution technique. -----------------------------------------------------------------------Fabio Trevisan is a partner of Bonn Steichen & Partners, a Luxembourg based independent law firm. ------------------------------------------------------------------------

WHO NORMALLY ENGAGES YOUR SERVICES? Our clients are mainly institutions, banks, large and medium corporations. Nevertheless, smaller entrepreneurs also turn to us for our expertise in various fields and the knowledge of the local market. WHAT MAKES YOU THE RIGHT ARBITRATOR? My twenty years long experience both in arbitration and in litigation is paramount to preparing the strategy in complex cases. I also am able to work in French, English and Italian. WHAT EXPERIENCES DO YOU POSSESS IN TERMS OF INTERNATIONAL DISPUTES AND THE LAWS OF DIFFERENT NATIONS? Being admitted in three different bars (Luxembourg, NY, Milan) gives me a broader perspective and allows me to deeply understand the differences between the civil and the common law systems. -----------------------------------------------------------------------The International Legitimate Consultant & Arbitrator and the Authorized Translator “Dr. Abdullah Mohammad Hijji” has his own law office, known as “T L C A A A T”.

WHAT ARE THE BENEFITS OF CHOOSING ARBITRATION OVER OTHER METHODS? WHY IS IT PARTICULARLY SUITABLE FOR CORPORATE DISPUTES? Mainly speed, flexibility of the proceedings, possibility to hear witnesses and cross examine them, which is not possible in a state trial. Also, confidentiality of the process makes it extremely attractive as the public will not be able to even know a dispute is ongoing, let alone the details of, for example, a patent dispute which could disrupt a line of business. HOW HAVE ADVANCES IN TECHNOLOGY CHANGED THE WAY YOU WORK? Speed in communication, accessibility of information has changed the way of working, for better for the most part. Reactivity, as a result, is key in client/ lawyer relationships. HOW HAS THE GLOBAL DOWNTURN IMPACTED BOTH THE TYPE AND THE VOLUME OF WORK IN YOUR JURISDICTION? Islamic & international laws. ARE YOU A MEMBER OF AN INSTITUTION? IF SO, WHAT ARE THE BENEFITS?

------------------------------------------------------------------------

Yes, I am a member of many international institutions and the benefits of these made me very famous and required.

I’ve very long & great experiences in: Personal Status Matters, Real Estate and Commercial Contracts.

HAVE THERE BEEN ANY RECENT CHANGES OR UPDATES TO THE LEGISLATION REGARDING ARBITRATION IN YOUR JURISDICTION?

PEASE GIVE A BRIEF SYNOPSIS OF YOUR EXPERIENCE IN DISPUTE RESOLUTION.

WHO NORMALLY ENGAGES YOUR SERVICES? Large Multinationals. WHAT MAKES YOU THE RIGHT ARBITRATOR? Fidelity and Accuracy. WHAT EXPERIENCES DO YOU POSSESS IN TERMS OF INTERNATIONAL DISPUTES AND THE LAWS OF DIFFERENT NATIONS? I’ve very good experiences in terms of international disputes and the laws of different nations. WHICH MAJOR INSTITUTIONS’ RULES HAVE YOU HANDLED ARBITRATION UNDER?

42 / October 2012

Volume of work has not fundamentally changed. The scope of the work evolved towards more litigation, namely more shareholders’ disputes, as well as investors’ complaints against management companies and banks.

Company: Bonn Steichen & Partners Name: Fabio Trevisan Email: ftrevisan@bsp.lu Web: www.bsp.lu Address: 2 rue Peternelchen, Immeuble C2, Luxembourg-Howald Telephone: +352 26 025 1

by improving and developing it and this is very clear and obvious to everybody who deals with us. HOW HAS THE GLOBAL DOWNTURN IMPACTED BOTH THE TYPE AND THE VOLUME OF WORK IN YOUR JURISDICTION? It hasn’t impacted them absolutely.

No, there haven’t. WHAT ARE THE BENEFITS OF CHOOSING ARBITRATION OVER OTHER METHODS? WHY IS IT PARTICULARLY SUITABLE FOR CORPORATE DISPUTES?

Company: The Office of The Legitimate Consultant & Arbitrator And The Authorized Translator “Dr. Abdullah Mohammad Hijji”

Because it works to make all liabilities reaching satisfactory solutions to all of them, by giving up some of their rights consent themselves and it’s the easiest and fastest method for solving all disputes and problems.

Name: Dr. Abdullah Mohammad Hijji

HOW HAVE ADVANCES IN TECHNOLOGY CHANGED THE WAY YOU WORK? Of course, advances in technology affected my work

Email: abmhijji@hotmail.com Address: Box #: 3868-6643-24242-2 Makkah – SA Telephone: 00966555505149

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Arbitration - the Key to Resolving Corporate Disputes -----------------------------------------------------------------------A.J. Krouse is a litigation partner at Frilot L.L.C. New Orleans, Louisiana. ------------------------------------------------------------------------

Frilot L.L.C. was founded in 1995 and offers full service representation in all areas of litigation and labour and employment matters on a local, regional and national basis before all courts and administrative agencies. The firm is known for its outstanding trial skills and ability to handle complicated litigation matters successfully. Its mission is to provide the highest quality legal services at reasonable costs to clients throughout the world, while maintaining professional and personal integrity. Mr Krouse has over 28 years as a litigation partner including extensive jury trial experience, advising clients in the course of defending, prosecuting, and settling litigation, including pre-litigation risk analysis, conducting or directing internal investigations; negotiating with governmental agencies in connection with administrative proceedings and investigations; conducting alternative dispute resolution (ADR) proceedings; managing electronic discovery (ESI) and database management. Mr Krouse has served as an arbitrator in over 140 arbitrations including large complex cases involving national and international parties and complicated multi party disputes. He has experience and training

Company: Bharucha & Partners Name: M. P. Bharucha Email: mp.bharucha@bharucha.in Web: www.bharucha.in Address: Cecil Court, 4th floor, M. K. Bhushan Marg, Colaba, Mumbai 400 039 Telephone: +91 22 2289 9300

ACQUISITION INTERNATIONAL

in both domestic and international arbitration laws and procedures, including AAA, ICDR, UNCITRAL, ICSID, ICC and LCIA rules and procedures. Mr Krouse provides neutral and dispute resolution services including serving as an arbitrator and mediator in domestic and international commercial, health care and life sciences, energy, securities and employment, franchise and construction disputes. He also provides special master, early neutral evaluation, mini-trial, fact finding, assisted negotiation and settlement counsel services. Mr. Krouse serves as neutral or party appointed arbitrator in ad hoc and institutionally administered arbitrations such as: • • • • • • • •

American Arbitration Association- construction, energy, commercial, employment, employment, class action and large complex case (LCC) panels Chartered Institute of Arbitrators (FCIArb) CPR Panel of Distinguished Neutrals FINRA Dispute Resolution Board of Arbitrators; American Health Lawyers Association London Court of International Panels ICC WIPO

WHAT MAKES YOU THE RIGHT ARBITRATOR? I am an experienced litigator; former federal judicial law clerk; former Captain U.S. Army Military Police

Corps; and have been well trained by a number of international organisations as an arbitrator WHAT ARE THE BENEFITS OF CHOOSING ARBITRATION OVER OTHER METHODS? It is a faster and less expensive method of resolving disputes HOW HAVE ADVANCES IN TECHNOLOGY CHANGED THE WAY YOU WORK? Electronic discovery and social media have changed the practice of law.

Company: Frilot L.L.C. Name: A.J Krouse Email: akrouse@frilot.com Web: www.frilot.com Address: 1100 Poydras St., 3700 Energy Centre, New Orleans, Louisiana, 70163 Telephone: +1 (504) 599-8016

Company: A&L Goodbody Name: Liam Kennedy Email: lkennedy@algoodbody.com Web: www.algoodbody.com Address: IFSC, North Wall Quay, Dublin 1 Telephone: +353 1 649 2000

October 2012 /

SECTOR SPOTLIGHT:

Arbitration - the Key to Resolving Corporate Disputes -----------------------------------------------------------------------Murray H. Miskin is the founder of Miskin Law Offices in Ontario, Canada. ------------------------------------------------------------------------

WHO NORMALLY ENGAGES YOUR SERVICES? My services have been used by large and small businesses, by governments and by non-government organisations. WHAT MAKES YOU THE RIGHT ARBITRATOR? From years of experience in court and in arbitration I am completely comfortable managing the process. Parties, witnesses and counsel enjoy the fair balanced approach I take to running an arbitration hearing. I encourage modifying the process to the dispute to make it expeditious. I encourage parties to settle at the right time. WHAT EXPERIENCES DO YOU POSSESS IN TERMS OF INTERNATIONAL DISPUTES AND THE LAWS OF DIFFERENT NATIONS? In my law practice I frequently have to deal with laws of different jurisdictions and keep them handy for reference as needed. WHICH MAJOR INSTITUTIONS’ RULES HAVE YOU HANDLED ARBITRATION UNDER? -----------------------------------------------------------------------Alejandro Ponce Martínez, a senior partner of Quevedo & Ponce (established in 1940), where he has worked since 1963, is a doctor of jurisprudence from the Catholic University of Ecuador (1970) and master on Comparative Jurisprudence (MCJ) from New York University (1973) . ------------------------------------------------------------------------

He has practiced in all branches of the law, in most of the Courts of Ecuador and in two international tribunals, as well as in arbitration both domestically and internationally. He has presided over an average of four to six arbitration cases per year from 1997 to 2010 and an overage of nine arbitrations during 2011 and 2012. He has lectured in international conferences and seminars mainly in Lima, Quito, San José (Costa Rica) and Guayaquil. He has been law professor at the Catholic University of Ecuador, Universidad Central del Ecuador, Catholic University of Santiago de Guayaquil, Universidad del Azuay and Universidad -----------------------------------------------------------------------Ana Tereza Basilio is a Partner at Basilio Advogados. ------------------------------------------------------------------------

Bachelor of Law from Universidade Cândido Mendes, she has accumulated experience in great law offices of Brazil, among them, Sergio Bermudes’ firm, where she worked during eleven years. She was also a partner of Trench, Rossi e Watanabe Firm (Baker & McKenzie), being responsible, in Brazil, for the civil and commercial litigation area, from July, 2002 to December, 2005. She is a post graduate in North American Law from Wisconsin University, and is a specialist in civil and commercial litigation as well as in arbitration. She taught Civil Law in the Post Graduation Course of the Escola Superior de Advocacia (Lawyer’s Superior School), from 1993 to 2001, and she’s the author of several books about corporate law. She is a professor in Fundação Getúlio Vargas, in the Arbitration post graduation course. For the past few years, Brazil’s economic scenario has consistently risen and nowadays is seen as a

44 / October 2012

I have worked with and taught students about most major rules applicable to commercial arbitration domestically and internationally. ARE YOU A MEMBER OF AN INSTITUTION? IF SO, WHAT ARE THE BENEFITS? I belong to the ADR Institute of Canada primarily, along with other ADR organisations. Training and continuing education programs are frequent and helpful. I regularly speak at these events. WHAT ARE THE BENEFITS OF CHOOSING ARBITRATION OVER OTHER METHODS? WHY IS IT PARTICULARLY SUITABLE FOR CORPORATE DISPUTES? Companies do not want their disputes or trade secrets to become public knowledge. Other benefits are: being able to choose your Judge, privacy and easy enforcement of awards HOW HAVE ADVANCES IN TECHNOLOGY CHANGED THE WAY YOU WORK? Most communication over arbitration work and issues arising in the course of an arbitration are dealt with by email faster than it was in the older days. We are getting away from boxes of evidence and Andina Simón Bolívar. He has widely written law articles, including on arbitration, and law text books. He was Chief Legal Advisor to the President of Ecuador (1985-1987) and Associate Judge of the Superior Court of Quito and the Administriave Tribunal of Quito ( 1988-1992, 2000-2004, 201112). He is a member of the Ecuadorian Group of the Permanent Court of Arbitration, ICSID Arbitrator and WIPO Arbitrator, and he is included in the list of suggested arbitrators of the arbitration centers of the Chamber of Commerce of Quito, the Ecuadorian American Chamber of Commerce and the Construction Chamber of Ecuador. He is correspondent of UNCITRAL. Since August 2008 he is the Director of the Section on Juridical Sciences of the “Casa de la Cultura Ecuatoriana Benjamín Carrión.” Together with important jurists from South America he has founded

secure choice for foreign investments. The economy’s fortification will surely increase the need for legal assistance in diverse areas, ranging from commercial to fiscal law. The Brazilian judicial system is aware that the upcoming years will surely come with a significant increase in litigation and that parties will seek to have their problems being solved with agility. Due to overall swiftness of the procedures involved in its development, arbitration arises as an efficient method for conflict resolution during the promising years to come. This is because there are several advantages in the use of arbitration, as well as being rapid, sensitive and judicial economy, allows parties greater freedom and flexibility in setting rules that will govern the process, as well as the choice of arbitrators for the case. Based on these existing benefits in the arbitration, our company is aware of the increase of this procedure brought by positive current status of countries and,

document briefs and keep evidence in digital format for easier access. We also use real time reporting to ensure that testimony is accurately available during the course of a hearing. HOW HAS THE GLOBAL DOWNTURN IMPACTED BOTH THE TYPE AND THE VOLUME OF WORK IN YOUR JURISDICTION? When times are good there are less disputes. In hard times there are more relationships breaking down and disputes to go to arbitration.

Company: Miskin Law Offices Name: Murray H. Miskin Email: miskinlaw@yahoo.com Web: www.adrworks.ca Address: 263-380 Armour Rd., Peterborough ON, Canada, K9H 7L7 Telephone: +1-705-755-7363

the “Sociedad Internacional de Derecho Comunitario e Integración (SIDECI)“(March, 2009). He joined the International Bar Association (IBA) in 2009, being part of its Arbitration section.

Company: Quevedo & Ponce Name: Alejandro Ponce Martínez Email: alejandro.ponce@quevedo-ponce.com Web: www.quevedo-ponce.com Address: Torre 1492, Av. 12 de Octubre N26-97 y Lincoln, Piso 16, Quito, Ecuador Telephone: +593 2 298 6650

due to a team that specialises in this subject, fully trust that it will meet the expectations of our current customers.

Company: Basilio Advogados Name: Ana Tereza Basilio Email: abasilio@basilioadvogados.com.br Web: www.basilioadvogados.com.br Address: Avenida Presidente Wilson, número 210 – 12º andar, Centro, Rio de Janeiro, Brasil – (zip code) Cep 20030-021 Telephone: +55 (21) 2277 4200 Fax: +55 (21) 2210 6316

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Arbitration - the Key to Resolving Corporate Disputes

-----------------------------------------------------------------------Louise Barrington is the founder of Aculex Transnational Inc. ------------------------------------------------------------------------

An international arbitrator’s most important quality is an open mind. But a close second attribute is frequently overlooked: an open calendar. Despite the impressive growth of international arbitration, at the end of the process increasing numbers of clients are going away disillusioned. And not just the side that loses. Complaints from parties cite the cost and length of the procedure as two major problems in resolving their disputes through international arbitration.

First, do you really need a trio of arbitrators? Not only does this triple the fees, it will triple the time, as the three arbitrators jockey to align their diaries. And, because work expands to fill the time available, counsel will end up billing more hours as well. Unless the dispute is highly complex or the amount at issue is substantial (at least US$5 million), you will probably be better off with one good arbitrator. Second, does the potential arbitrator have experience with your business? An arbitrator with the right expertise can shorten the process and cut to the real issues.

at once by delegating much of the work to research assistants or associates. On the other hand, there are scores of other talented practitioners who will gladly make your case a priority on their agenda. It isn’t difficult, with a bit of detective work, to locate lesserknown arbitrators, who are nevertheless competent, fair and efficient. Parties and counsel who ask the right questions before choosing their tribunal are likely to be much happier with the process.

Well-known arbitrators, the “household names” in the international business community, have packed agendas. Finding a date for a preliminary hearing may be tough; even worse, a whole week or two for the hearing. And then, the long wait begins. It can take six months to a year for a final award. And justice delayed – is justice denied.

Third, can your potential arbitrator guarantee that he or she has the time to devote to your case over the coming months, not only for the many procedural issues that may arise, but also a block of time for the hearing? This means choosing a hearing date, planning backwards to assure everyone can be ready to proceed, and then sticking to that date.

What can parties and counsel do to improve their odds of getting a fair and efficient resolution? Before automatically reaching for the CV of the most famous, revered arbitrator in the region, parties should ask some serious questions.

Fourth, do you really need the “top gun”? In a state court system, no litigant would insist that a supreme court justice hear their case in the first instance. The most famous arbitrators are by definition also the busiest. They often manage to handle dozens of cases

-----------------------------------------------------------------------Jodok Wicki is a Partner at CMS von Erlach Henrici AG. ------------------------------------------------------------------------

and his language capacities allow Jodok an efficient handling of also large and difficult matters.

HOW HAVE ADVANCES IN TECHNOLOGY CHANGED THE WAY YOU WORK?

Jodok has handled numerous litigations and arbitrations related to many different jurisdictions, such as the USA, Australia, China, Japan, Russia, Brazil, India, Saudi Arabia, the Arab Emirates, Iran, Morocco, Lebanon, Israel, Turkey, Greece and many European countries. In addition, Jodok worked 1996/97 as a foreign intern in law firms in New York and Sydney for extended periods.

An important change is certainly the easy availability of scanners with OCR these days allowing to have electronic copies of also very large volumes of documents in a searchable format. This speeds up access to the relevant documents. Moreover, the research possibilities in the time of the internet can clearly not be compared with the “old days”.

Jodok graduated 1992 from Zurich University and was admitted to the Zurich bar in 1994. He is actively pursuing national and international litigation and arbitration cases since his admission. Having command of English and French and being conversant in Italian, in addition to his native German language, a major part of his work is cross-border and he thus has substantial experience in working with and coordinating teams of lawyers across several jurisdictions and languages. His arbitration practice covers both the representation of parties and work as an arbitrator. Clients are the whole range of large multinational companies down to midsize companies. In line with Jodok’s focus on insurance related matters, he also regularly represents large international insurance companies. When acting as an arbitrator, Jodok is placing particular emphasis on a speedy resolution of the case and on structuring the proceeding in a transparent and foreseeable way for the parties. His analytical capabilities, a structured and efficient approach

ACQUISITION INTERNATIONAL

Company: Aculex Transnational Inc. Name: Louise Barrington Email: louise.barrington@gmail.com Web: www.aculextransnational.com Address: 9A Sunrise, Parkridge Village, Discovery Bay, Lantau, Hong Kong SAR Telephone: +852 6409 0356

WHAT ARE THE BENEFITS OF CHOOSING ARBITRATION OVER OTHER METHODS? WHY IS IT PARTICULARLY SUITABLE FOR CORPORATE DISPUTES? Due to the large number of signatory countries to the New York Convention, an arbitration award can be enforced internationally more broadly than state court judgments. Moreover, arbitration will often be quicker than a proceeding over several instances before state courts and the selection of qualified arbitrators allows ensuring that individuals knowledgeable in the particular area of law and industry, respectively, decide the dispute.

