International M&A in High Tech and Energy Sectors

From a European perspective

ABA, Eilat Conference

May 27th, 2013, Jan-Willem van Rooij

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A European perspective

1. Deal Terms and Practices

2. High Tech Transactions

3. E&P Transactions

Deal Terms and Practices (1)

• Common Law versus Civil Law, some general obervations:

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Topic Common Law Civil Law

Interpretation - Textual interpretation

- Pre contractual exchanges not relevant

- First: common intention of parties- Second: reasonable interpretation

- Pre-contractual exchanges are relevant

Efforts Defined terms of best and reasonable efforts

Depends on interpretation

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Deal Terms and Practices (2)

Topic Common Law Civil Law

Precontractual liability

Not applicable- No duty to negotiate in good

faith- No liability in case of

termination

Applicable- Duty to negotiate in good

faith- Liability in case of

termination of negotiations

LOI - In general not legally binding

- Aim to arrange for exclusivity, etc.

- Legally binding- Aim to exclude pre

contractual liability

Disclosure No duty to disclose information

Duty to disclose information

Deal Terms and Practices (3)

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Topic Common Law Civil Law

Warranty Breach gives right to claim damages

Breach gives right to all available remedies

Indemnity - Payment of a sum- Rules on damages not

applicable

- Ordinary contract clause- Less sharp/clear

distinction

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Deal Terms and Practices (4)

• 2013 European Private Target M&A Deal Points Study (to be released soon)• For transactions signed or closed in 2009, 2010 and 2011• Minimal transaction value of EUR 20 million• Target or substantial part of assets or operations in Europe

• 2011 Private Target M&A Deal Points Study• For transactions closed in 2011• Minimal transaction value of USD 25 million

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Deal Terms and Practices (5)

• Some observations between US and EU deal points:

* Was 38% in 2010 European Private Target M&A Deal Points Study

Deal Point US 2011 Study EU 2013 Study

Post closing PPA 82% 50%

Material Adverse Condition - Included- Subset: MAC defined

93%97%

24%90%*

No legal proceedings condition 69% 12%

Legal opinion condition 27% 1%

Sandbagging- Pro sandbagging clause- Anti-sandbagging clause

41%5%

22%47%

Deal terms and practices (3)

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Deal Point US 2011 Study EU 2013 Study

Baskets- Threshold- Deductible- Combination- No basket

31%59%5%5%

66%13%12%9%

Eligible claim threshold 17% 88%

Basket mean (% against transaction value) 0.65% 0.94%

Cap mean (% against transaction value) 18.88% 34%

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High Tech Transactions in Europe

• Volumes and values have decreased• PE has lost its appetite• Media & entertainment, health care and industrial automation seem to be the

leading technology acquirers• Less acquisitions, more joint ventures

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High Tech Transaction Considerations

EU Regulations:• EU Trademark Protection• EU Patent Protection• EU Model and Design Protection• EU Data Protection

• Note: EU Software not protected by patents • Consider: Tax structuring

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E&P in Europe

- Non regulated market- Shale gas seems to be on the rise- EU procurement law / transparency- EU safety regulation

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E & P in the Netherlands

- The Netherlands is one of the major gas producers

in Europe- Obligatory state participation of 40%- State profit share of 50%- Small field policy - Separate licenses for production, exploration and

storage- Fallow acreage, use it or loose it - Transfer of license requires prior state approval

(not for indirect transfers!)

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E & P in the Netherlands

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E & P transaction considerations

- Pre-emptive rights- Transfer of license requires prior state approval (not for indirect transfer)- Abandonment & decommissioning liabilities and

related security- Carry forward positions- Gas sales agreements- Cash calls and finance obligations- Follow acreage positions- Transportation agreements (non regulated)

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E&P market (outlook)

- Deal volumes remained stable in 2012 and are expected to increase in 2013- Large players will remain divesting North Sea assets- Many divestments expected/ongoing in oilfield services (often high tech) - Japan and China seem to be more active to ensure reliable energy supplies- Shale gas is under debate but may become a “game changer” in Europe as well- Decommissioning risks will probably increase

Amsterdam

Arnhem

Aruba

Brussel

Curaçao

Dubai

Eindhoven

Genève

Hong Kong

Londen

Luxemburg

New York

Parijs

Rotterdam

Singapore

Tokio

Zürich

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