UK

Fact file - Q1 2016 vs. Q1 2015

-35.0%

-75.7%

140.6%

Inbound

Domestic

Outbound

£23.1bn

£11.0bn

£4.4bn

Financial Services £10.9bn

Private equitybuyouts

-85.0%£946m

= total targeted activity

Private equityexits -62.2%£5.0bn

75.9%

Mergermarket trend report Q1 2016

The impending referendum that will determine whether the UK will remain in the EU has affected investor confidence within the UK. During Q1 2016, M&A activity targeting the region saw 288 transactions worth £27.5bn, down 48.8% by value compared to Q1 2015 (352 deals, £53.6bn), and marking the weakest quarterly deal count since Q2 2013 (276 deals, £15.7bn).

The drop in activity has affected the UK´s dominance in European dealmaking. During Q1, the UK saw its share in European M&A activity reduced to 22.2%. This has fallen from a record-breaking 47.5% reached in 2015, with £115bn-worth of deals bolstered by Anheuser-Busch InBev’s £79.6bn acquisition of SAB Miller, the highest valued deal targeting the UK on Mergermarket record (since 2001).

A highlight of the quarter was the announcement of the £10.5bn merger talks between London Stock Exchange (LSE) and Deutsche Boerse, the only transaction valued above £10bn targeting the UK so far this year. As a result, Financial Services was the most active sector by value with 26 deals worth £10.9bn.

Q2 2016 is expected to follow the same trend as seen this quarter, with uncertainty surrounding the UK´s membership of the European Union denting investor confidence. Once a final referendum decision has been met, a more stable climate for M&A is expected.

Bank of America Merrill Lynch led the Financial Advisor league table by value, advising on 10 transactions valued at £20.9bn, including the top five deals of the quarter. KPMG topped the table by deal count with 13 deals worth £347m.

Freshfields Bruckhaus Deringer led the UK Legal Advisor league table by value, advising on 14 deals valued at £16.4bn, and three of the top five deals of the quarter. Meanwhile, DLA Piper advised on the highest number of deals, with 22 transactions worth £750m recorded.

Business Services was the most active sector in terms of deal count, with 65 transactions valued at £7bn, yet with 17 fewer deals compared to Q1 2015 (82 deals, £5.5bn). Deal value largely consisted of IHS’ £4.3bn acquisition of rival financial information services company Markit Group, announced in March.

The decline in foreign investor confidence is reflected in the UK’s lacklustre inbound M&A activity so far in 2016. During the first quarter, 123 deals worth £23.1bn represent a 35% decrease by value compared to Q1 2015 (£35.6bn, 162 deals), while accounting for 39 fewer transactions.

A drop in sterling value against the euro has affected confidence felt among UK companies taking part in M&A outside of their borders. With 105 deals worth £11bn announced, UK outbound M&A decreased by 44.6% compared to Q4 2015 (157 deals, £19.9bn), recording the lowest quarterly deal count since Q1 2013 (98 deals).

UK domestic activity witnessed 164 deals worth US$ 4.4bn this quarter, a 75.7% decrease by value compared to Q1 2015 (188 deals, £18bn), as UK dealmakers turn towards smaller deals. Consequently, Q1 M&A deal value fell to its lowest on Mergermarket record.

The UK has been central to Europe’s overall M&A activity so far in 2015, contributing a 38.7% share to the regions total deal value, up from a 14.5% during the same period in 2014, and its highest stake on record (since 2001). The 1,004 deals worth £170bn announced to-date have already overtaken 2014’s full value (1401 deals, £94.8bn) by 79.2%, marking the highest annual total since 2007 (1,528 deals, £171.4bn).

Deal activity was bolstered by the highest valued H1 period on record (£136.5bn) whilst deal value in Q3 dropped to £33.5bn during the traditionally slow summer months. Despite showing a 59.7% decrease compared to Q2 (325 deals, £83.0bn), Q3 deal value increased by 81.6% compared to Q3 2014 (311 deals, £16.8bn).

According to Mergermarket intelligence, the turmoil surrounding the Greek economy and the consequentially weakened euro has pushed investors to be more confident when entering UK transactions. This year, inbound M&A has reached a record value at £138.6bn, up 118.7% by value compared to the whole of 2014, and overtaking all annual totals on Mergermarket record. France by comparison has recorded £42.4bn-worth of inbound deals to-date, down 41.7% by value compared to the same period in 2014 (185 deals, £72.8bn).

