DIVA SYNERGY UCITS FUND - Bernheim, Dreyfus & Co.

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Merger Arbitrage Portfolio – Case Studies Oracle / Phase Forward (PFWD US) Apache / Mariner Energy (ME US) Novartis / Alcon (ACL US) Activity • Medical software for hospitals and clinical institutions • $213 million turnover • 300 clients and over 10,000 clinical trials • Exploration and production of hydrocarbons (180m barrels of proven reserves) • Offshore (85%) and Onshore (15%) • 45% of sales in the Gulf of Mexico • World leader in eye care • $6.5 billion turnover • 300 clients and over 10,000 clinical trials Key Figures / Deal Terms • Market capitalization: $700 million • EBITDA: $30 million • Price: $17.00 per share • Break-up fee: 3.5% • Market capitalization: $2.3 billion • EBITDA: $571 million • Price: $7.8 + 0.17 of stock in Apache for each Mariner Energy • Break-up fee: 2.5% • Market capitalization: $44 billion • 2.8 of stock in Novartis for each Alcon • Nestle will receive $180 per share for the block of 52% (25% were acquired at $143 is a weighted average price of $ 168) Rationals • Strengthening the market for medical applications • Should benefit from Obama ‘s reform of the health system • Single asset in deep drilling • Geographical complementarities • Novartis and Alcon have highly complementary product portfolios that cover more than 70% of the worldwide vision care: pharmaceuticals and surgical contact lenses • Eye care is a growing market because of significant needs of an aging population Risks • Funding: No risk (Oracle has $13 billion in cash) • Antitrust: The deal is passed May 27 in second request to the United States. The risk focuses on the timing of review (the market is quite fragmented and dominated by Medidata) • Shareholder vote (June 22): low risk (friendly deal with a 30% premium) • Funding: $ 800 million (Apache has 2 billion on its BS) • Antitrust: HSR received May 3 • Shareholder vote Mariner: very low risk given the premium (45%) and recent events • MAC clause: very restrictive definition, excludes any particular event or change in legislation affecting the industry • According to the Swiss stock exchange regulations it only requires the approval of a majority shareholder (Nestle up to vote) • Legally, Novartis is not forced to improve its offer, despite the different treatment of minorities • However, we believe that Novartis will eventually raise its offer (employees hold 6% of capital + reputational risk) Closing Date • Late of August 2010 • Late of August 2010 • Beginning of April 2011 Performance • Discount to offer price: 2.5% • Return: 10% annualised • Discount to offer price: 6% • Annualized return: 25% • Discount to offer price: -8% (downside) • Final bid-price: $168 per share • Annualized return: 12% 11
Pre Event Driven Portfolio – Case Studies International Power (IPR LN ) Mobistar (MOBB BB) Mead Johnson Nutrition (MJN US) Activity • Electricity production • 4 million customers in UK • Gas 60%; <strong>Co</strong>al 20%; Other 20% • Mobile Telecommunication • 3 operators in Belgium: Proximus (41%), Mobistar (31%) and Base (28%) • Main shareholder France Telecom with 52% • Baby food (the Enfamil brand) • Former division of Bristol Myers Squibb (IPO in February 2009 spin-off in December 2009) • 60% of sales in emerging markets Key Figures • Revenue 2009: £3.5 billion • Market capitalization: £4.7 billion • EBITDA: £1.5 billion (42.8% margin) • Revenue 2010: €1.7 billion • Market capitalization: €3 billion • EBITDA: €550 million (32% margin) • Revenue 2010: $3.1 billion • Market capitalization: $13.5 billion • EBITDA: $780 million (7.3% margin) Valuation • EV/EBITDA: 7x • PER: 10x • Yield: 4% • EV/EBITDA: 6x • PER: 12x • Yield: 6% • EV/EBITDA: 14x • PER: 29x • Yield: 1.6% Potential Acquirers • GDF Suez: Discussions late 2010 that were stalled after: (1) price (2) operational structure • Strong geographical completion to other players, IPR is present in UK and Middle East • E.ON, Enel or Gas Natural • France Telecom: the new management (Stéphane Richard) is conducting a strategic review of investments • The group suffered setbacks after M&A: Teliasonera, Egypt, Switzerland, ... • Mobistar is a simple operation, readable, accretive and synergistic. • Nestle (just to collect $ 28 billion from the sale of Alcon) • Danone (turned down talks in 2009 - ideal for Numico) • Unilever (diversification into higher-growth segment such as personal care) • Heinz Catalysts • The company represents a prime target in a deregulated country without protectionist barriers • <strong>Co</strong>mplex decision process in France given the ownership of GDF (State, Albert Frère, ...) • Very low valuation (plant replacement cost estimated to 380p) • Mature market for 3 operators • Only mobile operator • Limited capex costs • High Yield pending buyout of minority • The stock has doubled since the IPO (results, growth) • Unquestionably the finest assets in the industry with consumer exposure / fertility in developing countries • Significant potential synergies for the purchaser (distribution networks, R & D, ...) Upside • Return on Investment: 25% • Target price: €60/share (upside: 30%) • Target price: $ 85/share (upside: 30%) 12
Page 1 and 2: DIVA SYNERGY UCITS FUND An Event-Dr
Page 3 and 4: Table of Contents Introduction to D
Page 5 and 6: Overview of Diva Synergy UCITS Diva
Page 7 and 8: 2. Pre-Event Merger Arbitrage - Ant
Page 9 and 10: Structure of Portfolio Market Volat
Page 11 and 12: Risk Management Risk Management Too
Page 13 and 14: Diva Synergy (Ucits) Risk Profile T
Page 15: M&A Market in 2011 Positive market
Page 19 and 20: Portfolio Managers (as at June 1 st

DIVA SYNERGY UCITS FUND - Bernheim, Dreyfus & Co.

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