Company: Jodok Wicki Name: CMS von Erlach Henrici AG Email: jodok.wicki@cms-veh.com CMS_LawTax_RGB_28-100.eps Web: www.cms-veh.com Address: Dreikönigstrasse 7, CH-8022 Zürich Telephone: +41 44 285 11 11

October 2012 /

SECTOR SPOTLIGHT:

Mauritius: Offshore Opportunities in 2012

MAURITIUS

— Offshore Opportunities in 2012 l

Acquisition International speaks to the Island’s leading professionals to discuss expectations and opportunities for 2012.

-----------------------------------------------------------------------Paul Halpin is the Founder and Executive Chairman of HCS, an international managed services and accounting firm, based in Mauritius. ------------------------------------------------------------------------

WHAT FACTORS ARE ATTRACTING COMPANIES AND WEALTHY INDIVIDUALS TO THE MAURITIUS? The factors that attract companies to Mauritius vary from case to case. Some companies locate here because of the DTA with India; others, because we are members of SADC; and others still because we have strong links with Asia, and a good geographical position on the edge of Africa. Most of all, Mauritius is a stable democracy with a high concentration of professionals. Communications links with the rest of the world are excellent, because of the high-speed undersea cables that connect the island with Asia and Africa. Tax rates are relatively low, with domestic rates at 15%, and tax credits are available to reduce that rate to 3% for internationally traded services. The Government of Mauritius prioritised the development of services industries around

the internet approximately ten years ago; and employment in IT-enabled industries is now close to 20,000, having grown from a base of approximately 2,000 at that time. The number of young people taking third-level courses has more than doubled in the last five years. The growth in availability of thirdlevel colleges indicates that Mauritian families value education. HOW COST EFFECTIVE IS IT TO BOTH LIVE, AND DO BUSINESS IN MAURITIUS? It depends on how you live. You can live to any standard anywhere in the world. However, there are certain cost advantages to our clients because of people and taxation costs; and we compete internationally on the basis of cost and service. Service is our number one differentiator, because our background enables us to provide top-tier service at reasonable rates. HOW DO LOCAL LAWS IN YOUR JURISDICTION DIFFER WITH THOSE OF OTHER OFFSHORE FINANCIAL CENTRES?

corporate, trust, funds and partnership solutions and also a new ‘first-on-the-market’ focusing on foundation entities. WHAT STEPS OVER RECENT YEARS HAS MAURITIUS TAKEN TO ACTIVELY DIVERSIFY ITS ECONOMY TO ENSURE CONTINUING PROSPERITY AND GROWTH IN SPITE OF THE GLOBAL DOWNTURN? Port Louis / Mauritius -----------------------------------------------------------------------Graham Sheward is Corporate Director – International Banking at Barclays Bank PLC – Mauritius. ------------------------------------------------------------------------

Established on 15 October 1919 in Mauritius, Barclays was the first international bank to commence operations in the island. Barclays Bank PLC Mauritius operates today as a branch of Barclays Bank PLC whose head office is in London. Barclays Bank PLC – Mauritius also offers worldclass international banking products and services to customers and clients worldwide. Through Barclays Mauritius International Banking, customers and clients have access to no less than seven leading offshore financial centres, with all their assembled expertise. Each of the Barclays global business centres to which Barclays Mauritius international banking is linked provides tax-efficient banking in a stable and respected jurisdiction. Products and services include

46 / October 2012

One of the most dynamic and fastest economies in sub-Saharan Africa, Mauritius has in successfully moved since its independence in 1968 from a monocrop sugar-dominated economy to a services-oriented one. The target spelt out is now that of an innovationdriven economy. This rapid and successful transition to a mature economy - one of just two in Africa - is testimony to the vision and will to succeed jointly shared by government, the business community and the population for sound economic management coupled with a vision to succeed. One salient feature of the business-friendly strategy is the fact that a foreign investor can settle hassle-free in Mauritius and be operational in just 3 days. Over and above being a country devoid of any exchange control and where export-oriented operators enjoy duty-free privilege for inputs and equipment, Mauritius also has one of the world’s most generous tax regimes, with personal and corporate tax harmonized at a low 15% and tax-free dividends.

By and large, local laws in Mauritius are businessfriendly and they are what an international investor would expect. We have data protection legislation and electronic transaction legislation that is on a par with the developed countries of the world. The development of double tax agreements with many African countries, combined with enabling financial services legislation, and strong regulation, makes Mauritius a safe choice for investors funds.

Company: HCS Halpin Consulting Solutions Name: Paul Halpin Email: paul.halpin@hcsmauritius.com Web: www.hcsmauritius.com Address: HCS, Nautica Business Centre, Black River, Mauritius Telephone: +230 259 1323 Mauritius has also spared no effort in securing nondouble taxation agreements. DTAs have been ratified with 39 countries and Investment Promotion and Protection Agreements secured with 36 countries. It is no coincidence that Mauritius has been recognised as the 1st country in Africa in the World Bank Ease of Doing Business Report. Mauritius has enacted anti-money laundering and terrorist financing legislation while the business framework itself has been made simpler. A “Work & Live in Mauritius” department has even been set up within the Board of Investment in Mauritius to expedite formalities for individuals and investors setting up in Mauritius.

Company: Barclays Bank PLC – Mauritius Name: Graham Sheward Email: graham.sheward@barclays.com Web: www.barclays.com/africa/mauritius Address: Barclays Bank PLC – Mauritius, Sir William Newton Street, Port Louis, Mauritius Telephone: International Banking Quick Service Desk: +230 4041010. Barclays Bank PLC – Mauritius: +230 4021000

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Double Taxation Agreements

DOUBLE TAXATION AGREEMENTS -----------------------------------------------------------------------Joaquim L. Mendes is co-founder of Grant Thornton Consultores and currently Managing Partner of the Tax and Advisory Services, besides acting as Country Head of Tax. ------------------------------------------------------------------------

HOW IMPORTANT IS IT FOR ENTREPRENEURS TO CHOOSE THE RIGHT BUSINESS FOR A NEW COMPANY? AND HOW DOES DOUBLE TAXATION AFFECT THEM ON A DAILY BASIS? The choice of which business to invest in is very important for any entrepreneur. The effect of tax in general and double taxation in particular is a relevant aspect but cannot be classified as essential, as no entrepreneur chooses its business based only the tax aspects. WHAT ARE THEY KEY BENEFITS OF TAX TREATIES/DTA’S? The main benefit of Tax Treaties/DTA’s is to enhance international commerce in the sense that they deal with the inevitable situations of double taxation either by eliminating it or at least by reducing its impact on the final business. Currently, Portugal has 56 DTT in place and 9 more are already signed and should enter into force soon, in a total of 65 DTT. HOW DOES A DOUBLE TAXATION AGREEMENT FOSTER COOPERATION BETWEEN THE HOME NATION AND INTERNATIONAL TAX AUTHORITIES? -----------------------------------------------------------------------Francis D’Souza is the Tax and Advisory Services Partner at BDO Oman. ------------------------------------------------------------------------

HOW ARE YOUR SERVICES SUPERIOR TO THOSE OF YOUR COMPETITORS AND HOW DO YOU STAND APART FROM THEM? PLEASE USE EXAMPLES WHERE APPROPRIATE. Our clients recognise us as their preferred and trusted advisor. We remain focused on helping our clients to navigate ever-changing economic and market conditions. We strive to provide the best possible services to our clients in order to continually improve clients’ expectations. HOW IMPORTANT IS IT FOR ENTREPRENEURS TO CHOOSE THE RIGHT BUSINESS ENTITY FOR A NEW COMPANY? AND HOW DOES DOUBLE TAXATION AFFECT THEM ON A DAY TO DAY BASIS? There is an increasing trend of foreign corporates and individuals venturing in to Oman and vice versa. When these businesses and individuals earn income from Oman, their income may be subject to tax

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The structure of double tax treaties usually follow international models/standards which are usually defined by internation organizations as, for instance the OECD. On the other hand not only the negotation and signature, but above all, the implementation of double tax agreements imply a high level of cooperation between the Tax Authorities of the intervening countries, namely in what concerns the need to exchange information. CAN YOU PLEASE EXPLAIN THE NEGOTIATION AND DRAFTING PROCESS WITHIN YOUR JURISDICTION? WHAT ARE THE KEY DIFERENCES WHEN DEALING WITH PARTIAL DOUBLE TAXATION AGREEMENTS? The negotiation and drafting process is usually made at the Government/Tax Administration level. The private sector is not usually involved in these processes. However, it is widely known that the Portuguese Government has been actively seeking for new countries with whom to enter into Double Tax Treaties, namely those with whom Portuguese companies and individuals have stronger commercial relations. WHAT IS THE BEST WAY TO REDUCE THE AMOUNT OF TAX WITHHELD FROM INTEREST, DIVIDENDS AND ROYALTIES PAID BY A RESIDENT OF ONE COUNTRY TO RESIDENTS OF THE OTHER? both in Oman and in the country where they are tax resident. i.e., the income is subject to international double taxation. Double taxation refers to income taxes that are paid twice on the same source of earned income. Double taxation occurs because corporations are considered separate legal entities from their shareholders. As such, corporations pay taxes on their annual earnings and when corporations pay out dividends to shareholders, those dividend payments incur withholding tax/income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corporate level. Double taxation invariably increases the burden of tax on foreign income. This has a negative impact on crossborder movement of investment, technology and expertise. Of all the decisions one has to make when starting a business, probably the most important one relates to taxes and selecting the right legal structure. WHAT ARE THE KEY BENEFITS OF TAX TREATIES/DTAS? A foreign corporate or individual may be eligible to claim exemption from or a reduced rate for withholding tax on certain types of income which

That will depend on a wide range of facts, namely the countries involved (EU or not), the nature of the participants (individuals or companies), their tax status (taxable entities or not) and obviously the existence of bi-lateral (e.g. DTT’s) or multi-lateral agreements to reduce Double Taxation. WHAT ARE PREDICTIONS REGARDING DOUBLE TAXATION AGREEMENTS OVER THE NEXT 12 MONTHS? We expect that negotiations with other countries will continue in order to enlarge the network of treaties already signed by Portugal and in this way promote international business by reducing its exposure to international double taxation.

Company: Grant Thornton Consultores, Lda. Name: Joaquim L. Mendes Email: joaquim.mendes@pt.gt.com Web: www.grantthornton.pt Address: Alameda António Sérgio, nº 22, 11º, Miraflores, 1495-132 Algés Telephone: +351 21 413 46 30

could include Royalties, Employee Compensation, Independent Contractor Payments, Scholarship, Fellowship or Grants. In order to avail the benefit the foreign corporate or individual must meet eligibility requirements and produce a tax residency certificate issued by the Revenue Authorities of the country where the foreign corporate/individual is tax resident.

Company: BDO Jawad Habib LLC Name: Francis D’Souza Email: francis.dsouza@bdo.com.om Web: bdo.com.om Address: Suit 601 & 602, Pent House, Beach One Bldg, Way no. 2601, Shatti Al Qurum, PO Box. 1176, PC 112, Sultanate of Oman Telephone: +968 24691500

October 2012 /

Thought Leader Global info@thoughtleaderglobal.com www.thoughtleaderglobal.com

Acquisition and Integration for Supply Chain Leaders

2nd annual Tax Planning Strategies and Experiences

4th Merger Integration Management Forum

September 27-28, 2012 Amsterdam

October 11-12, 2012 Amsterdam

November 15-16, 2012 Amsterdam

www.thoughtleaderglobal.com/ supplychain.pdf

www.thoughtleaderglobal.com/ tax.pdf

www.thoughtleaderglobal.com/ merger.pdf

Practical Training on Post-Merger Integration & Planning from a Supply Chain Perspective

In-House Perspectives: Planning, M&A Planning, Intangibles, Emerging Markets, TESCM

Advanced Strategies to Maximise Value from M&A and Reorganisations

Case Study: l Lessons Learned and Challenges Faced in a Global Supply Chain Integration l How to Position your Supply Chain Organisation for M&A Activities l How to be Involved as â&#x20AC;&#x2DC;Supply Chainâ&#x20AC;&#x2122; Early on in the Deal l Supply Chain as a Key Synergy Driver l Target Assessment and Due Diligence: Creating a Supply Chain Due Diligence Checklist l Operating Model Design for Supply Chain Companies

Salvatore Ferragamo Group Tax Due Diligence: Acquisition Essentials ABB Valuations & Impact on Post-Deal Integration Danish Tax & Customs: Communication with Tax Authorities: Before, During & After Implementation of Tax Planning Strategies Gruppo Lactalis Intra-Group Finance Strategy and Cash Pooling AmDocs Tax and Regulatory Issues in FACTA Gucci Group Developing a Simple/Flexible Transfer Pricing Model that Supports Business Expansion BMR Advisors M&A in India & Emerging Markets Medtronic TESCM in an M&A Environment Kerry Group Intangible Asset Planning as a Primary Component of Deal Value Centrica Implementing Significant Corporate Restructuring in a Fast Paced Environment Bayer Current Legal Framework and Case Law on Cross Border Loss Utilisation Piaggio Developing a Strong Tax Risk Policy for Asia Perkin Elmer Tax Strategies for Latin America UFS Investment Company Russian International Tax Developments

Case Study: l Experiences from a Supply Chain Redesign l Risks and Dependency Assessment, Challenges typical to Supply Chain l Structuring and Managing Integration Programmes Case Study: l Culture and Communications: Experiences from Cultural Challenges l Major Causes of M&A Failure and How to Avoid Them

Telekom Austria Identifying, Evaluating and Preparing to Realise Synergies in the Pre-Closing Phase BNP Paribas Fortis Strategy Execution as a Key Driver for M&A Success Statoil Conducting Cultural Due Diligence and Change Management Siemens Turnarounds: Linked to M&A and Integration Success Areva T&D Managing Integrations of Family-Owned Companies Electrolux Maintaining M&A Strategic Intent and Dealsourcing Equens Focusing on Synergy Creation during Integration: Best Practices Alcatel-Lucent & Konecranes New Business Start-ups and Venture Acquisition Philips Performance Measurement Strategies for the Integration Phase Stora Enso Integration of the Finance Function Ericsson Successful IT Integration: Exceeding Cost Savings Targets (with Carve-Out Strategies) Syngenta Sustainable Compliance: Is it Possible to Achieve while Integrating a New Business?

SECTOR SPOTLIGHT:

Resolving Real Estate Disputes

RESOLVING REAL ESTATE DISPUTES

l Disputes in the acquisition, management and disposal of all types of property are extremely common and the resolution of these disputes is an unavoidable reality in today’s property landscape. Many companies hold property as one of their most important assets, but it’s often not the core focus of the business; so any disputes are often referred straight to an experienced lawyer to save both time and money. Acquisition International speaks to Jason Juden at SJ Berwin to analyse recent developments and the major challenges facing the industry at this time.

-----------------------------------------------------------------------Jason Juden is Head of the Property Litigation Group (consisting of five lawyers) at the international law firm, SJ Berwin LLP. ------------------------------------------------------------------------

WHY IS THE INTERNATIONAL PROPERTY SECTOR ONE OF THE MOST CONTENTIOUS INDUSTRIES OUT THERE? It is a sector that has been hit hard in the post Lehman’s world where there is a scarcity of finance to facilitate transactions and developments. That means that effective asset management to improve value is critical and often leads to disputes. The industry is also affected by the numerous high profile insolvencies and issues that flow from them. WHAT KEY SECTORS DO PROPERTY DISPUTES AFFECT AND WHY? They affect all sectors. But perhaps the worst affected is the retail sector which is of course struggling with reduced consumer spending and the consequent numerous high profile insolvencies. This is likely to continue over the next year. WHAT ARE SOME OF THE MOST COMMON ISSUES AT THE SOURCE OF CONFLICTS? Landlords want to keep tenants and tenants want to leave or negotiate cheaper more flexible terms. This

ACQUISITION INTERNATIONAL

leads to a tension and there are therefore numerous disputes flowing from this, for example, relating to break notices, dilapidations claims and attempts to vary /be released from contractual obligations. WHAT ARE KEY CHALLENGES WHEN RESOLVING PROPERTY DISPUTES AND HOW CAN THEY BE AVOIDED? As with most disputes, it is important to keep an eye on the likely cost as against the likely gain and then come up with a cost effective mechanism to resolve a particular dispute.

It depends on the type of dispute but if I had to pick one it would normally be mediation. WHAT ARE THE MAJOR CHALLENGES FACING THE PROPERTY INDUSTRY IN 2012? HOW MIGHT THESE AFFECT DISPUTES? The lack of available finance and the high level of insolvencies. There will therefore be disputes that flow from this. However, the cost and likely returns will be critical in determining how the disputes progress and are determined.

IN AN INDUSTRY WHERE CONFLICTS ARE VAST AND DISPUTES OFTEN INVOLVE A MULTITUDE OF PARTIES, HOW IMPORTANT IS IT TO HAVE EXPERTISE ACROSS THE FULL RANGE OF DISPUTE RESOLUTION TECHNIQUES? HOW WELL EQUIPPED IS YOUR TEAM IN THESE AREAS? It is important to understand the different dispute resolution methods so that you can come up with a cost effective and timely strategy to resolve your clients’ disputes. That is something we are very well experienced in doing on a day to day basis. IN YOUR OPINION WHICH METHOD OF ADR IS MOST THE COST-EFFECTIVE AND SUITABLE TO THE PROPERTY SECTOR?

Company: SJ Berwin LLP Name: Jason Juden Email: jason.juden@sjberwin.com Web: www.sjberwin.com Address: 10 Queen Street Place, London, EC4R 1BE, UK Telephone: +44 (0)20 7111 2963

October 2012 /

SECTOR SPOTLIGHT:

Mapping Global Gender Equality

MAPPING GLOBAL GENDER EQUALITY

l Many of our global economies have made significant gains toward workplace equality over the last few decades and today, the world’s most competitive countries are those where women have the same opportunities as men. In the 1970s only 2% of global executives were female and today this figure stands at 52%; this increase has been made thanks to enhancements to equal employment opportunities by improving women’s access to education, skills, training and healthcare. Despite these advances however, official statistics published by the UN tell us that whilst women are performing 66% of the world’s work and producing 50% of the food, they are only earning 10% of the world’s income and own 1% of the world’s property. These statistics prove that collectively we still have a long way to go. Experts from around the world give Acquisition International their views on this developing subject. HOW SIGNIFICANT ARE THE DIFFERENCES IN OPPORTUNITIES FOR MEN AND WOMEN IN RELATION TO INCOME, STARTING AND RUNNING BUSINESSES, AND OWNING AND MANAGING PROPERTY? In this side I don’t think that there is in Mauritania a difference related to gender. In terms of business and owing or managing property women are not in the last of the file. On the contrary Mauritanian women are very involved in business and nothing prevents them from being business managers or property owners. DO YOU THINK PUTTING GLOBAL STANDARDS IN PLACE IS FEASIBLE? WHAT FORM COULD THESE STANDARDS TAKE AND HOW COULD THEY BE IMPLEMENTED? Yes I think it is feasible and very advisable to work with civil NGOs and political parties for this aim (e.g.: setting up standards regarding females for political party’s participation to elections). The best way is to involve more and more women and to lead them to be interested by political action. HOW COULD THE GOVERNMENT IMPROVE BUSINESS REGULATION FOR GREATER EQUALITY IN YOUR COUNTRY? To encourage banks for example to give a help for women in the matter of trade and investment and to develop programs against poverty especially in rural area. -----------------------------------------------------------------------Cheikhany Jules is the senior partner of Cheikhany Jules Law Office. ------------------------------------------------------------------------

HOW WOULD YOU DESCRIBE THE CURRENT STATE OF GENDER EQUALITY IN YOUR COUNTRY? HAS IT IMPROVED IN RECENT YEARS? We cannot say that in Mauritania like other African countries there is equality between genders. But the situation is better since four or five years ago because the government tried to improve female’s conditions in terms of healthcare and participation to political life.

