Danfoss Lazard Valaution Discussion

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EX-99.(C)(7) 2 a13-7576_5ex99dc7.htm EX-99.(C)(7)

Exhibit 99.(c)(7)
PRESENTATION TO THE SPECIAL COMMITTEE 1 3 D E C E M B E R 2 0 1 2 CON F I D ENT I A L
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Disclaimer The information herein has been prepared by Lazard Frères & Co. LLC (“Lazard”) solely based upon
information supplied by you (the “Company”) and information that is publicly available. Portions of the information
herein may be based upon certain statements, estimates and forecasts provided by the Company with respect to the
anticipated future performance of the Company. Lazard has relied upon the accuracy and completeness of the foregoing
information, and has not assumed any responsibility for any independent verification of such information or any
independent valuation or appraisal of any of the assets or liabilities of the Company or any other entity, or concerning
solvency or fair value of the Company or any other entity. With respect to financial forecasts, Lazard has assumed that
they have been reasonably prepared on bases reflecting the best currently available estimates and judgments as to the
future financial performance of the Company; we assume no responsibility for and express no view as to such forecasts.
The information set forth herein is based upon economic, monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof, unless indicated otherwise. These materials and the information
contained herein are confidential and may not be disclosed publicly or made available to third parties without the prior
written consent of Lazard; provided, however, that you may disclose to any and all persons the U.S. federal income tax
treatment and tax structure of any transaction described herein and the portions of these materials that relate to such tax
treatment or structure. Lazard will not be responsible for and will not provide any tax, accounting, actuarial, legal or
other specialist advice. Please be advised that any discussion of US tax matters contained herein is not intended or
written to be used and cannot be used for the purpose of (i) avoiding US tax related penalties or (ii) promoting,
marketing or recommending to another party any transaction or matter addressed herein. These materials are preliminary
and summary in nature and do not include all of the information that the Company should evaluate in considering a
possible transaction. Nothing herein shall constitute a commitment or undertaking on the part of Lazard or any related
party to provide any service. Lazard shall have no duties or obligations to you in respect of these materials or other
advice provided to you, except to the extent specifically set forth in an engagement or other written agreement, if any,
that is entered into by Lazard and you. CON F I D ENT I A L
The Lazard Team for the Sauer-Danfoss Special Committee Global Industrials group 8 years at Lazard Focus on
industrials/capital goods Machinery and equipment transaction experience Advised Sauer-Danfoss Special Committee in
2010 Advised Caterpillar NAVIN BHARGAVA Director Head of Special Committee practice and Chairman of Fairness
Opinion Committee Lead advisor to numerous Special Committees, including those of CNH, Delphi Financial, 99¢ Only
Stores, CNX Gas, Barnes & Noble, AMC, hotels.com, CSFB Direct, Hertz, Nationwide, Alfa, Dollar General, Chicago
Board of Trade and DoubleClick AL GARNER Vice Chairman, U.S. Investment Banking Head of U.S. Corporate
Finance 27 years at Lazard Broad range of financing and advisory experience Advised Special Committee of CNH on
the merger with Fiat Industrial JOE MAYBANK Vice Chairman, Global Cap. Mkts. Advisory Global Industrials group
Significant machinery and equipment transaction experience Advisor to CNH (Special Committee), Caterpillar,
Schneider Electric, CEMEX, Denison International, and Parker Hannifin Advised Sauer-Danfoss Special Committee in
2010 DONALD FAWCETT Managing Director Global Industrials group 4 years at Lazard Focus on industrials/capital
goods Machinery and equipment transaction experience Advised Caterpillar JUSTIN KATZ Vice President Head of
Investment Banking for Nordic region, based in Stockholm 20 years of financial advisory experience Scandinavian
machinery and equipment transaction experience GUSTAF SLETTENGREN Managing Director Head of Investment
Banking for Germany, based in Frankfurt European machinery and equipment transaction experience ERIC
FELLHAUER Managing Director BARRY RIDINGS Vice Chairman, U.S. Investment Banking Chairman of Lazard
Capital Markets and Lazard Middle Market Co-Head of Lazard Restructuring from 1999 to 2012 36 years of financial
advisory experience Advised Sauer-Danfoss Special Committee in 2010 CON F I D ENT I A L
Introduction Lazard is pleased to present its credentials to the Special Committee of the board of Sauer-Danfoss Inc.
(“Sauer-Danfoss”) in connection with the proposal from Danfoss A/S (“Danfoss”) Lazard is uniquely suited to advise the
Special Committee as it considers its response and its alternatives to the proposal from Danfoss Advised the Special
Committee of Sauer-Danfoss in 2010 in ultimately recommending against Danfoss’s final offer of $14/share Strong
existing knowledge of Sauer-Danfoss and key dynamics Full commitment of a team of senior bankers (same core team
as in 2010) Machinery and equipment sector specialists with significant additional relevant transaction experience in
hydraulics (e.g., cover bidder for Hagglunds, sale of Denison to Parker Hannifin, and sale of Atecs to Bosch and
Siemens) and active relationships with companies that participate in Sauer-Danfoss’s end markets (e.g., CNH Global,
Caterpillar, Manitou, Terex, JCB, Volvo, and Doosan/Bobcat) Global footprint, including strong practice in Nordic
Europe Preeminent position as a financial advisor to Special Committees Independent model focused on providing
unbiased financial advice Lazard recently advised the Special Committee of the board of CNH Global in connection with
the merger with Fiat Industrial C O N F I D E N T I A L
Proposed Discussion Agenda 1 Lazard Credentials and Relevant Experience 2 Current Situation Overview 3 Danfoss
A/S Proposal 4 Considerations for the Special Committee C O N F I D E N T I A L
I Lazard Credentials and Relevant Experience
Why Lazard? Our competitive strengths set us apart from other investment banks 1 COMMERCIAL/UNIVERSAL
BANKS BOUTIQUES I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E X P E R I E N C E
LTM ADVISORY REVENUE % OF TOTAL REVENUE Goldman Sachs 7% JP Morgan Chase 3% Morgan Stanley 5%
Bank of America 2% Lazard 54% Credit Suisse 6% Deutsche Bank 4% UBS 6% Citigroup 3% Evercore 86% Greenhill
96% $1,937 $1,423 $1,321 $1,037 $1,000 $974 $768 $765 $664 $455 $277 Lazard’s Global Presence We operate in
major business capitals worldwide and provide both domestic and cross-border advisory services 2 (a) Lazard also
maintains a joint cooperation agreement with Raiffeisen Investment AG for M&A advisory in Russia and the
Central/Eastern European region. (b) Lazard also maintains a strategic alliance with Alfaro, Dávila, y Ríos for financial
advisory in Mexico. 980 BANKERS WORLDWIDE North/South America – 490 Bankers Europe – 375 Bankers
Asia/Australia – 115 Bankers UNITED STATES New York, San Francisco, Chicago, Houston, Los Angeles, Boston,
Washington, D.C., Minneapolis, Charlotte CANADA UNITED KINGDOM FRANCE Paris, Bordeaux, Lyon ITALY
GERMANY(a) SPAIN SWEDEN BENELUX SWITZERLAND BRAZIL AUSTRALIA Sydney, Melbourne, Perth
UNITED ARAB EMIRATES INDIA KOREA SINGAPORE JAPAN CHINA Hong Kong, Beijing LATIN
AMERICA(b) Buenos Aires, Montevideo, Santiago, Panama City, Lima, Bogotá MBA Lazard 50:50 JV SAUDI
ARABIA I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E X P E R I E N C E $ in millions
Special Committee/Board-Level Advisory Expertise – Minority Squeeze-Outs Lazard, with its focus on financial
advisory, has established the pre-eminent position as an independent advisor in complex situations, typically involving
Special Committees. We have advised in numerous minority squeeze-outs... 3 Note: Includes minority squeeze-out
transactions and selected situations involving large, non-majority shareholders. I L A Z A R D C R E D E N T I A L S
AND RELEVANTEXPERIENCE
Special Committee/Board-Level Advisory Expertise 4 I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E
X P E R I E N C E ...and also have advised Boards and Special Committees on a wide variety of high profile and
complicated transactions
CNH Global Case Study 5 On May 30, Fiat Industrial launched a tender offer to acquire the remaining shares of CNH
that it did not already own for 3.828 NewCo shares for each CNH share Offer did not represent a premium over CNH
share price The Special Committee of the board of CNH retained Lazard and JP Morgan as its financial advisors In the
following months, Lazard and JP Morgan conducted extensive diligence and financial analysis and negotiated with Fiat
Industrial's advisors to achieve an increase in the offer price On November 19, Fiat Industrial announced a revised offer
representing a premium of more than 23% over the initial proposal In addition to the stock consideration of 3.828
NewCo shares for each CNH share, CNH shareholders will receive a special cash dividend of $10 per CNH share before
the end of the year Transaction creates one of the world's largest capital goods companies, with a simplified capital
structure and improved credit profile “one of the main reasons for this proposed transaction was to eliminate the
valuation discount of Fiat Industrial and CNH. Another main advantage of the transaction is that CNH can now have full
access to the FPT (engines, etc.) business. ...since both Fiat Industrial and CNH are undervalued, both parties can
participate in the upside that may come with the rerating of NewCo.” William Blair (11/26/12) 2012 TRANSACTION
SUMMARY WALL STREET MARKET REACTION Advisor to the Special Committee of the Board of Directors of On
