Global & ANZ Industrials - PwC Australia · Terminal, 6) NGL Energy Partners/Transmontaigne...

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Deals | November 2016

Global & ANZ IndustrialsDeal activity

2 | PwC

Global & ANZ Industrials • Deal Activity | 3

ContentsIndustrials update 4

Industrials news & multiples 7

Markets update 15

Case study – Containerchain 21

Industrials update

Industrials update

Disruption in traditional industrials sectors – ‘low’ disruption is not ‘no’ disruption

Are traditional industrials sectors the most unexplored frontier of the disruption economy? That may be the case. However, whilst industrials sector executives expect lower levels of digital disruption vs their counterparts in other industries, around 40% expect to see ‘moderate or massive’ digital disruption in the next 12 months.1 It is perhaps easy to understand why traditional industrials sectors are not typically considered in the context of disruption. Given innovation can be perceived to increase risk, the rate of technological change in risk focussed industries (such as construction for example) is more likely to be slow or sporadic. That does not mean that disruption will not come – whilst the construction sector has been called the last major undisrupted industry on the planet, the sheer scale and importance of the sector suggests that, inevitably, it will increasingly deploy disruptive innovation or disruptive new technologies, or be disrupted from the outside.

It should be noted that technological advances (new ways of doing and behaving as well as new physical machinery or products) within

traditional industrials sectors are currently as much about transforming, modifying and improving existing processes, products and services, as they are about a wholesale destruction of the old and creation of the new.

In Australia, the recent management buy-out of Containerchain is a case in point. In September 2016, CHAMP Private Equity agreed to acquire 50% of Containerchain. Containerchain, advised by PwC, is a fast growing Australian company that has developed a disruptive software solution for the container logistics sector, materially changing the way the industry thinks about the deployment and movement of shipping containers (see Containerchain case study on page 22).

In addition to Australian success stories such as this, it is clear that globally, developments in technology are increasingly being applied within the industrials sector. For example:

Frontier-tech (drones, augmented reality and virtual reality): Applications include industries where aerial/‘at height’ operations or monitoring are required, such as the construction and property management industries. For example, TraceAir offers a platform to help construction companies control quality and costs of construction with a visual interface and smart analytics powered by drones; and BetterView is using drones to provide monitoring and reporting services to the property management and maintenance sectors.

Supply chain applications for blockchain technology: Blockchain technology enables secure and transparent monitoring

of transactions, and therefore has applications in supply chains, which are essentially a series of transactions that link to move products from one point in the chain to another. IBM has launched a platform aimed at companies who need to track high-value items through complex supply chains, in an attempt to expand the use of blockchain beyond financial services adoption. Other examples include Provenance, which offers a traceability system for materials and products; and start-ups such as Fluent and Skuchain, which offer alternative platforms for lending into global supply chains.

Data analytics: Data analytics is being used to derive new insights to improve safety, quality, productivity and costs in industrials sectors. For example, workforce telematics company Rhumbix uses timekeeping and production data collected from the field to generate real-time productivity and performance insights in the construction sector.

Additive manufacturing: Additive manufacturing, or “3D Printing”, (the process by which digital 3D design data is used to build up a component in layers by depositing material), has been used within industrial production to print simple parts, and the industry is evolving to enable the production of much more complicated components. Leading global player, 3D Systems, has undertaken a series of acquisitions, including professional 3D printing service companies, software and content companies, and 3D printer manufacturers – in order to build an holistic offering.

Marketplaces: Applicable to many sub-sectors, particularly where resources (people or equipment) are a key component of service delivery. For example, EquipmentShare matches capital equipment lenders and borrowers in the construction sector.


1 Russell Reynolds Associates, Digital Pulse 2015

6 | PwC

Pre-fabrication, modularisation, robotics and automation: A World Economic Forum report in May 2016 highlighted the “moral obligation” of the engineering and construction industry to transform – highlighting the “vast potential” for driving productivity and efficiency through the adoption of digitalisation, innovative technologies, materials, tools, and new construction techniques.2 Pre-fabrication and modularisation (or ‘offsite construction’) is just one component of this, and we have already seen companies leading the way in its adoption. Broad Group of China is perhaps one of the most well-known, with its popular YouTube video of a prefabricated 30 story hotel it constructed in 15 days. Broad has now built around 30 of its ‘sustainable buildings’, predominantly in China – although the company announced at last month’s offsite construction expo in Washington DC that it hopes to build its first in the US in the next 2 years.

Advancements in technology and IP are not new to industrials sectors – they are essential components of driving productivity, efficiency and growth. What is apparent however, is that there is increasing momentum in the current rate of change – and perhaps most importantly the acceptance that major change is inevitable.

