Capital Markets Flash Canadian M&A Deals Quarterly

Q1 2015 | Canadian deals announced, sector report and more
Perspectives from your leading global mid-market M&A advisor
Capital
Markets Flash
Canadian M&A
Deals Quarterly
In this issue
2
Q1 highlights
7
anadian IPO Survey
C
Q1, 2015
8
orest, Paper & Packaging
F
Deals insights: Q1, 2015
12
Getting what you want for
your business
15 S
upreme Court decision
clarifies the application of
efficiencies to merger reviews
18
Surrey Biofuels Facility:
The first closed-loop organics
P3 in North America
19
Predictive financial modelling
for oil and gas investments
22
PwC strengthens forensic
technology practice with
acquisition of Platinum
Legal Group
23
Meet PwC’s Canadian Deals
industry team leaders
www.pwc.com/ca/deals
80,000
1,000
Inbound
Domestic
Outbound
Deal Volume
900
70,000
800
60,000
700
50,000
600
40,000
500
Q2
Q3
2009
Q4
Q1
Q2
Q3
2010
Q4
Q1
Q2
Q3
2011
Q4
Q1
Q2
Q3
2012
Q4
Q1
Q2
Q3
2013
Q4
Q1
Q2
2014
Q3
Q4
Q1
2015
0
1,200
Aggregate Deal Value
Deal Volume
1,000
140,000
120,000
800
600
80,000
60,000
400
40,000
200
20,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007
2008
2009
2010
2011
2012
2013
2014
0
Q1
VOLUME à
VALUE (US$ MILLIONS) à
100,000
2015
Sources: S&P Capital IQ, PwC Analysis
% Deal Values
% Deal Volumes
20%
75%
Quarterly Canadian M&A inbound, domestic and outbound activity
by value and volume, 2009–2015
15%
80,000
50%
1,000
Domestic
Outbound
Deal Volume
900
VOLUME à
Inbound
70,000
800
10%
60,000
700
50,000
25%
600
40,000
500
5%
400
30,000
10,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013
2014
2007
2008
2009
2010
2011
2012
Q1
Q3
Q4
Q1
Q2
Q3
2009
Q4
Q1
Q2
Q3
2010
Q4
Q1
Q2
Q3
2011
Q4
Q1
Q2
Q3
2012
Q4
Q1
Q2
Q3
2013
Q4
Q1
Q2
2014
0%
200
2015
100
Q1
2015
0
VOLUME à
300
20,000
0%
Sources: S&P Capital IQ, PwC Analysis
180,000
1,200
Aggregate Deal Value
160,000
1,000
140,000
120,000
800
100,000
600
80,000
60,000
40,000
Capital Markets Flash | www.pwc.com/ca/deals
20,000
Deal Volume
400
2
Q1 2015
200
OLUME à
The first quarter of 2015
brought a decline in inbound
deal activity compared to
Q4-2014, which is unusual
in that the weak Canadian
dollar would typically
result in increased interest
from abroad. In fact the
weak Canadian dollar
drove acquisitive Canadian
companies to domestic
targets, due to the higher
cost of US targets. Given
that inbound activity is
taking time to materialize,
Q2 and Q3 should see
increased inbound activity
as contemplated deals
come to fruition.
Q1
100
180,000
VALUE à
Fewer inbound deals
than expected
0
160,000
VALUE (US$ MILLIONS) à
A large part of the decline
in deal value can be
attributed to the significant
value of deals in Q4-2014,
led by Repsol’s acquisition
of Talisman, a transaction
valued at over $13 billion.
During the first quarter, we
also saw a larger number
of middle market deals (i.e.
deals valued between $50m
and $500m) as compared
to large deals.
200
10,000
Quarterly Canadian M&A, consecutive quarters
by value and volume, 2007–2015
ALUE (US$ MILLIONS) à
Given the weak Canadian
dollar, in our view it is
unusual that deal value and
volume were both down
during the first quarter of
2015. While deal volume
was only down slightly
between the two quarters,
deal value was down
substantially over the
same period.
300
20,000
VOLUME à
VALUE (US$ MILLIONS) à
90 days, 649 deals, $37.1 billion
Canadian M&A: Q1 in brief
400
30,000
80,000
| Canadian M&A: Q1 in brief
1,000
Inbound
Domestic
Outbound
Deal Volume
900
70,000
800
VALUE (US$ MILLIONS) à
60,000
700
50,000
600
40,000
500
400
Champlain Bridge in Montreal and Train de l’Ouest - a train to service
300
Montreal’s West Island and Trudeau International Airport. Caisse is
200
planning to create a new subsidiary to manage these activities.
30,000
Private
equity firms continue to drive deal activity
20,000
VOLUME à
60,000
400
40,000
200
20,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007
2008
2009
2010
2011
2012
2013
2014
2015
Private equity as a percentage of deal
by value and volume, 2007–2015
% Deal Values
0
Q1
VOLUME à
VALUE (US$ MILLIONS) à
During Q1-2015, private equity (‘PE’) firms continued to drive
10,000 M&A activity, accounting for close to half of all deal value.
Canadian
100
With respect to the deal, Caisse CEO Michael
Sabia recently
PE deals focused primarily on the infrastructure and real estate space,
0
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3 Q4
explained,
“There
will
be
and
is
a
substantial
market
for the
a trend we Q1expect
to
continue
for
the
foreseeable
future
as
PE
firms
2014
2015
2009
2010
2011
2012
2013
seek to expand their infrastructure and real estate investments beyond capabilities that this subsidiary will have – working for a long-term
public investor, not a short-term flipper of assets, a team that has the
deals involving existing assets. The reason is that such deals have
become highly competitive and expensive to execute, and therefore PE ability to manage a project from planning to execution to operation.”
firms are seeking opportunities to get involved earlier—as early as the
The challenge is that skill sets associated
with design and build phases
180,000
1,200
design,
build, finance and/or operate (‘DBFO’) phases so that they
can Value
Aggregate Deal of
Deal Volume
an
infrastructure
project
are
very
different
from those required to
160,000
‘own’
original projects from the beginning.