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HOW DOES THE SITUATION COMPARE TO OTHER COUNTRIES? I think that situation is better than in the other countries of the region, in so far as government brought a special attention to children and women by launching huge programs of vaccination and building health centre devoted to women’s and children’s health. Furthermore the parliament voted a law imposing a level of women candidatures presented by a political party to allow it to participate in elections (to be member of the parliament or mayor).

DO YOU HAVE ANY PREDICTIONS RELATING TO EQUALITY IN YOUR COUNTRY FOR 2012/13? According to what is already set up and what is shown and heard in the official declaration I am optimistic about the issue. Company: Cheikhany Jules Law Office Name: Cheikhany Jules Email: lawoffice@cheikhany.com Web: www.cheikhany.com Address: B.P 40034, Nouakchott - Mauritania Telephone: +222 22 32 66 31

October 2012 /

SECTOR SPOTLIGHT:

Mapping Global Gender Equality -----------------------------------------------------------------------Dr. Kallu Kalumiya is a Senior Partner at Kampala Associated Advocates. ------------------------------------------------------------------------

HOW WOULD YOU DESCRIBE THE CURRENT STATE OF GENDER EQUALITY IN YOUR COUNTRY? HAS IT IMPROVED IN RECENT YEARS? The state of gender equality in Uganda has substantially improved over the last two decades, especially with regard to the education of women and their engagement in business. The basic law of the land, the 1995 Constitution, explicitly provides that women shall be accorded full and equal dignity of the person with men; that women shall enjoy equal treatment with men in accessing opportunities in political, economic and social fields; and that women shall have the right to affirmative action for the purpose of redressing historical imbalances. Since 1986 we have witnessed a remarkable increase in the number of women holding high profile offices in the public service and senior management positions in the private sector. For instance, women currently hold the positions of the Speaker of Parliament, The Deputy Chief Justice, the Inspector General of Government, and several other senior positions in the three branches of government.

HOW SIGNIFICANT ARE THE DIFFERENCES IN OPPORTUNITIES FOR MEN AND WOMEN IN RELATION TO INCOME, STARTING AND RUNNING BUSINESSES, AND OWNING AND MANAGING PROPERTY? There are no significant differences for men and women in relation to opportunities to start and run businesses. However there is still a substantial gap in relation to ownership of the means of production such as land due to reasons of history and custom. There are still backward practices such as polygamy, bride price and child marriages, especially in rural areas where the majority of the population resides. These practices still seriously impede progress towards gender equality. There are also discriminatory practices by some employers who avoid employing married women because of the concern that that they will take their maternity leave (3 months) as they are permitted to do under the Employment Act. WHAT IMPACT DOES GENDER EQUALITY, OR INEQUALITY, HAVE ON A COUNTRY’S COMPETITIVENESS, PRODUCTIVITY AND EFFICIENCY? Women in Uganda constitute about 50% of the work force, especially in the rural areas where more than 70% of the total work force is employed in the agricultural sector. There is no question therefore that gender inequality has a serious deleterious effect on

the country’s levels of productivity, competitiveness and general efficiency. There is however no comprehensive empirical data on this subject. HOW COULD THE GOVERNMENT IMPROVE BUSINESS REGULATION FOR GREATER EQUALITY IN YOUR COUNTRY? The declared policy of the government is to allow free market principles to operate without undue interference. The government could however exercise its mandate to provide a regulatory framework which seeks to fully implement the constitutional principles designed to achieve gender equality through affirmative action. This would bridge the existing gap between what the law states and the actual reality on the ground.

Company: Kampala Associated Advocates Name: Dr. Kallu Kalumiya Email: kkalumiya@kaa.co.ug Web: www.kaa.co.ug Address: KAA House 41 Nakasero Road, Kampala Telephone: +256 (0) 414 344 123 Fax: +256 (0) 414 349 954

Company: Segun Akerele, Legal Practitioners Name: Olusegun Akerele Email: segun@segunakerele.com Web: www.segunakerele.com Address: 3rd Floor, Bishop’s Gate Building, 26 Moloney Street, Onikan, Lagos Telephone: 01-470 2829, 473 0624

Company: Ndikumana & Co. Advocates Name: Didace Ndikumana Email: ndiku_dace@yahoo.fr Telephone: 00257 79942132

52 / October 2012

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Mapping Global Gender Equality

Temptation and initiatives to balance things are bearing fruit even if psychological barriers, customs and traditions are sometimes the cause of nonacceptance of women in some domains. Indeed, few women are ministers, prefects, mayors, ambassadors or soldiers. For they have long been left out of major decision-making process. This concept of equality is a matter of great advantage when we consider the complementarity of each other in enterprises. Where men fail, women sometimes can really succeed. It’s just like putting together the various innate dispositions, skills of both the sexes for a great and complete development of the country.

-----------------------------------------------------------------------Attorney DOGBEAVOU law office is committed to the consultancy of business companies. ------------------------------------------------------------------------

Located in Lome (TOGO), it was created in May 1997 by the attorney DOGBEAVOU Sédjro Koffi who took his oath on 28th July, 1988. The cabinet counts three attorneys and three jurists working in collaboration in the following fields: commercial law, company law, debt recovery, labor law, civil law, criminal law, family law, real estate. The cabinet has successfully defended many court cases and continues doing so. In Togo, much effort is made to involve women in the building of the country since 1977 when the idea of women’s emancipation was brought forth. Since then, appointment of women in positions formerly occupied by men, promotion of gender equality,

ACQUISITION INTERNATIONAL

In order to improve gender equality, our government commits itself to an early promotion of the feminine gender, better education of girls, better opportunities for them, sensibilisation by women associations and NGOs. equal distribution of jobs, and adoption of a new code of persons and family in the current year with promotion of the rights of women in the marital life are the proofs of this strong will of rehabilitation of women in their rights and duties. Without knowing too deeply about other countries, we think that in Togo with the creation of women’s associations, the traditional barriers existing in other countries are no longer felt as such. There is no discrimination in the business regulation. There is no gap between the salaries, the power of creating enterprises and owning property, for the law is not discriminatory towards women but in contrary it is found that women in Togo have more economic power.

Company: Cabinet de Maître DOGBEAVOU Name: Sédjro Koffi DOGBEAVOU Email: sergelaw@yahoo.fr cabinetdogbeavou@yahoo.fr Address: 482, Rue ADABAWERE B.P. 968 Lomé -TOGO Telephone: 00 (228) 22 21 70 63; 00 (228) 90 04 35 75

October 2012 /

SECTOR SPOTLIGHT:

Transfer Pricing issues in Cross-Border M&A

TRANSFER PRICING ISSUES IN CROSS-BORDER M&A l Transfer Pricing issues are a major consideration for business executives, whether they are acquiring a new business, expanding into other regions or restructuring the company, transfer pricing tax implications are to be considered. M&A deals are swarmed with transfer pricing implications, not only in the bringing together of potentially inconsistent transfer pricing systems, but also in the integration objectives and financing needs of the prospective purchasers. Corporate transactions raise a whole host of issues from tax regulatory issues and compliance aspects to having influence over evaluation and the structure of the business. In M&A transactions, the interaction between transfer pricing and purchase accounting can play a critical role in determining the allocation of the purchase price among the target company’s tangible and intangible assets. Acquisition International speaks to a number of transfer pricing experts to get a comprehensive view of the subject. -----------------------------------------------------------------------Kevin Smith is a Director at PricewaterhouseCoopers LLP. ------------------------------------------------------------------------

In a deal environment which is focused on maximising cashflow and minimising the effective tax rate (ETR), transfer pricing analysis now forms a key tool in the assessment of any cross-border transaction. On the one hand, there is a risk that incorrect pricing can lead to significant variations in the level of profits achieved by an entity in a particular jurisdiction which will impact on its valuation. Historically unsustainable pricing arrangements may also lead to significant tax exposures in a number of jurisdictions. On the other hand, many groups are using the transaction as a springboard to realign the operational structure of the acquired group, whether on a stand-alone basis or to merge the business with existing operations. Transfer pricing considerations need to form a key part of the revised structure, if the ETR of the group is to be minimised as part of the overall drive to achieve synergies and maximise shareholder value.

In the transactions that PwC is advising on, transfer pricing is increasingly coming to the fore as a discussion point. The treatment of existing intellectual property, centralised functions such as procurement, the remuneration of local sales activities, and the appropriate location of the entrepreneurial returns to the business have been issues for debate on a number of recent deals, as well as the local deductibility of finance costs which are a feature in every transaction. As tax authorities become more aggressive in pursuing what they perceive as non-compliant pricing arrangements, either through disputing the methodology used or questioning the implementation, ensuring that the position is fully understood and robustly supported has become key. The utilisation of intellectual property is of particular interest to tax authorities, who are cautious of any restructuring which could be construed as moving valuable intangible assets out of their local operations. By contrast, the establishment of IP

friendly patent box regimes, in locations such as the UK, is likely to lead to a change in strategy when it comes to identifying the best location in which to centralise a group’s IP.

Company: PricewaterhouseCoopers LLP Name: Kevin Smith Email: smith.kevin@uk.pwc.com Web: www.pwc.com Address: 7 MoreLondon Riverside, London, SE1 2RT, United Kingdom Telephone: +44(0)207 804 5834

— Brazil: Unique transfer pricing rules and M&A deals -----------------------------------------------------------------------Carlos Ayub is a tax partner and Alexandro Tinoco is a transfer pricing senior manager in Deloitte’s São Paulo office. ------------------------------------------------------------------------

Brazil does not follow the Organization for Economic Cooperation and Development (“OECD”) transfer pricing guidelines. That alone makes the process of establishing efficient intercompany pricing policies challenging for most international groups. Multinational corporations entering into intercompany transactions have historically been subject to a significant level of scrutiny by the Brazilian tax authorities. As part of a long-awaited initiative to stimulate domestic growth, the Brazilian government enacted Law 12,715 of September 18, 2012. Law 12,715/2012 introduced significant changes to the Brazilian transfer pricing legislation. Unfortunately, these changes do little to align Brazilian transfer pricing legislation with international norms. They continue to lack the economic rationale provided under the U.S. transfer pricing regulations and the OECD Guidelines. Although affected by the economic downturn in 2012, Brazil has seen a peak of M&A transactions over the last

54 / October 2012

several years. In connection with the economic boom the country has recently experienced, the Brazilian tax authorities proved themselves very efficient in their search for taxable income. It is not unusual for taxpayers failing to comply with the complex and sometimes contradictory Brazilian transfer pricing legislation to receive multimillion dollar transfer pricing assessments. In this context, transfer pricing issues play a significant role when it comes to valuating

Company: Deloitte Touche Tohmatsu Web: www.deloitte.com.br Address: Rua Alexandre Dumas, 1981 – São Paulo – SP – 04717-906 - Brazil Name: Carlos Ayub Email: carlosayub@deloitte.com Telephone: +55 11 5186-1227

an M&A target to extent these may substantially affect the value of the target. It is therefore crucial for tax practitioners, lawyers, and multinational corporations intending to enter into M&A deals involving Brazilian companies to assess opportunities and risks in the transfer pricing area. This opportunity and risk assessment should be carefully performed otherwise it may fail to fully address the evermore complex Brazilian transfer pricing legislation.

Company: Deloitte Touche Tohmatsu Web: www.deloitte.com.br Address: Rua Alexandre Dumas, 1981 – São Paulo – SP – 04717-906 - Brazil Name: Alexandro Tinoco Email: atinoco@deloitte.com Telephone: +55 11 5186-1660

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Transfer Pricing issues in Cross-Border M&A

Other jurisdictions have no deadline for the preparation but only for submission of the documentation. The deadlines are typically short, e.g. 60 days or less. This gives little time to preparing the documentation upon request. HOW CAN A TRANSFER PRICING STUDY HELP DETERMINE IN WHICH FOREIGN COUNTRY A COMPANY SHOULD CONSIDER BUSINESS - EVEN BEFORE IT DOES SO FOR THE FIRST TIME? Transfer pricing is a means of defining the (appropriate) income allocation in a group of companies. It does so by referring to business functions and risks and to business transactions. A transfer pricing study helps defining and/or documenting if/why, given a certain allocation of functions and risks as well as a certain transactional set-up, is at arm’s length. If an enterprise thinks about the relocation of business functions into a new country or the redirection of business transactions through that country, a transfer pricing study helps understanding what the impacts could be because it reflects the as-is situation. From this, a sound planning of a relocation can be done taking into account country-specific tax regulations, e.g. tax incentives, tax rulings etc.

-----------------------------------------------------------------------Oliver Wehnert is a Partner | Tax Advisor | EMEIA Transfer Pricing Leader | Head of Practice – Germany/Switzerland/ Austria | International Tax Services - Transfer Pricing at Ernst & Young GmbH. ------------------------------------------------------------------------

HAVE THERE BEEN ANY RECENT UPDATES TO TRANSFER PRICING LEGISLATION IN YOUR JURISDICTION? According to draft legislation (“Jahressteuergesetz 2013”), Germany is about to implement the Authorized OECD Approach (so-called “AOA”) on the income allocation between headquarters and permanent establishment. The idea behind the proposed law is to adjust the national law to the international consensus established with the AOA. Essentially, the new elements are (i) the recognition of internal incidents occurring between the headquarters and the permanent establishment as so-called “dealings” and (ii) the allocation of risks and partially assets based on the underlying significant people functions. CAN YOU PLEASE DEFINE THE KEY TRANSFER PRICING ISSUES THAT CAN IMPACT CROSSBORDER TRANSACTIONS? One of the key impacts on cross-border transactions is the integration of the target company into the value chain of the acquirer. Typically, the acquirer has a certain policy with regards to the ownership of intangibles or the acquirer has an established structure for intercompany services (e.g. shared service center) or distribution (e.g. buy-sell instead of agent model). The conversion of the value chain can cause significant challenges from a tax perspective. Another important aspect to be observed is the potential application of CFC rules in the jurisdiction of the acquirer. A certain company structure involving low tax jurisdictions which was feasible from the perspective of the jurisdiction of the target

ACQUISITION INTERNATIONAL

HOW CAN TRANSFER PRICING HELP DETERMINE IN WHICH JURISDICTION TO HOLD AN INTANGIBLE ASSET? company may be problematic from the perspective of the CFC rules in the jurisdictions of the acquirer. This again causes restructuring considerations. HOW DO INTANGIBLE ASSETS LIKE PATENTS OR LICENSES APPLY TO TRANSFER PRICING? The identification of intangibles and their allocation in the group is key for every transfer pricing analysis. Often, the allocation of intangibles determines the characterization of group entities as for example entrepreneur receiving the residual profits or routine company receiving a small but stable margin. Also, the allocation of intangibles helps understanding whether or not license arrangement should be established from a transfer pricing perspective. The OECD identified transfer pricing issues pertaining to intangibles as a key area of concern to governments and taxpayers, due to insufficient international guidance. It was found that the development of clearer and consensus-based international guidance could help limiting uncertainty and risks. Therefore, the OECD has started a new project on the transfer pricing aspects of intangibles. The discussion draft was published on June 6, 2012. It is expected that this work will lead to an update of Chapter VI of the OECD Guidelines, and possibly of Chapter VIII.

One aspect is that enterprises usually have a policy on the allocation of intangible assets. In order to prevent complexities in the valuation of participations and in transfer pricing and in order to make use of synergies, many enterprises follow a central approach of holding the important intangibles in only a few or even in one jurisdiction. Another aspect is business reorganization. When considering a reorganization of the supply chain, enterprises inform themselves about the tax environment in different countries. Some countries offer beneficial tax regimes with regards to intangibles. Examples are (i) tax incentives for investments in research and development and (ii) the patent box. Those elements can impact the decision for a location for a new investment. DO YOU HAVE ANY PREDICTIONS FOR THE COURSE OF THE YEAR IN TERMS OF TRANSFER PRICING ISSUES? We believe that the trend towards an aggressive examination of transfer pricing will continue. We expect the new law on permanent income allocation to become effective as of January 1, 2013. An ordinance is expected to clarify open questions, also with regards to special industries.

WHAT ARE THE DANGERS OF TAKING A “WAIT AND SEE” APPROACH TO TRANSFER PRICING TO PRODUCE THE REQUIRED REPORTING AFTER A TAXING AUTHORITY MAKES A CLAIM? A lot of jurisdictions require transfer pricing documentation by law. Depending on the country, the deadlines for preparing the transfer pricing documentation can be different. Not infrequently, it is required that the documentation is prepared contemporaneously by the date of submission of the tax declaration. In those countries a “wait and see” approach leads to a violation of law which can trigger additional taxes, interest and/or penalties.

Company: Ernst & Young GmbH Name: Oliver Wehnert Email: oliver.wehnert@de.ey.com Web: www.ey.com Address: Graf-Adolf-Platz 15, 40213 Düsseldorf, Germany Telephone: +49 (211) 9352 10627

October 2012 /

SECTOR SPOTLIGHT:

Transfer Pricing issues in Cross-Border M&A Such an assessment may, in turn, help in making the decision of placing the intangible concerned in the relevant jurisdiction. WHAT ISSUES HAVE YOU COME UP AGAINST RECENTLY WITHIN YOUR JURISDICTION AND HOW HAVE YOU OVERCOME THEM? PLEASE USE EXAMPLES TO ILLUSTRATE YOU ANSWER. In our practice we have seen many issues concerning transfer pricing. For example: a) The tax authorities intended to challenge the level of profit earned by a given group by comparing the level of profit earned by the same group prior to a corporate reorganization. -----------------------------------------------------------------------Mario Barrera-Vazquez, Esq is a Senior Associate in the Tax Practice Group at Basham, Ringe y Correa, S. C. ------------------------------------------------------------------------

Basham, Ringe y Correa, S. C. (“Basham”) is a Mexican full-service law firm established in 1912, which currently has 20 partners, 2 of counsel and more than 120 lawyers. Basham currently has offices in Mexico City, Monterrey and Queretaro. CAN YOU PLEASE DEFINE THE KEY TRANSFER PRICING ISSUES THAT CAN IMPACT CROSSBORDER TRANSACTIONS? PLEASE DRAW ON YOUR OWN PAST EXPERIENCES IN YOUR ANSWER. The existence of comparables or the lack thereof; the availability of information concerning comparables; the differences between markets; and the economic circumstances. Indeed, when dealing with cross-border, controlled transactions, it is necessary to determine whether: (i) there are comparables available; (ii) the comparables found may constitute strong evidence not only from an economic perspective with regard to the arm’s length price, but also from the standpoint of the information available in connection therewith that may serve as evidence to support that the relevant independent transaction is indeed comparable; and (iii) the economic circumstances may affect the comparability analysis, particularly if the comparables belong to a different country and if so, to what extent. In our experience, failure to take care of those aspects may be used by the tax authority to reject the independent transactions chosen as comparables, which in turn allows it to re-adjust the transfer price and assess a deficiency, accordingly. WHAT PROACTIVE STEPS SHOULD A COMPANY TAKE WITH REGARDS TO TRANSFER PRICING WHEN BUYING AND SELLING IN A FOREIGN MARKET FOR THE FIRST TIME? First, awareness is necessary. Foreign companies must be aware that Mexico has transfer pricing rules and that it actively enforces them. Then, foreign companies must define the sort of controlled transactions they intend to carry on. Thereafter, they must determine, with the aid of advisors, what conditions for such transactions would be consistent with the arm’s length standard. During this process, they will necessary gather information concerning independent transactions

56 / October 2012

that may be used as comparables. Such information must be kept, so that it may be used as evidence, if necessary, in case of an audit or litigation. The result of such process will typically be a transfer pricing study, which must be kept as well for evidence purposes. From a Mexican perspective, an appraisal may also be performed by a commercial notary public [corredor público], a bank or an individual, licensed as an appraiser by Mexico’s Ministry of Education, which has a higher weigh from the standpoint of evidence. Finally, foreign companies must be aware of two other things: (i) the result of a transfer pricing analysis may sometimes require an adjustment to the transfer price; and (ii) the information and documentation they gather should certainly help to support their transfer pricing position however, the tax authorities may still challenge such position in any case. HOW CAN A TRANSFER PRICING STUDY HELP DETERMINE IN WHICH FOREIGN COUNTRY A COMPANY SHOULD CONSIDER BUSINESS - EVEN BEFORE IT DOES SO FOR THE FIRST TIME? A transfer pricing study should typically provide an analysis of the economic environment of the relevant country. Further, it should provide some sort of “forecast” of the price at which the relevant products or services may be sold. Thus, a transfer pricing study somehow tells companies what to expect in a given country. HOW CAN TRANSFER PRICING HELP DETERMINE IN WHICH JURISDICTION TO HOLD AN INTANGIBLE ASSET?