PwC works with industrials clients to identify, assess and execute opportunities to embrace new technologies – and face the challenges that disruption can bring. Please contact a member of the team if you would like to discuss how we could work with you:

• Robert Speedie Partner, Transaction Services E: [email protected] P: 03 8603 3173

• Andrew Livitsanos Director, Mergers and Acquisitions E: [email protected] P: 03 8603 0038

2 World Economic Forum: Shaping the Future of Construction - A Breakthrough in Mindset and Technology, May 2016

Industrials news & multiples

Industrials news & multiples

Building products

M&A NewsBoral Limited, announced an agreement with an affiliate of Fonterra, which is the owner of Fonterra Brick, to combine their brick businesses in North America.

Adelaide Brighton is seeking acquisitions as the Australian construction industry consolidates.

Metro Performance Glass has entered into an agreement to acquire Australian Glass Group.

Sources: S&P Capital IQ, Factiva, PwC research

Transaction multiples (EV/EBITDA)25.0X

20.0X

15.0X

10.0X

0.0X06-02-2014 12-02-2014 06-02-2015 12-02-2015 06-02-2016

1) Breedon Aggregates/Huntsmans Quarries, 2) Kingspan Group/Vicwest, 3) Lone Star Funds/Forterra Building Products, 4) Steinhoff International Holdings/Iliad Africa, 5) Quanex Building Products/WII Components Inc., 6) Byggmax Group AB/Skånska Byggvaror AB, 7) Westlake Chemical/Axiall Corporation, 8) The Sherwin-Williams/The Valspar, 9) MHG Corporation/Flat Glass Industries, 10) Hill & Smith Ltd/Hardstaff Barriers, 11) Eugene Corporation/Tongyang, 12) Inmobiliaria Carso/Fomento de Construcciones y Contratas, 13) Braas Monier/Ontop, 14) Metro Performance Glass/Australian Glass Group, 15) AFG Arbonia/Looser Holding, 16) Marsella Holdings S.à r.l./Braas Monier

Trading multiples (EV/EBITDA)Building products FY2015 Oct-16James Hardie Industries plc ASX:JHX 16.6x 16.0xFletcher Building Ltd. NZSE:FBU 8.8x 9.7xBoral Limited ASX:BLD 11.2x 9.8xAdelaide Brighton Ltd. ASX:ABC 10.5x 12.0xBrickworks Limited ASX:BKW 13.3x 10.6xCSR Limited ASX:CSR 6.8x 6.5xGWA Group Limited ASX:GWA 8.8x 10.6xMetro Performance Glass NZSE:MPG 11.3x 12.1x

Median 10.8x 10.6xAverage 10.9x 10.9x


Chemicals

Transaction multiples (EV/EBITDA)

5.0X

10.0X

15.0X

20.0X

25.0X

30.0X

35.0X

40.0X

45.0X

03-30-2014 09-30-2014 03-31-2015 09-30-2015 03-31-2016

1) Samsung SDI/Cheil Ind, 2) Sipacam UPL Brasil/Sipcam S.p.A., 3) Agriphar Crop Solutions/Platform Specialty Products Corp., 4) Scepter/Myers Industries, 5) Ferro, Specialty Plastics in US/Spain/A. Schulman, 6) Dongbu Farm Hannong/-, 7) Impreglon SE/Aalberts Industies NV, 8) Rockwood/Albemarle, 9) Galvani Indústria/Yara International ASA, 10) Simga-Aldrich/Merck KGaA, 11) Trecore Chemical/Texas Oil & Chemical, 12) Arysta LifeScience/Platform Specialty Products Corp., 13) Ixom/The Blackstone Group, 14) Fertilizantes Heringer/PCS Sales, 15) Valves Inc. of Texas/KMG Chemicals, 16) Evonik Industries AG/-, 17) GrowHow UK/CF Industries Holdings, 18) Alent plc/Platform Specialty Products Corp., 19) Cytec Industries/Solvay SA, 20) Rentech Nitrogen Partners/CVR Partners, 21) Canexus/Superior Plus, 22) Lotte Fine Chemical/Lotte Chemical Corp., 23) Kuo Ching Chemical/Sunko Ink, 24) Dongbu Farm Hannong/LG Chem, 25) Magenta Master Fibers/PolyOne, 26) E. I. du Pont de Nemours and Company/The Dow Chemical Company, 27) Syngenta AG/China National Chemical Corp., 28) Nuplex Industries/Allnex Belgium SA/NV, 29) Euticals/Albany Molecular Research, 30) Monsanto Company/Bayer AG, 31) The Andersons/HC2 Holdings,, 32) Axiall Corporation/Westlake Chemical, 33) Chemetall/BASF SE, 34) LG Life Sciences/LG Chem,, 35) Agrium/Potash Corporation of Saskatchewan, 36) Canexus/Chemtrade Logistics Income Fund, 37) Chemtura/LANXESS Deutschland

Trading multiples (EV/EBITDA)

Chemicals FY2015 Oct-16

Orica Limited ASX:ORI 8.8x 8.9x

Incitec Pivot Limited ASX:IPL 11.4x 8.7x

DuluxGroup Limited ASX:DLX 11.7x 13.0xNufarm Limited ASX:NUF 11.6x 9.1xAlexium International Group ASX:AJX NM NM


M&A NewsNufarm, an Australia-based agrochemical manufacturer, is looking for acquisition opportunities.