1,000
operate an asset effectively. The private
equity firms that can combine
140,000
infrastructure project management and operational skills are almost
For example, in January 2015 the Caisse de dépôt et placement
120,000
800
certain to have an edge over their competition in this regard.
du Québec entered a deal with the Government of Québec to take
100,000
over the financing and ownership of certain infrastructure projects,
600
80,000
beginning with the development of a light-rail system on the
% Deal Volumes
20%
75%
15%
10%
VOLUME à
VALUE à
50%
25%
5%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013
2014
2007
2008
2009
2010
2011
2012
0%
Q1
2015
Sources: S&P Capital IQ, PwC Analysis
Capital Markets Flash | www.pwc.com/ca/deals
3
Q1 2015
| Canadian M&A: Q1 in brief
No sign of O&G
Looking at more industry deals activity, there was little sign of
O&G in Q1-2015, which was similar to Q4-2014, with utilities,
finance, and real estate transactions leading deal value over
the quarter. Looking at deal volume, materials (i.e. primarily
B-to-B) was responsible for almost a quarter of deal activity,
followed by real estate, industrials, and software and services.
Interesting to note is that Q1-2015 saw the largest quarter for
venture capital (‘VC’) investments in eight years – since
before the financial crisis. The VC investments focused
around technology and services. Related to this, Q1 saw
a significant number of transactions in the tech space,
primarily due to higher valuations, higher multiples that
lead smaller organizations as they were to be acquired by
larger organizations.
Top five targeted industries
by value
Q1 2015
Industry
Percentage of value
Utilities
20%
Financials
14%
Real Estate
13%
Pharmaceuticals, Biote
11%
Technology Hardware
7%
Others
35%
Top five total
65%
Top five targeted industries
by volume
Q1 2015
Industry
Percentage of value
Materials
24%
Real Estate
14%
Industrials
13%
Software & Services
10%
Energy
8%
Others
32%
Top five total
68%
Capital Markets Flash | www.pwc.com/ca/deals
4
Q1 2015
What’s ahead?
We expect inbound deals to rebound somewhat, primarily due to the ongoing weak Canadian dollar. We are already seeing an interest in going
public transactions, with a number of Canadian companies having announcing their intent to conduct an IPO as this report was being prepared.
Top 10 transactions
Q1 2015, by value Announced
date
Target / Issuer
Seller(s)
Buyer(s) / Investor(s)
Total
transaction
value
US$mm,
historical rate
1
13 Mar 2015
Fortum Distribution AB
Fortum Oyj (HLSE:FUM1V)
AP Fonden 3; Borealis
Infrastructure Trust; AP Fonden
1; Folksam AB
6,947
2
09 Mar 2015
Valeant Pharmaceuticals
International, Inc.
(TSX:VRX)
—
Pershing Square Capital
Management, L.P.; Pershing
Square Holdings, Ltd.
(ENXTAM:PSH)
3,300
3
4
22 Jan 2015
City National Corporation
(NYSE:CYN)
Eaton Vance Management
Royal Bank of Canada (TSX:RY)
2,586
10 Mar 2015
Blue Coat Systems Inc.
NB Alternatives; Teachers’ Private Capital; Prospect
Bain Capital, LLC
Capital Corporation (NasdaqGS:PSEC); Twin Bridge
Capital Partners; Prospect Capital Management L.P.; NB
Private Equity Partners Limited (ENXTAM:NBPE); Thoma
Bravo, LLC
2,400
5
6
31 Mar 2015
ABP (Jersey) Limited
Goldman Sachs Group, Merchant Banking Division;
Infracapital
Canada Pension Plan
Investment Board; Hermes GPE
2,377
16 Feb 2015
Brit PLC (LSE:BRIT)
Apollo Global Management, LLC (NYSE:APO);
CVC Capital Partners Limited; JO Hambro Capital
Management Limited; AP Achilles Holdings (EH-1), LLC;
AP Selene Co-Invest, L.P.; AP Helios Co-Invest, L.P.
FFHL Group Limited
1,918
7
8
30 Mar 2015
Fundtech Ltd.
BServ, Inc.
DH Corporation (TSX:DH)
1,250
09 Feb 2015
Rio Alto Mining Limited
Aberdeen International Inc. (TSX:AAB); Van Eck
Associates Corporation; JPMorgan Asset Management
(UK) Limited
Tahoe Resources Inc.
(TSX:THO)
1,110
9
10
04 Mar 2015
Eurostar Group Limited
—
Caisse de dépôt et placement
du Québec; Hermes GPE
893
17 Mar 2015
CSH Master Care USA Inc. Chartwell Retirement Residences (TSX:CSH.UN)
HCP, Inc. (NYSE:HCP);
Brookdale Senior Living Inc.
(NYSE:BKD)
849
Total
Capital Markets Flash | www.pwc.com/ca/deals
5
23,630
Q1 2015
Capital Markets Flash | www.pwc.com/ca/deals
6
Q1 2015
Canadian IPO Survey - Q1, 2015: Turmoil and
uncertainty take a toll on Canadian IPO market
The market for initial public offerings in Canada teetered into
2015 under the influence of equity market confusion, depressed
commodity prices and a slack Canadian economy that all combined
to slow activity, the quarterly survey of Canadian markets by PwC
has shown.
The debut in March of the Aequitas NEO exchange is another
welcome sign of innovation and potential change in the Canadian
equity market landscape, Braunsteiner says. “We’re going to be
watching the development of NEO with real interest to see what kind
of new opportunities and new sectors it cultivates.”
After a volatile final quarter in 2014, the IPO market failed to pick up
speed in the first three months of this year. Just five new issues across
all exchanges made it to the market in the first quarter, the PwC
survey revealed, with total proceeds of more than $624 million – up
from the meager $2.3 million in the first quarter of 2014 but below
the $810 million from two issues in the final quarter of last year.
One new mining issue reached the market in the first quarter
(Montego Resources Inc. on the CSE) along with one oil & gas issue
(San Angelo Oil Limited on the Venture).
PwC has conducted its survey of the IPO market in Canada for more
than 10 years. The reports are issued on a quarterly basis to provide
information to the corporate sector, investors, the media and others
that will help them put the market into better perspective. For the
purposes of the survey, investment vehicles such as structured
products are not considered IPOs because they do not represent new
equity raised for operating companies.
The largest issue of the quarter was the $621 million float of Fairfax
India Holdings Corporation on the TSX. It was the only TSX activity
in a quarter that saw just one issue on the TSX Venture and three
on the CSE.
To learn more about how PwC can help, contact Geoff Leverton or
Dean Braunsteiner.