The amendments to the OECD’s Transfer Pricing Guidelines concerning corporate reorganization allow such analysis. However, this is not possible under Mexican Law. It is necessary always to compare an independent transaction (or an independent level of profit) with the controlled transaction. So, we successfully made this argument in court. b) The tax authorities disallowed certain comparables used to determine the arm’s length price of a given company on the grounds that the information used belonged to prior years and not to the year under audit. We successfully made the argument with the tax authority that business cycles may include more than a given year and for this reason, it is possible to use multiple-year information. c) In cases where a transfer price falls without an arm’s length range, the tax authority may adjust towards the median of the range under the law, and not just towards the lower end thereof. In our view, such adjustment is disproportionate and therefore, unconstitutional. The relevant challenge is still pending to be solved upon. DO YOU HAVE ANY PREDICTIONS FOR THE COURSE OF THE YEAR IN TERMS OF TRANSFER PRICING ISSUES? Transfer pricing rules will remain in place indefinitely. Further, the tax authorities are actively conducting audits on this subject, and it is expected that such audits will increase in the near future, as their transfer pricing group grows and gets more specialized. So, taxpayers must always take transfer pricing matters into account when structuring their related party transactions.

A transfer pricing study should inform about what level of income should be expected from a given intangible under certain circumstances in a given jurisdiction. Further, transfer pricing studies may provide a general overview of the legal environment prevailing in the jurisdiction concerned with regard to the protection of intangibles. With such information it is possible to determine the level of protection that the intangible concerned will have from an intellectual property standpoint in the relevant jurisdiction; and the tax burden that income earned from such intangible will be subject to in the relevant jurisdiction.

Company: Basham, Ringe y Correa, S. C. Name: Mario Barrera-Vazquez Email: mbarrera@basham.com.mx Web: www.basham.com.mx Address: Paseo de los Tamarindos 400-A, 9th floor, Bosques de las Lomas, 05120, Mexico City, Mexico Telephone: +5255 5261-0507

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Media and Entertainment Disputes

MEDIA AND ENTERTAINMENT DISPUTES l After years of sustained growth, the media and entertainment industries have become two of the largest, most highly specialised sectors in the world. Combined, they are also extremely contentious and disputes are rife. Acquisition International discusses disputes within the sectors with James Libson at Mishcon de Reya.

-----------------------------------------------------------------------James Libson is Executive Partner and Head of Mishcon Private at Mishcon de Reya. ------------------------------------------------------------------------

Disputes are, by their very nature, distracting and, for most of us, stressful. The obvious solution is to solve them as quickly as possible. But the law can be a complex beast and otherwise rational people can be consumed by emotion in the midst of a dispute. Our approach is simple: give clear, dispassionate advice from the start. Whether the dispute is personal or commercial, our philosophy is the same. Assimilate the facts and explain the options - means of resolution can be as diverse as the issues themselves. Going to court is not the answer to everything. Each dispute requires a bespoke solution, sometimes aggressive, sometimes measured. We fight our client’s corner: we take ownership of your dispute so that we can resolve it for you as effectively as possible. We believe in delivering a return on your investment.

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We have protected our clients’ reputations for years. Many of our clients in the media and entertainment world are household names but what sets us apart is our discretion; most of our work in this area never becomes public. Where we can, we stop publications or broadcasts altogether. Where the information has been published, our team acts with intelligence and speed. We are tenacious in protecting our clients’ reputations, combining legal strategy with commercial advice and personal sensitivity. The value to our clients lies in the group’s ability to provide calm counsel in difficult times, avoiding legal proceedings wherever possible and defending them forcefully when they arise. But crisis management is by no means all we do. We know that is not enough. Through our Public Advocacy work and with our close connections in the worlds of PR and lobbying, we also help clients avoid the

recurrence of similar crises and try to enhance as well as protect their personal and their business’ reputations.

Company: Mishcon de Reya Name: James Libson Email: james.libson@mishcon.com Web: www.mishcon.com Address: Mishcon de Reya, Summit House, 12 Red Lion Square, London WC1R 4QD Telephone: 0207 440 7132 Twitter: @Mishcon_de_reya

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SECTOR SPOTLIGHT:

Resolving Disputes in the Aviation Industry

RESOLVING DISPUTES IN THE AVIATION INDUSTRY l The aviation industry is ever-changing and evolving, presenting a host of opportunities and challenges to those working within it. Disputes which may arise within the industry can cover anything from issues with aircraft design, aviation accidents (including passenger injuries or cargo claims), federal investigations and enforcement actions, contractual disputes with airport operatives or suppliers, product liabilities, to regulatory issues. Acquisition International speaks to Sunil Seth at Seth Dua & Associates to examine the key factors influencing disputes in this complex industry. -----------------------------------------------------------------------Sunil Seth is a Senior Partner at Seth Dua & Associates. ------------------------------------------------------------------------

WHY IS THE AVIATION SECTOR SUCH A CHALLENGING AND EVER-CHANGING INDUSTRY? Currently, the Aviation industry is in a state of turbulence, passing through black clouds (high fuel cost, stringent norms, cash flow crunch etc.) hindering growth and overall competency. But, recently there appears to be a silver lining, with the Government introducing fresh reforms - increasing Foreign Direct Investment cap from 26% to 49% in the civil aviation sector. DO YOU BELIEVE THERE HAS BEEN AN INCREASE IN THE NUMBER AND COMPLEXITY OF AVIATION DISPUTES OVER RECENT YEARS? WHAT FACTORS DO YOU BELIEVE MAY HAVE LED THIS INCREASE? In our view, the on-going global economic crisis has put a great strain on the finances of airlines and leasing companies, leading to immense tension in the Industry and thereby causing an increase in disputes. Disputes involving multiple countries and legal systems, interference by Government in private transactions (in case of bankruptcy, restructuring) pose complex challenges in resolving disputes/ add to the complexity of aviation disputes.

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HOW DO YOU AND YOUR TEAM KEEP UP TO DATE WITH CHANGES IN REGULATION? HOW IMPORTANT IS THIS? We have assisted the Government Authorities in drafting various Legislations, policies and regulations and have been at the forefront in bringing about changes in the highly regulated sector. WHAT ARE THE KEY CHALLENGES IN HANDLING COMPLEX AND SENSITIVE DISPUTES IN YOUR JURISDICTION AND ACROSS THE GLOBE AND HOW DO YOU OVERCOME THESE HURDLES?

IN YOUR OPINION WHICH METHOD OF ADR IS MOST THE COST-EFFECTIVE AND SUITABLE TO THE SECTOR? AND HOW DOES THIS CHOICE VARY ACROSS INDUSTRIES AND DIFFERENT TYPES OF DISPUTE? We believe that amicable settlement through formal consultation, failing which, referral to the Arbitral Tribunal (preferably institutional) is the most suitable method for resolving disputes.

In depth knowledge about the local as well as foreign law, varying socio- economic conditions, evolving regulatory issues are the key challenges. HOW DIFFERENT IS THE APPROACH TOWARDS DISPUTE RESOLUTION WITHIN THE AVIATION INDUSTRY NOW COMPARED TO THE EARLY NOUGHTIES? There has been a shift from the litigious environment to a pro Alternate Dispute Resolution environment. Particularly in India, clients avoid costly and time consuming litigation and choose to resolve the disputes by means of ADR (institutional Arbitration).

Company: Seth Dua & Associates Name: Sunil Seth Email: sunil.seth@sethdua.com Web: www.sethdua.com Address: 601, 6th Floor, DLF South Court, Saket, New Delhi 110017 Telephone: +91(11) 41644400 Fax: +91(11) 41644500

October 2012 /

Juridica is a lawyer-owned financial services company operated in an investment banking tradition and focused exclusively on capital and finance for corporations, law firms, lawyers, and claim-holders worldwide. Juridica arranges capital and provides innovative claim risk transfer and mitigation strategies and financial products to lawyers, law firms and businesses through its management of Juridica Investments Limited, a London Stock Exchange/AIM-listed claims investment fund. Juridica also partners and co-invests with other leading financial institutions and insurers in London and New York. Juridica adds more than financial value to cases, firms and legal matters through claim finance and monetization: it adds economic value through its strategies. Proprietary systems and software, and unique case evaluation systems, make Juridica a leader in law market finance. Juridicaâ&#x20AC;&#x2122;s claims risk analysis and valuation systems allow it expertly to design financial arrangements that better align the interests of professionals and their clients in claim prosecution, management and monetization. Through over fifty yearsâ&#x20AC;&#x2122; combined experience in finance and law product innovations, Juridicaâ&#x20AC;&#x2122;s principals have developed an extensive, world-wide network of leading law, legal ethics, finance and consulting experts and scholars. Juridica calls on this network to assist in case and risk analysis, financial modeling and financial product design.

info@juridicacapital.com or +1 866 443 1080

www.juridica.co.uk

SECTOR SPOTLIGHT:

Business Valuation & Transaction Pricing in M&A

BUSINESS VALUATION AND TRANSACTION PRICING IN M&A l Completing a successful transaction requires a sharp focus on the relationship between risk and return. The risk of purchasing an over-priced business and failing to integrate effectively can prove rather costly. Valuation services are essential for acquirers and sellers alike, such experts can prove to be a critical part of the deal team. Jonathan Massing at Kingswood Corporate Finance gives Acquisition International some expert insight into these vital services. Transactions involving real businesses can no longer be driven by a financial model / spreadsheet approach. Vendors need to leave something on the table to make a transaction attractive. Fundamentally it is about establishing the willing buyer/willing seller position and recognising that transactions that are based on opportunistic ideas are unlikely to gain traction unless the vendor is in some distress. HAVE YOU BEEN INVOLVED IN ANY RECENT TRANSACTIONS THAT DEMONSTRATE YOUR EXPERTISE THAT YOU WOULD LIKE TO COMMENT ON?

-----------------------------------------------------------------------Jonathan Massing is the founder and managing partner of Kingswood Corporate Finance. He is a founding member of the Corporate Finance Faculty and holds the dual qualification of Chartered Accountant and MRICS. ------------------------------------------------------------------------

Kingswood Corporate Finance, set up in 1993, advises a range of clients exclusively focussed on private entrepreneurial businesses and management. HOW DO YOU STAND OUT AS A LEADING PLAYER IN VALUATION SERVICES? Kingswood provides independent commercial advice on the valuation of private businesses, primarily for commercial transactions, and the valuation of equity interests in SME businesses. WHO IS A TYPICAL CLIENT? Kingswood typically acts for private entrepreneurial businesses and management teams, either seeking to effect a change of ownership, or who have been previously backed by financial investors and seeking to subsequently restructure the ownership of their business. Kingswood also act for corporate buyers and sellers. HOW CAN YOU AND YOUR TEAM BE VITAL ASSETS TO BUYERS AND SELLERS IN ALL STAGES OF AN M&A TRANSACTION?

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Kingswood has substantial experience in making transactions attractive, the preparatory work and execution. HOW WOULD YOU DESCRIBE THE CURRENT ECONOMIC CLIMATE? WHAT IMPACT HAS THIS HAD ON THE DIFFICULTIES OF COMING TO AN AGREEABLE PURCHASE PRICE? The current economic climate has opened a significant gap between pricing expectations by vendors and the perception of value to purchasers. The difficult funding climate has also created an environment where transaction values have to be driven by affordability and ability to fund, as opposed to meeting the “wish” expectations of vendors.

A recent transaction that Kingswood Corporate Finance was involved in related to a client acquiring the UK operations from a German listed company. The operations were no longer core to activities but nevertheless the vendors had considerably higher expectations of the value of the business they were selling before the transaction had got under way. During due diligence the German owners of the business also found themselves on a steep learning curve finding out things about the entity that they had not fully understood. The transaction was completed at a substantially lower value and the other key drivers in the transaction such as transactional and reputational risk, which outweighed the need to maximise the cash value of the shares being sold. DO YOU HAVE ANY PREDICTIONS RELATING TO BUSINESS VALUATIONS AND TRANSACTION PRICING FOR THE NEXT 12 MONTHS? In our view business valuations and transaction pricing will continue to remain subdued for the next 2 to 3 years, partly driven by the non-availability of (cheap) debt finance but also due to the frequent low performance of vendor businesses where EBITDA performance has been subdued during the recession.

HOW CAN YOU ASSIST PROSPECTIVE ACQUIRERS AND/OR SELLERS IN COMING TO AN AGREEABLE FAIR PRICE FOR THE TARGET COMPANY? Greater emphasis is required to bridge the valuation gap between acquirers and sellers. The use of mechanisms such as earn out; deferred consideration; and contingent payments is not new, and neither is the concept of vendor loans to be refinanced at some point in the future. Residual equity and antiembarrassment clauses are important. HAVE YOU ALTERED YOUR APPROACH TO VALUATIONS AND TRANSACTION PRICING IN LIGHT OF THE CURRENT ECONOMIC CLIMATE?

Company: Kingswood Corporate Finance Name: Jonathan Massing (Managing Partner) Email: jonathan.massing@kingswood.org.uk Web: www.kingswood.org.uk Address: 3 Coldbath Square, London, EC1R 5HL Telephone: 020 7841 0000

October 2012 /

SECTOR SPOTLIGHT:

Growing Your Business Through Joint Ventures

GROWING YOUR BUSINESS THROUGH JOINT VENTURES l Joint ventures (JV) are becoming an increasingly common way for companies to form strategic alliances; joining forces with a company with the right distribution channels, technologies and finance can help to grow the bottom line, develop new products and move into new markets. Suitable for businesses of all sizes, multinationals right down to SMEs have found JV to be one of the most popular methods of expanding business in recent years. But whilst joining forces with another firm allows you to share resources, expertise and reward, you also share the risks; entering into a JV is a major decision. Philip Coulson, a Partner at Coulson Harney, gives Acquisition International some expert insight into how to make a joint venture a success.

HOW CAN A COMPANY ASSESS IF IT IS READY TO COMMIT TO A JOINT VENTURE? Once a company has identified a suitable partner and agreed upon the general commercial terms of the venture, the company may be ready to commit to the venture. At this point the parties must agree on the most suitable structure and arrange for preparation of the key legal documentation. The key question to consider at the outset is to ask whether the potential joint venture partner has skills, know-how or contacts that are important and are not readily available if the company were to operate on its own, outside a joint venture. WHAT ARE THE KEY QUALITIES TO LOOK FOR IN A PARTNER? This will depend to some extent on the joint venture in questions. For example, is the partner committing cash, land, expertise, know-how, contacts or other assets to the venture? One key quality for all parties involved in joint ventures is trust. This is particularly important in the situation where one party is based overseas and the prospective partner is locally based. It is crucial

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to ensure the local partner is trustworthy and has the expertise/assets/connections that are being promoted.

DO YOU ANTICIPATE A CONTINUING INCREASE IN JOINT VENTURES? DO YOU HAVE ANY OTHER PREDICTIONS?

HOW CAN THE PARTIES INVOLVED ENSURE THAT IT IS A SUCCESS?

Yes, particularly in East Africa and Africa generally. Given the global economic crisis a number of European and US companies are looking for opportunities in Africa in which they can invest as a partner in fresh projects or existing projects.

There are a number of factors that will assist in the success of a project including: •

Ensuring a well-structured joint venture vehicle is used – applying the right structure for the joint venture in question;

•

Ensuring that the documentation (in any structure) reflects the parties’ intentions and adequately outlines their rights and obligations;

•

Ensuring that the documentation includes provisions on dispute resolution processes;

•

Ensuring that the documentation outlines the procedure for termination of the joint venture and winding up/deregistration of the joint venture vehicle;

•

Ensure that tax advice is received at the outset and that a corporate structure is established that works both commercially and from a taxation perspective.

The recent enactment into law in Kenya of the Limited Liability Partnership Act for example is likely to see the use of limited liability partnerships as workable joint venture vehicles.

Company: Coulson Harney Name: Philip Coulson Email: p.coulson@coulsonharney.com Web: www.coulsonharney.com Address: P.O. Box 10643, Nairobi, Kenya Telephone: +254 20 289 9000

October 2012 /

SECTOR SPOTLIGHT: Consumer Goods

CONSUMER GOODS l Many consumer players are experiencing diminishing growth in their home markets and are employing cost saving initiatives as well as trying to come up with new products locally to ensure stable earnings. Some firms are looking to venture into new potentially high-growth markets to seek out growth in the current economic climate. The consumer sector has been expanding rapidly in a number of emerging markets due to the increase in monthly household income, growing middle class and steadily rising population. The consumer sector is known as a safe haven for investors in uncertain times and is in a prime position to be a hot bed for merger and acquisition (M&A) Activity. Nusmir Huskić, a founder of Huskic Law Office - Advokatski ured Huskić, gives Acquisition International his expert opinion on the sector.

HOW WOULD YOU DESCRIBE THE CONSUMER MARKET IN YOUR JURISDICTION? HOW IS THE AREA FARING IN COMPARISON TO OTHER LOCATIONS? It is a market that is dependent on other markets in area (Croatia, Serbia, Slovenia etc) even dependent on global market. Basically the offers of goods on consumer market are not so far from other locations, perhaps offers of electronics products are more far from other markets. However, food and beverages products are definitely in line with neighbour markets (Serbia, Croatia...). HAS THERE BEEN A SIGNIFICANT CHANGE IN THE SALES OF CONSUMER GOODS SINCE THE FINANCIAL CRISIS OF 2008? Definitely, because consumer habits have changed in part, for example, customers are increasingly buying non-branded products or copies of branded products produced and imported for a low price. Another example, shows that women buying non-branded women’s bags and clothes for a low price but they buy

64 / October 2012

more they one product for the same amount of money for which they would buy one branded product. IN YOUR OPINION, HOW SERIOUS IS THE RISK OF A POTENTIAL NEW FINANCIAL CRISIS DUE TO THE DOWNTURN IN THE EURO ZONE? WHAT IMPACT WOULD SUCH A CRISIS HAVE ON THE CONSUMER MARKET IN YOUR JURISDICTION? The risk of a potential new financial crisis can have a large impact on consumer market in Bosnia and Herzegovina due to fact that the average monthly salary is around EUR 425 and does not change much compared to market movements and crisis. In such cases, the consumer market, except food and beverages, would experience a large drop in the movement of goods; the consumer would buy only necessary products. ARE THERE ANY EMERGING MARKETS THAT YOU THINK ARE PARTICULARLY VULNERABLE TO A DOWNTURN IN 2012? WHAT EFFECT WOULD A DOWNTURN HAVE ON THESE MARKETS?