Personal care


25.0X

30.0X

35.0X

15.0X

20.0X

10.0X

5.0X

0.0X10-21-2014 04-21-2015 10-21-2015 04-21-2016

1) Consortium (SK Holdings & others)/Bioland, 2) MW Legal 36/Global Cosmed, 3) Alliance Pharmaceuticals/MacUvision Europe, 4) TwinLab Consolidated/Nutricap Labs, 5) Pact/Jalco, 6) SKC Co/Bioland, 7) Vitaco Holdings/Vitaco Health Group, 8) Biostime Healthy Australia/Swisse, 9) Symrise/Pinova Holdings, 10) Soulbrain/Genic Co., 11) Shanghai Taifu Xiang’ Equity Investment Fund/Shanghai Jahwa United, 12) Alliance Pharma/Sinclair IS Pharma plc, Non-Aesthetics Business, 13) Han Bul Cosmetics/Neopharm, 14) Balchem/Albion Laboratories, 15) InvestIndustrial/Artsana, 16) Shanghai Jahwa/Mayborn, 17) Allianz/Atlantic Grupa, 18) Karex Berhad/Pasante Healthcare, 19) Probi USA/Nutraceutix, 20) Swallowfield/Brand Architekts, 21) Danone/The WhiteWave Foods, 22) Seoul Leaguer Cosmetics/Hugel, 23) SIIC Medical Science & Technology/Vitaco, 24) Lonza/InterHealth, 25) –/Oriflame, 26) Ausnutria Dairy/Nutrition Care


Personal care FY2015 Oct-16

BWX Limited ASX:BWX - 23.1xPental Limited ASX:PTL 6.9x 6.8xAsaleo Care Limited ASX:AHY 15.3x 8.9x


M&A NewsBiostime Healthy Australia acquired the remaining 17% stake in Swisse Wellness from a group of sellers on September14, 2016.

Ausnutria Dairy Corporation entered into the business sale agreement to acquire Nutrition Care Pharmaceuticals for $26.4M.

BWX, an Australian developer of skin and hair care products, is actively seeking personal care acquisitions.


Transport & logistics


25.0X

30.0X

35.0X

40.0X

45.0X

50.0X

15.0X

20.0X

10.0X

5.0X

0.0X05-16-2014 11-16-2014 05-16-2015 11-16-2015 05-16-2016

1) Hestya Energy/HES Beheer NV, 2) Supreme Group/EMS Seven Seas, 3) TransForce/Transport America., 4) EdgeStone Partners/Logistec Corp, 5) G3 Canada/Great Sandhills Terminal, 6) NGL Energy Partners/Transmontaigne Partners, 7) TransForce/Contrans Group, 8) Christchurch City Holdings/Lyttelton Port, 9) Sutton & Son/Imperial Tankers, 10) Knight Transportation/Barr-Nunn Transportation, 11) Radiant Global Logistics/Wheels Group, 12) XPO Last Mile/UX Specialized, 13) Kintetsu World Express/APL Logistics, 14) Japan Post Bank/Toll Holdings, 15) Hitachi Rail/Ansaldo STS, 16) FedEx Corporation/TNT Express, 17) Echo Global Logistics/Command Transportation, 18) XPO Logistics/XPO Logistics Europe, 19) XPO Logistics/Bridge Terminal Transport, 20) Apax Partners/Quality Distribution, 21) Rodan Transport/Hodges Trucking Company, 22) Cisa Trading/Brisa – Concessão Rodoviária, 23) Bluefin Investments/IN tIME Express Logistik, 24) Roadrunner Transportation Systems/Stagecoach Cartage and Distribution, 25) XPO Logistics/Con-way, 26) Transurban Queensland/AirportLinkM7, 27) Den Hartogh Holding/InterBulk, 28) Marco Polo Holding/Save SpA, 29) GIC Pte/Asciano, 30) The Brighton Pier Group/The Brighton Marine Palace & Pier, 31) Trimac Corporation/Trimac Transportation, 32) Elanders AB/LGI Logistics, 33) Matson Logistics/Span-Alaska Transportation, 34) Temasek Holdings/SMRT Corporation, 35) Genesee & Wyoming/Providence and Worcester Railroad, 36) Atlantia SpA/Save SpA


Transport & logistics FY2015 Oct-16

Brambles Limited ASX:BXB 10.5x 10.8xAurizon Holdings Limited ASX:AZJ 10.1x 9.3xQube Holdings Limited ASX:QUB 11.9x 14.3xSteamships Trading Company ASX:SST 8.5x 7.9xK&S Corporation Limited ASX:KSC 4.9x 6.9xLindsay Australia Limited ASX:LAU 6.2x 6.4xCTI Logistics Limited ASX:CLX 9.7x 10.2x


M&A NewsQube Holdings Limited agreed to acquire the remaining 33% of Moorebank Industrial Property Trust from Aurizon Holdings for $98.9M.