“Despite the slowdown, the IPO market is still all about new
opportunities, and we saw emerging trends and developments this
quarter,” says Dean Braunsteiner, PwC national IPO leader. “The
Fairfax issue, an investment fund focused on businesses in the Indian
subcontinent, is an innovation that has found favour in a chaotic
market otherwise fixated on falling oil prices and other headlines.”
Capital Markets Flash | www.pwc.com/ca/deals
7
Q1 2015
Forest, Paper & Packing Deals Insights
Quarterly global M&A: Q1, 2015
90 days, 31 deals, US$12.3 billion1
M&A deal activity is off to a good start in 2015 highlighted by Rock-Tenn and MeadWestvaco
combining to create a leading global provider of consumer and corrugated packaging.
PwC is pleased to share with you our quarterly analysis of
mergers and acquisitions (M&A) activity in the global forest,
paper and packaging (FPP) industry for the first quarter (Q1)
of 2015.
Multi-year deals analysis
Global FPP M&A Activity
Overview
2012
2.0
2013
1.7
Global M&A activity in the FPP sector in Q1 2015 saw an
increase in total deal value relative to the fourth quarter (Q4)
of 2014. A total of 31 M&A deals were announced during Q1
2015 with a total value of US$12.3 billion and an average
(median) deal size of approximately US$8 million. This
compares to 34 deals in Q4 2014 with a total value of US$2.8
billion and an average (median) deal size of approximately
US$36 million.
Value
2.9
2014
3.3
2.0
8.0
3.2
The top five largest announced deals in Q1 2015 (based on deal
value) accounted for US$12.0 billion or 98% of total deal value,
with the largest deal accounting for the majority of the total. This
is a significant increase from Q4 2014 where the top five largest
transactions accounted for US$1.9 billion or 67% of total deal
value. In addition, the top five largest announced deals in Q1 2015
were focused in the Americas and the EUMEA regions, whereas the
top five largest deals in Q4 2014 were more evenly spread across
all regions. Furthermore, a number of the top five deals in Q1 2015
involved strategic buyers as opposed to financial buyers.
The table below presents the information with respect to the top
five deals announced in Q1 2015.
5.3
1.3
2.8
.5
12.3
2015
0
5
10
15
20
Deal value (US$ billions)
In comparison to the first quarter in 2013 and 2014, there was
an increase in Q1 2015 in terms of total deal volume and a
significant increase in terms of deal value. The graphs to the
right provide a summary of deal activity by quarter for each of
2012, 2013, 2014 and Q1 2015.
Notable deals
3.3
Q1
Q2
Q3
Q4
Volume
2012
34
2013
26
2014
27
2015
29
28
34
30
38
55
35
26
34
31
0
50
100
150
200
Deal volume (Number of global M&A deals)
Source: S&P Capital IQ (Forest and Paper Products, Paper Packaging), PwC Analysis.
1 Based on deals where value was disclosed
Capital Markets Flash | www.pwc.com/ca/deals
8
Q1 2015
| 90 days, 31 deals
Top five deals announced in Q1, 2015
Deal Value
(US$ millions)
Announced Date
11,355
01/26/2015
MeadWestvaco Corporation
Rock-Tenn Company
Americas
341
02/23/2015
Duropack GmbH
DS Smith Plc
EUMEA
122
02/06/2015
ITL Corp.
Northwest Hardwoods, Inc.
Americas
104
03/09/2015
Grupo CYBSA
Smurfit Kappa Group plc
Americas
65
1/26/2015
API Group plc
CoSine Communications Inc.
EUMEA
Target
Buyer
Region
Source: S&P Capital IQ (Forest and Paper Products, Paper Packaging), PwC Analysis
Capital Markets Flash | www.pwc.com/ca/deals
9
Q1 2015
Capital Markets Flash | www.pwc.com/ca/deals
10
Q1 2015
| 90 days, 31 deals
Deal activity continues to be strong in the Americas region
Geographical distribution of deals
There were many notable deals announced by strategic buyers in
Q1 2015 in the Americas region, as follows:
The distribution of announced deals in Q1 2015 (based on total deal
value) was more geographically focused in the Americas region than
was the case in Q4 2014. The below charts present the respective
information for Q1 2015.
• Rock-Tenn Company and MeadWestvaco Corporation merged
to create a leading global provider of consumer and corrugated
packaging with combined net sales of US$15.7 billion and adjusted
EBITDA of US$2.9 billion. Annual synergies from the transaction are
estimated by the companies to be $300 million and will be achieved
over three years;
• Northwest Hardwoods Inc. acquired Industrial Timber & Lumber
Company based in Beachwood, Ohio. Industrial Timber & Lumber
sells over 200 million board feet of high quality hardwood lumber
annually and has approximately 400 employees with operations in
Ohio, West Virginia, North Carolina and Pennsylvania;
• Hokuetsu Kishu Paper Co., Ltd, a Japan-based pulp and paper
company, announced that it will acquire controlling stakes in
Alberta, Canada based pulp company Al-Pac Forest Products Inc.
and its marketing unit, Al-Pac Pulp Sales Inc. from Mitsubishi
Corp. and Oji Holdings Corp, however, terms of this transaction
were not publicly disclosed; and
• Smurfit Kappa Group acquired Grupo CYBSA, a non-integrated
corrugated, folding cartons and flexible packaging manufacturer
with operations in El Salvador and Costa Rica.
These deals continue the trend of activity in the Americas region with
44 deals in the last four quarters (Q2 2014 to Q1 2015 respectively)
with a total deal value of US$14.7 billion.
In the Americas, there were 13 announced deals in the quarter with
a total deal value of US$11.8 billion. The number of transactions
decreased by three from the prior quarter, however, the total deal value
was significantly higher than in Q4 2014 as a result of the Rock-Tenn
Company and MeadWestvaco Corporation merger.
In the EUMEA region, there were five deals with a total deal value
of US$0.4 billion. Both the deal volume and total deal value are
lower than in Q4 2014.
There were 13 deals with a total deal value of US$0.1 billion in the
Asia/Pacific region. Although the deal volume increased compared to
Q4 2014, total deal value fell significantly.
Trends and insights
In the upcoming quarters we expect the major trends impacting the
sector to continue to influence deal making. These trends include:
• The strengthening of the U.S. economy
• Expectations of slowing growth in China
• Security of fibre supply
Altogether, economic conditions and industry trends are driving
opportunities for FPP companies to create shareholder value. We
expect deal making to continue in the sector as companies look to gain
strength in core markets.