I think that mobile devices market can be potential vulnerable to a downturn in 2012. Although, there is a low amount of monthly salary a lot of consumer have habit to change their mobile device almost every year. Due to fact that a Smartphone are most popular mobile devices and everyone wants to connect to their Facebook using mobile devices any downturn with a large scale would lead to a major crisis on these markets.

Company: Huskic Law Office – Advokatski ured Huskić Name: Nusmir Huskić Email: info@huskiclaw.com Web: www.huskiclaw.com Address: Dolina 2, 71 000 Sarajevo, Bosnia and Herzegovina Telephone: +387 33 666 624

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

M&A in the Technology Industry

M&A IN THE TECHNOLOGY INDUSTRY

l M&A activity in the technology sector has declined in 2012 and growth remains flat, however this decline is half that seen in other M&A industries. The long term outlook appears to be relatively safe due to on-going innovation in the industry. American buyers captured 75% of global volume and 87% of disclosed value, in comparison to the previous quarter this is a decrease in volume of 15% and an increase in value of 8%. Sales of the new iPhone could add up to 0.5% to US GDP in the fourth quarter, a much needed boost to the economy. Acquisition International speaks to Titus Walek, a Partner with Heymann & Partner Rechtsanwälte., for his take on the current state of the technology sector. technological advances in a globalized world. Reducing or postponing M&A activities in response to an economic downturn is therefore not always a viable option for players in the technology sector. WHICH AREAS ARE CURRENTLY DRIVING THE INDUSTRY, AND WHERE DO YOU THINK THE GREATEST OPPORTUNITIES LIE? Transactions involving internet (including internet services) and software companies are playing an important role in the German tech M&A market. We are expecting that this trend will persist or even strengthen in the near and mid-term future. Addition potential for growth in the technology sector could lie in the implementation of the “energy transition” currently pursued by the German government. DO YOU HAVE ANY PREDICTIONS FOR THE M&A IN THE TECHNOLOGY SECTOR IN 2012/13?

PLEASE PROVIDE A BRIEF HISTORY OF YOUR FIRM AND OUTLINE YOUR MAIN PRACTICE AREAS. Heymann & Partner was founded in April 2005, with the goal to set up a small and focused law firm. Our main areas of practice are M&A (in particular in the technology sector), Private Equity/Venture Capital, Corporate Restructuring, IT/IP and Outsourcing. HOW WOULD YOU DESCRIBE THE TECHNOLOGY INDUSTRY IN YOUR COUNTRY? HOW IS THE COUNTRY FARING IN COMPARISON TO OTHER LOCATIONS? The technology industry remains the backbone of the German economy. Clients from abroad confirm that German players in the technology industry (including small and medium sized companies)

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are still well-respected for their ability to develop innovative products, services and technologies.

On the supposition that the macroeconomic conditions will not fundamentally change (which seems almost impossible to predict) we would expect to see a stable, if not slightly expanding flow of M&A transactions in the technology sector.

WHAT FACTORS HAVE LED TO THE FALL IN LEVELS OF M&A TRANSACTIONS RELATING TO THE TECHNOLOGY SECTOR? HOW DOES THIS COMPARE WITH THE OVERALL M&A DECLINE ACROSS ALL SECTORS? The European debt crisis and the resulting loss of confidence for European economies curb most types of M&A activities, including transactions in the technology sector. However, compared to transactions in other industries, the tech M&A market seems to be less vulnerable to the uncertainties currently overshadowing the general economic landscape. One plausible explanation seems to be that transactions in the technology sector are in many cases driven by the imperative to keep pace with the ever evolving

Company: Heymann & Partner Rechtsanwälte Name: Titus Walek Email: t.walek@heylaw.de Web: www.heylaw.de Address: Taunusanlage 1, 60329 Frankfurt, Germany Telephone: +49 (69) 768063-60

October 2012 /

SECTOR SPOTLIGHT: Q3 Report

Q3 — Report l Acquisition International speaks to experts around the world about to see how their jurisdictions have fared in the third quarter of 2012.

— Attracting Foreign Talent – The United Kingdom’s Split Personality -----------------------------------------------------------------------Hugo Fletcher is a Barrister at Gherson. ------------------------------------------------------------------------

Britain has traditionally embraced immigrants, but this approach has become strained when the numbers have become exceptionally high or the economy has faltered. As early as the seventeenth century, restrictions were placed on numbers of foreign seamen that could crew British ships; a response to the use of large numbers of Indian sailors on British East Indiamen. The seventeenth and eighteenth centuries saw a large influx of French Huguenots who established a flourishing silk weaving trade in London. Mostly they were welcomed, but inevitably, as numbers grew, there were complaints. By 1810 London had its first Indian restaurant; in 1815 some 10% of Nelson’s sailors at the Battle of Trafalgar were foreign, from 25 nations. Throughout

the nineteenth century the UK had an open attitude to immigrants; significant restrictions were only imposed by the 1905 Aliens Act, following concern at the influx of Russian Jews fleeing persecution in Russia. Since then, the country has tried to balance recognition of the desirability of skilled and humanitarian immigration with the concern that the fabric of society does not become damaged. Most Western democracies wrestle with this problem, trying to tighten immigration rules whilst maintaining talented migration. But immigration rules can be a blunt instrument and negotiating them becomes ever trickier. There have been seven significant statements of changes to the UK Immigration Rules this year, and eight in 2011. Gherson advises on all immigration matters and navigating the associated pitfalls, dealing with all points–based applications; from Tier 1 entrepreneurs and investors to applications for sponsor licences

under Tier 2, as well as all other routes. This includes rectifying matters for those who come to us after a refusal; not because they don’t meet the requirements, but because they have not proved it or not fully understood what was expected of them.

Company: Gherson Name: Hugo Fletcher Email: hfletcher@gherson.com Web: www.gherson.com Address: 1 Great Cumberland Place, London, W1H 7AL Telephone: +44 (0) 207 724 4488

Company: Bentsi-Enchill Letsa & Ankomah Name: Seth K. Asante Email: seth.asante@belonline.org Web: www.belonline.org Address: First Floor, West Wing, Teachers’ Hall Annex, 4 Barnes Close, Education Loop, P. O. Box GP 1632, Accra, Ghana Telephone: +233 302 220516

Company: Egypt Japan Steel Works (EJSW) Name: Dr. Eng. Mokhtar Sultan Eng. Mahmoud Sultan, CEO. Email: mokhtar.sultan@ejswco.net mahmoud.sultan@ejswco.net Web: www.ejswco.net Address: 2 Saudia bldgs., Nozha st., Golf area, Heliopolis, Cairo, 11341, Egypt Telephone: (+202) 22 909 269

66 / October 2012

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Q3 Report

-----------------------------------------------------------------------Ilko Stoyanov is a partner at Advokatsko druzhestvo Andreev, Stoyanov & Tsekova which is the exclusive cooperation partner of Schönherr Rechtsanwälte GmbH in Bulgaria. ------------------------------------------------------------------------

WHAT IS THE MOST RECENT GROWTH FORECAST PUBLISHED BY OFFICIAL SOURCES IN YOUR JURISDICTION? HAS THIS LAST QUARTER BEEN CONSISTENT WITH PREVIOUS FORECASTS? The most recent growth forecast for Bulgaria reviewed by us is published by the Ministry of Finance (“MF”) in the Recent Economic Developments in Bulgaria actual as of September 2012. Also the National Reform Program for the period 2011 – 2015 of the MF last updated in April 2012 gives a forecast- outlook for the economic development in Bulgaria. Data therein is based on the preliminary statistics disclosed in September by the National Statistic Institute. According to the MF the Bulgarian’s potential growth in 2012 is projected at 1.2%, thus it is expected to grow at 2.4% on average during the period 2013−2015. Bulgarian Gross Domestic Product (“GDP”) growth came in at 0.5% yoy and 0.3% qoq in Q2 2012 after being flat in Q1.

Industrial turnover on the domestic market gain further speed in June, supported by electricity, gas, steam and air conditioning supply. In July, retail sales, in particular retail sales of medical and orthopedic goods and retail sales of food, beverages and tobacco increased further in comparison with the same month of the previous year. The outset of the active tourist season resulted in a two-fold increase in tourism revenues. Real estate (both commercial and residential) is still one of the most attractive investment opportunities in Bulgaria, an increase was observed in sales implemented through the concept of “Retail sale via mail order houses or via Internet”. Despite of the good economic indicators, we are not aware of any major deals carried out in these sectors during the Q3 period. HAS THERE BEEN ANY SIGNIFICANT CHANGE IN REGULATION WHICH MAY HAVE AFFECTED GROWTH LEVELS IN YOUR JURISDICTION THROUGHOUT THIS Q3 PERIOD?

Data about the economic growth the Q3 is still not available. Generally, the economic indicators meet the previous forecasts and speak for a further strengthening of macroeconomic state of Bulgaria.

In July 2012 Bulgaria’s parliament has approved amendments to the Energy Act which enable the State Energy and Water Regulatory Commission to make quarterly revisions to renewable power feed-in tariffs (“FiT”) when it discovers over 10% change in any of the price forming elements, instead of waiting a year for the next price revision period. Further, the energy regulator cut by over 50% the FiTs for solar photovoltaics (PV) and by some 22% those for wind energy. The decision has been strongly criticized by sector organizations and companies.

WHICH SECTORS HAVE SHOWN THE MOST PROMISE/EXPERIENCED THE MOST INVESTMENT AND GROWTH OVER THIS Q3 PERIOD? HAVE ANY MAJOR DEALS BEEN ANNOUNCED WITHIN THIS SECTOR?

WHAT MAJOR FISCAL POLICIES AND ECONOMIC REFORMS HAVE BEEN INTRODUCED AND WHAT ARE THEIR INTENDED OUTCOMES OVER THE COURSE OF 2012?

The new legislation on public procurement adopted in 2012 is an important step towards a better system for the monitoring, prevention and sanctioning of irregularities. This aims to limit the negative phenomena that public procurement is an essential tool for maintaining of political corruption. To this contributes also the fact that most of the payments granted by financial funds of the EU are allocated through public procurement. The Bulgarian government has made considerable progress on some of the pension reform measures including those on the pensionable age for both men and women. The recent pension reform will yield substantial savings worth 4 percent of GDP over the medium-term. Some changes in the VAT legislation have been adopted in 2012. They envisage limitation to the VAT exemption of supplies of construction rights, changes in the scope of the reduced VAT rate of 9 percent (the standard VAT rate in Bulgaria is 20 percent), administrative sanctions for non-compliant storage of fiscal receipts.

Company: Schoenherr Bulgaria (in cooperation with Advokatsko druzhestvo Andreev, Stoyanov & Tsekova)

Name: Ilko Stoyanov Email: i.stoyanov@schoenherr.eu Web: www.schoenherr.eu Address: Bulgaria, 1000 – Sofia, Alabin 56 Str., 2nd floor Telephone: + 359 2 933 10 72

Alexander Nevsky Cathedral / Bulgaria

Company: Ndikum Law Offices Name: Philip Forsang Ndikum Email: philip@ndikumlawoffices.com Web: www.ndikumlawoffices.com Telephone: +237 3347 1537

ACQUISITION INTERNATIONAL

October 2012 /

SECTOR SPOTLIGHT: Q3 Report

— Gaining a Decisive Edge in Arbitration & Mediation -----------------------------------------------------------------------Les J. Weinstein, Esq. is Director of ADR Strategic Consulting at DecisionQuest. ------------------------------------------------------------------------

For more than 30 years, DecisionQuest has been at the legal research and consulting frontier, addressing the special challenges that lawyers and their business clients face as they increasingly rely on Alternative Dispute Resolution (ADR) – be it arbitration and/or mediation. DecisionQuest’s U.S.-based principals have been retained as consultants in more than 18,000 highrisk disputes internationally, including hundreds of arbitration and mediation matters. We know that an arbitration – especially across borders – is not the equivalent of a bench or jury trial and that mediation is not just another court sponsored settlement conference. Our social scientist professionals identify the strengths and vulnerabilities of your case. We help you and your lawyers make strategic decisions to refine your arbitrator qualifications, most effectively present your case story, minimize risk and maximize opportunities. -----------------------------------------------------------------------De Cuyper Brothers origins lie in the agency created on July 1st, 1958 at Avenue Louise, 375 by Jean-Pierre De Cuyper. ------------------------------------------------------------------------

The agency experienced tremendous growth in Belgium, mainly based on Family Law. Jean-Pierre De Cuyper, helped by his wife AnneMarie, aimed to lay the foundations of the profession and to improve the training of professionals. Jean-Pierre De Cuyper was joined by his younger brother Willy De Cuyper in 1967. The latter received an excellent theoretical and practical training from his elder. In 1971 Willy De Cuyper tool over the wellestablished agency GRAY in which he supervised and took charge. During the same year, Jean-Pierre De Cuyper received his first appointment to the position of judicial expert within the courts and prosecutor’s offices in the French speaking part of Belgium.

DecisionQuest has developed specific ADR research methodologies, often involving “mock arbitrations” in which we assemble panels of ADR neutrals from our highly qualified pool of surrogate neutrals. If you have already chosen your arbitrator or panel, DecisionQuest matches the surrogate arbitrators as closely as possible to your designated neutral(s) in the arbitration simulation. We work with your lawyers to assess and react to your case, and to your adversary’s case, in a controlled blind research setting. Our social scientists, communication specialists, trial experts, psychologists, and graphic consultants consider how single neutrals as well as full panels process and filter information based on their attitudes, values, and experiences. DecisionQuest will also help develop the most effective means of visually presenting your evidence and case theory. Visual tools that bring focus and clarity to counsel’s case themes have the power to overcome the subtle, inherent predispositions that might otherwise hurt you.

In addition to his extensive knowledge in criminal law, Jean-Pierre De Cuyper specialised in domestic and international State Security for countries in their territory. In 1973 the two brothers merged their agencies in Brussels. In 1983, Willy De Cuyper received his first appointment to the position of judicial expert in Belgium in the field of private collections and ancient toys. In 1991, Minister Louis Tobbak signed a new and restricting law which marked a turning point in the profession. Out of more than 900 PIs, only 61 were allowed to practice their activities. The two brothers stood among the first 18 as legal trainee supervisors for the training of PI candidates recognized by the Home Secretary. Jean-Pierre De Cuyper was honoured with the Golden Medal of the Order of Leopold II. Later, he received an honorary doctorate at the York University (USA) for his distinguished services to the

Our professionals understand the often subtle nuances of presenting to arbitrators, mediators, and panels of decision makers. Because of the wealth of our experience working closely with both Claimants and Respondents, DecisionQuest will provide you with the keenest insight into how opposing counsel is likely to approach the case. It’s your extra edge and can often be a dispute outcome altering one.

Company: DecisionQuest Name: Les J. Weinstein, Esq. Web: www.decisionquest.com Email: lesweinstein@decisionquest.com Address: 21535 Hawthorne Blvd., Suite 310, Torrance, California 90503 Telephone: + 1 310 618 9600

global criminology and for his publications regarding the struggle against fraud. The brothers De Cuyper finally reached their target: to manage an all-round agency mostly based on antifraud activities in all fields and the struggle against them and their operators.

Company: De Cuyper Brothers Name: Jean-Pierre & Willy De Cuyper Email: decuyper@skynet.be Web: www.decuyper.net Address: 502-504 avenue Louise à 1050 Bruxelles Telephone: +32 2 649 44 88 Fax: +32 2 686 01 41

Company: Rajab B Bakhnug Name: Rajab B Bakhnug Email: rbakhnug@yahoo.com Address: Omar Mukhtar Street, Hadad Building, Tripoli, Libya Telephone: +218 (021) 4440886/3333929

ACQUISITION INTERNATIONAL

October 2012 /

SECTOR SPOTLIGHT: Q3 Report

Over the past two years we have seen Malta becoming increasingly more popular for both the set-up of investment funds as well as for corporate vehicles. We have, in fact managed to grow our business from practically a two person office to a professional team of over 20 people in less than two years.

Valletta / Malta

This remarkable growth was realised through our robust client service offering at Alter Domus together with the availability of our professional staff here on the island. The government and local authorities are also supporting the industry in order to attract new players to the industry. Malta is no longer only being presented as a sunny tourist destination but rather as a serious player with a robust legal framework and with the appropriate infrastructure in place. This environment has also contributed to Alter Domusâ&#x20AC;&#x2122;s success locally. It is very encouraging for us to continue investing in this jurisdiction as we are confident that Malta will continue to attract investors.

-----------------------------------------------------------------------Chris Casapinta is the Managing Director of Alter Domus Malta. ------------------------------------------------------------------------

Alter Domus is an international player with an integrated solutions approach covering full corporate management services and outsourcing as well as a robust fund administration service offering. With more than 550 professionals across 15 offices and desks worldwide, we can therefore support our clients and business partners in many jurisdictions including

70 / October 2012

Luxembourg, Netherlands, Belgium, Channel Islands and UK, Cyprus, Singapore, Hong Kong and Beijing. As Managing Director my role is to manage the office in Malta and liaise with our colleagues within the group. I am also actively involved in helping existing and prospective clients to set up operations in Malta. This includes working with a number of non-Maltese advisors including international law firms, family offices and private banks located in well-known asset management jurisdictions.

Company: Alter Domus (Services) Malta Limited Name: Chris Casapinta Email: chris.casapinta@alterdomus.com Web: www.alterdomus.com Address: Domestica Building, 4th Floor, Msida Valley Road, Msida, MSD 9020 â&#x20AC;&#x201C; Malta Telephone: +356 21 48 08 28

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Meet The Experts

MEET THE EXPERTS

— Eastern European Expert Demand in the Eurozone has fallen sharply during the recent financial crisis and growth for Eastern Europe has been predicted to slow to 3.1% in 2012 from 4.6% in 2011. Following the financial crisis of 2008 the Baltic region experienced deep economic contractions, an 18% drop in Latvia, 15% in Lithuania and 14% in Estonia, but they all managed to bounce back and see strong export-driven growth. However the strength of European exports have fallen as a

result of the turmoil in the Eurozone and many of the export driven countries in emerging Europe will suffer, such as the Czech republic which has one third of its exports going to Germany and Slovakia that has 87% of its exports destined for European markets.

Company: Gakovic d.o.o. Name: Darko Gakovic Email: darko.gakovic@gakovicdoo.com Web: www.gakovicdoo.com Address: Gakovic d.o.o., ul. Avijaticarski trg 8, Zemun- Beograd, Srbija Telephone: +381 (0)11 316 86 83

— The Importance of Protecting Intellectual Property Intellectual property (IP) rights are valuable assets for any business, possibly among the most important it possesses. The IP rights of a business can set them apart from their competitors, form an essential part of their marketing or branding and can often be used to secure loans or sold or licensed providing an important revenue stream.