Qube Holdings has proposed to acquire a 50% shareholding in Amalgamated Terminals, currently held by Brookfield Infrastructure Partners.


10 | PwC

Business services


15.0X

20.0X

10.0X

05.0X

0.0X08-12-2014 02-12-2015 08-12-2015 02-12-2016 08-12-2016

1) Dimension Data Australia/Oakton Limited, 2) Ricardo/Lloyd’s Register Rail Limited, 3) Equifax/Veda Group, 4) CSC Computer Sciences Australia/UXC Limited, 5) Canon Australia/Converga, 6) Smartgroup/Advantage Salary Packaging, 7) Baring Private Equity/SAI Global, 8) Nomura Research/ASG Group


Business services FY2015 Oct-16

Salmat ASX:SLM 30.3x 7.4xSAI Global ASX:SAI 10.7x 10.1xALS Limited ASX:ALQ 10.7x 14.0xCredit Corp ASX:CCP - -Collection House ASX:CLH 9.0x 5.2xSMS ASX:SMX 9.1x 7.4x


M&A NewsBaring Asia Private Equity Fund entered into a binding scheme implementation deed to acquire SAI Global Limited from a group of sellers for $1B.

Credit Corp Group entered into a share sale agreement to acquire National Credit Management from Thorn Group Limited for $22.6M.

Salmat Limited acquired the remaining 50% stakes in MicroSourcing International for $24.3M.


Dairy


50.0X

60.0X

70.0X

80.0X

90.0X

100.0X

30.0X

40.0X

20.0X

10.0X

0.0X05-16-2014 11-16-2014

1) Fonterra/Beingmate Baby & Child Food, 2) –/The a2 Milk, 3) –/China Huishan Dairy, 4) Groupe Lactalis S.A./AK Gida Sanayi ve Ticaret AS, 5) Kraft Heinz/Kraft Foods, 6) Consortium (Center Labs/Yuanta)/Ausnutria Dairy, 7) Compagnie Gervais Danone/Groupe Centrale Danone, 8) –/Vietnam Dairy Products, 9) PZ Cussons/Five AM Life, 10) Arcor S.A.I.C./Mastellone Hermanos, 11) Champ Harvest/China Huishan Dairy, 12) Center/Ausnutria Dairy, 13) Qurain Petrochemical Industries/Saudia Dairy & Foodstuff, 14) Center/Ausnutria Dairy, 15) Post Holdings/MFI Holding, 16) –/China Dairy Group


Dairy manufacturers FY2015 Oct-16

Warrnambool Cheese & Butter ASX:WCB 7.3x 43.8xFonterra Shareholders Fund NZSE:FSF - -Australian Dairy Farms Group ASX:AHF - NMThe a2 Milk Company Limited NZSE:ATM 111.6x 24.1xBellamy’s Australia Limited ASX:BAL 68.2x 22.3xBega Cheese Limited ASX:BGA 22.1x 16.4x


M&A NewsBlue River Group entered into an agreement to acquire Wagga Wagga business of Fonterra Australia. The sale includes Riverina Fresh brand along with Wagga Wagga business.

AusreQuality Limited and Bureau Veritas SA signed a definitve agreement to acquire Dairy Technical Services from Warrnambool Cheese And Butter Factory Company Holdings.

Ballamy’s Australia has appointed Greenhill &Co to ofer advise on strategic options.



Food manufacturing


0.0X

5.0X

10.0X

15.0X

20.0X

25.0X

30.0X

35.0X

40.0X

45.0X

03-31-2014 09-30-2014 03-31-2015 09-30-2015 03-31-2016

1) Balchem/Performance Chemicals & Ingredients,,, 4) First Pacific, Wilmar/Goodman Fielder, 5)/, 6)/, 7) R&R Ice Cream/Australasian Food Group, 8) Tyson Foods/The Hillshire Brands, 9) Bay Valley Foods/Flagstone Foods,, 11) Lindt & Sprüngli/Russell Stover Candies, 12) URC International/Griffins Foods, 13) General Mills/Annie’s, 14) Finsbury Food/Fletchers Group of Bakeries, 15) Post Holdings/MOM Brands, 16) 9135430 Canada Inc/MRRM, 17) Itoham Foods/ANZCO Foods, 18) The Kraft Heinz/Kraft Foods, 19) JBS S.A./Moy Park, 20) Ferrero/Thorntons, 21) Snyder’s-Lance/Diamond Foods, 22) Pinnacle Foods Inc/Boulder Brands, 23) Idun Industri/The Waverley Bakery, 24) Cotton Parent/Krispy Kreme Doughnuts, 25) Pacific Equity Partners/Patties Foods, 26) Mondelez International/The Hershey Company, 27) Gores Holdings/Hostess Brands, 28) UTZ Quality Foods/Golden Enterprises, 29) SIIC Medical Science & Technology Group/Vitaco Holdings, 30) Amplify Snack Brands/Tyrrells Potato Crisps


Food manufacturers FY2015 Oct-16

Coca-Cola Amatil Limited ASX:CCL 10.0x 10.3xFreedom Foods Group ASX:FNP 32.9x 46.3xCapilano Honey Limited ASX:CZZ 10.7x 11.9xFFI Holdings Limited ASX:FFI 11.8x 10.2x


M&A NewsMedibee Apiaries acquired Manuka beekeeping assets from Capilano Honey Limited for $9.2M.