Distribution of Q1 2015 deals based on deal value and deal volume
Geographic distribution – Deal value
EUMEA
Asia/Pacific
Americas
3%
Geographic distribution – Deal volume
EUMEA
Asia/Pacific
Americas
1%
16%
42%
42%
96%
Source: S&P Capital IQ (Forest and Paper Products, Paper Packaging), PwC Analysis.
Capital Markets Flash | www.pwc.com/ca/deals
11
Q1 2015
Getting what you want for your business
Preparation key to achieving value from a sale
If you’re looking to sell your business, now might be
the right time – especially if you’re well prepared.
From experienced owner managers who have waited years to
squeeze value out of their businesses, to private equity firms
looking to divest business assets, a lot of sellers are looking to take
advantage of the positive deals climate in Canada. “It’s a seller’s
market,” says John Merenda, a director in PwC’s Consulting
and Deals practice, “and with that come high valuations.”
While the deals outlook for the remainder of 2015 is positive,
sellers who put their businesses up for sale without any
preparation are going to have a tough time achieving the value
they think they deserve. That’s because the trend towards
higher valuations, while a big draw for many sellers, can also
be a major stumbling block when it comes to closing a deal.
“A lot of deals aren’t getting done because valuations
are too high,” explains Merenda. “If a business isn’t
prepared, asking for big multiples isn’t realistic.”
So what can owner managers and other business owners
do to make sure they get the highest value out of a
potential sale or divestiture? The answer is deceptively
simple: Do your homework and be prepared.
Plan for all aspects of the divestiture
If you’re looking to sell, it helps to know what you want. That’s
why it’s best to start any sales process with the development of
a sale or divestiture project plan. This plan should clearly define
the parameters of the business or assets you are planning to sell,
outline your specific objectives for the sale, identify key value
drivers that could attract buyer interest, and document any risks
associated with the sale or divestiture process. The plan should
also outline the implications of anything that might be left behind
following the sale (e.g. stranded costs, restructuring requirements).
It can help to engage a third party to assist with developing and
managing your sale or divestiture project plan – an advisor with
extensive experience in the sales process who can help look at your
existing business using an objective and rational lens. In the case
of owner-managers who have put a lifetime of sweat equity into
a business, it can be difficult to evaluate the true strengths and
weaknesses associated with a business. A third party advisor can
walk you through the process and help you make the decisions
needed to put your business’ best foot forward during a sale.
Importantly, with ever increasing levels of cross border M&A, you’ll
want an advisor that is part of a large worldwide network to help
expose your deal to potential buyers in more geographic regions.
There are a lot of buyers out there with capital. But, there’s also a lot of
competition, if you’re looking for a premium valuation, you need to choose the right
advisor and be ready. You need to be prepared for any questions a prospective buyer
might have and make sure the information you are presenting is consistent and
accurate. Conducting sell side due diligence can go a long way toward making sure
you’re in a good position to attract and sustain value.
John Merenda,
Director, PwC’s Consulting and Deals
Capital Markets Flash | www.pwc.com/ca/deals
12
Q1 2015
| Getting what you want for your business
Adding value in the sales process
How your trusted advisor can help when selling your business
As trusted advisors, below is a description of the specific actions we take in each of the three key phases of a
business sale transaction:
Phase 1
Phase 2
Phase 3
(4-6 weeks)
(12-16 weeks)
(8-12 weeks)
Transaction
Preparation
Transaction
Execution
Structuring
and Closing
• Work together with the company’s
• Develop marketing materials and
• Manage additional internal and
management to plan and execute
the transaction strategy
• Identify revenue enhancement
opportunities to potentially
increase valuation:
– Perform preliminary screening
& profiling of potential buyers;
– Assess expected value ranges
for all parties involved
– Provide preliminary tax planning
and advice
– Identify optimal transaction
options
• Work with you to prepare the
Company in anticipation of a
transaction that includes:
– Preparation of financial information
– Analysis/diligence of information
- will prepare company for
buyer due diligence including
ensuring credibility of information
and minimizing surprises in
the diligence process
– Organization structuring
Capital Markets Flash | www.pwc.com/ca/deals
provide other services that require
minimal involvement on your
part, so you can continue running
your business at full capacity:
– Prepare a no-names teaser to
show to potential buyers (this will
preserve your confidentiality)
– Contact qualified potential
purchasers on your behalf
– Solicit expressions of interest
in your business
– Gauge potential market interest
from confidential discussions
with potential buyers
– Coordinate the due diligence
process
external resources including lawyers,
accountants and consultants
• Collaborate with you to negotiate
the sales purchase agreement to
maximize the value of the business
and your after tax proceeds
• Work alongside management
until the close of the transaction
to ensure all of your needs are
met and there is no money left
on the table
• Develop a competitive bidding
process to maximize opportunities and
create tension amongst
potential buyers.
• Act as the intermediary between the
company and potential purchasers
during the due diligence process.
Control all communication to
potential transacting parties.
– This will reduce the company’s
time commitment to the
transaction allowing it to run
the business as usual
13
Q1 2015
| Getting what you want for your business
Prepare, prepare, prepare
Position for the exit and execution
When it comes to achieving the most value from a sale, sellers
should consider undertaking preparatory sell-side due diligence
prior to marketing the deal. This due diligence process can
help you identify critical operational issues and concerns that
you can address in advance in order to neutralize them as a
negotiating point with buyers. For example, undertaking projects
to improve operational efficiencies can positively affect earnings
and working capital, while helping to lower back office costs.
In addition to pre-sale planning, sellers also need to actively
manage all aspects of the transition process. At the end of the day,
the realization of deal value comes down to execution. By actively
managing the execution of the deal, you can decrease delays and
retain more value than if potential buyers dictate the process.
Preparatory due diligence can also help a seller anticipate the
requests and questions they might receive during the sale process
so that they can respond more effectively. Sellers and their
advisors can use the process to pressure test and validate forecast
assumptions, identify key actions that would drive enhanced profits,
and identify and address potential concerns related to synergies
and standalone costs – activities that can inspire buyer confidence.
Most importantly, it helps to avoid surprises in the sale process
which can often impact deal valuation or timing. “The purpose
of sell-side due diligence is not to avoid risks or weaknesses of the
business,” says Damian Peluso, a partner in PwC’s Consulting and
Deals practice, “but rather to be prepared to discuss these items
and related mitigating factors with potential buyers.” In the end,
addressing these issues up front will increase credibility with buyers.