It can be surprising to some how many aspects of the business can be protected, from the company name or logo to designs, inventions and works of creative or intellectual effort. It is of the upmost importance that the senior management of a business understand the importance of their intellectual property and seek the right advice in order to ensure that it is protected.

Company: Wildbore & Gibbons Name: John Kennedy Email: john.kennedy@wildbore.eu Web: www.wildbore.eu Address: Wildbore House, 361 Liverpool Road, London N1 1NL Telephone: +44 (0)20 7607 7312

— Forming Companies and Doing Business in Bangladesh Over the past 5 years, Bangladesh has been growing at an annual rate of approximately 6%, mainly due to its progressing industrial and services sectors. This growth has made the country an increasingly attractive option for entrepreneurs looking to take advantage of opportunities in this challenging economic climate. Bangladesh entices these investors with some very attractive ‘pull factors’; rapid growth and the introduction of freer trade and investment policies, 100% foreign ownership, no minimum capital requirement, tax exemptions including interest on loans, capital gains tax and costs incurred from remuneration paid for

ACQUISITION INTERNATIONAL

foreign technicians in certain sectors and finally, there is no shortage of major international banks offering competitive services to business customers. It’s one thing to read about the advantages of forming a business in trading in Bangladesh; however Bangladesh company formation can be complex and time-consuming so it’s quite essential to enlist the support of an expert. Search online for ‘company incorporation in Bangladesh’ and a wealth of options are returned, so how to determine the right one? It’s incredibly important to select the right firm as

company incorporation requires knowledge and experience to effectively build a corporate structure and achieve business objectives. Company: Abul Khair Group Name: Muhammad Mahbubur Rahman Email: mrahman@abulkhairgroup.com Web: www.abulkhairgroup.com Address: D. T. Road Pahartali, Chittagong, Bangladesh Telephone: +88-031-714541-44

October 2012 /

DEAL DIARY:

M&A from around the world

DEAL DIARY — Deal index 73

AHLSTROM

NUJIRA

ANT’S EYE VIEW

PEMCO

ASPECTS HOLIDAYS

ROTAIR

AWLI GROUP LTD

RTT HEALTH SCIENCES

BANCABC

SEAGULL

BRUNI GLASS

SUNVAL

DECONTA

THERAVECTYS

DIAM

TLM-TVP

DUROPACK

UNIBOARD CANADA

ESMALGLASS-ITACA

UNIVERSAL COAL

ESPRESSO HOUSE

ZODIAC RECREATIONAL

FIL ROUGE

GRAEFF

HUTCHISON GLOBAL SERVICES

IMAGE DESIGN TECHNOLOGY

ING DIRECT

JEVCO

MEYER BERGMAN

72 / October 2012

20-20

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world Ant’s Eye View

PwC US today announced that it has acquired substantially all the assets of Ant’s Eye View (AEV), a premier boutique social media strategy development and consulting firm. With the closing of the deal, Ant’s Eye View consultants will join PwC’s existing social and digital professionals to help companies create and execute effective social media and digital marketing strategies. Former AEV founders, CEO Sean O’Driscoll and Chief Innovation Officer Jake McKee, have joined PwC as principals.

‘‘

We are very pleased to welcome these seasoned social media professionals to PwC’s Advisory Practice,” said Dana Mcilwain, PwC Vice Chairman and U.S. Advisory Leader. “The addition of this talented team to our Management Consulting roster strengthens our ability to help our clients use social media to engage with their customers and employees, creating a positive and powerful brand experience.

‘‘ ‘‘

‘‘

Rainer Häggblom, Chairman of JPD Capital Ltd. Oy commented... We worked hard for this landmark deal in specialty papers. These are technically demanding growth businesses also requiring a lot of expertise from financial advisors. Rainer Häggblom The team at SEB Enskilda was led by Per Thurezon, client responsible for Munkjö and Director at SEB Enskilda Corporate Finance. Olov Jubel worked as project leader for the transaction. SEB Enskilda were representing Munkjö and the main owner of Munkjö, EQT. We have a long working relationship with both companies.

The transaction was relatively complex involving both twodemerger processes, a cross-country merger and a subsequent listing. All parties had a common goal and worked together to solve the upcoming difficulties and issues in a pragmatic way.

The acquisition reflects PwC’s commitment to building depth in areas that meet the needs of its clients, addressing their most complex business challenges, from strategy to execution. We’re excited to be part of PwC and look forward to teaming with our new colleagues,” said Sean O’Driscoll, former CEO of Ant’s Eye View and now a PwC principal. “Brand management begins with activating and embedding the customer voice into every aspect of the business, and the breadth of PwC’s consulting capabilities coupled with their deep industry skills will enable us to deliver greater value to companies ready to take the transformative leap to become a true social enterprise.

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The planned transaction will be executed through two partial demergers. In the first phase, Ahlstrom and EQT, the principal owner of Munksjö AB, will establish a new company to be named Munksjö Corporation (in Finnish Munksjö Oyj) to acquire the operations of Munksjö AB in exchange for new shares in Munksjö Corporation. The European operations of Ahlstrom’s Label and Processing business area are then separated through a partial demerger and transferred into Munksjö Corporation in exchange for shares in Munksjö Corporation to be distributed to Ahlstrom’s shareholders.

l Acquisition strengthens PwC’s social media strategy and digital marketing capabilities to transform companies into ‘social enterprises’ that engage customers and employees

‘‘

l Ahlstrom Corporation has signed an agreement with EQT, the principal owner of Munksjö AB, to combine its Label and Processing business area with Munksjö AB to form a global leader in specialty papers through two partial demergers: one consisting of the Label and Processing operations in Europe (LP Europe) and one in Brazil (Coated Specialties). The new company will be called Munksjö Corporation (in Finnish Munksjö Oyj) and its shares will be listed on NASDAQ OMX Helsinki. The transaction enables Ahlstrom to focus exclusively on its value-added business areas: Building and Energy, Filtration and Food and Medical. Meanwhile, the Label and Processing business area can be further developed together with Munksjö.

ASPECTS HOLIDAYS

The acquisition was completed September 21, 2012. Financial terms of the transaction will not be disclosed.

Tom Newell, Managing Director with Greene Holcomb & Fisher LLC. Initiated the transaction and represented Ant’s Eye View in the process. To learn more, visit http://pwc.com/us/en/advisory/ customer-impact/ants-eye-view-join-pwc.jhtml.

Ahlstrom combine with Munksjö Group to create a world leader in specialty papers

PwC Completes Asset Acquisition of Ant’s Eye View

Financial Adviser to EQT/Munksjö

Financial Adviser to the Vendor

l Specialist self-catering holiday lettings company Classic Cottages has acquired Aspects Holidays for an undisclosed sum. Aspects Holidays, based in Hayle, was established in 1989 by Jennie and David Smith and markets 296 holiday cottages, mostly in St Ives. All of its properties are in Cornwall. The deal will see Aspects Holidays continue to trade under its own brand and Jennie Smith will remain involved in the business for at least a year. All 18 Aspects Holidays staff are being retained by Classic Cottages. Chris Wills Helston-based Classic Cottages was established 33 years ago. The family-owned business markets 741 high quality self catering holiday homes in Devon, Cornwall, Dorset and Somerset. Classic Cottages chairman Simon Tregoning said: “Jennie has built up a successful and well-established business with a strong brand and specialist knowledge of St Ives, all of which was attractive to us. Working with Aspects will give us first-hand experience of running multiple properties in the same location, and that’s something new for us given our wide geographic spread.” The team at Francis Clark were representing Jennie and Dave Smith, the partners in Aspects Holidays. The team was led by Scott Bentley, a partner in the Truro office and supported by manager Mike Woodford and Richard Wadman a director in the corporate finance team. Scott and Mike have advised Jenny and Dave for many years and have maintained a close working relationship with them.

‘‘

Commenting Scott Bentley said

The deal was one of those that from a strategic and cultural point of view “just made sense” for both parties and the fact that Jenny had known Simon Tregonning MD of Classic Cottages for many years via trade associations meant that Classic was not a cold and uninformed purchaser at the start of the process and also that there was an element of trust and mutual respect between both parties that does not usually exist from the outset of a transaction. Classic Cottages acquires Aspects Holidays

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AHLSTROM

Advisor’s for Aspects Holidays

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Advisor’s for Classic Cottages Legal Advisers to the Debt Providers

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October 2012 /

DEAL DIARY:

M&A from around the world AWLI GROUP LTD l Leading expedited freight transport provider expands its service reach by acquiring London Heathrow based specialist air cargo forwarder. The acquisition of the Heathrow forwarding arm of AWLI Group Inc ., is a logical strategic move by Priority Freight in order to pursue its mission of becoming the principal provider of time critical and expedited freight services to multiple industry sectors and across diverse geographies. Completion took place on the 1 August and staff and operations are now ensconced within the Priority Freight group. AWLI Group has undergone a name change and is now Priority Freight LHR. Commenting on the investment, Andrew Austin, Priority Freight’s CEO said, “Critical to the success of our business is a hands-on approach, whereby our people are in total control of each shipment, all hours of the day and every step of the way. We will integrate the known expertise of AWLI to help maintain this control at a critical hub, Heathrow and within the crucial function of air cargo forwarding.” The corporate team at leading regional law firm Furley Page Solicitors led by Susan Jennings, Partner and Head of Corporate, acted for Priority Freight Worldwide Limited in its acquisition of AWLI Group Limited. There were a number of challenges faced during the transaction in terms of both logistics and understanding, as the majority shareholders were based in the US and had no experience of selling an English company. Aspects also came to light during the due diligence process which could have scuppered the deal and certainly delayed completion, but these were overcome by us working with our client to find a practical solution they could live with. Priority Freight has worked with Furley Page LLP for a number of years, but this transaction is the first time it has worked with the corporate team. Andrew Austin has said that he liked our candid, clear and commercially sensible approach and will happily use our services again. The corporate team is recommended by independent legal directories, Legal 500 and Chambers and Partners and Susan Jennings is a leading individual in her field.

PRIORITY FREIGHT ACQUIRES AWLI GROUP LIMITED

BANCABC

BRUNI GLASS

l ADC African Development Corporation GmbH & Co. KGaA (‘ADC’), ISIN DE000A1E8NW9, a fast growing pan-African banking group focused on the frontier markets of sub-Saharan Africa, is pleased to announce that it has now become the majority shareholder in ABC Holdings Limited (‘BancABC’) with a shareholding of 50.4% as a result of the underwriting of BancABC’s recently finished rights offer. ADC has subscribed to 82 million new shares at USD 0.60 per share, therefore investing an additional USD 49 million (EUR 39 million).

l AXA Private Equity, the leading European diversified private equity firm, announces today that it has agreed to acquire a majority 70% stake in Bruni Glass, a European leader in the field of special glass containers for spirits, food, pharmaceutical products and related accessories. Alongside AXA Private Equity, the founding members and the management of Bruni Glass took part in the deal with a total stake of 30%.

As a result of the significant change in ADC’s shareholding in BancABC, ADC will consolidate BancABC in its financial statements latest at year-end. Consequently, ADC’s current balance sheet will significantly change and be transformed into the balance sheet of an operational banking group. BancABC is a regional banking group with 50 branches and 1,000 employees in five Southern African Development Community (SADC) countries (Botswana, Zimbabwe, Zambia, Tanzania and Mozambique). With this purchase and the recent acquisition of a strategic stake in Union Bank Nigeria (‘UBN’), as well as together with the other existing ADC operations in Equatorial Guinea (Banco Nacional de Guinea Ecuatorial), Kenya (Resolution Health), Rwanda (RSwitch) and South Africa (iVeri), ADC has reached significant milestones towards its defined goal of becoming one of Africa’s leading panAfrican banking groups. The management is confident that this will be rewarded by the shareholders and therefore is suspending the share buyback program which was initiated on 20 February 2012, for the time being with immediate effect. The company will notify about the resumption of the share buyback accordingly. Under the share buyback program to date 311,988 own shares were purchased which represents a share of 3.62% of the share capital. A total of EUR 2,733,275.32 was invested in own shares at an average purchase price of EUR 8.80. BancABC is the banking brand name of ABC Holdings Limited, a company registered in Botswana, which has a primary listing on the Botswana Stock Exchange and a secondary listing on the Zimbabwe Stock Exchange. BancABC is a regional bank with operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe and has a group services office located in Johannesburg, South Africa.

The Italian top Law Firm Gianni, Origoni, Grippo, Cappelli & Partners assisted AXA Private Equity in the acquisition of a majority stake in the Bruni Glass Group. The team was formed by Gianluca Ghersini, Partner and co-head of the Firm’s Private Equity Department, together with Valentina Dragoni, Managing Associate, and Gabriele Ramponi, Senior Associate. Bruni Glass is a successful glass manufacturer making glass containers for spirits, food, pharmaceutical products and related accessories since 1974. In particular, the Italian glassmaker sculpts the skull-shaped bottles for Crystal Head Vodka, the vodka brand headed up by Blues Brothers star Dan Aykroyd. Gianluca Ghersini

Bruni Glass already experienced a first private equity round in 2008 when a majority stake was acquired by Cape, the Italian private equity arm of French banking group Natixis which was then put under special administration by the Bank of Italy in April 2011. Gianluca and his team had to show top level technical skills and experience, both under a drafting and negotiation point of view, in order to gain the sellers’ full confidence and trust over the contractual structure of the transaction. The sophisticated and opened attitude of the sellers and of their counsels helped in reaching the goal. Gianluca and his team assisted AXA Private Equity in all of its last three deals in Italy: further to the acquisition of Bruni Glass, the very recent acquisition of a majority stake in Lima Corporate and of a 49% stake in KOS Group last year. Gianni Origoni Grippo Cappelli Partners gghersini@gop.it http://www.gop.it/

African Development Corporation acquisition of majority share in BancABC

AXA Private Equity acquires a 70% stake in Bruni Glass

Sponsoring Brokers

Legal for AXA Private Equity

Legal Adviser to the Purchaser

Auditors Fiscal Aspects/ Structure

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74 / October 2012

Financial Aspects

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world DIAM

DUROPACK

l PINOVA Capital, an independent Munich-based private equity firm, today announced an investment into deconta GmbH.

l H.I.G. Capital (“H.I.G.”) announced the sale of DIAM International (“DIAM” or the “Company”) to LBO France, a leading French private equity firm.

As part of a succession plan, PINOVA bought shares in deconta GmbH, a leading supplier for decontamination with a special emphasis on Asbestos in August 2012. Managing shareholder Wilhelm Weßling will maintain a majority stake and will continue to manage the company. Together with PINOVA as new shareholder, deconta will continue especially its international expansion.

Based in Paris, France, DIAM is the leading global designer and manufacturer of high quality luxury and retail point of purchase (“POP”) displays. DIAM’s more than 1,300 employees in 13 countries throughout Europe, Asia, Africa, North America, and Australia provide the world’s leading luxury brands and specialty retailers with a full range of POP display services. The Company’s primary business segments include prestige retail displays, mass-market displays, non-cosmetic displays and installation services. For over 30 years, DIAM has nurtured close relations with the world’s leading cosmetic brands with a growing range of products and services to support their worldwide development.

explains Joern Pelzer, Partner at PINOVA Capital.

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With PINOVA deconta has gained a competent partner with solid technical know-how and a clear understanding of the details of our business to build further infrastructure, enhance the product offering and enter new geographic markets. adds Wilhelm Weßling, Managing Director of deconta GmbH.

deconta was advised by VR Unternehmerberatung, a midcap orientated Mergers & Acquisitions advisor based in Düsseldorf.

“H.I.G. has been a tremendous partner to DIAM and has been instrumental in helping us execute our growth strategy,” said Michel Vaissaire, Chief Executive Officer of DIAM.

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‘‘ ‘‘

Asbestos decontamination is one of the big challenges for the construction industry. Being a leading producer of machines and equipment, deconta is in an excellent position to further grow the business especially internationally.

In the last five years, we’ve significantly expanded our international sales, made a key acquisition, and made sizeable investments to improve our market leading customer support and manufacturing efficiency. We are very happy to now welcome LBO France as a shareholder. “DIAM was an extremely successful investment for H.I.G.,” commented Olivier Boyadjan, Managing Director of H.I.G. in Paris. The team at Advention was led by Alban Neveux, the Group Managing Director, along with Julien Perret, Manager.

PINOVA Capital is an independent Private Equity firm focusing on high growth Engineering and Services companies in German speaking Europe. As a leading equipment supplier for on-site removal operators, deconta is known for solid and innovative solutions with a focus on asbestos decontamination. In addition to the machine and equipment program, deconta provides special solutions for specific customer needs, even on short notice. Furthermore, deconta owns an extensive range of machines and equipment which it leases to customers in a rental model.

PINOVA Capital invests in deconta GmbH Financial & Tax Due Diligence Provider

Alban Neveux

“We represented the buyer, LBO France, with whom we had worked extensively with before, and we lead the strategic due diligence for him

In this deal two particular challenges had to be faced and properly assessed: First, the international dimension of Diam’s market environment which led to conducting extensive investigations in Asia and more specifically in China through our local office, and second the number of product categories in which Diam now operates.”

The consideration to be paid for 100% of the Operations amounts to EUR125m and will be paid in cash at completion. Mondi Group will assume approximately EUR5m net cash as of the same date, implying an enterprise value of EUR120m. For the year ended 31 December 2011, the Operations generated unaudited pro forma consolidated revenues of EUR160m and unaudited pro forma consolidated adjusted EBITDA of EUR23m. Mondi Group was represented in this transaction by Hauser Partners Rechtsanwälte GmbH.

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Wulf Gordian Hauser, Managing Partner of Hauser Partners Rechtsanwälte, stated:

The team of Hauser Partners was able to meet the client’s expectations to handle a large volume multinational transaction at a very high speed. This was possible due to the long experience of our team in handling cross-border M&A transactions.

IntraLinks (NYSE: IL) empowers global companies to share content and collaborate with businesses partners without losing control over information. Through the IntraLinks platform, companies, partners, and third parties can share and work together on even the most sensitive documents — while maintaining compliance with policies that mitigate corporate and regulatory risk. IntraLinks has more than 15 years of experience, and a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion. IntraLinks is the proven provider of enterprise strength collaboration solutions, and is headquartered in New York City. In addition the company operates eleven offices on four continents.

H.I.G. CAPITAL COMPLETES SALE OF DIAM

MONDI GROUP TO ACQUIRE DUROPACK

Commercial Vendor Due Diligence Provider

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l Mondi Group has signed an agreement with Duropack GmbH (“Duropack”) for the acquisition of Duropack’s operations (the “Operations”) in Germany and the Czech Republic, consisting of two corrugated box plants and one recycled containerboard mill. The two corrugated box plants consume approximately 130.000 tonnes of containerboard per annum while the recycled containerboard mill is capable of producing 105.000 tonnes per annum.