the Merger with I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E X P E R I E N C E
Sauer-Danfoss 2010 Case Study 6 ...and in 2010 Lazard also advised the Special Committee of Sauer-Danfoss On
December 22, 2009, Danfoss A/S notified Sauer-Danfoss that it intends to launch a tender offer to acquire the remaining
shares of Sauer-Danfoss that it does not already own for $10.10 per share in cash The Special Committee of the board of
Sauer-Danfoss retained Lazard as its financial advisor In January and February 2010, Lazard conducted extensive
diligence and financial analysis and negotiated with Danfoss's advisors to achieve an increase in the offer price to $12.75
per share, a 26% increase Subsequently, management produced a financial forecast reflecting higher growth and earnings
than in its prior plan. Lazard negotiated with Danfoss's advisors again and achieved an increase in the offer price to
$13.25 per share, as announced on March 9, 2010 On April 7, 2010, Mason Capital announced it had acquired a stake in
Sauer- Danfoss and would not tender its shares at the $13.25 per share offer Lazard had a dialogue with Mason Capital
and continued negotiations with Danfoss's advisors and achieved another increase in the offer price to $14.00 per share
as announced on April 10, 2010 Due to stronger than expected preliminary first quarter results and an improving outlook
and based upon Lazard's advice, the Special Committee advised shareholders to reject the $14.00 per share offer On
April 29, 2010, Danfoss's tender offer expired TRANSACTION SUMMARY Advisor to the Special Committee of the
Board of Directors of On the Tender Offer by 2010 I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E X
PERIENCE
Selected Lazard Machinery & Equipment Experience I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E
X P E R I E N C E $1.4 billion 2011 ON ITS SALE TO $1.7 billion PENDING SPECIAL COMMITTEE ON BUY-IN
OFFER FROM Lazard has significant relevant experience advising hydraulic systems and components manufacturers
and companies that participate in Sauer-Danfoss’s end markets $490 million 2012 IPO CO-MANAGER Not Completed:
$4.9 bn 2007 STRATEGIC BUYER ON THE POTENTIAL ACQUISITION OF COMPACT EQUIPMENT BUSINESS
$500 million 2009 REFINANCING AND COVENANT RENEGOTIATION N.A. 2009 STRATEGIC ASSESSMENT
Not Completed: $720 m 2008 ADVISED STRATEGIC BUYER ON ACQUISITION OF HAS ACQUIRED $1.6 billion
2005 Flender Holding GmbH $545 million 2005 ON THE SALE OF BOART LONGYEAR TO Not Completed 2005
FINANCIAL BUYER ON THE POTENTIAL ACQUISITION OF BOMAG BUSINESS $253 million 2004 HAS BEEN
ACQUIRED BY Parker Hannifin $9.2 billion 2002 HAS SOLD ATECS TO Bosch & Siemens $6.2 billion 1999 ON ITS
ACQUISITION OF $1.3 billion 1997 ON ITS SALE OF TO $1.2 billion 2011 ON ITS ACQUISITION OF SFERT 551
million 2009 ON THE RESTRUCTURING OF ITS DEBT AND THE DEBT OF ITS GEHL SUBSIDIARY 344 million
2001 ON THE SALE OF ITS CRANE DIVISION TO Not Disclosed 2011 ON ITS ACQUISITION OF SHANGHAI
JIANSHE LUQIAO MACHINERY 7
Selected Lazard Industrials Experience 8 $23 billion 2011 ON ITS SEPARATION INTO THREE INDEPENDENT
COMPANIES $0.7 billion 2011 SPECIAL COMMITTEE OF ON ITS SALE TO MR. TIANFU YANG AND $2.0
billion 2011 ON ITS ACQUIS ITION OF A 34% STAKE IN AREVA NP SAS FROM $10.6 billion 2011 ON ITS
SEPARATION INTO THREE INDEPENDENT PUBLIC COMPANIES 1.6 billion 2012 ON ITS SALE OF DEUTSCH
ENGINEERED CONNECTING DEVICES TO $1.2 billion 2011 ON THE PUBLIC TAKEOVER OFFER FROM $4.4
billion 2011 ON ITS SALE TO $280 million 2010 ON ITS ACQUIS ITION OF $24 billion 2011 ON SPLIT-OFF OF
CARGILL’S STAKE IN MOSAIC SPECIAL COMMITTEE OF $290 million 2011 ON THE SALE OF CRENLO AND
PALADIN TO 330 million 2012 ON THE SALE OF ITS INVESTMENT IN DELORO STELLITE TO $3.5 billion
PENDING ON THE SALE OF INOXUM TO $4.9 billion 2012 ON THE MERGER OF ITS FLOW CONTROL
BUSINESS WITH $235 million 2012 ON ITS SALE TO Undisclosed 2012 ON THE SALE OF ITS AUTOMOTIVE
AIR CONDITIONING BUSINESS TO $2.1 billion PENDING ON THE MERGER OF ITS COMMODITY
CHEMICALS BUSINES S WITH $2.3 billion 2012 ON ITS MERGER WITH $10.1 billion 2008 ON ITS SALE TO
$12.0 billion 2007 ON ITS SEPARATION INTO THREE BUSINESSES $220 million 2011 ON THE SALE OF HEIL
TRAILER TO I L A Z A R D C R E D E N T I A L S A N D R E L E V A N T E X P E R I E N C E
II Current Situation Overview
The Big Picture I I C U R R E N T S I T U A T I O N O V E R V I E W 9 Revenue and earnings have recovered
substantially since the previous offer from Danfoss $1.9bn in LTM revenue vs. $1.2bn in 2009 revenue (+68%) $396m in
LTM EBITDA vs. ($26)m in 2009 EBITDA Share price up significantly over the past three years (+350%) as business
performance has improved Prior to announcement of current Danfoss proposal, public market valuation was at a slight
discount to historical levels Trading at 4.5x EV/LTM EBITDA vs. three-year historical average of 5.5x EV/LTM
EBITDA Shareholder base has evolved Mason Capital exited Current institutional shareholder base comprised mostly of
mutual funds Possibility that activist hedge funds could once again purchase shares post-announcement of proposal?
Recent weakness in performance due to global economic conditions 2012 revenue guidance recently lowered to 5% -
10% decline Competitors have also recently experienced weakness and lowered guidance Danfoss has said it has no
interest in selling all, or part of, its stake in Sauer-Danfoss Danfoss has a strong balance sheet and ample liquidity to fund
a potential increase in its proposal In many respects, Sauer-Danfoss is in a much different position than it was in late
2009/early 2010
Recent Evolution ($ in millions) I I C U R R E N T S I T U A T I O N O V E R V I E W Key Events Net sales decline by
45% y-o-y due to global recession Quarterly dividend suspended Credit agreement with Danfoss to borrow up to $690m
Danfoss announces intent to pursue tender offer at $10.10/share Restructuring program continues (working capital,
CapEx and headcount) Board ultimately recommends against $14.00/share; offer expires Credit line voluntarily reduced
by $190m Due to continued strong cash generation, reduced available credit line with Danfoss by $200m and lent ~
$180m of excess cash to Danfoss Danfoss announces intent to pursue tender offer at $49.00/share E. Alstrom appointed
President, CEO and Director Quarterly dividend reinstated Net Sales $1,159 $1,641 $2,057 $1,903 % Growth (44.6%)
41.5% 25.4% (7.5%) EBITDA ($26) $348 $453 $419 % Margin n/m 21.2% 22.0% 22.0% Ent. Value $1,131 $1,633
$1,704 $1,770 Net Debt(c) $494 $236 ($51) ($141) Equity Value $583 $1,368 $1,755 $1,911 EV / EBITDA LTM n/m
4.7x 3.8x 4.5x 2009 2010 2011 2012E(a)(b) Source: Company filings. Note: Financials shown for financial year end
December 31. (a) Lazard extrapolation based on Sauer-Danfoss guidance; assumed net sales decrease of (7.5%) and
EBITDA margin constant from 2011. (b) Enterprise value and related data based on Q3 2012 financials and based on
unaffected share price on November 27, 2012. (c) Including minority interest. 10
Stock Price Performance: Last 5 Years I I C U R R E N T S I T U A T I O N O V E R V I E W 11 0 10 20 30 40 50 60
$70 06 Dec 2007 06 Dec 2008 08 Dec 2009 09 Dec 2010 11 Dec 2011 12 Dec 2012 Price Source: FactSet. Current
Proposal: $49.00 28 Nov 2012 Danfoss announces proposal of $49.00 per share 22 Dec 2009 Danfoss offers $10.10 per
share 30 Oct 2009 Danfoss acquires additional 20.6% stake Average Price Pre-Current Proposal 1 Week $39.28 1 Year
$41.29 1 Month 39.62 2 Years 40.97 3 Months 39.81 3 Years 32.50 Price Post-Current Proposal Current $52.35 Avg.
Since Proposal 52.57 $25.90 9 Mar 2010 Danfoss raises offer to $13.25 per share 10 Apr 2010 Danfoss raises offer to
$14.00 per share 10 Mar 2008 Danfoss acquires controlling stake Sauer-Danfoss’s share price is up significantly both
over the past five years and since Danfoss’s prior offers in 2009 / early 2010... $52.35 +102%
Stock Price Performance in Context: Last 5 Years I I C U R R E N T S I T U A T I O N O V E R V I E W 12 Source:
FactSet as of 12/12/12. (a) Hydraulics peers include Eaton, Parker, and Sun Hydraulics. (b) Selected Customers include
Caterpillar, Terex, AGCO, Cargotec, Deere, Manitou, Oshkosh, Palfinger, and Toro. (c) Mid-Cap Industrials include
A.O. Smith, Actuant, Astec, CLARCOR, Colfax, Crane, Franklin Electric, Graco, Kaydon, Lindsay, Manitowoc, RBC
Bearings, Regal-Beloit, and Rexnord. 0 50 100 150 200 250 12 Dec 2007 11 Dec 2008 11 Dec 2009 12 Dec 2010 12 Dec
2011 12 Dec 2012 Indexed Hydraulics Selected Customers Mid-Cap Industrials SHS $25.90 (a) (b) (c) $52.35 +102%
+21% +15% (33%) ... and its shares have outperformed peers due to strong recovery of underlying business
Relative Valuation 13 I I C U R R E N T S I T U A T I O N O V E R V I E W PAST 3 YEARS CURRENT PAST 3
YEARS CURRENT 0 6 12 18 24 30x Dec 09 Jul 10 Feb 11 Oct 11 May 12 Dec 12 Hydraulics Selected Customers Mid-
Cap Industrials Sauer-Danfoss 1 6 11 16x Dec 09 Jul 10 Feb 11 Oct 11 May 12 Dec 12 Hydraulics Selected Customers
Mid-Cap Industrials Sauer-Danfoss Source: FactSet as of 12/12/12. Note: Demag (a) Hydraulics peers include Eaton and
Parker. (b) Selected Customers include Caterpillar, Terex, AGCO, Cargotec, Deere, Manitou, Oshkosh, Palfinger, and
Toro. (c) Mid-Cap Industrials include A.O. Smith, Actuant, Astec, CLARCOR, Colfax, Crane, Franklin Electric, Graco,
Kaydon, Lindsay, Manitowoc, RBC Bearings, Regal-Beloit, and Rexnord. 8.8x 10.1x 7.9x 6.1x 19.0x 11.3x 13.4x 10.4x
10.1x 7.9x 7.1x 6.1x 4.5x 0 3 6 9 12x Eaton Mid-Cap Industrials Selected Customers Parker Sauer-Danfoss (current)
Sauer-Danfoss (unaffected) 19.0x 13.4x 12.6x 11.7x 11.3x 10.1x 6 10 14 18 22x Mid-Cap Industrials Sauer-Danfoss
(current) Eaton Parker Selected Customers Sauer-Danfoss (unaffected) n/m n/m (a) (b) (c) 12.1x EV/ LTM EBITDA
PRICE/ LTM EPS (a) (b) (c) Sauer-Danfoss has consistently traded at a discount to peers, reflecting the limited size and
liquidity of its float and lack of research coverage Note: Calendarized to December 31 year end; Pro forma for eaton’s
acquisition of cooper, Terex’s acquisition of Demag Cranes, and Colfax’s acquisition of Charter.