Preparing a business for sale should also include planning for
the subsequent negotiation of the purchase agreement – from
the scope of the transaction to price adjustment mechanisms,
representations and warranties. By thinking about these
terms before putting a company into play, sellers can make
sure they are in the best position for negotiating a deal.
Present tailored financial information for the transaction
Any buyer is going to want to review detailed financial information
about the business or assets up for sale. The challenge for sellers
is recognizing that specific types of buyers may require different
information. For example, it might be important to present both
GAAP financial statements in addition to deal-based financial
statements. If these statements are not consistent, a seller should
act early to bridge any differences. It is critically important during a
sales process to avoid presenting inconsistent information to buyers
as any information that cannot be reconciled or bridged will erode
buyer confidence and, therefore, the perceived value of a business.
The critical activity during this phase is to move quickly from
signing to close. This means sellers need to facilitate the rapid
development of plans for transition of services, systems and
back office operations to the divested business. These activities
can take significant time during a sale – and the longer they
take, the more likely it is that value will be eroded. By thinking
proactively about exiting and deal execution, sellers can reduce
the risks associated with the later phases of a deal, phases
that unprepared sellers often treat as an afterthought.
Maximize value…..Minimize time to close
Whether you’re an owner manager looking to retire or a private
equity firm looking to divest specific assets, you need to know
what you want to get out of a sale in order to set your business
up to achieve it.
In today’s deals environment, realizing deal value can come down
to understanding critical issues for buyers and being able to speak
to potential downside risks and mitigating factors – not just to
upsides and forecasts.
“There are a lot of buyers out there with capital. But, there’s also a
lot of competition,” says Merenda. “If you’re looking for a premium
valuation, you need to choose the right advisor and be ready. You
need to be prepared for any questions a prospective buyer
might have and make sure the information you are presenting
is consistent and accurate. Conducting sell side due diligence can
go a long way toward making sure you’re in a good position to
attract and sustain value.”
The need to be consistent and reasonable also extends to any
projections and forecasts a seller wants to present to buyers.
Supporting forecasts with realistic assumptions and data can
help with alleviating the concerns of potential buyers who might
otherwise argue that highly optimistic forecasts are unfounded.
Capital Markets Flash | www.pwc.com/ca/deals
14
Q1 2015
Supreme Court decision clarifies the
application of efficiencies to merger reviews
An economist’s view of the implications of
Tervita Corp v. Canada (Commissioner of Competition)
In a January 2015 decision that is likely to have significant implications for future
Competition Act proceedings, the Supreme Court set out a procedure for the assessment
of efficiency gains in merger review cases and the responsibility of the Commissioner of
Competition to quantify consumer losses. The decision provides clarity regarding the
relative balancing of consumer losses from lessened competition with efficiency gains
benefitting merging parties.
Background
Section 96 of the Competition Act allows for the approval of mergers causing consumer losses due to lessening of competition in the event
that efficiency gains (for example, economies of scale) offset these losses. The court noted the two methods have been employed to date to
evaluate these efficiencies under Section 96:
The total surplus standard
The balancing weights standard
An assessment is made by comparing the quantum of the deadweight
loss to the incremental producer surplus from efficiency gains that may
occur as a result of the merger (which effectively treats gains to
consumers and gains to the merging parties equivalently). Deadweight
losses in economic terms happen when the price of a product deviates
from the equilibrium price of a fully competitive market. When two
parties are merging there is a risk that the price will increase compared
to the pre-merger price and as such will create a deadweight loss (or
will increase it). Under this method, the deadweight loss needs to be
quantified and contrasted with the benefits that the producer
will gain from new efficiencies that will be created by the merger
(incremental producer surplus). In this regard, we note that
courts in Canada usually deal with the incremental producer surplus
only as they relate to the merging parties (see the Superior Propane
decision cited by the Supreme Court). In reality there could be what
economists refer to as “secondary impacts”, where other producers of
complementary products may also benefit from the merger through
higher prices for their products. Secondary impacts are considered in
the UK and EU and their introduction to Canada should be considered
by competition lawyers representing merging parties.
Permits the consideration of merging party benefits and consumer
losses differently. This method involves the calculation of weights
that will cause the positive impact on the merging parties and the
negative impact on consumers to be equal, followed by a
determination of whether these weightings are reasonable.
Capital Markets Flash | www.pwc.com/ca/deals
15
Q1 2015
| Supreme Court decision clarifies the application of efficiencies to merger reviews
Decision of the Court
The Supreme Court decision sets out a two-step approach for the
relative analysis of efficiencies and negative consumer impacts. The
first step consists of a comparison of quantitative efficiencies and
quantitative consumer impacts. If those quantitative efficiencies are
greater than, or are likely to be greater than, quantitative negative
impacts on consumers, the second step will be used to weigh
qualitative evidence regarding each impact.
In the Tervita case, the Supreme Court found that the merging
parties were successful in quantitatively demonstrating some of their
claimed efficiency gains, whereas the Commissioner of Competition
failed to present quantitative evidence, causing the merger to be
approved under Section 96. Specifically, without the calculation of
price elasticities, it was impossible to calculate consumer loss (and
deadweight loss), and so the Commissioner’s price evidence was
assigned zero weight. As a result, despite the finding that the merger
is likely to contribute to a substantial lessening of competition, the
merger was permitted to proceed due to a lack of evidence regarding
the quantitative impact of this outcome on consumers
Implications for the future
The emphasis placed on the quantification of efficiencies and
deadweight losses in the Tervita case indicates that disputes on this
subject are likely to continue in future merger review cases. In
particular, the decision confirms the existence of a significant
burden on the Commissioner of Competition to quantify consumer
losses when the latter are used to deny merger approval. Merging
parties should expect that in future cases, the Commissioner of
Competition may produce evidence regarding the quantum of
consumer loss.
While the Tervita decision indicates that the quantification of
elasticities is necessary for the Commissioner of Competition to
quantify deadweight loss from a merger, we note that the
quantification of elasticities is a very complex procedure in practice
and often there is insufficient data to perform such a procedure.