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DECONTA

Legal Adviser to the Purchaser

Commercial Due Diligence Provider Legal Adviser to the Vendor Financial Due Diligence Provider Vendor Due Diligence Provider

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October 2012 /

DEAL DIARY:

M&A from around the world ESMALGLASS-ITACA

Espresso House

l 3i, an international investor, and funds managed by 3i, have today announced their divestment of Esmalglass-Itaca (“Esmalglass”), a leading global supplier of intermediate products for the ceramic industry, to international investing firm Investcorp. Terms of the transaction were not disclosed.

l Herkules Private Equity Fund III has entered into an agreement with Palamon Capital Partners to acquire Espresso House, Sweden’s largest branded coffee shop chain. Herkules considers Espresso House, with its experienced, Norwegian led management team, to be a strong base for growth and expansion.

l Initiative & Finance (I&F) has taken a majority stake in the buy-in management buyout of French marketing group Fil Rouge.

Espresso House is Sweden’s largest branded coffee shop chain with 120 directly owned and operated coffee shops across the larger cities of Sweden. The company is focused on high quality specialty coffee, and offers a broad menu of warm and cold drinks, hot and cold food and bakery products. Espresso House has about 900 employees, and estimated turnover for 2012 is approximately SEK 560 million.

CIC, Société Générale and Neuflize OBC reportedly provided a debt package to finance the acquisition, based on a 45% leverage ratio.

Since then, 3i has worked closely with the management team to develop the company’s strategy. This included the 2004 acquisition of the remaining 40% of Itaca, a subsidiary of Esmalglass involved in colours manufacturing for the ceramic industry, that it did not yet own. This acquisition established the company as one of the leading worldwide producers in technology, products, technical assistance and design.

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Cuatrecasas, Gonçalves Pereira advised all shareholders of the Esmalglass Group on divesting from it. The majority shareholder was 3i, a client with a long-standing working relationship with Cuatrecasas, Gonçalves Pereira. Dr. María José Guillén Cuatrecasas, Gonçalves Pereira partner Dr. María José Guillén (corporate law) led the deal.

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The main challenges of this deal derived from there being a large number of shareholders (12), with different profiles and interests. The deal was completed on May 31, 2012, when all the financial and economical conditions the parties agreed on were met. These conditions were very much bound to Spain’s current economic situation.

‘‘ ‘‘

We are impressed by the outstanding track record, strong culture and the enthusiasm of the management team and organisation. Espresso House has outperformed its competitors and we believe there is strong potential for further growth, says Sverre Flåskjer, Partner at Herkules Capital.

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In 2002, 3i and the management of Esmalglass acquired 100% of the company, in the largest MBO in Spain that year. 3i took a 49% stake in a deal valued at €230 million.

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Established in 1978 in Villareal, Spain, Esmalglass produces high quality ceramic glazes and colours as well as inkjet inks, an innovative and rapidly growing product used to decorate tile surfaces. Esmalglass products are sold to more than 450 customers worldwide. The company employs more than 1,000 staff and its global activities are supported by manufacturing and mixing plants in Spain, Brazil, Portugal, Italy, Russia, Indonesia and China, as well as large design and technical assistance teams in all the major ceramic markets across the world. In 2011, Esmalglass generated a turnover of approximately €270 million.

Adriano Capoferro, CEO at Espresso House, says that Building off the strength of the business we have expansive plans for Espresso House for the next 5 years. We look forward to working with Herkules to create further value in developing further growth targets for Espresso House. Herkules Private Equity Fund III acquires a majority of the shares of Espresso House Holding AB from Palamon European Equity II,L.P. for an undisclosed amount. Closing of the transaction is planned to take place by end of September 2012. Merlin Piscitelli, Director, Merrill DataSite International, was introduced to the Espresso House deal through Sweden’s largest law firm - Mannheimer Swartling. Merrill DataSite provided the virtual Merlin Piscitelli data room (VDR) solution for the project. And, throughout its lifecycle, securely managed over 20,000 pages of confidential information for due diligence and involved close to 100 professionals in the review phase. This ensured the deal could run smoothly and to its successful conclusion.

3I EXITS ESMALGLASS-ITACA

Herkules III acquires Espresso House

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FIL ROUGE

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The company’s current managers took a stake in the buyout and were joined by entrepreneur Alexandre Georgeault, which will take the group’s reins as president.

I&F closed its latest generalist small-cap vehicle on a €140m hard-cap in May last year. The firm set out to raise the fund as it gained independence from the Natixis group via a management buyout in October 2010. The team was led by Jean-Marie JOB, Partner, and Jean HAMET associate at law firm “JTBB Avocats”. We are representing the seller, FIL ROUGE DEVELOPMENT which is client of our firm since more than one year. FIL ROUGE DEVELOPMENT, the seller, is a holding family group composed of 3 subsidiaries which activities has been developed around 2 historical managers. Also, the main difficulty was to ensure the sustainability and development of the company after the deal: To overcoming this difficulty, various mechanisms were contractually intended as well as: l

Participation of the seller into the share capital of the buyer,

Historical managers were associated to the choice of the new partner manager,

The relation between the new manager partner and the historical managers was also specifically planned to ensure the transition and the phasing out of historical managers.

Marsh advised I&F for the insurance due diligence of Fil Rouge. This project was led by Thomas Brault, from our due diligence team.

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76 / October 2012

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ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world GRAEFF

HUTCHISON GLOBAL SERVICES

IMAGE DESIGN TECHNOLOGY

l Losberger GmbH (“Losberger”), an H.I.G. Europe portfolio company headquartered in Bad Rappenau, Germany, acquired the assets of GRAEFF Container und Hallenbau GmbH to further strengthen its position in the market for temporary space solutions.

l Tech Mahindra, a provider of software solutions mainly to telecom companies, on Tuesday said it is acquiring privately held Hutchison Global Services for USD 87.1 million, payable upfront.

I am delighted about the acquisition of GRAEFF, as the complementary product range and the strong brand name of GRAEFF open up many opportunities for Losberger. At the same time, the Losberger Group offers excellent prospects for the future of GRAEFF and its employees.

Tech Mahindra, a provider of software solutions mainly to telecom companies, on Tuesday said it is acquiring privately held Hutchison Global Services for USD 87.1 million, payable upfront.

l This acquisition is Midwich’s first in the Australia and New Zealand region and was effective as of 1 August, 2012. Established in 1998, IDT will continue to be spearheaded by Gerry Wilkins, Founder and Managing Director of the company.

‘‘

‘‘ ‘‘

Berndt H. Zoepffel, CEO of Losberger, commented: I am delighted about the acquisition of GRAEFF, as the complementary product range and the strong brand name of GRAEFF open up many opportunities for Losberger. At the same time, the Losberger Group offers excellent prospects for the future of GRAEFF and its employees.

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The management and H.I.G. are committed to the strategic objective of becoming the world’s leader in temporary space solutions through both organic growth and strategic acquisitions. The acquisition of GRAEFF represents an important step on our way to realize our growth strategy, with more to follow, says Dr. Klaas Reineke, Director at H.I.G. and chairman of the board of the Losberger Group. Consulting on the deal were Roedl & Partner, they were acting on behalf of the buy side and provided experience as well as knowledge concerning insolvency. “Challenges faced included insolvency of the target, short time frame, during the negotiations, the interests of all Stakeholders needed to be taken into account.” says Joerg Hattenbach, General Manager at Roedl & Partner

H.I.G.-Backed Losberger Acquires Container Specialist GRAEFF

‘‘ ‘‘

The acquisition will provide significant enhancement of Tech Mahindra’s expertise in the customer management space and will thus be a key component of its strategic plans going forward, the Mahindra group company said.

As part of the deal, HGS clients have committed to procure services worth USD 845 million over a 5 year period and have agreed to HGS being their exclusive provider of certian agreed services in India, Tech Mahindra said.

With this acquisition we further strengthen our leadership position in the telecom domain. Hutchison’s focused service portfolio combined with our domain knowledge, geographic spread and execution excellence will help us become the undisputed leaders in this space and extend these services to other verticals and markets, said Tech Mahindra’s Manag-

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In March 2012, GRAEFF filed for bankruptcy, whereupon H.I.G. presented the insolvency administrator with a superior proposal to acquire the business and continue its operations under the newly founded GRAEFF Container GmbH. The majority of jobs at GRAEFF have been saved in the course of the transaction.

Hutchison Global Services (HGS) operates out of Mumbai and Pune and is among the largest captive BPO (business process outsourcing) in the telecom domain. It provides customer lifecycle operations to clients in UK, Ireland and Australia and has an associate base of over 11,500 employees.

ing Director CP Gurnani.

Kotak Investment Banking was the financial advisor for Tech Mahindra, while Hutchison was advised by Goldman Sachs and Ernst & Young. Tech Mahindra shares were up 1.5% at Rs 823 on NSE in afternoon trade.

TECH MAHINDRA BUYS HUTCHISON GLOBAL SERVICES FOR USD 87.1M

“Our partnership with Midwich allows us to expand our product offering and act as a one-stop shop for our customers’ audio and visual needs. The acquisition will also help us increase our investment into the local marketplace, from adding technical resources, improved stock levels, marketing materials and training programmes, so that we can fully equip and support IDT customers,” said Wilkins.

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Stephen Fenby, Managing Director of Midwich added,

This transaction represents our first move outside our traditional European market. We have been most impressed with Gerry and his team, and with the similarities in our businesses and service ethos. IDT has a great portfolio of quality brands and a strong reputation with customers serving the AV industry. We very much look forward to helping the team at IDT to build a leading specialist audio visual distribution business.

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Located in Mannheim in Baden-Württemberg and Lübars in Saxony Anhalt, Germany, GRAEFF develops, produces, sells or leases steel halls (i.e. for production or warehousing), pavilions (offices, sales outlets) and containers (accommodation, sanitary and workshop containers). The products of GRAEFF can be combined in various ways. They can be arranged to form production halls with attached office complex, or to form schools and kindergardens with gyms and sanitary facilities. In 2011, the company generated revenues of about €48m and had 85 employees.

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According to Wilkins, the acquisition is a major coup as it enables IDT to tap into the resources and expertise of a global company, while still retaining the great local service and strong local investment for which IDT is recognised.

Wilkins added the acquisition is a win for IDT’s local channel and current employees. “By partnering with Midwich, our local vendors can expect to see larger transactions, improved buying power, and more opportunities passing through their sales channels. Our local staff can also expect continued investment in local jobs and broader opportunities to grow their career.” IDT’s key technology areas are video walls and related control and processing, IP signal distribution and digital signage. IDT is also a major distributor of large format commercial displays, including a variety of touch-screen solutions. Its principle vendors include Avitech, Brightsign, HaiVision, Jupiter, Magenta Research, NEC, Planar, and Samsung.

IMAGE DESIGN TECHNOLOGY JOINS MIDWICH GROUP

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ACQUISITION INTERNATIONAL

October 2012 /

DEAL DIARY:

M&A from around the world

l The British online banking arm of Dutch financial services group ING, is to be taken over by Barclays, adding 1.5million customers to the books. In a welcome bit of non-Libor-related press, Barclays has agreed to by ING Direct UK from the Dutch banking group, taking on £10.9bn worth of deposits and a £5.6bn mortgage book. The deal will add 750 ING Direct staff and around 1.5 million customers to Barclays’ existing pot. ING revealed its plans to offload the UK business in August this year, thought to be part of its plans to repay bailout cash that it received from the Dutch government in 2008, at the height of the financial crisis. From a customer point of view, nothing much will change in the near term. Barclays has said that it will continue using ING Direct’s ‘operations and platforms’ to service existing customers, and that they can expect ‘to enjoy at least equivalent terms and conditions to those which they currently enjoy.’ The bank did also explain in a statement that it will eventually integrate the ING part into its UK Retail and Business Banking division. But regulatory approval and completion of the deal are not expected to occur until Q2 next year, so any further integration is unlikely to begin just yet. Interestingly, neither party has revealed exactly how much cash is going to change hands for the deal to go off, although Barclays revealed that it is picking up the mortgage book with a discount of around 3%, and that deposits are being transferred to it at equal value. Shareholders are obviously dubious about the deal, however, as Barclays shares were down 0.6% and ING’s were down 0.7% in early morning trading on Tuesday. IntraLinks (NYSE: IL) empowers global companies to share content and collaborate with businesses partners without losing control over information. Through the IntraLinks platform, companies, partners, and third parties can share and work together on even the most sensitive documents — while maintaining compliance with policies that mitigate corporate and regulatory risk. IntraLinks has more than 15 years of experience, and a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion. IntraLinks is the proven provider of enterprise strength collaboration solutions, and is headquartered in New York City. In addition the company operates eleven offices on four continents.

JEVCO l Intact Financial Corporation (TSX: IFC) today announced that it has completed its $530 million acquisition of The Westaim Corporation’s (TSX: WED) wholly-owned subsidiary, JEVCO Insurance Company, a leading provider of specialty and niche insurance products for individuals and businesses in Canada. The acquisition enhances Intact’s position in Canada by increasing its direct premiums written by approximately $350 million on a pro forma basis and bringing its market share to 17 per cent. The acquisition will enhance the company’s product offering to include insurance for recreational vehicles, such as motorcycles, snowmobiles and all-terrain vehicles, as well as commercial, surety and non-standard auto insurance. Fasken acted as legal counsel to Intact Financial Corporation in connection with its acquisition, through a whollyowned subsidiary, of Jevco Insurance Company. “Our work included drafting, negotiating and settling the Share Purchase Agreement, conducting due diligence, preparing the application for approval of the Minister of Finance (Canada) under the Insurance Companies Act (Canada), and drafting, negotiating and settling all closing documents and attending upon the closing. Robert McDowell, a senior partner at the firm and head of the firm’s Financial Institutions Group, led the team, participated actively, and oversaw and directed its work. Koker Christensen, a partner at the firm and a member of the firm’s Financial Institutions Group, led the negotiating and drafting of the Share Purchase Agreement and had primary day-to-day responsibility for executing the transaction. We represented Intact Financial Corporation with whom we have a long-standing corporate and transactional working relationship. There were certain challenges relating to due diligence and deal structure. As well, the parties wanted the Share Purchase Agreement signed and the deal closed as soon as possible. We assisted in overcoming these challenges by remaining focussed on our client’s key business objectives, being dedicated and responsive, and working cooperatively with other counsel involved in the transaction. The negotiation and settlement of the Share Purchase Agreement in combination with the due diligence work was intense and efficient The target dates for signing the Share Purchase Agreement and closing the transaction were met.”

BARCLAYS ACQUIRES ING DIRECT’S UK BUSINESS

Intact Financial completes acquisition of JEVCO

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Meyer Bergman l Meyer Bergman, the retail-focused European real estate investment management firm, has acquired a prime high-street retail property in central Copenhagen, Denmark, for €34 million. The acquisition, which represents Meyer Bergman’s first purchase in Denmark, was also the first acquisition undertaken on behalf of its second fund, Meyer Bergman European Retail Partners II. Meyer Bergman’s first fund, Meyer Bergman European Retail Partners I was fully committed in 2011. The property, which was built in 1882 and is Grade IV listed, comprises circa 5,000 m² of gross lettable retail space. Located in the prime retail area in central Copenhagen, the building is located on Kobmagergade, near its intersection with Stroget, the longest pedestrianized shopping street in Europe. The area benefits from high footfall, with an average of 60,000 to 70,000 visitors per day, and is currently undergoing significant refurbishment works and upgrading. As a result, the retail offer is being refined due to strong retailer demand for the area. Benetton and Louis Vuitton have both relocated to Kobmagergade, close to where retailers Gucci, MaxMara, Mulberry, Hermès, Abercrombie & Fitch, as well as the Ilum Department Store, are located. The building is currently let to a range of tenants on short leases, which therefore presents Meyer Bergman with an opportunity to actively manage the property, as Kobmagergade transitions into a revitalized retail extension to Stroget.

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A team lead by partner Steen Puch Holm-Larsen acted for the vendor in this high profile high street transaction. The vendor is an investment vehicle managed by Proark who has been a client with us for a long time. In the course of the transaction the parties should agree on certain contingencies in relation to an on-going High Court dispute with a former tenant, an on-going tax reassessment matter and re-location and termination of tenancies.

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ING DIRECT

The transaction documents and funds flow on closing were structured in a way that safeguarded and balanced either party’s risks.

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78 / October 2012

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world NUJIRA

PEMCO

ROTAIR

l Nujira Ltd, the world leader in Envelope Tracking (ET) technology, has raised a further $12 million in its latest funding round, securing the rollout of the company’s Coolteq.L IC technology for mobile handsets and supporting the ramp to volume production. The latest funding round included a new investor, Zurich-based SAM Private Equity, as well as existing investors Amadeus Capital Partners, Climate Change Capital, Environmental Technologies Fund, NES Partners and angel investors.

l Sagicor Life Insurance Company (Sagicor USA) is pleased to announce that it has completed its acquisition of PEMCO Life Insurance Company (PEMCO Life), a Washington-based company, at the close of business.

l Elgi Equipments, the Coimbatore-based manufacturer of air-compressors and automobile service station equipment, has strengthened its international presence by acquiring Rotair S.p.A, an Italian compressor company.

Nujira’s patents cover not only the core technical breakthroughs that underpin Nujira’s high bandwidth, high efficiency Coolteq® ET modulator ICs, but also wider system elements. These include system architectures, timing alignment, linearization with or without Digital Pre Distortion (DPD), PA performance enhancement, system optimization, test & measurement, and production-line calibration techniques.

NUJIRA RAISES $12 MILLION FROM LATEST FUNDING ROUND

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We want to welcome the PEMCO Life policyholders to the Sagicor family and we are excited to get to know them.” He further emphasized that the terms and conditions of their policies will remain unchanged, with insurance coverage, benefits and services being provided by Sagicor USA. “We look forward to providing high quality service to our newest family members for many years to come, as we offer them ‘Wise Financial Thinking for Life’.

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We jointly evaluated the strategic fit both in terms of the products and the markets served and prepared the transaction case to arrive at the optimal transaction structure for financing and taxation purposes. The deal team was led by Mr. Ramprasad M, Executive Chairman at MAPE Advisory Group. We were representing ELGI Equipments Ltd (the acquirer). We have been working with this client for over 5 years now and have a reasonable understanding of the company’s business and strategic growth areas. We also advised them on an acquisition they made in France in 2010. The biggest challenge was to overcome the cultural gap between a small yet strong local European business and a larger, professionally managed Indian business. This was overcome by investing time and developing mutual trust over a series of interactions organized by us both in India and in Italy.

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Palladio Corporate Finance, of Milan, is an M&A advisory firm and is part of Palladio Finanziaria, a leading independent Italian investment bank, with net invested assets of over EUR 500 million and 40+ professionals.

Fletcher Financial, Inc. served as the finder and facilitator on Sagicor Life Insurance Company’s acquisition of PEMCO. John Scott, President represented Sagicor on the transaction and has a long-standing, working relationship with Sagicor dating back to the late 1990’s. While all transactions have challenges that must be overcome, the PEMCO purchase was achieved without any major obstacles. All parties involved in the transaction were diligent and professional in their efforts to successfully complete the sale. Fletcher Financial was founded in 1988 and has assisted with over 250 mergers and acquisition transactions, with some of the nation’s largest insurance carriers.

Palladio represented the owners of Rotair, the Donadio and Musso families, from Caraglio, in the North-West of Italy. The two families had founded the company shortly after WWII.

