Howard E. Johnson presented an update on M&A market activity. Global M&A deal value reached over $3 trillion in 2013, while North American deal value was around $1 trillion. In Canada, the largest deals in 2013 included Nexen Energy which was acquired by CNOOC for $19.5 billion. Foreign buyers, particularly from the United States and Asia, have been increasingly active in acquiring Canadian companies.

1. February 19, 2014
M&A Market Update
Howard E. Johnson
MBA, FCPA, FCA, FCMA, CBV, CPA, CFA, ASA, CF, C.DIR

2. 2
Speaker
Howard E. Johnson
MBA, FCPA, FCA, FCMA, CBV, CPA, CFA, ASA, C.Dir
Managing Director, Veracap M&A International Inc.
(416) 597-4500; hjohnson@veracap.com
Howard is a Managing Director of Veracap M&A International and its sister
firm, Campbell Valuation Partners Limited. He is also the incoming
President for M&A International.
Howard has been involved in business valuation, acquisition, divestiture,
and shareholder value advisory assignments for corporations throughout
North America. He is the author of several books on the subjects of
business valuation and corporate finance, and has acted as an expert
witness on valuation matters before the courts.
2

3. 3
About Veracap M&A International
Veracap M&A International Inc. is a leading investment bank advising on
acquisitions, divestitures, financing and shareholder value initiatives.
As a member of M&A International, Veracap forms part of the world’s
leading organization of M&A advisors, with over 600 professionals in 41
countries.
Veracap is a sister company of Campbell Valuation Partners, Canada’s
longest established independent business valuation firm.
www.veracap.com
3

4. 4
About M&A International
Veracap and our M&A International Inc. partners closed 1,300 transactions
totaling more than US$75 billion in transaction value in the past five years

5. 5
This material is for educational purposes only. It deals with
technical matters which have broad application and may not be
applicable to a particular set of circumstances and facts. As well,
the course material and references contained therein reflect laws
and practices which are subject to change. For these reasons, the
course material should not be relied upon as a substitute for
specialized advice in connection with any particular matter.
Although the course material has been carefully prepared, the
author does not accept any legal responsibility for its contents or for
any consequences arising from its use.
© Howard E. Johnson, 2014
Disclaimer

6. 6
Source: S&P Capital IQ
Global M&A Activity
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Global M&A Transactions
Deal Value ($ USD
Millions)
Total No. of Deals
No. of Deals with Reported
Value
Deal Value ($ USD Millions) No. of Deals

7. 7
Source: S&P Capital IQ
Global M&A Activity
-
5,000
10,000
15,000
20,000
25,000
0
5
10
15
20
25
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Global M&A Transactions
> $500M
$100M - 500M
$50M-100M
< $50M
Median Deal Value
($ USD Millions)
Median Deal Value ($ USD Millions) No. of Deals

8. 8
Source: S&P Capital IQ
Global M&A Activity

9. 9
Source: S&P Capital IQ
North American M&A Activity
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
North American M&A Transactions
Deal Value ($ USD
Millions)
Total No. of Deals
No. of Deals with
Reported Value
Deal Value ($ USD Millions) No. of Deals

10. 10
Source: S&P Capital IQ
North American M&A Activity
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
0
5
10
15
20
25
30
35
40
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
North American M&A Transactions by Deal Value
> $500M
$100M - 500M
$50M-100M
< $50M
Median Deal Value
($ USD Millions)
Median Deal Value ($ USD Millions) No. of Deals

11. 11
Source: S&P Capital IQ
North American M&A Activity
Consumer Discretionary
Consumer Staples
Energy
Financials
Healthcare
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
0
1,000
2,000
3,000
4,000
5,000
6,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Number of North American M&A Transactions by IndustryNo. of Deals

