1. 30-Nov-15
30-Nov-2015
Dealspeak
26th Nov-2nd December
30-Nov-15
27-Nov-2015
THUR US$ 1.6bn MONUS$ 194mFRI SAT/SUNUS$ 7.7bn US$ 8.3bn TUES
#Dealspeak
The week in numbers (Global % increase/decrease in value compared to 19th-25th November)
30-Nov-15
99.6%
US$ 3.0bn
Insulation firm swaps hands between two PE firms China’s broadband revolution takes shape
44.3% 64.2% p15.3%
US$ 65m
A sleepy week for US M&A Shake up in Chinese construction sector
6.8% 47.4% 98.3% p200.6%
Stories of the week
Sector breakdown
US$385m
US$5.3bnUS$4.0bn
US$
1.0bn
US$780m
TMT Industrials & Chemicals Consumer Financial Services PMB EMU Real Estate Construction
US private equity firm Blackstone, in partnership with small
Danish-based Lego owner Kirkbi, has agreed to acquire high-tech
insulation firm Armacell from current owner Charterhouse Capital
Partners in a secondary international buyout.
According to Mergermarket Intelligence, a number of stategics and
financial sponsors were circling the target in the auction process,
including Cinven, Carlyle, Astorg Partners and Pamplona.
Hong-Kong listed China Mobile Ltd has acquired the fixed-line
and broadband business from China TieTong for US$ 5.3bn, in
an attempt to meet consumer demand for more efficient internet
services.
According to a company statement, the purchase gives China-mobile
approximately 11.9m fixed broadband customers and 18.3m fixed
line customers.
The largest deal targeting the US this week was
the US$ 780m domestic acquisition of Sleepy’s
by MattressFirmHoldingCorp.
The consolidated company will receive an
estimated US$3.6bn in annual sales and 3,500
stores, according to a statement from Mattress Firm.
It has been a quiet week for US M&A, with just four
deals worth US$971mannounced, downfrom54
deals worth US$ 12.3bn the previous week.
Truworths, the listed South Africa-based fashion
retailer, has agreed to acquire Office Holdings
Limited, the UK-based footwear retailer, from
Silverfleet Capital Partners, the UK-based
private equity firm, for US$ 385m.
Silverfleet has achieved a 3.4x return from the
sale of Office Holdings. The private equity has
also recently invested in Danish womenswear
clothing brand, Masai Clothing Company,
announced in June 2015.
Hainan Island Construction has agreed to
acquire HNA Infrastructure Industry Group
from its controlling shareholder,
HNAInfrastructureIndustryGroup,forUS$4.0bn.
Following the acquisition, Hainan Island
Construction plans to invest and develop a
range of infrastructures, including ports, roads
and airports, it said in a statement.
Daily deal values
WED
Silverfleet triples returns from retail sale

2. Mamakote Ramathe is currently Executive Head within
Vodacom Group’s M&A division, responsible for evaluating and
executing acquisition opportunities and any other corporate activity in
South Africa. Her career history includes working for Cazenove Corporate
Finance, National Empowerment Fund, Vantage Risk Capital and the
Development Bank of Southern Africa.
League tables: 26 Nov-02 Dec 2015 vs. 2014
Editorial snapshot
Quote of the week
“The drive to invest is seeing real
momentum, and it is hard to see it
stopping anytime soon.”
Patrick Sarch, Clifford Chance
3M Company, the Minnesota-based diversified
technology company, is interested in making
acquisitions in the healthcare, industrial and
personal safety areas, CFO Nicholas Gangestad
said on Tuesday:
“Would I consider acquisition targets that would
move our return on invested capital for a period
of time below 20%? Yes,”he said at a conference,
“as long as we were convinced that 3M would be
adding significant value as a part of that deal.”
Corporate Interview: South Africa focus
2015/(2014)
1/(-)
2/(9)
3/(32)
UBS Investment Bank p
Morgan Stanley 
Guotai Junan
Securities Co Ltd
p
Financial Advisers
Legal Advisers
1/(26)
2/(-)
3/(7)
US$ 5.4bn
US$ 5.0bn
US$ 2.2bn
King&WoodMallesons p
Scotto&Associates p
Simpson Thacher
& Bartlett

US$ 2.1bn
US$ 1.0bn
US$ 1.0bn
RBC found guilty of faulty advice
Royal Bank of Canada has been ordered to pay
an estimated US$ 75m in fines following advice
during their sale of Rural/Metro Corporation to
Warbung Pincus in 2011.