Competition authorities elsewhere have begun to rely on diversion
Capital Markets Flash | www.pwc.com/ca/deals
ratio analyses, which are simpler and can be based on consumer
survey data. We expect that these types of analyses will become
increasingly important in merger review proceedings given the
burden of quantification being placed on the Commissioner of
Competition. We recommend that lawyers for merging partners
acquaint themselves with these types of analyses.
We believe that in response to this decision the Commissioner of
Competition may attempt to introduce concepts that would narrow
the application or weighting of efficiencies. In this regard it is
important to understand that guidelines issued by the European
Union, US and UK authorities have significantly limited the
consideration of efficiencies. In the European Union, the application
of efficiencies is limited to instances that are beneficial to
consumers. This places a substantial burden on merging parties to
demonstrate that gains to consumers from a merger or acquisition
are timely and sufficient to offset competition concerns. US
guidelines require efficiencies to benefit consumers so as to be
sufficient to reverse the merger’s potential to harm customers in the
relevant market. The UK also requires efficiencies to produce
consumer benefits, but differs from EU and US approaches in that it
permits benefits experienced by consumers in other industries to be
considered, although the interpretation of this distinction has not
been clarified to date. All three jurisdictions tend to focus on
efficiencies resulting in reductions to variable, and particularly
marginal (short-term variable) costs, given that these costs are more
likely to be passed on to consumers than reductions in fixed costs.
Depending on the circumstances of a particular market, a long-term
reduction in fixed costs could also be argued to constitute a benefit
to consumers.
In light of the above, we believe that as a result of the Tervita
decision, merging parties need to take a proactive approach to
claiming and quantifying efficiencies as well as industry-wide
benefits. At the same time, the merging parties should be equipped
to challenge deadweight loss quantifications. In addition, we believe
that future merger review proceedings may involve a shift from
assigning equal weights to deadweight loss on incremental producer
surplus towards an approach that puts more weight on the former.
16
Q1 2015
Key aspects of efficiencies to consider
Below is a list of key aspects that merging parties should consider
when they embark on an evaluation of the magnitude and nature
of efficiencies:
What is the nature of the efficiency?
Efficiencies can be generated from economies of scale, economies of
scope, reduction in duplicated costs, reduction in supplier costs (for
vertical mergers) and improved products. The nature of the
efficiency will determine its impact on consumers and the market
generally. For instance, if the efficiency relates to an economy of
scale, does it involve economies in fixed or variable costs? Is there a
limit up to which point these efficiencies will be achieved, after
which further investment will be required for additional volumes?
Will the efficiency improve customer experience by offering new or
improved products or access to a wider range of products at a single
location?
Is the efficiency merger specific?
To be considered merger specific, it must be demonstrated that the
efficiency could not have been achieved without the merger, for
instance through alternative agreements, the adoption of best
practices or the licensing of technology.
Can the efficiency be quantified?
Are there applicable demand-side efficiencies as well?
Efficiencies should be quantified in a robust manner while taking
into account potential risks or uncertainties in their realization.
Business plans and forecasts, reports of expert consultants, case
studies of similar mergers and market analysis can all be employed
in this process. Cost and supply function modelling using
econometrics can be used to demonstrate scale advantages and the
competitive dynamics of the market. Efficiencies expected as a result
of future innovations may be more challenging to quantify, but in
the event specific comparable technologies can be identified, an
avoided license cost approach can be used.
Benefits to consumers from a merger, for instance as a result of
improved coordination of service delivery or benefits to service from
economies of scale, can also be identified. However, these types of
efficiencies are generally difficult to quantify and are therefore limited
to the secondary qualitative stage of the two part process set out by
the Supreme Court.
How elastic is consumer demand for the
relevant products?
Consumer price elasticity will determine the degree to which the
merged firm can exercise its market power to raise prices without
resulting in a decline in revenues from offsetting quantity declines.
This is a key determinant of negative consumer impacts from mergers.
Consumer price elasticity, when coupled with an understanding of
competitive dynamics in a market, can also be used to understand
the likelihood that savings from efficiencies will be passed on
to consumers.
Capital Markets Flash | www.pwc.com/ca/deals
17
Q1 2015
Surrey Biofuels Facility: The first closed-loop
organics P3 in North America
PwC’s Infrastructure and Project Finance team was retained by
the City of Surrey and Partnerships BC as financial adviser on the
procurement of an organic waste biofuel processing facility under
a design-build-finance-maintain (DBFM) model which will be
partially funded by PPP Canada. PwC’s team was selected because
of our recognized global expertise in the waste-to-energy sector
combined with our local knowledge of P3 procurement in BC.
Deals’ Infrastructure and Project Finance team is helping the
City of Surrey become a world-class leader in household
waste management.
The City of Surrey, British Columbia (BC) is implementing the
second phase of its Rethink Waste Collection Program, and its goal is
to create a fully integrated model for organic waste management that
maximizes the diversion of household organic waste from the landfill
and that is both economically and environmentally sustainable.
Our role included assisting the City with the competitive selection
process, which included carrying out the financial evaluations of
the bidders’ submissions and developing the legal contract, financial
structure, payment and performance mechanism, financial models,
and value-for-money analysis for the project.
Once established, the facility will process the City’s organic waste
into a 100% renewable fuel. This fuel will then be used to power
Surrey’s waste collection vehicles, creating a sustainable closed-loop
system. The facility will be situated on City-owned property.
Capital Markets Flash | www.pwc.com/ca/deals
18
Q1 2015
Predictive financial modelling for oil and
gas investments: How do you quantify
project uncertainty?
Investment structures in oil and gas take on different forms and
the success of any project rests with multiple variables. But with
investments associated with changing variables, one thing is
clear – they often bring a certain level of inherent uncertainty.
When evaluating investments, it’s important to build a quantitative
perspective on key financial and operational risks (as well as
upsides), and the impact they have on a project’s feasibility.
Managing these uncertainties can act as a key differentiator in the
competition for investment. Conversely, overlooking mitigation
opportunities (such as hedging arrangements) due to a primitive risk
understanding, can unnecessarily expose you to cash flow instability
or overall return risks.
Oil, gas, and NGL price volatility derives from both regional and
global factors like economic growth, consumption behaviour, egress
availability, geopolitics, and production technology; just to name a
few. Having to predict inherently uncertain commodity pricing is just
one of the major assumptions investors and operators need to make
when confronting major decisions.