12. 12
Source: S&P Capital IQ
North American M&A Activity
North American EV/EBITDA Multiples by Industry
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Consumer Discretionary 8.9 10.0 10.1 11.2 11.4 7.1 10.9 11.1 9.6 11.5
Consumer Staples 10.2 13.4 8.9 10.8 9.5 9.6 8.4 9.1 9.7 10.7
Energy 7.8 8.2 8.1 8.1 7.7 6.2 9.5 11.0 7.2 6.8
Financials 10.6 15.9 15.5 15.3 10.9 8.8 12.2 12.7 11.5 13.2
Healthcare 12.1 12.6 14.7 15.6 15.6 7.7 12.0 11.4 11.2 10.5
Industrials 10.1 9.5 9.5 9.3 9.9 7.1 8.1 9.2 8.1 8.2
Information Technology 12.5 14.4 13.2 14.3 15.7 11.7 13.8 12.7 12.1 16.0
Materials 8.7 6.7 7.7 8.9 9.8 7.0 9.0 10.5 8.2 7.6
Telecommunication Services 6.8 9.1 10.5 8.7 10.3 7.3 7.5 5.5 10.9 8.0
Utilities 10.0 8.0 9.4 9.2 8.4 8.0 15.4 9.0 9.8 10.6
All Industries 10.0 10.8 10.3 11.5 11.0 7.7 10.5 10.9 9.7 9.9

13. 13
Source: S&P Capital IQ
North American M&A Activity
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Number of Private Companies Sold
United States
Canada
No. of Deals

14. 14
Source: S&P Capital IQ
North American M&A Activity
0
100
200
300
400
500
600
700
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Number of Public Companies Sold
United States
Canada
No. of Deals

15. 15
Source: S&P Capital IQ
North American M&A Activity
0
10
20
30
40
50
60
70
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Median Premium Over Public Trading Price (1-Month Prior) (%)
United States
Canada
Median Premium (%)

16. 16
Source: S&P Capital IQ
Canadian M&A Activity
-
500
1,000
1,500
2,000
2,500
0
50,000
100,000
150,000
200,000
250,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Canadian M&A Transactions
Deal Value ($ CAD
Millions)
Total No. of Deals
No. of Deals with
Reported Value
Deal Value ($ CAD Millions) No. of Deals

17. 17
Source: S&P Capital IQ
Canadian M&A Activity
Top 10 Takeovers of Canadian Companies
Target Buyer Country of Buyer Year
Total Transaction Value
($ CAD Billions)
Alcan, Inc. Rio Tinto Group United Kingdom 2007 45.8
Petro-Canada Suncor Energy Inc. (TSX:SU) Canada 2009 24.1
Falconbridge Limited Xstrata plc (LSE:XTA) Switzerland 2006 23.0
INCO Limited Vale S.A. (BOVESPA:VALE5) Brazil 2007 21.4
Nexen Energy CNOOC Ltd. Hong Kong 2013 19.5
Placer Dome Inc. Barrick Gold Corporation (TSX:ABX) Canada 2006 13.0
Fording Canadian Coal Trust, Inc. Teck Resources Limited (TSX:TCK.B) Canada 2008 11.6
Labatt Brewing Company Limited Companhia de Bebidas Das Americas
(AMBEV) (BOVESPA:AMBV4)
Brazil 2004 10.8
IPSCO, Inc. SSAB AB (OM:SSAB A) Sweden 2007 9.4
MBNA Canada Bank, Credit Card Portfolio,
Certain Other Assets and Liabilities
The Toronto-Dominion Bank (TSX:TD) Canada 2011 8.6

18. 18
Source: S&P Capital IQ
Canadian M&A Activity
-
200
400
600
800
1,000
1,200
0
5
10
15
20
25
30
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Canadian M&A Transactions by Deal Value
> $500M
$100M - 500M
$50M-100M
< $50M
Median Deal Value
($ CAD Millions)
Median Deal Value ($ CAD Millions) No. of Deals

19. 19
Source: S&P Capital IQ
Canadian M&A Activity
Consumer Discretionary
Consumer Staples
Energy
Financials
Healthcare
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Number of Canadian M&A Transactions by IndustryNo. of Deals

20. 20
Source: S&P Capital IQ
Canadian M&A Activity
0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Number of Canadian Companies Sold
Canadian Buyer of
Canadian Firm
Foreign Buyer of
Canadian Firm
No. of Deals