SAGICOR LIFE INSURANCE COMPLETES ACQUISITION OF PEMCO

ELGI EQUIPMENTS BUYS ITALIAN COMPANY ROTAIR

Giuseppe Benedetti

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Nujira announced the first commercial IC in its Coolteq.L product family of ET power supply modulators for mobile handsets in February 2012 at Mobile World Congress. The NCT-L1100 reduces wasted energy from power amplifiers (PAs) in mobile handsets by more than 50%, cutting heat dissipation and extending battery life. In April Nujira also announced the filing of its 150th patent relating to ET, emphasizing its dominant position in the ET intellectual property landscape.

Bart Catmull, Sagicor USA’s Chief Operating Officer, said

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As the world leader in Envelope Tracking technology, Nujira remains in an extremely strong market position, and we continue to lead the way both commercially and technologically. ET is fast becoming a mandatory requirement for smartphones, driven by the poor battery life of existing 4G handsets, and the need to support multiple LTE frequency bands for global adoption. We have been at the forefront of this technological shift, pioneering the development of ET over the last 10 years. This latest investment not only allows us to continue that development work, but also reinforces the growing value of our extensive ET patent portfolio.

MAPE Advisory Group advised the acquirer on the entire transaction from ideation to closure including shortlisting a relevant target in Europe based on our understanding of their business. We enabled a contact with the target by reaching out through our local partners in Italy.

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Commenting, Nujira CEO Tim Haynes said:

PEMCO Life and its approximately 7,500 policyholders will join the approximately 60,000 current policyholders of Sagicor USA as a result. Sagicor USA has been in the life insurance business for almost 60 years, and has experienced strong business growth since joining the Sagicor Financial Group in 2005. The Company’s vision is to improve the lives of the people in the communities in which they operate. Sagicor USA has total assets of over US $930 million and is rated “A-” (Excellent) by A.M. Best Company. In addition to its financial strength, Sagicor USA is known for its innovative products and excellent customer service. It recently launched simplified issue whole life and no lapse universal life insurance products specifically designed for healthy individuals, ages 18 to 65 years. With no medical exam necessary, the simplified issue process is designed to greatly enhance the policyholder experience.

The main challenge of this deal – negotiations were held along 18 consecutive months – was bridging the cultures, along two different lines: Italian-Indian and simple enterprise-structured group and it was overcome by communicating clearly and relying on mutual trust. Giuseppe Benedetti, of counsel to Palladio, lead the negotiations for the sellers.

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October 2012 /

DEAL DIARY:

M&A from around the world RTT HEALTH SCIENCES

SEAGULL

SUNVAL

l Diversified industrial services and retail group‚ Imperial Holdings [JSE:IPL], announced it has entered into an agreement with RTT Group Limited to acquire RTT Health Sciences for R500m.

l GMT Communications Partners , a European media and communications focused private equity group, has teamed up with the management and founding chairman to invest in Seagull , a provider of computer based training systems and e-learning for seafarers worldwide.

l Germany’s largest dairy company, Deutsches Milchkontor (DMK), is expanding its product portfolio with the acquisition of the baby food manufacturer Sunval from the investment company BWK.

Imperial said the acquisition complemented Imperial Logistics’ service offering through the provision of logistics‚ supply chain and distribution solutions to the pharmaceutical and fast moving consumer health industries. “The business offers good growth prospects as it strengthens Imperial’s current exposure to high growth African economies and provides the group with exposure to the growing pharmaceutical and healthcare industries‚” Imperial said in a JSE Sens statement. RTT Health Sciences includes RTT Medical‚ RTT Trans Africa‚ RTT Consumer Health and RTT Essentials. The team from TWB (Tugendhaft Wapnick Banchetti and Partners) was led by Zoe Banchetti, a partner with extensive experience in handling complex and major mergers and acquisitions. Zoe was assisted by associate, Helen Fotakis. TWB represented the purchaser, Imperial Holdings Limited, with whom the firm has had a very long-standing relationship. The acquisition of one of Africa’s leading pharmaceutical distributors and healthcare supply chain service providers offers a point of entry into a new market for Imperial, namely the pharmaceutical logistics market in South Africa, as well as in developing markets across the African continent. Webber Wentzel acted as legal adviser for the seller, RTT Group (Pty) Ltd, and its shareholders. Sally Hutton, partner and co-head of private equity led the team at Webber Wentzel, assisted by associate, Andrew Westwood.

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She commented:

We have a long standing relationship with the shareholders of RTT. We acted for Actis in the 2007 buyout transaction of RTT and RTT has also been a client since then.

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The business was founded in 1996 by its chairman, Oscar Johansen, a long term maritime industry executive, and financial partner Bjørn L.G. Braathen. PRESS RELEASE GMT Communications Partners (“GMT”), the European media and communications focused private equity group, is delighted to announce that it has teamed up with the management and founding Chairman to invest in Seagull AS (“Seagull”), the leading provider of computer based training systems and e-learning for seafarers worldwide. Founded in 1996 by its Chairman, Oscar Johansen, a long term maritime industry executive, and financial partner Bjørn L.G. Braathen, Seagull offers a comprehensive library of training and on-board courses for regulatory, compliance and improved seafarer knowledge, in line with the requirements of the key global seafarer regulatory bodies. This transaction sees GMT, alongside Oscar Johansen and Roger Ringstad, Seagull’s Managing Director, acquiring the shareholdings of certain of Seagull’s existing shareholders, enabling Seagull to increase investment in product development, sales and marketing and support for its customers. Seagull has developed a state of the art training system and comprehensive library of training modules for use on-board vessels, in offices and maritime colleges, as well as online. Mark Soundy, partner at Weils, and Paul Stallebrass, partner at CMS, led the teams advising GMT on the equity and debt respectively. GMT is a long standing client of both firms Tenden Advokatfirma ANS (“Tenden”), a leading regional law firm south of Oslo, acted as legal advisors to the vendors and the management of Seagull. Tenden has acted as legal advisor to Seagull since the establishment of the company. The team from Tenden was lead by Tor Bechmann and Odd Gleditsch d.y., both partners of Tenden. They are both also members of Tenden’s group for Transactions and Corporate Law.

Baden-based Sunval is Germany’s largest manufacturer of private label organic baby food, supplying retailers and chemists. Ebner Stolz prepared a Financial Fact Book on Behalf of the seller covering all financial and tax aspects relevant to a potential investor. The deal team was led by Wolfgang Russ and Armand von Alberti, partner and senior manager transaction services. DMK will add the company to its baby food business which includes well-known brand Humana. It plans to run Sunval with its original staff, keeping both products and customers in place. BWK acquired a 40% stake in Sunval in a management buy-in succession solution in 2008, in which it brought in new managing director Ralf Jungfermann. Jungfermann acquired 20% of the business in the transaction, which was supported by a small amount of debt from BW Bank. The original owner exited the company the following year, raising BWK’s stake to 73%. In 2009, Sunval acquired the baby food product lines of De-Vau-Ge Gesundkostwerk and Hochdorf Nutrifood with support from BWK. The move doubled Sunval’s turnover. The acquisition was financed with one-third equity and two-thirds debt provided by BW-Bank and KfW. During the holding period, Sunval’s turnover grew by an average of 36% year-on-year, reaching €37m in the 2012 financial year – up from €16m in 2008. Its EBITDA grew from €1.5m to €5m in the same period. Sunval was founded in 1979 and is based in Waghäusel. The company produces organic own-brand and private-label baby food that is distributed in specialist shops and drug stores. It employs 140 people. Matthias Heining led the deal for BWK.

GMT COMMUNICATIONS PARTNERS BACKS SEAGULL IN MBO

German dairy leader strengthens baby food arm with Sunval deal

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80 / October 2012

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DEAL DIARY:

M&A from around the world TLM-TVP

l THERAVECTYS, a biotechnology company that is developing a new generation of vaccines based on lentiviral vector technology, announced today that it has secured 7.48 million euros as of the end of H1 2012. These funds, raised exclusively from private investors, will enable THERAVECTYS to pursue the development of a new generation of vaccines, with an anti-HIV therapeutic vaccine as its first priority. For this third funding round, Guy PAILLAUD, former executive manager of PROMODES, and John PIETERS, former CEO of AMGEN France- some of the company’s historical investors - have been joined by 10 new private investors, which include the TETHYS fund (BETTENCOURT family), Philippe ODDO and Richard HENNESSY. Development of new vaccine candidates In particular, this new amount of funds raised will enable the company to fund: - Phase I/II of the clinical trial of its anti-HIV vaccine candidate; - The development of new vaccine candidates based on lentiviral vector technology and concerning other indications; - The planning of new laboratories that are larger and can better accommodate the company’s development

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We thank our investors—both old and new—for the trust that they have placed in us. Thanks to their support, within the next two years we hope to be able to demonstrate in humans not only the safety but also the potential effectiveness of our anti-HIV vaccine candidate,” says Renaud VAILLANT, CEO at THERAVECTYS, who adds that “this funding should also allow us to continue and even strengthen our efforts in research and development of new indications alone or in collaboration with other large pharmaceutical laboratories.

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Jean-Claude Gonneau, MD, a PE veteran, former Cowen Europe General Manager, led the team at Camden Associates. Camden was chosen by the company because of their special understanding of the financing requirements and sensitivities of the main investors. The challenge completing this deal was that the market was nearly shut for early stage biotech companies and very little money had been raised in the last months of 2011 for PE deals in the biotech sector in France. This is the largest raise to date.

THERAVECTYS raises 7.48 million euros

l The nationalized Austrian bank successfully has sold the aluminum hot-rolling mill TLM-TVP d.o.o. in Croatia to the Vienna-based Euris. Hypo Alpe-Adria-Bank International AG (HAA) successfully has sold its largest industrial participation - the indirect majority participation (83.96%) in the aluminium company TLM-TVP – after a transparent and multi-stage tendering procedure to the Austrian company EURIS Handel GmbH. The contracts were signed recently in Austria and Croatia. EURIS, currently the largest and most important customer of TLM-TVP, will bring experience, knowledge and resources to TLM-TVP in order to develop the business and ensure its positive future development. HAA has found an excellent investor in EURIS that will honor the work over the last years and provide a long-term strategy in the interest of TLM-TVP, its workforce, customers, suppliers and the region. TLM-TVP is one of the largest employers in Šibenik, Croatia, employing over 530 people and generated net sales of € 140m in 2011. With the sale of its stake in TLM-TVP, HAA has passed a milestone on its way to downsize the bank and focus on its core business. The aluminium company was purchased by HAA in 2007, the current sale was preceded by a major restructuring program since 2011. In the financial statement of 2010, TLM-TVP´s debt at Hypo Group amounted to € 80.3m. Over the last three years, Hypo Group invested more than € 45m in the aluminum company. Initially, a turnaround had been planned for 2011. However, the recession in Italy and Croatia prevented this attempt.

Hypo Alpe Adria Divests TLM-TVP in Croatia

UNIBOARD CANADA l Pfleiderer Canada Inc., completed the sale of all of the shares of its wholly-owned subsidiary Uniboard Canada Inc., a North American leader in engineered wood products, to an affiliate of Kaycan Ltd., a North American leader in vinyl, aluminum and engineered wood siding, trim and aluminum building products for over 38 years, in an all cash deal. Uniboard’s facilities include three particleboard lines, one MDF line, five thermally fused melamine lines and two laminate flooring lines servicing primarily the Canadian, US Northeast and Mid-West US markets. Kaycan is a private Canadian corporation focused on the North American building industry.

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Uniboard’s President and CEO James Hogg stated,

This agreement marks the dawning of an exciting new era for Uniboard. As a market leader in Quebec, Ontario and the Northeast United States market, this acquisition will allow Uniboard to reinforce our market position and to fully focus our attention on driving the business forward in both our panel and laminate flooring operations.

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THERAVECTYS

Kaycan’s President Lionel Dubrofsky added,

We are fully committed to the growth of Uniboard in its core markets. We bring strong operating experience in the building products environment as well as a very solid financial basis to this deal. Uniboard’s senior management will remain intact to manage the business. The direction of Uniboard and existing customer relations will be reinforced. Davies Ward Phillips & Vineberg LLP represented longstanding client Kaycan, providing legal, commercial, tax and strategic advisory services. The Davies team was led by Richard Cherney, a managing partner of the firm. CIBC World Markets Inc. acted as financial advisor and McCarthy Tétrault LLP and Morrison Cohen LLP acted as legal advisors to Pfleiderer AG, Uniboard’s ultimate parent company in Germany.

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ACQUISITION INTERNATIONAL

October 2012 /

DEAL DIARY:

M&A from around the world UNIVERSAL COAL

Zodiac Recreational

20-20

l Universal Coal (ASX: UNV) has demonstrated the strength of its Kangala thermal coal project and the Eskom off take contract, securing 65% project financing from South Africa’s FirstRand Bank.

l OpenGate Capital, LLC, a private investment and acquisition firm, announced today it has signed an agreement to acquire Zodiac Recreational from Zodiac Marine & Pool, a portfolio company of The Carlyle Group (NASDAQ:CG).

l 20-20 Technologies Inc. (“20-20 Technologies” or the “Corporation”) (TSX: TWT) announced today that it has entered into a definitive arrangement agreement (the “Agreement”) to be acquired by an affiliate controlled by Vector Capital Corporation (“Vector”), a leading global private equity firm specializing in the technology sector.

“As we transition from an explorer and developer of coal projects to a producer, having a proactive bank working with us at multiple levels is important, and with RMB’s track record, we look forward to a long term relationship with the RMB Group,” Universal head of commercial and corporate affairs Anthony Ward said.

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The funding package being applied at a Group level will also benefit Universal in bringing our other projects in the future into production with the support of one bank with core terms agreed and in place. IntraLinks (NYSE: IL) empowers global companies to share content and collaborate with businesses partners without losing control over information. Through the IntraLinks platform, companies, partners, and third parties can share and work together on even the most sensitive documents — while maintaining compliance with policies that mitigate corporate and regulatory risk. IntraLinks has more than 15 years of experience, and a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion. IntraLinks is the proven provider of enterprise strength collaboration solutions, and is headquartered in New York City. In addition the company operates eleven offices on four continents.

Our role was to structure an Account Receivables financing facility in order to provide enough liquidity for Zodiac Recreational. Current environment in this industry was the main challenge for the deal. The team at Gide Loyrette Nouel was led by Guillaume jolly (Tax partner) and Edgard Nguyen (senior associate M&A). We were representing OpenGate Capital, a US private equity firm. OpenGate Capital’s European partners, Robert Lezec and Julien Lagreze, led the transaction. Gide Loyrette Nouel has a long-standing working relationship with OpenGate Capital, as we take care of all their transactions in France (in particular, Fleurus Presse and the recent acquisition of the French consumer publication “Réponse À Tout!” from Groupe Ayache) and certain of their cross border transactions.

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The 6.5 year project finance facility will be based in South African Rand given the Rand based off take agreement with Eskom.

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GE Factofrance has a long and strong relation with OpenGate Capital and successfully closed a couple of transaction with them.

Challenges have been overcome thanks to our expertise in cross border transactions and private equity deals and also our ability to deliver the full range of services which apply to M&A transactions, by involving lawyers from our specialist groups (including competition, tax, IP and real estate). IntraLinks (NYSE: IL) empowers global companies to share content and collaborate with businesses partners without losing control over information. Through the IntraLinks platform, companies, partners, and third parties can share and work together on even the most sensitive documents — while maintaining compliance with policies that mitigate corporate and regulatory risk. IntraLinks has more than 15 years of experience, and a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion. IntraLinks is the proven provider of enterprise strength collaboration solutions, and is headquartered in New York City. In addition the company operates eleven offices on four continents.

Under the terms of the Agreement, Vector has agreed to acquire all of the issued and outstanding shares of the Corporation for consideration of $4.00 in cash per share, representing total equity value, on a fully diluted basis, of approximately $77 million. The $4.00 per share consideration represents a 28% premium over the closing share price of $3.12 on April 3, 2012, the last trading day before the strategic review process was publicly announced, and a 33% premium over the average closing share price for the 90 days prior to April 3, 2012. The Agreement represents the culmination of the strategic review process initiated by the Corporation’s Board of Directors in order to review strategic and financial alternatives to enhance shareholder value. The strategic review process was supervised by the Special Committee of the Board of Directors of the Corporation composed of four independent directors, namely Jocelyn Proteau as Chairman, Jacques Malo, Philip Deck and Benoît La Salle. Speaking on behalf of the Special Committee, Chairman Jocelyn Proteau said:

‘‘

Through a broad and thorough process, the Corporation contacted in excess of 50 potential financial and strategic purchasers from across Canada, the United States and Europe. The transaction with Vector is the culmination of this extensive public process and provides compelling value to our shareholders. On behalf of the Board, I would like to take this opportunity to thank the current shareholders for their support throughout the years.

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It also includes a Master Finance Deed for future Universal projects that will allow their project financing needs to be added with greater simplicity.

Olivier Lène Director in the GE Factofrance - Restructured Finance division lead the team at GE Capital.

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The project finance mandate for R270 million (A$31 million) with FirstRand’s Rand Merchant Bank division (RMB) is noteworthy as the company had previously expected Kangala to be funded on a 50% debt and 50% equity basis.

UNIVERSAL COAL CLOSER TO KANGALA CASH FLOW WITH 65% PROJECT FINANCING SECURED

OpenGate Capital Signs Agreement to Acquire Zodiac Recreational

20-20 TECHNOLOGIES INC. TO BE ACQUIRED BY VECTOR CAPITAL

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DEEP & FAR

Attorneys-at-Law 13th F1., No. 27, Sec. 3, Chung San N. Rd. Taipei 104, Taiwan, R.O.C. Tel: +886-2-2585-6688 Fax: +886-2-25989900/25978989 email@deepnfar.com.tw Deep & Far was founded in 1992 and is one of the largest law firms in this country. The firm is presently focused on the practice in separate or in combination of all aspects of intellectual property rights (IPRs) including patents, trademarks, copyrights, trade secrets, unfair competition, and/or licensing, counseling, litigation and/or transaction thereof. Since this firm edges itself into the IPRs field, the firm quickly comes to fame. As an illustration, this firm often is one of the largest sources from which foreign filing orders originate. The fascinating rise of this firm begins from the founder of Deep & Far attorneys-at-law, C. F. Tsai, who is the one first patent practitioner in this country who both has technological and law backgrounds and is qualified as a local attorney-at-law. The patent attorneys and patent engineers in this firm normally hold outstanding and advanced degrees and are generally graduated from the top five universities in this country and/or the university in the US. Our prominent staffs are dedicated to provide the best quality service in IPRs. As a proof, about one half of top 100 incorporations in this country have experiences of seeking patented their techniques, but more than one fifth of the top 100 incorporations are/were clients of this firm. Furthermore, Hi-Tech companies in the science-based industrial park located at Hsin Chu play an important role in booming the economy of this country. About one half of which have experiences in seeking patented their techniques, and out of more than 60% of the patent-experienced companies in that park have ever entrusted their IPR works to this firm. We have experienced in seeking IPR-protections for our clients in more than 100 territories all over the world. We have thousands of IPR-cases respectively prosecuted before official Patent Offices of major industrialized countries. This firm not only is the most competent in IPR-related matters in this country but also is very familiar with IPR-practices in major industrialized countries. As a matter of fact, this firm oftentimes tries and makes precedents of new claim-drafting styles. While we might have become wonderfully famed locally with remarkable appreciation and respects, we would like to extend our services for internationalized or quality service-requiring foreign conglomerated giants, corporations or individuals. We strongly believe that we will win more applause from clients all over the world.