Sales Growth and EBITDA Margin vs. Peers I I C U R R E N T S I T U A T I O N O V E R V I E W 14 Sauer- Source:
FactSet. Note: Calendarized to December 31 year end. (a) Excludes financing business; Caterpillar revenue growth
reflects acquisition of Bucyrus. (b) For hydraulics business only. (c) Excludes financing business. (d) Mid-Cap
Industrials include A.O. Smith, Actuant, Astec, CLARCOR, Colfax, Crane, Franklin Electric, Graco, Kaydon, Lindsay,
Manitowoc, RBC Bearings, Regal-Beloit, and Rexnord. 30% 20% 17% 16% 16% 16% 15% 13% 10% 8% 7% 6% 6%
5% 0% 7% 14% 21% 28% 35% Sun Hydraulics Sauer-Danfoss Caterpillar Deere Eaton Mid-Cap Indu. Parker Toro
AGCO Palfinger Terex Oshkosh Cargotec Manitou % margin LTM EBITDA MARGIN Median: 14% (a) (c) (b) Selected
Customers Hydraulics Mid-Cap Industrials (d) 29% 28% 23% 22% 22% 21% 18% 17% 14% 13% 10% 9% 8% 8% 0%
10% 20% 30% Caterpillar Sun Hydraulics Terex Manitou Eaton Palfinger Sauer-Danfoss Deere AGCO Parker Mid-Cap
Indu. Toro Cargotec Oshkosh % CAGR 2009A 2012E SALES CAGR Median: 15% (a) (c) (b) 1.3% 1.7% 4.9% (0.2%)
(2.0%) 6.0% -- 6.0% 4.1% 1.6% 5.4% 5.0% (1.7%) (7.7%) (d) ’12E – ’13E Sales growth
SUMMARY METRICS RECENT DEVELOPMENTS Revenues 2013E: $22.8 Hydraulics Rev. 2013E: 3.2 Ent. Value:
34.4 9.6x Recently completed Cooper acquisition for $11.9bn strengthening its position in the electrical end-market and
further diversifying away from legacy business In November, lowered 2012 Hydraulics revenue guidance from 3%
growth to 2% decline, driven by weakness in the construction equipment markets U.S. Hydraulics revenue growth
forecast reduced from 8% to 2% due to weakness in the mobile portion of the business Non-US growth forecasted to be
down 5% y/y due to limited recovery in Asia - Barclays (11/1/12) Revenues 2013E: $13.2 Hydraulics Rev. 2013E: 3.4
Ent. Value: 13.8 6.7x In October reported weak fiscal Q1 results and reduced fiscal year guidance significantly; shares
sold off 8% Cancellations from global construction OEMs were key driver of quarter earnings miss New guidance calls
for FY13 (6/30) revenue to decline 2% (+4% previously) Due to global weakness, taking action to adjust workforce and
level of capex - Jefferies (10/19/12) Revenues 2013E: $0.2 Ent. Value: 0.6 9.0x Recent performance has been weak Q3
earnings below consensus, at the low end of guidance Q4 guidance below consensus, now expects decline in U.S.
revenues Weak Europe and Asia starting to impact U.S. demand Adjusting to lower overall level of demand, but
potential rebound in 2012 - Kansas City Capital Associates (11/06/12) Key Hydraulics Players: Selected Observations
($ in billions) I I C U R R E N T S I T U A T I O N O V E R V I E W 15 Source: FactSet, Thomson ONE,
MergerMarket, Wall Street research, company filings. (a) Pro forma for Cooper acquisition. EV/’13 EBITDA: “We think
the outlook remains uncertain in some of ETN’s core markets as we enter 2013, especially in Hydraulics given more
moderate trends in global construction.” EV/’13 EBITDA: “PH made negative comments about preduction adjustments
in the construction equipment industry... We believe that ETN could have seen similar customer cancellations/
adjustments in its bydraulics business.” Ev/’13EBITDA: “Continuing weakness overseas and concerns domestically
have caused us to lower our fourth-quarter and year-end forecast for SNH... Fiscal 2013 is projected to be a relatively
flattish year as we are assuming a soft first half will be offset by an uptick in second half performance.”
End-Market Perspectives: Selected Analyst Commentary I I C U R R E N T S I T U A T I O N O V E R V I E W 16
HYDRAULICS / OVERALL INDUSTRIAL “Hydraulics markets will likely contract in the 2%-3% range following 2%
market decline this year, comprised of likely significant double-digit decline in the second half of 2012 and the first half
of 2013. With many key customers’ production running well under final demand a strong growth recovery is likely in the
second half of next year Buckingham Research (11/29/12) AGRICULTURE “We expect USDA to revise its forecast
upward as the beneficial impact of sharply higher crop prices on cash crop receipts, and a positive revision to ‘farm-
related income’, more than offset the negative impacts of lower crop yields and lower harvested area on net cash
income.” BAML (7/18/12) “The impact [of the drought] is relatively neutral as higher commodity prices will offset
much of the loss of production and farmers will actually look to take advantage of higher commodity prices in the next
harvest.” Credit Suisse (8/30/12) CONSTRUCTION EQUIPMENT “Conditions in the domestic construction market are
pointing to gradual improvement, with spending up ~6% (in ompared to previous cycles, the current one is unique.
Traditional oil and gas related construction has been an important driver of growth Citi (9/7/12) “...Caution toward
construction equipment (inventory build amidst a sluggish commercial construction recovery following an extended
period of strong shipments) and mining equipment (lower mining company capex, slowdown in project approvals).”
RBC (11/20/12) AERIAL WORK PLATFORM “Aerial work platform demand remains robust as fleet age has increased
over recent years and replacement is required given the uneconomical nature of maintaining old equipment relative to
fleet replacement.” Citi (12/7/12) “We asked branch managers about their 2013 capex intentions by equipment type.
Branch managers expect to add fleet for all equipment types surveyed, but most so for aerial work platforms.” UBS
(11/9/12) TURF CARE “We believe there are several positive trends... First, golf rounds played in 2012 were at their
highest level since 2010, thereby setting up capital budgets at golf courses for the coming year. This should help increase
sales of both turf and irrigation equipment. Landscape contractors are also cautiously optimistic that business will
steadily improve.” Longbow Research (12/6/12)
I I CU R R E N T S I T U A T ION O V E R V I EW Shareholder Base Composition 17 Legend: None Low Medium
High The institutional shareholder base is currently comprised mainly of mutual funds and is dispersed (Mason Capital,
who agitated in 2010, appears to no longer have a position). However, post-announcement of Danfoss’s proposal, activist
hedge funds could potentially take stakes 9/30/12 % Total % Float Level of Activism 6/30/10 % Total % Float Level of
Activism 3/31/10 % Total % Float Level of Activism 1 Vanguard 1.9% 7.8% Mason Capital 4.3% 17.6% Mason Capital
4.0% 16.4% 2 Wellington 1.9% 7.8% Vanguard 1.7% 7.0% Dimensional 1.5% 6.1% 3 American Century 1.5% 6.1%
Pennsylvania PSERS 1.5% 6.1% Vanguard 1.4% 5.7% 4 AllianceBernstein 1.5% 6.1% Dimensional 1.4% 5.7%
Pennsylvania PSERS 1.0% 4.1% 5 BlackRock 1.4% 5.7% Lonestar 1.3% 5.3% AQR 1.0% 4.1% 6 Royce & Associates
0.8% 3.3% BlackRock 1.1% 4.5% BlackRock 0.9% 3.7% 7 Dimensional 0.8% 3.3% Carlson 0.7% 2.9% Lonestar 0.8%
3.3% 8 Reinhart 0.7% 2.9% Hudson Bay 0.5% 2.0% State Street 0.6% 2.5% 9 D. E. Shaw 0.5% 2.0% State Street 0.5%
2.0% TFS 0.4% 1.6% 10 State Street 0.5% 2.0% AQR 0.4% 1.6% Water Island 0.4% 1.6% 11 TIAA-CREF 0.5% 2.0%
Northern Trust 0.4% 1.6% Northern Trust 0.3% 1.2% 12 Schroder 0.5% 2.0% TFS 0.4% 1.6% First Manhattan 0.3%
1.2% 13 Walthausen & Co. 0.5% 2.0% First Manhattan 0.3% 1.2% Parametric 0.3% 1.2% 14 Systematic Financial 0.4%
1.6% Parametric 0.3% 1.2% Renaissance Tech 0.3% 1.2% 15 Northern Trust 0.4% 1.6% TIAA-CREF 0.3% 1.2%
GAMCO 0.3% 1.2% Source: FactSet. Note: Shading indicates ownership currently and in 2010; % total refers to
percentage ownership of total float, % float refers to minority free float. CURRENT HISTORICAL Top 12 shareholders
hold 51% of the public float (as of September 30, 2012)
Shareholder Cost Basis Analysis I I C U R R E N T S I T U A T I O N O V E R V I E W 18 Source: FactSet. Majority of
shares that have turned over in the past year were purchased at prices under $42. 10% were purchased above the current
proposal price ($49); 55% of the float has traded since the proposal ONE YEAR COST BASIS (AS OF 11/27/12) SIX
MONTH COST BASIS (AS OF 11/27/12) 342 1,029 1,075 2,089 531 2,010 2,073 1,787 872 154 3% 11% 20% 38%
42% 59% 76% 91% 99% 100% 0% 25% 50% 75% 100% 0 1,250 2,500 $33 - $34 $34 - $35 $35 - $36 $36 - $37 $37 -
$38 $38 - $39 $39 - $40 $40 - $41 $41 - $42 $42 - $43 Volume (000s) % Cumulative 402 3,126 5,279 6,239 3,940 1,914
2,150 2,881 2,536 1,676 1,337 1,070 1% 11% 27% 46% 58% 64% 71% 80% 87% 93% 97% 100% 0% 25% 50% 75%
100% 0 4,000 8,000 $32 - $34 $34 - $36 $36 - $38 $38 - $40 $40 - $42 $42 - $44 $44 - $46 $46 - $48 $48 - $50 $50 -
$52 $52 - $54 $54 - $56 Volume (000s) % Cumulative TOTAL SHARES TRADED / FLOAT = 101% TOTAL SHARES
TRADED / FLOAT = 275%
III Danfoss A/S Proposal