21. 21
Source: S&P Capital IQ
Canadian M&A Activity
Top 10 Deals Involving Canadian Buyers and Sellers in 2013
Target Buyer Country of Seller Country of Buyer Closed Date
Total Transaction Value
($ CAD Billions)
Nexen Inc. CNOOC Ltd. Canada Hong Kong 25/02/2013 19.5
Portfolio of 425 Properties of Loblaw
Companies Limited
Choice Properties Limited Partnership Canada Canada 05/07/2013 7.0
Inmet Mining Corporation First Quantum Minerals Ltd. Canada Canada 01/04/2013 6.5
Neiman Marcus Group LTD Inc. Ares Management LLC; Canada Pension
Plan Investment Board
United States United States; Canada 25/10/2013 6.4
Canada Safeway Limited Sobeys Inc. Canada Canada 03/11/2013 5.8
Primaris Retail Real Estate Investment
Trust
H&R REIT; H&R Finance Trust Canada Canada 04/04/2013 4.5
Ally Credit Canada Limited and ResMor
Trust Company, Inc.
Royal Bank of Canada Canada Canada 01/02/2013 3.7
Astral Media Inc. Bell Media Inc. Canada Canada 05/07/2013 3.4
Celtic Exploration Ltd. Exxonmobil Canada Energy Canada Canada 26/02/2013 3.2
Saks Incorporated Hudson's Bay Company United States Canada 04/11/2013 2.8

22. 22
Source: S&P Capital IQ
Cross-Border M&A in Canada
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Foreign Buyers of Canadian Companies by Region
United States
Europe
Asia / Pacific
No. of Deals
Location of Buyer

23. 23
Consumer Discretionary
424
12%
Consumer Staples
118
3%
Energy
267
8%
Financials
255
7%
Healthcare
225
7%
Industrials
665
19%
Information Technology
854
25%
Materials
568
16%
Telecommunication Services
31
1%
Utilities
59
2%
Foreign Buyers of Canadian Companies by Industry # of Deals (2004-2013)
Source: S&P Capital IQ
Cross-Border M&A in Canada

24. 24
Consumer Discretionary
$27,078
6%
Consumer Staples
$29,962
7%
Energy
$87,355
21%
Financials
$21,336
5%
Healthcare
$13,832
3%
Industrials
$31,756
8%
Information Technology
$31,536
7%
Materials
$171,501
40%
Telecommunication Services
$811
0%
Utilities
$12,523
3%
Foreign Buyers of Canadian Companies by Industry $ Value (2004-2013)
Source: S&P Capital IQ
Cross-Border M&A in Canada

25. 25
Source: S&P Capital IQ
Cross-Border M&A in Canada
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
-700
-500
-300
-100
100
300
500
700
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
# of Net M&A Transactions
Candian Buyer of
Foreign Firm
Foreign Buyer of
Canadian Firm
Net M&A
CAD/USD Exchange
Rate
No. of Deals CAD/USD Exchange Rate

26. 26
Source: S&P Capital IQ
Cross-Border M&A in Canada
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
-$200,000
-$150,000
-$100,000
-$50,000
$0
$50,000
$100,000
$150,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ Value of Net M&A Transactions
Candian Buyer of
Foreign Firm
Foreign Buyer of
Canadian Firm
Net M&A ($ CAD
Millions)
CAD/USD
Exchange Rate
Deal Value ($ CAD Millions) CAD/USD Exchange Rate

27. 27
Source: S&P Capital IQ
Cross-Border M&A in Canada
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Canadian Buyers of Foreign Companies by Region
United States
Europe
Asia / Pacific
No. of Deals
Location of Seller

28. 28
Consumer Discretionary
478
10%
Consumer Staples
140
3%
Energy
432
9%
Financials
607
13%
Healthcare
204
4%
Industrials
561
12%
Information Technology
687
15%
Materials
1,389
30%
Telecommunication Services
34
1%
Utilities
122
3%
Canadian Buyers of Foreign Companies by Industry # of Deals (2004-2013)
Source: S&P Capital IQ
Cross-Border M&A in Canada

29. 29
Consumer Discretionary
$87,585
16%
Consumer Staples
$13,041
2%
Energy
$99,679
18%
Financials
$119,857
21%
Healthcare
$39,461
7%
Industrials
$64,386
11%
Information Technology
$23,515
4%
Materials
$69,828
12%
Telecommunication Services
$1,586
0%
Utilities
$52,767
9%
Canadian Buyers of Foreign Companies by Industry $ Value (2004-2013)
Source: S&P Capital IQ
Cross-Border M&A in Canada

30. 30
Empirical Observations
•Valuation multiples have returned to historic highs in some
sectors (e.g. technology)
•Deals are taking longer to close
•Lots of cash on corporate balance sheets
•Private equity overhang of approx. US $430B
•Small cap public company issues & opportunities
•2014 likely to be a relatively good year (but how long will it
last?)

31. 31
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