Capilano Honey Limited acquired 50% stake in Western Honey Supplies for $2.5M.


Seafood processing


09-21-2014 03-21-2015 09-21-2015 03-21-2016

35.0X

25.0X

30.0X

15.0X

20.0X

10.0X

5.0X

0.0X

1) MC Ocean Holdings/Cermaq, 2) Benchmark Genetics/Stofnfiskur HF, 3) Hassad Food/A’Saffa Foods, 4) –/Havfisk ASA, 5) Tassal Operations/GC & AC Holdings, 6) Castlex Jeju Golf Club/Sajodaerim, 7) –/Sajo Industries, 8) Maruha Nichiro/Sanford, 9) –/Grieg Seafood ASA, 10) Lerøy Seafood Group/Havfisk ASA


Seafood processors FY2015 Oct-16

Tassal Group Limited ASX:TGR 5.8x 7.6xHuon Aquaculture Group ASX:HUO 4.4x 13.4xSeafarms Group Limited ASX:SFG NM NMClean Seas Tuna Limited ASX:CSS 15.8x NMMareterram Limited ASX:MTM NM NM


M&A NewsNo recent news

12 | PwC

Packaging


0.0X

2.0X

4.0X

6.0X

8.0X

10.0X

12.0X

14.0X

16.0X

05-01-2014 11-01-2014 11-01-201505-01-2015 05-01-2016

1) Genstar Capital/Pretium Packaging, 2) Amcor/Bella Prima Perkasa, 3) Violet Profit/Sino Haijing, 4) Clayton, Dubliner & Rice/Mauser Group, 5) KKR/Goodpack Ltd, 6) Crown Holdings/Empaque, 7) ESNT International/Clondalkin Group Holdings, Specialist Packaging Division, 8) Graphic Packaging/Norampac Inc, North American Boxboard Manufacturing and Converting Assets, 9) Wendel/Constantia Flexibles, 10) WestRock/MeadWestvaco, 11) Ball Corp/Rexam, 12) DS Smith/Duropack, 13) Smurfit Kappa/Inspirepac, 14) KapStone Kraft Paper/Victory Packaging, 15) Apollo Global Mgmt/Verallia, 16) Caisse de dépôt et placement du Québec/IPL, 17) Nissha Printing/H.I.G. Luxembourg Holdings 28 S.à r.l, 18) Scientex Packaging Berhad/Mondi Ipoh Sdn Bhd, 19) Transcontinental Inc. (TSX:TCL.A)/Ultra Flex Packaging Corp., 20) Graphic Packaging/Colorpak, 21) Amcor/Alusa, 22) RPC Group/British Polythene, 23) Taisho Pharmaceutical/DHG Pharmaceutical, 24) Packaging Corporation/Tim-Bar Corporation, 25) MacFarlane/Nelsons for Cartons and Packaging, 26) Refresco Group/Whitlock Packaging, 27) Berry Plastics Group/AEP Industries Inc. (NasdaqGS:AEPI), 28) Amcor/Rigid Plastics Blow Molding Operations, 29) Madison Dearborn/Powerflute Oyj


Packaging FY2015 Oct-16

Amcor Limited ASX:AMC 13.0x 12.2xOrora Limited ASX:ORA 11.7x 11.6xPact Group Holdings ASX:PGH 10.0x 11.4xPMP Limited ASX:PMP 3.9x 4.0xOPUS Group Limited ASX:OPG 8.8x 3.5xPro-Pac Packaging ASX:PPG 8.9x 8.3x


M&A NewsAmcor has agreed to acquire the North American rigid plastics blow moulding operations of Sonoco Products Company for USD 280m., Sonoco is a global packaging company based in the United States. The acquisition price of USD 280m represents a multiple of 8.0 times LTM EBITDA.

Americas: Amcor is actively seeking packaging acquisitions in North and South America.


M&A NewsAustralia: GUD Holidings agreed to acquire Griffiths Equipment Limited. Griffiths reported sales turnover of approx. $8M. GUD Holdings is seeking further bolt-on opportunities for automotive business.


Home appliances


15.0X

20.0X

10.0X

5.0X

0.0X05-27-2014 11-27-2014 05-27-2015 11-27-2015 05-27-2016

1) L E Lundbergföretagen/Husqvarna AB, 2) Rheem Manufacturing/CEM, 3) Whirlpool/Indesit, 4) Hamilton Beach Brands/Weston Products, 5) APG Asset Management/De’ Longhi, 6) –/Guangdong Homa Appliances, 7) –/Vatti Corporation, 8) Middleby/Aga Rangemaster, 9) Mitsubishi Electric Corporation/DeLclima, 10) Qingdao Haier Co/GE Appliances, 11) Quaestio Capital Management/Sabaf SpA, 12) NIBE Energy Systems/The Climate Control, 13) SEB SA/WMF Group, 14) Cott Corporation/Eden Springs, 15) Melrose Industries/Nortek Inc.