Current Proposal ($ in millions, except per share data) 19 Source: Company filings, FactSet. I I I D A N F O S S A / S P
R O P O S A L PRICE $49.00/share PREMIUMS 1-Day Prior Share Price: 24% 1-Week Prior Share Price: 25% 4-Week
Prior Share Price: 22% 3-Month Prior Share Price: 28% VALUATION Equity Value: $2,378 Enterprise Value: 2,237 EV
/ LTM EBITDA: 5.7x TYPE Cash tender offer FINANCING No financing contingency The current proposal of
$49.00/share represents a 24% premium and 25% premium over the 1-day prior share price and the 1- week prior share
price, respectively Current proposal represents a higher starting premium than the previous initial Danfoss proposal in
December 2009 (20% premium to 1-day prior, 10% premium to 1-week prior)
Current Proposal in Context ($ in millions, except per share data) I I I D A N F O S S A / S P R O P O S A L Source:
Company filings, FactSet. (a) Share price as of December 12, 2012; Previous Previous Offer Current Current Purchases
Initial Final Proposal Trading(a) Items Announcement Date 3/10/2008 10/30/2009 12/22/2009 4/10/2010 11/28/2012
Close Date 7/11/2008 10/30/2009 n/a n/a n/a Increase in Ownership, if Any 17.0% 20.6% 24.1% 24.3% 24.4% Purchase
Price $248 $161 $119 $165 $579 Price Per Share $29.67 $16.00 $10.10 $14.00 $49.00 $52.35 Aggregate Equity Value
$1,457 $780 $494 $679 $2,378 $2,540 Aggregate Enterprise Value $1,934 $1,352 $1,065 $1,200 $2,237 $2,399 Implied
LTM Multiples EV / LTM Sales 0.98x 1.07x 0.92x 1.00x 1.15x 1.23x EV / LTM EBITDA 8.3x n/m n/m n/m 5.7x 6.1x
Premiums Paid Analysis 1-Day Prior Share Price 69% 116% 20% 66% 24% 33% 1-Week Prior Share Price 45% 101%
10% 52% 25% 33% 4-Week Prior Share Price 56% 125% 13% 56% 22% 31% 3-Month Prior Share Price 22% 182%
27% 76% 28% 36% 20 Current proposal represents a higher starting premium than the previous initial Danfoss offer in
December 2009
Comparison of April 2010 Business Plan and Actual Performance I I I D A N F O S S A / S P R O P O S A L 2010A
2011A 2012E(a) ACTUAL PERFORMANCE Net sales $1,641 $2,057 $1,903 % growth 41.5% 25.4% (7.5%) EBITDA
$348 $453 $419 % margin 21.2% 22.0% 22.0% CapEx ($26) ($52) ($55) % of sales 1.6% 2.5% 2.9% Net Working
Capital $237 $256 n/a % of sales 14.5% 12.4% n/a 2010E 2011E 2012E PREVIOUS BUSINESS PLAN (April 2010)
Net sales $1,400 $1,470 $1,555 % growth 20.8% 5.0% 5.8% EBITDA $206 $220 $236 % margin 14.7% 14.9% 15.2%
CapEx ($30) ($44) ($47) % of sales 2.1% 3.0% 3.0% Net Working Capital $252 $259 $269 % of sales 18.0% 17.6%
17.3% Source: Company filings, Management business plan. (a) Lazard extrapolation based on Sauer-Danfoss guidance;
assumed net sales decrease of (7.5%) and EBITDA margin constant from 2011. 21 Actual performance for FY 2010 and
2011 significantly exceeded the April 2010 business plan due to strength of economic recovery
Preliminary Analysis of Current Proposal ($ in millions, except per share data) I I I D A N F O S S A / S P R O P O S A
L 22 Current Current Public Trading Precedent Minority Buy-In Proposal Trading Comparables Transactions(d)
Premiums(e) Per Share $49.00 $52.35 Aggregate Equity Value $2,378 $2,540 Net Debt (incl. Minority Interest) (141)
(141) Hydraulics Selected Mid-Cap All Aggregate Enterprise Value $2,237 $2,399 Peers(a) Customers(b) Industrials(c)
Hydraulics Transactions Implied Sales Multiple 2011A $2,057 1.09x 1.17x 1.33x 0.63x 1.61x - - LTM 1,949 1.15x 1.23x
1.31x 0.62x 1.59x 1.10x - 2012E 1,903 1.18x 1.26x 1.32x 0.63x 1.49x - - Implied EBITDA Multiple 2011A $453 4.9x
5.3x 9.1x 6.8x 11.3x - - LTM 396 5.7x 6.1x 8.8x 7.9x 10.1x 8.3x - 2012E(f) 419 5.3x 5.7x 8.6x 6.0x 9.3x - - Premium to
Unaffected Price 1-Day Prior Share Price $39.38 24% 33% - - - - 28% 1-Week Prior Share Price 39.32 25% 33% - - - -
29% 4-Week Prior Share Price 40.06 22% 31% - - - - 28% 3-Month Prior Share Price 38.36 28% 36% - - - - - Source:
Company filings, FactSet. (a) Hydraulics peers include Eaton and Parker. (b) Selected Customers include Caterpillar,
Terex, AGCO, Cargotec, Deere, Manitou, Oshkosh, Palfinger, and Toro. (c) Mid-Cap Industrials include A.O. Smith,
Actuant, Astec, CLARCOR, Colfax, Crane, Franklin Electric, Graco, Kaydon, Lindsay, Manitowoc, RBC Bearings,
Regal-Beloit, and Rexnord. (d) Includes selected hydraulics transactions since 1998. (e) Includes closed minority buy-ins
with U.S. targets and transaction values in excess of $250 million. 100% cash transactions only. (f) Lazard extrapolation
based on Sauer-Danfoss guidance; assumed net sales decrease of (7.5%) and EBITDA margin constant from 2011.
Minority Buy-In Premiums: Summary Analysis I I I D A N F O S S A / S P R O P O S A L Median 1-day premium for
all cash buy-in offers is 28%. In slightly over half of these, the acquiror ultimately increased the offer by a median of
15% Source: SDC. Note: Key assumptions for precedents include: Past 10+ years (since 1/1/2002); minority buy-in
transactions (U.S. public targets, excluded short-form mergers and other subsequent offerings) in excess of $250 million;
at least 51% held at announcement and 100% ownership after transaction. 23 SUMMARY MINORITY BUY-IN
PREMIUM DATA (FINAL OFFER) # OF TRANSACTIONS 1-DAY 1-WEEK 4-WEEK PREMIUM OF FINAL VS.
INITIAL OFFER MEAN MEDIAN MEAN MEDIAN MEAN MEDIAN MEAN MEDIAN ALL-CASH
CONSIDERATION 16 27% 28% 29% 29% 32% 28% 15% 15% CASH + STOCK 1 10% 10% 9% 9% 14% 14% 2% 2%
STOCK 11 18% 22% 19% 23% 18% 23% 7% 7% TOTAL 28 23% 24% 24% 26% 26% 25% 12% 10% 57% of all
analyzed transactions included a revised offer
Analysis at Various Prices: Illustrative ($ in millions, except per share data) I I I D A N F O S S A / S P R O P O S A L
Source: Company filings, FactSet. (a) Lazard extrapolation based on Sauer-Danfoss guidance; assumed net sales
decrease of (7.5%) and EBITDA margin constant from 2011. 24 Current Current Analysis Proposal Trading at Various
Prices Per Share $49.00 $52.35 $53.00 $55.00 $57.00 $59.00 Premium to Current Share Price (6%) - 1% 5% 9% 13%
Increase From Current Proposal - 7% 8% 12% 16% 20% Minority Equity Value $579 $619 $627 $650 $674 $698
Aggregate Equity Value 2,378 2,540 2,572 2,669 2,766 2,863 Net Debt (incl. Minority Interest) (141) (141) (141) (141)
(141) (141) Aggregate Enterprise Value $2,237 $2,399 $2,431 $2,528 $2,625 $2,722 Implied Sales Multiple 2011A
$2,057 1.09x 1.17x 1.18x 1.23x 1.28x 1.32x LTM 1,949 1.15x 1.23x 1.25x 1.30x 1.35x 1.40x 2012E(a) 1,903 1.18x
1.26x 1.28x 1.33x 1.38x 1.43x Implied EBITDA Multiple 2011A $453 4.9x 5.3x 5.4x 5.6x 5.8x 6.0x LTM 396 5.7x 6.1x
6.1x 6.4x 6.6x 6.9x 2012E(a) 419 5.3x 5.7x 5.8x 6.0x 6.3x 6.5x Premium to Unaffected Price 1-Day Prior Share Price
$39.38 24% 33% 35% 40% 45% 50% 1-Week Prior Share Price 39.32 25% 33% 35% 40% 45% 50% 4-Week Prior
Share Price 40.06 22% 31% 32% 37% 42% 47% 3-Month Prior Share Price 38.36 28% 36% 38% 43% 49% 54%
Danfoss PF Net Debt / EBITDA 1.4x 1.5x 1.5x 1.5x 1.5x 1.6x Every $1/share increase in the proposed price represents
approximately $12 million in total value Danfoss has sufficient liquidity and balance sheet strength to increase the
proposal
IV Considerations for the Special Committee
Key Issues I V C O N S I D E R A T I O N S F O R T H E S P E C I A L C O M M I T T E E THRESHOLD
QUESTIONS Does Danfoss’s current proposal give Sauer-Danfoss’s minority shareholder adequate consideration for
their ~24% minority stake in Sauer-Danfoss? What is an appropriate valuation for Sauer-Danfoss? What alternatives do
Sauer-Danfoss’s minority shareholder have? Is the cash consideration offered not only fair, but does it also represent the
best result available for the minority shareholders? VALUATION The Special Committee should develop a view as to
the value of Sauer-Danfoss Underlying management projections should be rigorously reviewed and diligenced Industry
dynamics and the competitive landscape should be considered by the Special Committee The Special Committee should
work closely with financial and legal advisors to consider available options to make appropriate assessments on value
and to determine the optimal negotiating posture Independent directors must hold themselves to the highest standard in
acting on behalf of shareholders as the record could be scrutinized in any subsequent litigation Process is critical - the
Special Committee generally has the ability to control timing and process; one of the Special Committee’s greatest
advantages is the power to say “no” 25
How Does the Special Committee Develop its View on Value? I V C O N S I D E R A T I O N S F O R T H E S P E C I
A L C O M M I T T E E What is fair value? What are the valuation methodologies that Lazard would utilize in
determining value? Precedent transactions and minority squeeze-out premiums paid Discounted cash flow analysis
(incorporating management projections and sensitivities) Other factors (e.g., transaction closing conditions, etc.)