Executives and investors are forced to deal with uncertainty around
construction and approval delays, reservoir performance, exchange
rates, regulatory costs (including carbon pricing), operating
incidents (e.g. pipeline spill), interest rates, labour and production
costs, and asset utilization.
It can even cause unnecessary deal rejection.
Sample risk considerations
Impact on
Answer the questions
How can we protect ourselves through
hedging from downside exposure
to fluctuating prices?
•Internal rate of return
What is the probability of achieving an IRR
less than my hurdle rate?
Do various reserves scenarios impact our
investment decision?
• Project timing and life
What is the impact of capital expenditure
overruns and project delays?
•Enterprise risk
•Net present value of project
•Covenants and capacity to repay debt
•Free cash flow
How can hedging impact my downside
valuation risk?
What is the probability of breaching project
financing covenants?
What are the required “break-even” forecast
prices and reserves?
How does interest rate volatility impact our
financing structure?
What is the likelihood that we’ll need to
make a future equity injection?
Can our capital structure withstand volatile
prices?
How does a major “black-swan” economic
or operating incident undermine cash flow?
What is the impact of future fluctuations in
exchange rates?
What role does egress uncertainty play in
the business case for investment?
Is an asset likely to have a high-cost
operating incident?
What effect could royalty scheme
and carbon pricing changes have on
investment economics?
Capital Markets Flash | www.pwc.com/ca/deals
19
Q1 2015
| Predictive financial modelling for oil and gas investments: How do you quantify project uncertainty?
How we can help
Modelling and simulation
Our specialized team of Business Modelling advisors can help you
assess the short- and long-term financial risk and provide the necessary
insight for better decision making. We combine leading modelling
practices and simulation techniques to develop robust project
evaluation models and identify how fluctuations in critical forecast
variables (pricing, reserves, operating and capital expenditures,
regulations and others) are likely to affect your project.
Accurate and insightful modelling of oil and gas projects requires
proper pre-planning, a robust model structure and complexity
management. Our team is comfortable working with a wide range
of factors that drive complexity like reservoir modelling outputs,
multilayered drilling plans, capital project schedules (such as LNG
terminal construction), advanced commodity price simulations, and
utilization uncertainty scenarios.
Modelling diligence
In addition, our simulation analysis tools can work in conjunction
with your existing financial models, to provide an objective review.
The added simulation capability gives senior executives easy-toimplement tools and outputs needed to make informed decisions and
proactively mitigate potential risks.
Consider the volatility of critical variables
Price benchmarks
Price (as % of base price)
Exchange rates
CAD/USD
Base wages
Average wage (per hour basis)
1.40
29
200%
1.30
27
150%
1.20
100%
1.10
50%
1.00
0%
0.90
-50%
0.80
250%
WTI
Brent
NYMEX NG
-100%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0.70
Canada
Alberta
British Columbia
25
23
21
19
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
17
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
... and how they impact critical decision factors
Sample forecast distribution of
brent crude benchmark
Probability ($)
Sample probability distribution
for project IRR
Probability (%)
Actual price data
Price probability mean forecast
5% distribution tails
90% confidence level
150
125
7
6
5%
90%
NPV sensitivity to volatility in various factors
5%
31.7%
-14.7%
Crude
(280)
oil price
Reserves
5
100
4
Capital
expenditures
75
3
Inflation
50
298
149
(200)
213
(160)
2
Royalties
(60)
25
1
(52)
0
0
Transportation
cost
2009
2011
2013
2015
2017
Capital Markets Flash | www.pwc.com/ca/deals
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%
20
72
(20)
(300) (200) (100)
55
17
0
100
200
300
Q1 2015
Case study
Simulating uncertainty
Simply plugging in “most-likely” estimates
for one or more uncertain factors into a
simple 3-scenario model (of low, base, and
high commodity price assumption), can lead
to a myopic and distorted view of risk and
project upside. Demonstrated in the below
NPV probability diagram, we helped a client
quantify the uncertainty in a Canadian LNG
project through Monte-Carlo simulations
using multiple input assumptions for
uncertain factors, most important of which
was the uncertain approval date.
10%
80%
145
-400
-200
0
200
10%
868
400
600
800 1,000 1,200 1,400
Project NPV
Case study
Mitsubishi Corporation
“PwC has the expertise to assist companies
in making strategic inbound-investments
into Canada’s energy industry. As a trusted
advisor they have guided us on several
significant steps regarding our company’s
recent Canadian investments. This includes
assisting us in tackling a variety of issues we
have faced related to our energy investments,
navigating its complex accounting, and
understanding Canadian tax compliance
requirements. PwC is focused on supporting
us with prudent advice for these investments,
and our engagements with PwC provide
us with confidence that we’ll continue to
succeed with the execution of our strategy
into the future.”
– Shinya Miyazaki, CEO, Diamond Gas
Management Canada Ltd. (a subsidiary of
Mitsubishi Corporation)
Capital Markets Flash | www.pwc.com/ca/deals
21
Q1 2015
PwC strengthens forensic technology practice
with acquisition of Platinum Legal Group
We’re proud to have acquired the business of
Platinum Legal Group
Talk to our Forensic Technology Services
team about eDiscovery, litigation support,
and managing electronic evidence
Purchase enhances litigation support and
eDiscovery service offerings
In March, 2015, PwC Canada acquired Platinum Legal Group (PLG),
one of Canada’s leading electronic discovery and litigation support
firms. Led by William Platt, PLG has joined PwC’s Toronto office
and will continue servicing clients in Calgary, Halifax, Montreal,
Ottawa, and Vancouver.
Platinum Legal Group specializes in electronic evidence
management in litigation, competition and investigative matters.
This acquisition strengthens PwC’s Forensic Technology Service
capabilities in the areas of discovery, data recovery, data analysis,
and review of electronic data. Currently, PwC offers a full
complement of services from the PwC Forensic Lab including:
Capital Markets Flash | www.pwc.com/ca/deals
discovery readiness assessment, investigative analytics, cyber and
social network investigations, digital forensics, eDiscovery, and
evidence management services.
“We are pleased to welcome Platinum Legal Group to our growing
forensics practice,” says Lori-Ann Beausoleil, PwC Canada’s National
Forensics Co-Leader. “Their expertise compliments our experience
in data acquisition and analysis allowing us to expand our evidence
management and e-discovery offering.”