Home appliances FY2015 Oct-16

Breville Group Limited ASX:BRG 11.2x 15.2xShriro Holdings Limited ASX:SHM 7.9x 5.3xGUD Holdings Limited ASX:GUD 14.5x 14.7xQuantum Energy Ltd. ASX:QTM NM NM



Capital goods


05-23-2014 11-23-2014 05-23-2015 11-23-2015 05-23-2016

25.0X

15.0X

20.0X

10.0X

5.0X

0.0X

1) Nomura Shipbuilding/Sasebo Heavy Industries, 2) Brambles/Ferguson Group, 3) Hua An Fund Management/China CNR Corporation, 4) Reliance Defence Systems/Reliance Defence and Engineering, 5) Immovent, Jakubas Investment/Newag, 6) BorgWarner/Remy International, 7) Westinghouse Air Brake Technologies/Faiveley Transport, 8) Dealdone Shares/UGint Co.Ltd. (KOSDAQ:A195990), 9) American Securities/Blue Bird, 10) Interpump Group/Mega Pacific, 11) Nidec Corporation/Motors, Drives and Electric Power Generation, 12) Crestview Partners/Accuride Corp.

Trading multiples (EV/EBITDA)Capital goods FY2015 Oct-16Austal Ltd. ASX:ASB 8.7x NMMaxiTRANS Industries ASX:MXI 4.6x 8.3xMMA Offshore Limited ASX:MRM 2.4x 6.1xBradken Limited ASX:BKN 62.9x 12.6xZicom Group Limited ASX:ZGL 5.0x 5.2x


M&A NewsAustralia: Hitachi Construction Machinery entered into a bid implementation agreement to acquire Bradken Limited for approx. $560M.


Engineering & construction


07-01-2014 01-01-2015 07-01-2015 01-01-2016

35.0X

25.0X

30.0X

15.0X

20.0X

10.0X

05.0X

0.0X

1) Versar/J.M. Waller Associates, 2) AECOM/URS Corporation, 3) ARCADIS/Hyder, 4) Court Square Capital Partners/Pike, 5) ClubCorp/Sequoia Golf, 6) ARCADIS/Callison, 7) HC2 Holdings,/DBM Global, 8) OTOC/Bosco Jonson, 9) Southwest Gas Corporation/Brigadier Pipelines, 10) VINCI Energies/Electrix Limited, 11) KUKA/Swisslog Holding, 12) Great Lakes Dredge & Dock/Magnus Pacific, 13) Fisher-Klosterman/Emtrol, 14) Qatar Holding/Canary Wharf Group, 15) Kingspan/Vicwest, 16) The Blackstone Group/IXOM, 17) –/National Pump & Energy, 18) Centerbridge Partners/Senvion, 19) Primoris Services Corporation/Primoris, 20) Element Materials Technology/TRaC, 21) The Carlyle Group/Nationwide Accident Repair Services, 22) Eastern Bay Energy/Horizon Energy Distribution, 23) DC Capital Partners/Hill International, 24) Veritas Capital/Alion Science and Technology, 25) Orion Group/T.A.S. Commercial Concrete Construction, 26) Crescent Capital/Cardno, 27) Tetra Tech/Coffey, 28) CDP Equity/Saipem, 29) Team, Inc./Furmanite, 30) Ferrovial Servicios, S.A./Broadspectrum, 31) Decmil/Cut & Fill, 32) VINCI/J & P Richardson Industries, 33) Inmobiliaria Carso/Fomento de Construcciones y Contratas, 34) Caisse de dépôt et placement du Québec/SPIE SAS, 35) Stantec/MWH Global, 36) Surbana International Consultants/SMEC


Engineering & construction FY2015 Oct-16

CIMIC ASX:CIM 13.2x 7.2xLend Lease ASX:LLC 9.3x 10.2xDowner ASX:DOW 4.1x 4.8xWorley Parsons ASX:WOR 6.7x 14.3xMonadelphous ASX:MND 3.7x 6.1xCardno ASX:CDD 6.8x 17.5xDecimil ASX:DCG 1.8x 19.4xLycopodium ASX:LYL 13.2x 10.3x


M&A NewsResource Capital Fund entered into an agreement to acquire an additional 60.22% stake in Ausenco Limited.

Downer EDI has partnered with State Grid Corporation of China on its bid for Ausgrid, the NSW state-owned electricity distribution business.

Cardno will sell its software business, XP Solutions, to private equity firm EQT for USD$ 49M.