Historical stock price and trading history COMPANY DYNAMICS Key factors and risks impacting the Sauer-Danfoss
ability to achieve its business plan projections INDUSTRY DYNAMICS Key factors and trends impacting the
machinery and equipment industry generally and served sectors (agriculture, construction, material handling, turf care)
specifically Comparable company analysis Other relevant analyses (e.g., PV of future share price, etc.) 26
Summary Process Timeline: Illustrative I V C O N S I D E R A T I O N S F O R T H E S P E C I A L C O M M I T T E
E 27 Week 1 2 3 4 5 6 7 8 9 Due diligence Preparation/presentation of valuation analyses Development of Special
Committee position Negotiations Lazard Opinion Committee meeting and rendering of Opinion to Special Committee
Announcement Timeline below is illustrative of a typical process. Danfoss has communicated its desire to work with the
Special Committee on a friendly basis to determine the optimal structure and timing to consummate a potential
transaction Timing/ Outcome ?
Appendix
A Supporting Materials
Danfoss A/S Business Overview ($ in millions) A SU P P O R T I N G M A T E R I A L S DANFOSS CLIMATE &
ENERGY : FY’11A SALES: $3,777 Danfoss Refrigeration & Air Conditioning Controls Danfoss Power Electronics
Danfoss Heating Solutions Danfoss Commercial Compressors Danfoss District Energy OTHER AREAS : FY’11A
SALES: $189 SAUER-DANFOSS : FY’11A SALES: $2,057 Remaining Danfoss Development activities after
divestment of Danfoss Water Controls and Danfoss Geared Motor activities in 2011 Danfoss Appliance Controls
Agriculture Construction Material Handling Turf Care Specialty Source: Company filings and Company website. Note:
Assumes DKK to USD exchange rate of 0.17326 as of 12/7/12; Sauer-Danfoss financials as reported. 28
Danfoss A/S Financial Overview ($ in millions, except per share data) A SU P P O R T I N G MA T E R I A L S Source:
Company filings. (a) Assumes DKK to USD exchange rate of 0.17326 as of 12/7/12; Pro forma for $579.4 million
acquisition of shares from Sauer Holdings on November 30, 2012. (b) Pro forma for purchase of minority shares at
$49.00 per share; assumes transaction financed with revolver availability. (c) Reflects availability under committed credit
lines plus cash and cash equivalents. (d) Assumes additional borrowings accrue interest at 4.0% rate. Danfoss has
sufficient availability under its credit agreements, with no financial covenants, and cash at hand to fund a potential
increase in its initial proposal DANFOSS A/S FINANCIAL SUMMARY Including Sauer-Danfoss FYE Dec-31 2011A
LTM PF LTM(a) Total Net Sales $5,874 $5,901 $5,901 % Growth 7.5% 0.5% 0.5% EBITDA $1,026 $924 $924 %
Margin 17.5% 15.7% 15.7% EBIT $732 $623 $623 % Margin 12.5% 10.6% 10.6% CASH FLOW ITEMS Capital
Expenditure $231 $226 $226 CAPITALIZATION Cash & Cash Equivalents $129 $161 $161 Secured Debt $222 n/a n/a
Unsecured Debt $872 n/a n/a Total Debt $1,093 $911 $1,491 Net debt $965 $750 $1,329 Liquidity(c) $1,116 $1,149
$569 Shareholders Equity $1,792 $2,029 $2,029 CREDIT STATISTICS Net Debt / Net Capitalization 35.0% 27.0%
39.6% Net Debt / EBITDA 0.9x 0.8x 1.4x EBITDA / Net Interest expense 5.8x 15.0x 10.9x (b) (d) 29 Financials below
are on “as reported” basis (a)
Stock Price Equity Enterprise Sales EBITDA P/E Company as of 12/12/12 Value Value LTM 2011A 2012E 2013E LTM
2011A 2012E 2013E LTM 2011A 2012E 2013E Sauer-Danfoss $52.35 $2.5 $2.4 1.23x 1.17x 1.26x -- 6.1x 5.3x 5.7x --
13.4x 11.0x 14.0x -- Hydraulics Peers Eaton $52.04 $24.1 $34.4 1.58x 1.60x 1.58x 1.51x 10.4x 11.0x 10.4x 9.6x 12.6x
13.2x 12.7x 11.8x Parker 83.12 12.4 13.8 1.05 1.06 1.05 1.04 7.1 7.1 6.7 6.7 11.7 12.0 12.0 12.2 Median 1.31x 1.33x
1.32x 1.27x 8.8x 9.1x 8.6x 8.2x 12.1x 12.6x 12.3x 12.0x Customers Caterpillar $87.95 $57.5 $63.2 0.98x 1.10x 1.00x
0.99x 5.7x n/m 5.7x 5.6x 9.0x 11.9x 9.6x 10.1x Terex 26.32 2.9 4.7 0.62 0.59 0.63 0.60 8.4 n/m 7.1 6.3 22.3 n/m 13.1
10.1 AGCO 49.17 4.8 5.5 0.56 0.63 0.56 0.54 5.6 7.0 5.9 5.4 6.9 8.3 9.4 8.9 Cargotec €19.70 1.4 2.0 0.47 0.49 0.47 0.48
8.2 6.8 6.9 7.0 10.5 8.1 11.3 11.9 Deere 86.25 33.8 33.4 1.00 1.11 0.99 0.93 6.1 6.7 6.0 5.6 11.3 12.9 11.1 10.2 Manitou
€11.82 0.6 0.7 0.42 0.47 0.43 0.43 7.9 6.7 6.0 5.8 10.8 12.4 10.9 11.1 Oshkosh 28.80 2.6 3.0 0.37 0.39 0.38 0.41 6.1 5.5
5.9 5.4 11.5 12.4 12.2 10.9 Palfinger €16.00 0.7 1.0 0.84 0.90 0.84 0.81 10.4 9.7 8.2 7.5 13.7 13.4 13.8 12.1 Toro 42.88
2.5 2.6 1.34 1.37 1.33 1.26 10.0 10.8 10.0 9.3 20.0 22.8 19.6 17.4 Median 0.62x 0.63x 0.63x 0.60x 7.9x 6.8x 6.0x 5.8x
11.3x 12.4x 11.3x 10.9x Mid-Cap Industrials A.O. Smith $61.73 $2.4 $2.2 1.18x 1.31x 1.17x 1.07x 9.2x 12.0x 8.7x 7.6x
19.1x 18.6x 21.1x 18.2x Actuant 29.09 2.1 2.4 1.52 1.59 1.50 1.43 8.4 9.1 8.4 8.0 24.9 16.6 13.5 12.4 Astec 30.81 0.7
0.7 0.66 0.70 0.67 0.65 8.4 8.4 8.3 7.2 18.9 17.7 18.3 15.2 CLARCOR 45.86 2.3 2.1 1.89 1.90 1.88 1.79 9.9 10.0 9.9 9.1
18.9 18.8 19.0 17.3 Colfax 38.98 3.7 5.1 1.66 1.36 1.30 1.20 14.3 13.0 9.8 8.6 n/m n/m 29.8 19.7 Crane 44.01 2.5 3.0
1.18 1.20 1.17 1.12 7.8 8.1 7.7 7.0 n/m n/m 11.7 10.5 Franklin Electric 59.51 1.4 1.5 1.69 1.80 1.66 1.52 10.4 11.4 10.4
9.5 17.5 22.5 19.0 17.3 Graco 51.82 3.1 3.3 3.37 3.67 3.26 3.01 12.5 13.0 11.7 10.5 23.2 22.3 21.6 18.1 Kaydon 23.42
0.8 0.9 1.90 1.95 1.90 1.92 10.9 9.6 8.7 8.8 n/m 15.4 14.1 13.8 Lindsay 76.47 1.0 0.8 1.51 1.63 1.47 1.39 10.7 12.3 9.4
8.5 22.6 27.1 19.6 18.1 Manitowoc 15.68 2.1 4.0 1.04 1.10 1.03 0.99 10.3 11.6 9.9 8.1 25.0 n/m 21.5 11.9 RBC Bearings
48.13 1.1 1.0 2.43 2.65 2.39 2.20 10.0 12.1 9.7 8.6 17.7 24.3 19.2 16.8 Regal-Beloit 70.24 2.9 3.7 1.15 1.30 1.17 1.13 7.9
11.2 8.2 7.5 14.8 18.5 14.9 13.3 Rexnord 21.37 2.1 3.8 1.85 1.98 1.85 1.76 10.1 10.5 9.2 8.6 n/m n/m 21.9 18.6 Median
1.59x 1.61x 1.49x 1.41x 10.1x 11.3x 9.3x 8.6x 19.0x 18.7x 19.1x 17.1x Public Trading Comparables ($ in millions,
except per share data) A SU P POR T I NG MA T E R I A L S 30 (a) (a) Source: FactSet, Company filings. Note:
Calendarized to December 31 year ende; Pro forma for Eaton’s acquisition of Cooper, Terex’s acquisition of Demag
Cranes, and Colfax’s acquisition of Charrer. (a) Excludes financing business.