2UK trend report Q1 2016www.mergermarket.com

UK

Quarterly M&A value Sector breakdown Cross-border activity

87.675.4

26.146.1

57.1 57.4 56.2 63.8

240

23.1

180

43.1

19.6

76.864.4

46.4 47.7

82.1

57.5

11.0

480

457

238

389

445

481

478

582

615

123

639

484

285

440

500

436

494

610

580

105

0

100

200

300

400

500

600

700

0

50

100

150

200

250

300

2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

Valu

e of

dea

ls (£

bn)

Inbound value Outbound value Inbound deal count Outbound deal count

Deal

cou

nt

34.8

32.1

14.1

14.4

24.1

17.3

26.8

13.8

53.6

27.5

68.8

23.1

8.4

22.6

14.5

28.4

15.7

28.0

82.5

27.6

50.0

9.5

25.7

24.1

16.4

16.8

18.7

32.8

40.6

39.0

50.3

17.3

14.9

18.5

17.5

35.4

115.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

Q12016

Value of deals (£bn)Q1 Q2 Q3 Q4

5 10 15 20 25 30

Financial Services

Business Services

Consumer

Energy, Mining & Utilities

Pharma, Medical & Biotech

Industrials & Chemicals

Technology

Leisure

Transport

Other

Deal value (£bn)Q1 2015 Q1 2016

3UK trend report Q1 2016www.mergermarket.com

Top deals

Deal value(£m)

Ann.date

Bidder company Bidder country Buy-side

advisorsTarget

companyTarget sector

Sellercompany Sell-side advisors

10,480 16-Mar Deutsche Boerse AG Germany FA: Bank of America Merrill Lynch; Deutsche Bank; HSBC; Perella

Weinberg Partners

LA: Linklaters; Advising FA: Herbert Smith Freehills

London Stock Exchange (LSE) Plc Financial Services

FA: Barclays; Goldman Sachs; JPMorgan Cazenove; RBC Capital Markets; Robey Warshaw; Societe Generale; UBS Investment Bank

LA: Freshfields Bruckhaus Deringer

4,288 21-Mar IHS Inc USA FA: Bank of America Merrill Lynch; Goldman Sachs; Klein and

Company

LA: Weil Gotshal & Manges; Advising FA: Sullivan & Cromwell

Markit Group Limited Business Services

FA: JPMorgan

LA: Davis Polk & Wardwell; Advising FA: Debevoise & Plimpton

2,153 22-Feb Sysco Corporation USA FA: Deutsche Bank

LA: Freshfields Bruckhaus Deringer; McCann FitzGerald;

Advising FA: White & Case

Brakes Group Business Services

Bain Capital LLC FA: Goldman Sachs; Bank of America Merrill Lynch; HSBC

LA: Baker & McKenzie; Clifford Chance

1,451 04-Jan Acadia Healthcare Company Inc USA FA: Jefferies

LA: Stephenson Harwood; Advising FA: Davis Polk & Wardwell; White & Case

The Priory Group Limited Pharma, Medical &

Biotech

Advent International Corporation FA: Bank of America Merrill Lynch; Barclays; Numis Securities;

Rothschild

LA: Freshfields Bruckhaus Deringer

989 18-Mar J Sainsbury Plc United Kingdom

FA: Morgan Stanley; UBS Investment Bank

LA: Clifford Chance; Advising FA:

Ashurst

Home Retail Group Plc Consumer FA: Bank of America Merrill Lynch

LA: Linklaters

UK

4UK trend report Q1 2016www.mergermarket.com

Legal advisor league table by deal count

Ranking Company name Q1 2016

Q1 2016

Q1 2015

Value (£m)

Deal count

Count change

1 1 DLA Piper 750 22 -5 2 5 Linklaters 12,973 17 -2 3 2 Clifford Chance 5,922 17 -5 4 8 Pinsent Masons 70 17 -1 5 7 Eversheds 678 15 -3 6 4 Freshfields Bruckhaus Deringer 16,425 14 -6 7 27 White & Case 11,441 14 7 8 10 Squire Patton Boggs 586 13 -4 9 6 Travers Smith 800 11 -7

10 3 CMS 688 11 -11 11 15 Dentons 341 11 -1 12 22 Herbert Smith Freehills 11,157 10 1 13 12 Slaughter and May 394 9 -5 14 13 Macfarlanes 67 9 -5 15 30 Gateley 64 9 2

Legal advisor league table by value

Ranking Company name Q1 2016

Q1 2016

Q1 2015

Value (£m)

Deal count

% Value change

1 1 Freshfields Bruckhaus Deringer 16,425 14 -55.7%2 4 Linklaters 12,973 17 -13.6%3 2 White & Case 11,441 14 -36.7%4 8 Herbert Smith Freehills 11,157 10 -8.1%5 20 Latham & Watkins 10,711 5 157.8%6 260 NautaDutilh 6,913 3 - 7 - Stibbe 6,903 3 - 8 279 Vinge 6,882 4 - 9 253 Mannheimer Swartling 6,882 2 -

10= - Cadwalader, Wickersham & Taft 6,882 1 - 10= 93 Cravath, Swaine & Moore 6,882 1 4,201%12 15 Davis Polk & Wardwell 6,416 4 -13.3%13 5 Clifford Chance 5,922 17 -59.2%14 32 Sullivan & Cromwell 5,435 4 252.9%15 42 Weil Gotshal & Manges 4,657 6 339.3%