14 | PwC

Infrastructure services


07-25-2014 01-25-2015 07-25-2015 01-25-2016

30.0X

25.0X

15.0X

20.0X

10.0X

05.0X

0.0X

1) Better Capital PC/OfficeTeam, 2) XPO Logistics/XPO Logistics, 3) VINCI/Electrix, 4) Iron Mountain/Recall Holdings, 5) Altor Equity/Transcom WorldWide, 6) The Carlyle Group/Nationwide Accident Repair Services, 7) Johnson Service/London Linen Supply, 8) DC Capital Partners/Hill International, 9) Freeman Audio Visual/Staging Connections, 10) Team, Inc./Furmanite Corporation, 11) A2A S.p.A./Linea Group, 12) Canon Australia/Converga, 13) Grovepoint Capital/EnServe Group, 14) RealPage/NWP Services, 15) Caisse de dépôt et placement du Québec/Elior Group, 16) HNA Group/gategroup, 17) Predica Prevoyance Dialogue du Credit Agricole/S.A. Elis, 18) –/Eltel AB


Infrastructure services FY2015 Oct-16

Programmed ASX:PRG 6.3x 12.8xRCR Tomlinson ASX:RCR 3.3x 13.0xSpotless ASX:SPO 13.0x 6.4xUGL ASX:UGL NM NMBSA ASX:BSA 4.9x 6.5xSouthern Cross Electrical Eng ASX:SXE 1.0x 2.2x


M&A NewsSpotless Group has decided not to sell its laundries unit and will retian the business within the group portfolio. Several private equity firms have been in talks with Spotless for the possible transaction.


Markets update

16 | PwC

Macroeconomic and foreign exchange data Macroeconomic indicators

Indicator – Q2 – 2016 Australia United Kingdom

United States Germany China Japan

GDP (YoY %Δ) 3.3 2.1 1.3 1.7 6.7 0.8

Industrial production (YoY %Δ) -1.5 2.1 -0.2 -0.6 ~ 0.1

CPI (YoY %Δ) 1.0 0.4 1.0 0.1 2.1 -0.3

Exports (YoY %Δ) -4.4 -8.2 -6.1 1.1 -4.4 1.8

Current Account Balance ($US B) -11.6 -41.1 -119.9 89.5 61.5 43.4

Notes: Figures are for Q2 2016 as reported by OECD.org • Real GDP growth is calculated as % change year on year • CPI Inflation is calculated as % change year on year • Industrial Production Index is calculated as % change year on year for the index • Exports is calculated as % change year on year • Trade balance is calculated as Exports fob less imports cif in $US B •

Crude Oil – Brent ($ per Bbl. – ICE: ^B)

20.00

30.00

40.00

50.00

60.00

Nov-2015 Mar-2016 Jul-2016 Nov-2016 Mar-2017 Jul-2017 Nov-2017

Development – Crude Oil

Latest price 46.86 Week-to-date -4.62%

52-week low 26.01 Month-to-date 1.43%

52-week high 51.85 Year-to-date 28.00%

Gold ($ per troy oz. – COMEX: ^GC)

Nov-2015 Mar-2016 Jul-2016 Nov-2016 Mar-2017 Jul-2017 Nov-2017

1,040.00

1,090.00

1,140.00

1,190.00

1,240.00

1,290.00

1,340.00

1,390.00

Development – Gold

Latest price 1,296.13 Week-to-date 2.31%

52-week low 1,046.27 Month-to-date 1.58%

52-week high 1,374.91 Year-to-date 22.14%

Note: Straight line shows historical spot prices, dotted marked line shows futures prices. Price development table is based on most actively traded futures contract.

Markets update

Source: S&P Capital IQ


FX – Spot rates

EUR USD BRL CNY INR

1 EUR - 1.0960 3.4859 7.4285 73.1203

1 USD 0.9124 - 3.1805 6.7778 66.7150

1 BRL 0.2869 0.3144 - 2.1311 20.9763

1 CNY 0.1346 0.1475 0.4693 - 9.8432

1 INR 0.0137 0.0150 0.0477 0.1016 -

FX – Month-to-date % change

EUR USD BRL CNY INR

1 EUR - -2.49% -4.42% -0.91% -2.35%

1 USD 2.56% - -1.98% 1.63% 0.15%

1 BRL 4.62% 2.02% - 3.68% 2.17%

1 CNY 0.92% -1.60% -3.54% - -1.45%

1 INR 2.40% -0.15% -2.12% 1.47% -

FX – Week-to-date % change

EUR USD BRL CNY INR

1 EUR - 0.71% 2.34% 0.75% 0.43%

1 USD -0.71% - 1.61% 0.04% -0.28%

1 BRL -2.28% -1.59% - -1.55% -1.87%

1 CNY -0.75% -0.04% 1.57% - -0.33%

1 INR -0.42% 0.28% 1.90% 0.33% -

FX – Year-to-date % change

EUR USD BRL CNY INR

1 EUR - 0.92% -18.98% 5.35% 1.67%

1 USD -0.91% - -19.71% 4.39% 0.75%

1 BRL 23.42% 24.55% - 30.02% 25.48%

1 CNY -5.08% -4.21% -23.09% - -3.49%

1 INR -1.64% -0.74% -20.31% 3.62% -

Source: S&P Capital IQ as of 31/10/2016

18 | PwC

CommoditiesPlastics PP ($ per lb. – NYMEX: ^QE)