“Combining PLG’s 13+ years of experience in eDiscovery and
litigation support with PwC’s forensics presence will allow us to
increase service offerings across Canada,” says William Platt, PwC
Partner, eDiscovery Litigation Support. “I am excited to have joined a
team of leaders and innovators in electronic evidence management.”
22
Q1 2015
Meet PwC’s Canadian Deals industry
team leaders
When it comes to helping
you achieve deal success —
we're industry focused!
Meet our Deals industry team leaders
www.pwc.com/ca/ID
When it comes to helping you achieve deal success—we’re industry focused
Whether you’re considering raising capital, making an acquisition, a divestiture or entering into a strategic alliance, one
thing is certain: to achieve deal success today, you need deep industry experience and insights.
Each of our industry focused teams brings you fresh perspectives gained through hands-on deal-making experience in
their respective sectors—in Canada and globally.
Our approach helps you to source and execute deals faster and on more favorable terms, while minimizing business
disruption and risk.
We welcome you to get in touch with any of our Deals industry team leaders profiled on www.pwc.com/ca/ID to discuss
your unique needs.
Capital Markets Flash | www.pwc.com/ca/deals
23
Q1 2015
| PwC Deals Practice
Achieving deal success—
from concept to close and beyond
To provide feedback on this publication
or to subscribe, please email:
[email protected]
The PwC Deals team helps clients raise capital and complete
acquisitions, divestitures, or strategic alliances. We add value across
the entire deal spectrum, from concept to close and beyond, by:
• developing your deal strategy;
• managing your go-to-market strategy;
• presenting your deal to the right targets,
partners and capital providers, across the globe;
• supporting your deal with due diligence, including fraud and/or
anti-bribery and corruption assessments, valuation,
integration and tax advisory services; and
• implementing changes to deliver
deal synergies.
Our Canadian Deals team is part of the world’s largest Transaction
Advisory practice1. Our approach helps clients to source and execute
deals faster and on more favourable terms, while minimizing
business disruption and risk.
We look forward to your call.
Nicolas Marcoux
Canadian Deals Leader
[email protected]
+1 514 205 5302
ca.linkedin.com/in/nicolasmarcouxpwc/en
1 Source: Kennedy; “Business Advisory Services Marketplace 2012”; © BNA Subsidiaries, LLC. Reproduced under license.
Capital Markets Flash | www.pwc.com/ca/deals
24
Q3 2014
PwC Deals
Capital Markets Flash
blog
Your source for unique Canadian M&A insights
Our Capital Markets Flash blog features facts, figures, and our unique
industry perspectives on Canadian and global mergers and acquisitions
(M&A) and related issues. It’s all wrapped up in a more convenient to use
digital format that’s still completely focused on helping you to achieve
deal success—from concept to close, and beyond.
www.pwc.com/ca/CMFblog
Capital Markets Flash | www.pwc.com/ca/deals
25
Q3 2014
Capital Markets Flash | www.pwc.com/ca/deals
26
Q3 2014
| Canadian contacts
Contact us
Your PwC Deals Leadership Team
Nicolas Marcoux*
Canadian Deals Leader
Steven Henderson
Forensic Services
Helen Mallovy Hicks
GTA
Corporate Finance
PricewaterhouseCoopers Corporate Finance Inc
[email protected]
+1 416 941 8328
[email protected]
+1 416 814 5739
Jim McGuigan*
British Columbia
Miriam Pozza
Quebec
Lori-Ann Beausoleil
Forensic Services
Regulatory Compliance, Risk and Controls
[email protected]
+1 604 806 7594
[email protected]
+1 514 205 5286
[email protected]
+1 416 687 8617
Johanne Mullen
Infrastructure and Project Finance
Dominic Ricketts
Transaction Services
[email protected]
+1 514 205 5080
[email protected]
+1 416 687 8408
David Planques
Corporate Advisory and Restructuring
Clinton Roberts
Alberta
[email protected]
+1 514 205 5302
Ken Goodwin
Valuations, Modelling and Disputes
[email protected]
+1 416 814 5760
[email protected]
+1 416 815 5275
[email protected]
+1 403 509 7307
Corporate finance services in the US are provided through PricewaterhouseCoopers Corporate Finance LLC (“PwC CF”). PwC CF is owned by
PricewaterhouseCoopers LLP, a member firm of the PricewaterhouseCoopers Network, and is a member of FINRA and SIPC. PwC CF is not
engaged in the practice of public accountancy. US persons, please contact the FINRA registered representatives noted with an *.
Capital Markets Flash | www.pwc.com/ca/deals
27
Q1 2015
All dollar amounts are expressed in US dollars, unless otherwise noted.
All transaction values expressed in this document are generally based on S&P Capital IQ’s Total Transaction Value (in US$mm, historical rate),
defined as follows:
• Total Transaction Value: Equal to Total Consideration to Shareholders + Total Other Consideration + Total Deferred/Earnout/Contingent
Payments + Total Rights/Warrants/Options + Cash and Short Term Investments + Net Assumed Liabilities + Adjustment Size.
In addition to the footnotes, sources may include: The Associated Press, Barrons, Bloomberg, BMO Capital Markets, Business Standard,Canada
Stockwatch, S&P Capital IQ, CIBC, CIBC World Markets, Conference Board of Canada, The Economist, Eurasia Group, The Financial Post, The
Financial Times, FT Alphaville, The Globe and Mail, Goldman Sachs, International Monetary Fund, International Trade Suite, Marketwatch, McKinsey
Quarterly, Moodys, mergermarket, National Bank, National Post, New York Times, PR Newswire, RBC Capital Markets, Reuters Loan Connector,
S&P LCD, Scotiabank, Seeking Alpha, Standard & Poors, Stikeman Elliot, TD Newcrest, TD Securities, TMX Group, The TMX MiG Report, Toronto
Dominion Bank, Torys LLP, United Nations, VC Circle, Wall Street Journal, The Washington Post, William Blair & Company LLC, Zero Hedge,
Saskatchewan Trade and Export Partnership, Globalventures Magazine, and GlobeAdvisor.com.
PricewaterhouseCoopers LLP, PricewaterhouseCoopers Corporate Finance Inc. and other member firms of the PwC Network (“PwC”) do not
make or imply any representations or warranties with respect to the accuracy, or completeness of the information contained in this document. This
document is intended for informational purposes only. The views and opinions expressed in this document are solely those of the authors and do
not necessarily represent the views of PwC or its employees.
© 2015 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved.
PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 2147-96 0515