Financial advisor league table by deal count

Ranking Company name Q1 2016

Q1 2016

Q1 2015

Value (£m)

Deal count

Count change

1 6 KPMG 347 13 02 1 Rothschild 10,976 11 -12 3 7 Bank of America Merrill Lynch 20,929 10 -2 4 10 Lazard 3,380 10 0 5 3 PwC 916 10 -8 6 14 Grant Thornton 85 9 0 7 4 JPMorgan Cazenove 15,544 8 -5 8 33 HSBC 15,192 8 4 9 17 Barclays 12,938 8 1

10 34 RBC Capital Markets 12,480 8 4 11 16 UBS Investment Bank 14,081 6 -2 12 5 EY 354 6 -7 13 2 Goldman Sachs 17,289 5 -13 14 20 Deutsche Bank 14,055 5 -1 15 8 Citi 3,366 5 -6

Financial advisor league table by value

Ranking Company name Q1 2016

Q1 2016

Q1 2015

Value (£m)

Deal count

% Value change

1 3 Bank of America Merrill Lynch 20,929 10 14.9%2 1 Goldman Sachs 17,289 5 -33.0%3 4 JPMorgan Cazenove 15,544 8 -5.6%4 10 HSBC 15,192 8 17.5%5 6 UBS Investment Bank 14,081 6 -2.5%6 13 Deutsche Bank 14,055 5 45.1%7 7 Barclays 12,938 8 -10.2%8 16 RBC Capital Markets 12,480 8 184.4%9 11 Perella Weinberg Partners 11,079 3 -12.2%

10 9 Rothschild 10,976 11 -18.3%11 - Societe Generale 10,480 2 - 12 - Robey Warshaw 10,480 1 - 13 110 SEB 6,882 2 42,913%14 - Centerview Partners 6,882 1 - 15 - Klein and Company 4,288 1 -

UK

5

UK

UK trend report Q1 2016www.mergermarket.com

About Mergermarket

Mergermarket is a mergers & acquisitions (M&A) intelligence service.

Mergermarket is part of The Mergermarket Group which has nearly 1000 employees worldwide and regional head offices in New York, London and Hong Kong.

In any market, the life blood of advisors is deal flow. Mergermarket is unique in the provision of origination intelligence to the investment banking, legal, private equity, acquisition finance, public relations (PR) and corporate markets.

With an unrivalled network of analysts covering M&A in the Americas, Europe, Middle-East, Africa and Asia-Pacific, Mergermarket generates proprietary intelligence and delivers it together with daily aggregated content, on its Mergermarket.com platform and by real-time email alerts to subscribers.

This wealth of intelligence, together with a series of deal databases, individual and house league tables, profiles and editorial have proven time and time again that this product can and does generate real revenues for clients. This is apparent when you see that Mergermarket is used by over 1,500 of the world’s foremost advisory firms to assist in their origination process.

Commercial contactsAmericas: Kurt ViehlT: +1 212 390 7812

Asia: Ajay NarangT: +852 2158 9764

EMEA: Ben RumbleT: +44 3741 1007

PR contactsAmericas: Chrissy CarneyT: +1 646 378 3118

Asia: Su- Chin ZhangT: +852 2158 9706

EMEA: Luella AtabakiT: +44 20 3741 1124

Production contactsAnalyst: Robert Melia T: +44 20 3741 1290

Global research editor: Kirsty WilsonT: +44 20 3741 1281

Deal submission contactsEMEA: Andrea PutaturoT: +44 20 3741 1274

Americas: Jason LoriaT: +1 646 378 3122

Asia-Pacific: John CapulongT: +852 2158 9723

South Korea: Jade Lee T: +822 772 8410

Trend report criteria

All data is based on transactions over US$ 5m and is based on Mergermarket’s M&A deals database.Deals with undisclosed deal values are included where the target’s turnover exceeds US$10m.Deals where the stake acquired is less than 30% will only be included if the value is greater than US$100m.

M&A trends and top deals correct as of 01-Apr-2016, 9am GMTLeague tables correct as of 06-Apr-2016, 9am GMTAll values are in GBP.

M&A trend: Based on the dominant geography of the target company being UK. All trend data excludes lapsed and withdrawn bids.

Cross-border M&A: Inbound refers to the dominant geography of the target company being UK, and the dominant geography of the bidder being any other country excluding UK. Outbound refers to the dominant geography of the bidder company being UK, and the dominant geography of the target being any other country excluding UK. Excludes lapsed and withdrawn bids.

Top deals: Based on the dominant geography of the target company being UK. FA refers to financial advisor and LA refers to legal advisor. Excludes lapsed and withdrawn bids.

Industry analysis: Based on the dominant sector and geography of the target company being UK. Excludes lapsed and withdrawn bids.

League tables: Based on the dominant geography of the target, bidder or seller company being UK. Financial advisor tables exclude lapsed and withdrawn bids. Legal advisor tables include lapsed and withdrawn bids.