Nov-2015 Feb-2016 May-2016 Aug-2016 Nov-2016 Feb-2017

0.00

0.00

0.00

0.01

0.01

0.01

0.01

Development – Plastics


52-week low 0.01 Month-to-date -1.47%


Rubber (¥ per kg. – CBOT: ^JRU)

Nov-2015 Aug-2016Feb-2016 May-2016 Nov-2016 Feb-2017

140.00

150.00

160.00

170.00

180.00

190.00

200.00

210.00

Development – Rubber




Plastics PE ($ per lb. – NYMEX: ^QD)

Nov-2015 Mar-2016 Mar-2017Jul-2016 Nov-2016 Jul-2017 Nov-2017

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Development – Plastics

Latest price 0.00 Week-to-date 1.99%



Aluminium (¥ per kg. – TOCOM: ^IA)

Nov-2015 Aug-2016Feb-2016 May-2017May-2016 Nov-2016 Feb-2017

112.00

112.50

113.00

113.50

114.00

Development – Aluminum



52-week high 113.55 Year-to-date -0.62%



Iron Ore ($ per MT – NYMEX: ^IY)

Nov-2015 Nov-2016Mar-2016 Nov-2017Jul-2016 Mar-2017 Jul-2017

0.01

10.01

20.01

30.01

70.01

60.01

50.01

40.01

Development – Iron

Latest price 64.40 Week-to-date 3.37%



Note: Straight line shows historical spot prices, dotted marked line shows futures prices. Price development table is based on most actively traded futures contract.


20 | PwC

Equity indicesS&P/ASX 200 Industrials

Sep-2011 Sep-2014Sep-2012 Sep-2016Sep-2013 Sep-2015

0

1,000

2,000

3,000

6,000

5,000

4,000

Development – S&P/ASX 200 Industrials Sector Index

Latest value 5,252.94 Week-to-date 0.48%

52-week low 4,557.69 Month-to-date -0.83%


S&P 500 Sector Indices – Industrials Sector


0

100

300

200

400

600

500

Development – S&P 500 Sector Indices – Industrials Sector Index

Latest value 504.87 Week-to-date 1.02%



S&P Europe 350 – Industrials


0

500

1,000

1,500

2,500

2,000

Development – S&P EUROPE 350 – Industrials (Sector)

Latest value 1,793.56 Week-to-date -0.88%

52-week low 1,476.30 Month-to-date -0.23%


S&P smallcap 600 Sector Indices – Industrial Sec.


0

400

200

600

1,000

800

Development – S&P SmallCap 600 Sector Indices – Industrials Sector Index

Latest value 816.66 Week-to-date 0.80%





Case study – Containerchain

22 | PwC

Case Study – Containerchain

Equity investment in Containerchain by CHAMP private equityTransaction summary

• On 10 August 2016, PwC concluded a 12 month process for Containerchain Pty Ltd to successfully secure CHAMP Private Equity as an equity investor going forward

• CHAMP will invest to acquire a signigicant stake in Containerchain, which includes an amount paid upfront to the founders, an amount payable in FY17 as an earn-out and an amount of new capital into the business. The new capital will help to accelerate Containerchain’s global growth strategy

• The transaction values Containerchain at a significant multiple of revenue and EBITDA.

Transaction highlights

• Strong interest in the business with 20 indicative offers received – competitive tension maintained

• Final agreed price represented a significant revenue multiple

• Exceeded the expectations of the founders.

PwC’s role

• PwC were engaged as the exclusive M&A adviser following a competitive pitch process. The role involved:

– Coordinating a global marketing campaign to identify interested investors – over 100 parties contacted utilising PwC’s global office network

– Managing the shortlisting of bidders and due diligence process

– Negotiation of transaction terms and associated documentation

• PwC Tax led a complex restructure and provided ad hoc tax advice.

About Containerchain

• Containerchain is a fast growing Australian company that has developed a disruptive software solution for the container logistics sector. The company generates both transaction and subscription revenue streams derived from the movement of shipping containers. Its technology places barriers on competing products entering the space.

About CHAMP private equity

• CHAMP is a leading Australian private equity firm with a strong track record of principal investment s dating back to 1987. Important to this transaction, CHAMP has a Singapore office presence, which enables it to help portfolio companies accelerate growth outside Australia into Asia.


Industrials networkTransaction services

Mergers and acquisitions

Robert Speedie

T: +61 (3) 8603 3173 E: [email protected]

Andrew Livitsanos

T: +61 (3) 8603 0038 E: [email protected]

Aaron van den Berg

T: +61 (3) 8603 1884E: [email protected]

Ian Fionda

T: +61 2 8266 5116 E: [email protected]

pwc.com.au

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This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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