According to a court document, RBC had“aided
and abetted breaches of fiduciary duty by
former directors”, at the expense of Rural/Metro
Corporation shareholders, pushing for a quick
sale rather than advising the seller to seek a
higher price.
What over-riding trends do you see driving M&A
within South Africa’s telecommunications sector?
South African’s telecommunications landscape is
characterised by a rather more mature mobile market
with SIM card penetration rate at more than 150%.
Mobile operators have been experiencing downward
pressure in the pricing of mobile voice and core service
offering; this has triggered the need to develop new
solutions and offerings beyond
traditional revenue sources.
Interesting deals within the
space include the proposed
MTN and Telkom network
sharing deal that eventually
did not receive the support of
the Competition Authorities.
There was also the Telkom and
BCX transaction aimed at positioning Telkom to growing
beyond its core connectivity business while expanding
its existing offering by providing scale in IT services.
MTN’s acquisition of Internet Service Provider, Afrihost,
sought to grow Afrihost’s customer base while leveraging
its investment in broadband.
These deals have the effect of enabling operators to
beef up their networks through both infrastructure
and spectrum allocation, so as to meet the growing
consumer demand for data and to move closer towards
offering integrated services. Operators find themselves
in a position where they need constantly innovate and
find ways to distinguish themselves from competitors in
order to acquire and retain customers, and to streamline
existing operations.
“The valuation of a business must
be reflective of growth potential
to avoid overpaying. You cannot
underestimate the importance of
knowing and aligning with your key
stakeholders and choosing the right
partners.”
Mergermarket data shows that South Africa has
been more acquisitive this year, particularly outside
of the continent. What do you think is driving this?
South Africa is experiencing low economic
growth, slowing demand from exports, increasing
unemployment and financial pressure on consumers,
as well as a decline in commodity markets affecting
our energy and mining sectors. Such weakening
macroeconomic conditions and
unfavourable exchange rate
movements continue to impact
financial performance for a
number of businesses operating
in the country.
The picture creates an
opportunity for established
South Africa-based companies to begin to look
elsewhere for growth opportunities, as the ability to
make successful acquisitions across different sectors is
hampered by some of these challenges.
We have seen some interesting deals being announced
where South African based companies have made
acquisitions abroad. Deals such as Oceana Group
buying US-based fisheries for US$ 382.3m, Brait’s
proposed acquisition of Britain’s New Look for R14.2bn,
Woolworth’s acquisition of Australia’s David Jones for
R21.4bn and Brait’s acquisition of an 80% stake in
Virgin Active gyms.
And finally, what is your outlook for South African
M&A in 2016? Do you think its strong M&A activity
will continue?
The South African economic outlook is challenging
and there are sectors that are specifically hard hit such
as mining, on the back of declining commodity prices,
as well as lower export demands from China affecting
the industrial sector. Rising interest rates, increasing
unemployment, and declining consumer demand will
have a negative impact on both the consumer and
financial services sector.
I expect opportunities for M&A activities in 2016 to be
driven by potential consolidation as companies seek
to rationalise costs and streamline operations while
getting rid of redundancies in capacity. This situation
could play itself within the mining resource sectors.
Companies that offer new innovative solutions for
addressing consumer demands and business needs will
position themselves as attractive acquisition targets, as
they provide growth potential for companies looking to
grow additional sources of revenue.
What key qualities fo you look for when sourcing an
acquisition?
Attractive acquisition opportunities provide a compelling
growth story and synergistic value, with the ability to
generate sustainable profits. The economic environment
must be conducive for growth, and there must be a clear
plan for a well-run business with capable management
able to execute on the strategy of the merged entity.
The valuation of a business must be reflective of
growth potential to avoid overpaying. You cannot
underestimate the importance of knowing and aligning
with your key stakeholders and choosing the right
partners. It is important to understand the political and
social environment the target company is operating
in and have the right partnerships with contractual
arrangements that foster an alignment of interests
between parties.
“Attractive acquisition opportunities
provide a compelling growth story
and synergistic value, with the ability
to generate sustainable profits.”