Transaction TV as a Multiple of: Date Ann. Acquiror Target Target Description Value Sales EBITDA Aug-12 Weichai
Power Linde Hydraulics (KION) Manufactures hydraulics, pneumatics and seals $485 1.40x 9.9x Dec-10 Unitas Capital
Hyva Manufactures fluid power cylinders and actuators for trucks and cranes 694 1.08 8.8 Oct-09 Danfoss A/S Sauer-
Danfoss (~21% stake) Manufactures engineered hydraulic and electronic systems and components for mobile equipment
160 1.07 n/m Jul-08 Bosch Hägglunds Drives Manufactures industrial hydraulic drive systems 721 2.16 9.3 Mar-08
Danfoss A/S Sauer-Danfoss (~17% stake) Manufactures engineered hydraulic and electronic systems and components
for mobile equipment 248 0.98 8.3 Jun-08 Doughty Hanson Svendborg Brakes Manufactures hydraulic brake solutions
for wind power, mining, marine and oil industries 725 n/a 18.5 Oct-07 Argan Capital Faster Manufactures quick release
couplings and multi-connectors for hydraulic power systems mainly for the agricultural equipment end-markets 196 2.38
9.0 Oct-06 Specma Hydraulic JMS Systemhydraulik Manufactures hydraulic systems, such as single hydraulics
components and hydraulic power packs 16 0.76 8.6 Oct-05 Parker-Hannifin Sterling Hydraulics Manufactures custom
hydraulic screw-in cartridge valves and manifold systems 59 1.40 n/a Jun-05 Segulah Hexagon Automation
Manufactures hydraulic cylinders, components, pumps, motors, valves and filters for mobile applications 155 0.51 7.6
Dec-03 Parker-Hannifin Denison International Manufactures highly engineered hydraulic fluid power systems and
components including vane pumps, hydrostatics and digitally-controlled fan-drive systems 198 1.13 8.2 Apr-00 Siemens-
Bosch Mannesmann Atecs Businesses included materials handling equipment, hydraulics/automation equipment,
automotive systems, automotive components, rubber extrusion 9,167 0.78 8.7 Jan-00 Sauer Danfoss Fluid Manufactures
orbital motors, hydrostatic steering units, proportional load-sensing valves, gear pumps, and electrohydraulics used in
off-highway mobile equipment 304 0.94 6.7 Jan-00 Parker-Hannifin Commercial Intertech Manufactures hydraulic gear
pumps and motors, control valves and telescopic systems for OEMs 473 0.88 7.4 Feb-99 Eaton Aeroquip-Vickers
Manufactures engineered components and hydraulic components including hoses, fittings, adapters and precision molded
and extruded plastic products for industrial, aerospace and automotive markets 1,986 0.92 7.5 Apr-98 Textron David
Brown Group Manufactures industrial gears, pumps and transmission systems 326 1.30 8.8 Median 1.10x 8.3x Selected
Precedent Hydraulics Transactions ($ in millions) A SU P P O R T I N G MA T E R I A L S 31 Source: Company
filings, FactSet. Note: Only shaded transactions included in median calculation.
Selected Recent Minority Squeeze-Outs ($ in millions) A S U P PO R T I N G M A T E R I A L S 32 Source: SDC. Date
Offer Consideration Premium % Change from Announced Acquiror Target Value Offered 1 Day 1 Week 4 Week Initial
Offer 02/23/11 DEP Duncan Energy Partners $1,045 Stock 35% 35% 32% 4% 11/01/10 CNA Financial CNA Surety 478
Cash 38% 38% 52% 21% 08/26/10 Berkshire Hathaway Wesco Financial 545 Cash 19% 18% 14% (1%) 03/21/10
CONSOL Energy CNX Gas 989 Cash 24% 46% 38% -- 01/03/10 Novartis Alcon 12,900 Stock 23% 23% 23% 10%
09/04/09 Fairfax Financial Odyssey Re Holdings 1,050 Cash 29% 30% 40% 8% 03/03/09 Magellan Midstream Partners
Magellan Midstream Holdings 1,148 Stock 22% 23% 17% -- 08/12/08 Mitsubishi UFJ UnionBanCal 3,707 Cash 26%
29% 103% 17% 07/21/08 Roche Holding Genentech 46,695 Cash 14% 26% 28% 7% 03/10/08 Nationwide Mutual
Insurance Nationwide Financial Services 2,450 Cash 38% 29% 29% 11% 10/23/07 Investor Group Waste Industries
USA 272 Cash 33% 41% 31% 3% 07/17/07 Alfa Mutual Alfa Corporation 890 Cash 45% 45% 32% 25% 11/20/06
Toronto-Dominion Bank TD Banknorth 3,232 Cash 7% 8% 7% -- 10/09/06 VNU NetRatings 378 Cash 44% 45% 46%
31% 09/12/05 Wachovia WFS Financial 504 Stock 14% 11% 28% -- 09/01/05 IYG Holding 7-Eleven 1,301 Cash 32%
31% 14% 15% 02/21/05 Novartis Eon Labs 933 Cash 11% 8% 23% -- 01/10/05 News Corp Fox Entertainment Group
7,054 Hybrid 10% 9% 14% 2% 08/02/04 Cox Enterprises Cox Communications 8,390 Cash 26% 25% 25% 9% 05/24/04
Westcorp WFS Financial 310 Cash 4% 6% 5% -- 05/23/03 Fidelity National Financial Fidelity Natl Info Solutions 392
Stock 24% 25% 37% -- 04/10/03 USA Interactive Hotels.com 1,237 Stock 13% 10% 28% -- 08/20/02 Unocal Pure
Resources 434 Stock 21% 27% 22% (3%) 05/31/02 USA Interactive Expedia 3,636 Stock 36% 27% 22% -- 05/31/02
USA Interactive Ticketmaster 841 Stock (26%) (28%) (28%) (34%) 02/19/02 Sabre Travelocity.com 447 Cash 46% 40%
22% 22% 02/15/02 Xcel Energy NRG Energy 673 Stock 29% 34% (3%) 12% 02/04/02 Limited Intimate Brands 1,645
Stock 10% 18% 25% 2%
Weighted Average Cost of Capital Calculation: Illustrative ($ in millions, except per share data) A S U P P O R T I N G
M A T E R I A L S 33 Source: Barra, FactSet, Ibbotson Associates, KPMG. (a) Local predicted levered beta per Barra.
(b) Risk Free Rate is 10-year US Treasury Yield as of 12/12/12. (c) Represents the long-term expected equity risk
premium based on differences between large company stock total returns and long-term government bonds historical
arithmetic mean returns on the S&P 500 from 1926-2008 (2012 Ibbotson Associates Yearbook). Stock Equity Debt /
Levered Unlevered Cost of Company Price Value Debt + Equity Beta (a) Beta Equity AGCO $49.17 $4,769 22.8% 1.50
1.26 11.7% Cargotec €19.70 1,407 36.8% 1.42 0.99 11.1% Caterpillar $87.95 57,513 40.9% 1.41 0.97 11.0% Deere
$86.25 33,781 15.7% 1.15 1.03 9.3% Doosan Infracore KRW 16,850.00 2,644 69.6% 1.22 0.45 9.8% Eaton $52.04
24,105 14.6% 1.33 1.20 10.5% Haulotte €5.23 213 49.2% 1.54 0.94 11.9% Oshkosh $28.80 2,637 26.6% 1.70 1.37
12.9% Palfinger €16.00 745 27.1% 0.94 0.74 7.9% Parker-Hannifin $83.12 12,400 12.5% 1.27 1.16 10.1% Sauer-
Danfoss $52.35 2,540 6.6% 2.00 1.91 14.9% Sun Hydraulics $25.25 659 0.0% 1.43 1.43 11.2% Terex $26.32 2,908
41.5% 1.97 1.35 14.7% Toro $42.88 2,519 8.2% 1.00 0.95 8.4% Average 26.6% 1.42 1.12 11.1% Median 24.7% 1.41
1.10 11.1% Assumptions Marginal Tax Rate 35.0% Risk Free Rate of Return(b) 1.7% Equity Risk/Market Premium(c)
6.6% Pre-Tax/After-Tax Cost of Debt Pre-Tax 4.0% 4.5% 5.0% 5.5% 6.0% After-Tax 2.6% 2.9% 3.3% 3.6% 3.9% Debt
/ Debt / Levering Relevered Cost of Ent. Value Equity Factor Beta Equity Weighted-Average Cost of Capital 0.0% 0.0%
1.000 1.10 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 10.0% 11.1% 1.072 1.17 9.5% 8.8% 8.8% 8.9% 8.9% 8.9% 20.0% 25.0%
1.163 1.27 10.1% 8.6% 8.7% 8.8% 8.8% 8.9% 30.0% 42.9% 1.279 1.40 11.0% 8.5% 8.6% 8.7% 8.8% 8.9% 40.0%
66.7% 1.433 1.57 12.1% 8.3% 8.4% 8.6% 8.7% 8.8% 50.0% 100.0% 1.650 1.81 13.7% 8.1% 8.3% 8.5% 8.6% 8.8%
60.0% 150.0% 1.975 2.16 16.0% 8.0% 8.2% 8.4% 8.6% 8.8%
B Additional Lazard Qualifications
Lazard Special Committee/Board-Level Advisory Transactions B A D D I T I O N A L L A Z A RD Q U A L I F I C A
T I O N S 34 SQUEEZE -OUT CLOSING DATE SPECIAL/ INDEPENDENT COMMITTEE BUYER/OTHER
VALUE ($MM) INDUSTRY DEAL DESCRIPTION Pending CNH Global Fiat Industrial $1,700 Industrials Minority
squeeze out of remaining 12% July-2012* Volkswagen AG Porsche AG 17,633 Automotive Multi-stage transaction
culminating in the merger of Porsche with VW May-2012 Delphi Financial Group Tokio Marine Holdings 2,728
Insurance 100% cash acquisition of Class A and Class B shares Apr-2012 Eurasian Natural Resources Corp. plc
Shubarkol Komir JSC 600 Metals & Mining Purchase by ENRC of 75% stake in Shubarkol Komir JSC from ENRC
controlling shareholders Jan-12 99¢ Only Stores Ares / Canada Pension Plan Inv. Board / Gold/Schiffer family 1,578
Retail 100% cash acquisition Nov-11 Harbin Electric Tianfu Yang / Abax 722 Industrials Management buy-out; Buyout
group owned 40.6% of Harbin Sep-11 Niscayah Group AB Stanley Black & Decker 1,200 Security 100% cash offer for
Class A and Class B shares and warrants Aug-11 Barnes & Noble Liberty Media 204 Retail Purchase of newly-issued
convertible preferred stock Jul-11 PRIMEDIA Inc. TPG Capital 525 Media 100% cash acquisition Jun-11 Vivo
Participacoes Telecomunicacoes de Sao Paulo 15,200 Telecommunications Merger of two companies controlled by
Telefonica SA May-11 The Mosaic Company Cargill 24,000 Agriculture Split- in Mosaic Apr-11 Alcon Novartis 12,900
Healthcare Cash and stock minority squeeze-out of remaining 23% not owned Apr-11 Ameristar Casinos Estate of Craig
H. Nielsen 458 Gaming/Leisure Purchase by Ameristar of 26.2 million shares, which represented 45% of total shares
outstanding and 83% of Estate's holdings Jun-10 Protection One GTCR 828 Security Services 100% cash acquisition
May-10 CNX Gas CONSOL Energy 1,000 Power & Energy Minority squeeze out Feb-10 IMS Health TPG & CCP
Investment Board 5,200 Healthcare 100% cash acquisition Dec-09 OSG America L.P. Overseas Shipholding Group 75
Shipping Minority squeeze out Dec-09 Clear Channel Outdoor Holdings, Inc. Institutional investors 2,500 Radio Debt
refinancing Withdrawn Sauer -Danfoss Danfoss 119 Industrials Minority squeeze-out of remaining 24.3% Nov-09 Hi-
Shear Technology Corporation Chemring Group Plc 132 Aerospace and Defense Technology 100% cash acquisition Oct-
09 KKR Private Equity KKR & Co. 17,169 Private Equity Acquisition of KKR Private Equity Investors Sep-09
Magellan Midstream Holdings, L.P. Magellan Midstream Partners, L.P. 1,148 Energy Transform partnership structure
with LP owning the GP Jun-09 Enterprise Products Partners, L.P. TEPPCO Partners, L.P. 26,000 Power & Energy
Merger to form largest publicly traded energy partnership * Lazard represented the buyer in the transaction.
Lazard Special Committee/Board-Level Advisory Transactions (cont’d) B A D D I T I O N A L L A Z A R D Q U A L I
F I C A T I O N S 35 SQUEEZE -OUT CLOSING DATE SPECIAL/ INDEPENDENT COMMITTEE BUYER/OTHER
VALUE ($MM) INDUSTRY DEAL DESCRIPTION Jun-09 * Hearst-Argyle Television Hearst Corp. $1,194 Media
100% cash acq. of the 18% minority stake held by public shareholders Jun-09 Transatlantic Holdings Public shareholders
1,136 Insurance Secondary offering of a 45% stake in Transatlantic held by AIG (AIG held a 59% stake prior to the
offering) Withdrawn International Shipholding TBD 300 Shipping Bid by third party; ISH has 25% shareholder Feb-09
Tower Group CastlePoint Holdings 531 Insurance Acquisition for cash and stock of CastlePoint. Same person is
Chairman and CEO of Tower and CastlePoint Dec-08 Nationwide Financial Services Nationwide Mutual 2,400
Insurance Acquisition for cash of publicly held Class A shares Jul-08 Clear Channel Communications Thomas H. Lee &
Bain Capital 26,700 Radio Management buy-out Apr-08 Alfa Corporation Alfa Mutual 840 Insurance Acquisition for
cash of shares held by public Apr-08 Tarragon Not applicable 1,200 Real Estate Restructuring advisory Jan-08 TXU
KKR & TPG 45,000 Power & Energy 100% cash acquisition Withdrawn Affiliated Computer Services Controlling
shareholder and Cerberus n/a Technology Services Acquisition by Cerberus and controlling shareholder withdrawn.
Previous potential exchange of Class B shares for preferred stock withdrawn Oct-07 Catalina Marketing Hellman &
Friedman 1,700 Marketing Services 100% cash acquisition. Catalina had previously entered into a definitive agreement
with ValueAct Capital Jul-07 Dollar General Corp. KKR 7,300 Discount Stores 100% cash acquisition of the common
stock of Dollar General by KKR Jul-07 CBOT Holdings (Chicago Bd. of Trade) Chicago Mercantile Exchange 11,000
Financial Exchange Acquisition for stock (or stock and cash) by CME. Subsequent unsuccessful bid by
IntercontinentalExchange Jul-07 Moscow CableCom Corp. Renova Media 152 Telecom. Acquisition of minority interest
by controlling shareholder May-07 USI Holdings Goldman Sachs Capital Partners 1,380 Insurance Brokerage 100%
cash acquisition of all outstanding shares of USI Holdings by Goldman Sachs Capital Partners Apr-07 Alliance Imaging
Oaktree & MTS Health Investors 230 Healthcare KKR sold its controlling position to Oaktree and MTS Health Investors
Dec-06 Alpharma Alpharma 303 Healthcare Repurchase of Class B shares from AL Industrier SA Jul-06 Gambro AB
Indap AB 5,400 Healthcare Buyout led by largest shareholder Withdrawn Emmis Communications Management 1,300
Media Management buy-out May-06 iPayment Management 918 Payment Processing Management buy-out * Lazard
represented the buyer in the transaction.
VALUE ($MM) INDUSTRY DEAL DESCRIPTION Mar-06 Maytag Corporation Whirlpool Corp. $2,700 Household
Laundry/Equip. Merger. Break-up fee paid to Ripplewood. Rival bid from Haier withdrawn Nov-05 Paxson
Communications NBC Universal n/a Broadcasting - month call right for control shares Jul-05 DoubleClick Hellman &
Friedman 1,100 Media/Technology Sale of company under direct supervision of Board Withdrawn infoUSA Inc. Vin
Gupta & Company 836 Database Services Bid from Chairman and CEO not accepted Jul-05 Weight Watchers
International, Inc. Weight Watchers International, Inc. 552 Consumer/Media/ Technology Acquisition of ownership
interest in WeightWatchers.com from controlling shareholder of both WWI and WW.com Apr-05 Hollywood
Entertainment Movie Gallery, Inc. 1,300 Retail After announcement of management led LBO with Leonard Green &
Partners, parties agreed to reduced price. Blockbuster subsequently bid. Thereafter announced transaction with Movie
Gallery. Blockbuster launched tender offer, which subsequently expired Dec-04 AMC Entertainment JPMorgan Partners
/ Apollo Management 2,000 Entertainment Acquisition by JPMorgan Partners and Apollo Management (holder of
convertible preferred) Oct-04 Blockbuster Inc. Public shareholders n/a Retail Split-off from parent Viacom Jul-04
Canary Wharf Group plc Morgan Stanley 3,000 Real Estate 11-month auction that led to rival bids from Morgan Stanley
and Brascan Corp. Lazard was co-advisor Jul-04 Hollinger International Barclay brothers 1,300 Media Sale of Telegraph
Group Sep-03 Finance company n/a 500 Finance Financing from related parties Jun-03 Hotels.com USA Interactive
1,997 Lodging Acquisition of 32% publicly held minority stake not owned by USAI. USAI owned 68% of the
outstanding shares and controlled approximately 97% of the voting power Apr-03 Charter Communications Vulcan
Ventures 300 Cable Borrowing of up to $300 million from Paul Allen and/or Vulcan Ventures. Paul Allen is controlling
shareholder of Charter and majority shareholder of Vulcan Feb-03 National Golf Properties Goldman Sachs / Whitehall /
Starwood Capital Group 1,100 Real Estate/Golf Acquisition of 100% of public company; acquisition of American Golf
Corporation, the largest tenant of NGP and an affiliate of NGP Feb-03 Anaconda Nickel Not determined 450
(Australian) Natural Resources Proposal to acquire company in midst of rights offering. Minority shareholder with board
representation has underwritten the rights offering and would gain control if not fully subscribed by public
VALUE ($MM) INDUSTRY DEAL DESCRIPTION Jan-03 XM Satellite Radio Investors and General Motors $450
Satellite/Broadband Restructuring includes $200 million of new funds and $250 million in payment deferrals and related
credit facilities from GM NA Adelphia Communications n/a 21,000 Cable After public disclosure of transactions
between Adelphia and Rigas family, Special Committee was appointed to evaluate resolution of such affiliate
transactions Dec-01 Asia Global Crossing Global Crossing 400 Telecommunications Drawdown of intercompany loan
commitment Aug-01 CSFBdirect Credit Suisse First Boston 110 Internet Financial Services Acquisition of 17% publicly
held minority stake not owned by CSFB Jan-01 Hertz Corp. Ford Motor Company 714 Rental Car Acquisition of 18%
publicly held minority stake not owned by Ford NA Real estate related operating company Not determined >3,000 Real
Estate Not publicly disclosed NA Real estate related services business Not determined NA Real Estate Not publicly
disclosed Oct-00 U.S. Can Corp. Mgmt./Berkshire Partners 628 Steel Containers Recapitalization led by Management
and Berkshire Partners July-00 Coinmach Laundry GTCR Golder Rauner 860 Laundry Services Acquisition of
approximately 72% by GTCR Nov-99 Knoll, Inc. Warburg Pincus 1,330 Furniture Acquisition of 40% by Warburg
Pincus and management Nov-99 Maxxim Medical Management/Fox Paine 793 Medical Instruments Management-led
leveraged buy-out Jun-99 Spelling Entertainment Viacom 167 Entertainment Acquisition of remaining 20% of Spelling
by Viacom Jun-99 Berkshire Realty Company, Inc. Management/ Whitehall/ Blackstone 1,300 Real Estate Advisor to
Board in management led buyout Apr-99 Brylane Pinault-Printemps Redoute 231 Apparel Acquisition of remaining
50.1% of Brylane by Pinault-Printemps Redoute Aug-98 Telemundo Group, Inc. Investor Group 712 Entertainment Sale
to an investor group comprised of Sony Pictures Entertainment, Liberty Media Corp., Apollo Management and Bastion
Capital Fund May-98 Shareholders of PolyGram N.V. The Seagram Company Limited 10,600 Music and Film Sale of
PolyGram, of which 75% was owned by Philips N.V., to Seagram; provided opinion to Management Board and
Supervisory Board of PolyGram Apr-98 Wheelabrator Technologies Inc. Waste Management Inc. 875 Waste
Management Acquisition of the remaining 33% of Wheelabrator Technologies Inc. by Waste Management
C Lazard Biographies
Biographies C L A Z A R D B I O G R A P H I E S 38 BARRY W. RIDINGS, Vice Chairman of U.S. Investment
Banking Barry W. Ridings is a Managing Director and Vice Chairman of U.S. Investment Banking of Lazard. Mr.
Ridings joined Lazard Frères in July 1999 to co-head its Restructuring advisory practice. Mr. Ridings is also Chairman of
LFCM Holdings, which includes the operations of Lazard Capital Markets and Lazard Alternative Investments and
Chairman of Lazard Middle Market. Mr. Ridings has been involved in the restructuring of troubled companies for over
thirty years. He has been involved in a number of major restructurings including, among others, Lehman Brothers,
Lyondell, Calpine, Collins & Aikman, Owens Corning, Boston Chicken, Fruit of the Loom and Daewoo. Over this
period he has been involved in over 150 debtor and creditor assignments, including both pre-petition and Chapter 11
restructurings, domestically and internationally. Mr. Ridings has also been the principal investment banker on over 25
public offerings of High Yield Debt. He has extensive experience in initial public offerings, secondary stock offerings,
opinion letters and mergers and acquisitions. Mr. Ridings is licensed by the NASD and New York Stock Exchange with
Series 7 General Securities, Series 24 General Principal and Series 63 State Law licenses and is an Exchange Official of
the American Stock Exchange. He has acted as an Expert in various bankruptcy cases in New York, New Jersey,
Delaware, Arizona, New Hampshire, Florida, Illinois, Ohio and Texas. He is also a Fellow of the American College of
Bankruptcy and member of the International Insolvency Institute. Colgate University, B.A. in Religion, Cornell
University, M.B.A. in Finance
Biographies (cont’d) C L A Z A R D B I O G R A P H I E S 39 DONALD FAWCETT, Managing Director and COO of
North American Banking Group Donald Fawcett is a Managing Director and Chief Operating Officer of the North
American Banking Group. With a particular focus on industrial companies, he has a broad range of experience. Selected
capital goods assignments include: advisor to the Special Committee of CNH Global on the minority buy-in offer from
Fiat Industrial; advisor to the Special Committee of Sauer-Danfoss on the minority buy-in offer from Danfoss A/S;
strategic assessment of Caterpillar Financial for Caterpillar; the sale of General Signal Corporation to SPX Corporation;
the sale of Best Power (SPX Corporation) to Invensys plc; the sale of Denison International to Parker Hannifin; the sale
of FSG (VE) to Pall Corp.; the sale of Plymouth Products (VE) to Pentair; the sale of Everpure VE) to Pentair; VE’s
acquisitions of U.S. Filter Corporation, Superior Services and Aqua Alliance; Compagnie de Saint- acquisition of Furon
Company; Schneider Electric’s acquisitions of Power Measurement and American Power Conversion. Selected building
products assignments include: U.S. Concrete’s Chapter 11 reorganization; recapitalization of Jacuzzi Brands; CEMEX’s
comprehensive refinancing plan (2009 and 2012); senior lenders of Masonite on its pre-negotiated bankruptcy; the sale
of Jacuzzi Brands to Apollo; the sale of Culligan (Veolia Environnement, “VE”) to Clayton, Dubilier & Rice; Matsushita
Electric Works’ acquisition of Universal Lighting Technologies; and The Stanley Works’ acquisition of Générale de
Protection. Prior to joining Lazard, Mr. Fawcett spent three years at The NTC Group and two years in the corporate
finance department of Smith Barney in New York. Harvard University, A.B. in History, Cambridge University, Diploma
in Historical Studies, Columbia Business School, M.B.A.
Biographies (cont’d) C L A Z A R D B I O G R A P H I E S 40 GUSTAF SLETTENGREN, Managing Director, Head of
Investment Banking for Nordic Region Mr. Slettengren has 20 years of M&A experience with a focus on the Nordic
markets. He spent 13 years based in London and since 2003 has been responsible for Lazard’s Nordic practice based in
Stockholm. Public transactions include: Orc Software / Nordic Capital, Niscayah/Stanley Black & Decker/Securitas,
Trimble/Tekla, Strategic advice to Eltek, Munters/Nordic Capital/Alfa Laval, Strategic advice to Haldex in relation to
split up, Cisco/Tandberg, Hemtex/ Hakon, Cision/Triton, advisor to the republic of Estonia in relation to the offer for
Eesti Telekom by Telia Sonera, Nasdaq/OMX, IBM/Telelogic, Investor and EQT/Gambro, Old Mutual/Skandia,
Ericsson/Marconi, RNB/JC, Fisher Scientific/Perbio, Lehman Brothers and Ratos/Tornet, Eiendomsspar Sundt
AS/Pandox, Telia/Sonera, Saab/Celsius, Toyoda/BT Industries, Metso/Svedala, MMP Monster/Jobline, SEAT/Eniro,
Industrikapital/Kemira, Kone/Partek and G4F/Wackenhut. Other offers include Glaxos' hostile offer for Wellcome, the
defense of Northumbrian Water against Lyonnais des Eaux, the contested offer of GEC/VSEL and the IPO of Alfa Laval
and Ledstiernan. Negotiated sales include: JetPak, Skandia Liv / Skandia, Mekonomens acquisition of Meca, Sandvik
acquisition of Shanghai Jianshe Luqiao Machinery, Skanska sale of Autopista Central, Haldex sale of Traction to Borg
Warner, Mekonomens acquisition of Sörensen and Balchen, sale of HQ to Carnegie, sale of Munters MCS division to
Triton, Norfood sale to Caldic, advisor to the Kingdom of Sweden in relation to Carnegie, and Max Matthiesen, advisor
to the Swedish Ministry of Finance on its pledge in Kauthing AB, Åhlens acquisition of NK from RNB, Tele2
Luxembourg, Polen and Lichtenstien, sale of Lantmannen Farskbrod to Fazer, Paroc's sale to Arcapita, sale of Brämhults
to Eckes, V&S acquisition of Cruzan Rum, NCC Roads Polska to Strabag, Accent Equity Partners' sale of Jøtul to Ratos,
Latour's sale of IF Luftfilter to Camfil Farr, BBI sale to Ratos, Electrolux's sale of Dometic to EQT, Sandvik's sale of
Sandvik Saws and Tools to Snap on, Incentive's sale of Hägglunds Drive to Atle, ILVA's sale to Advent International,
Bewator's sale to EQT, Kraft Freia Marabou's sale of Slotts, Kockens and O'boj to Unilever, Nordiska Fondkommission's
sale of Aktiedirekt to Teletrade, SEK's sale to ABB, Celsius' sale of Kockums to HDV and Radnor Holding
Corporation's sale of Styrochem to CRH. Mr. Slettengren is a graduate of the Stockholm School of Economics.
Biographies (cont’d) C L A Z A R D B I O G R A P H I E S 41 NAVIN BHARGAVA, Director Navin Bhargava joined
Lazard in 2004 and is a Director in the General Banking group with a focus on the Capital Goods and Multi-Industry
sectors. While at Lazard, Mr. Bhargava has focused on a wide range of M&A and other advisory assignments. Recent
transactions include advisor to the Special Committee of Sauer-Danfoss on the minority buy-in offer from Danfoss A/S;
Hertz’s acquisition of Dollar Thrifty ($2.3 billion); PPG's separation of its Commodity Chemicals business and merger
with Georgia Gulf Corporation via a Reverse Morris Trust structure ($4.9 billion); Tyco's combination of its Flow
Control business with Pentair via a Reverse Morris Trust structure ($4.9 billion); Tyco’s separation into three publicly
traded companies ($23billion); sale of Smurfit-Stone to RockTenn ($4.3 billion); split-off of Cargill’s stake in The
Mosaic Company ($24 billion); sale of Dover Corporation’s Crenlo, Paladin, and Heil Trailer businesses; Honeywell’s
acquisition of Sperian Protection ($1.4 billion); strategic assessment of Caterpillar Financial for Caterpillar; sale of Trane
to Ingersoll Rand ($10.1 billion); split-up of American Standard Companies, including the sale of its Bath & Kitchen
business to Bain Capital ($1.8 billion) and the spin-off of its vehicle controls business (WABCO; $3 billion); Schneider
Electric’s acquisition of American Power Conversion ($6.1 billion); sale of Anheuser-Busch InBev’s selected metal
packaging assets to Ball Corporation ($577 million). Prior to joining Lazard, Mr. Bhargava was an Associate at a
strategic consulting firm in New York and Singapore, focusing on assignments across a variety of industries. Cornell
University, B.S. in Engineering (cum laude), Columbia Business School, M.B.A. (Beta Gamma Sigma Honors).
C L A Z A R D B I O G R A P H I E S 42 JUSTIN KATZ, Vice President Justin Katz joined Lazard in 2008 and is a
Vice President in the General Banking group with a focus on the Capital Goods and Multi-Industry sectors. While at
Lazard, Mr. Katz has focused on a wide range of M&A and other advisory assignments. Recent transactions include
Hertz’s acquisition of Dollar Thrifty ($2.3 billion); Tyco’s separation of its Flow Control business and merger with
Pentair via a Reverse Morris Trust structure ($4.9 billion); Tyco’s separation into three publicly traded companies ($23
billion); ITT’s separation into three companies ($10 billion); split-off Cargill’s stake in The Mosaic Company ($24
billion); Honeywell’s acquisition of Sperian Protection ($1.4 billion); #G Capital’s acquisition of Burger King ($4.0
billion); Kraft’s acquisition of Cadbury ($21.6 billion); and strategic assessment of Caterpillar Financial for Caterpillar.
Prior to joining Lazard, Mr. Katz was an Associate in strategic consulting, focusing on assignments across a variety of
industries. Northwestern University, B.A. in Mathematical Methods in the Social Sciences and Economics (cum laude),
Columbia Business School, M.B.A. (Beta Gamma Sigma Honors) Biographies

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