Imperial Brands PLC · LSE:IMB
Imperial Brands — Imperial Tobacco Group — Merger or Acquisition (July 2007)
29 slides from Imperial Brands's merger presentation, Jul 18, 2007
Slide 1: Proposed Acquisition of Altadis
Proposed Acquisition of Altadis 18 July 2007 Imperial Tobacco Group PLC
Slide 2: Gareth Davis, Chief Executive
Gareth Davis Chief Executive
Slide 3: Disclaimer
Disclaimer This presentation includes certain forward looking statements that identify expectations of future events or results. All statements based on future expectations rather than historical facts are forward looking statements that involve a number of risks and uncertainties and Imperial Tobac
Slide 4: Transaction Summary
Transaction Summary Proposed offer of €50 per Altadis share in cash - equity value of €12.6bn (£8.5bn*) - Enterprise Value of €16.2bn (£11.0bn*) To be recommended by Altadis board Financed by new debt and a rights issue Additional value from operational efficiencies, non-core asset divestmen
Slide 5: Strategic Rationale
Strategic Rationale A great strategic fit Meets our established acquisition criteria Strengthens position as world’s no.4 Major enhancement to operating platform and scale Mature and developing market opportunities Stronger & more diversified brand and product portfolios Revenue benefi
Slide 6: Process Considerations
Process Considerations Process driven by Spanish takeover laws - new laws effective from 13 August 2007 Offer document filed with CNMV today - approval expected in September Shareholder approval required at EGM - shareholder circular to be posted today Anti-trust clearance requirements - EU
Slide 7: Funding
Funding Debt New bank facilities of £9.2bn - refinance certain existing Imperial & Altadis facilities - additional borrowings for acquisition No material change to average cost of debt Equity £5.4bn standby underwriting & equity bridge facility Estimated £5bn rights issue within 12 months -
Slide 8: Key Financials
Key Financials Price represents EV/EBITDA multiple of 14.2x* - 11.1x* including synergies and costs 32% premium to 12 March 2007 closing price** Returns expected to exceed WACC - by the second full financial year of ownership - approaching WACC in first full financial year EPS enhancement ex
Slide 9: Operational Efficiencies
Operational Efficiencies Operational efficiencies of c.€300m* pa by end of second full financial year - lower production and purchasing costs - sales and marketing synergies - rationalisation of corporate overheads Estimated one-off cash costs of c.€470m Sale of non-core assets of €650m Note:
Slide 10: Altadis overview
Altadis overview Three core businesses - cigarettes, cigars, logistics Well known cigarette and cigar brands Broad international presence c.27,400 employees 27 manufacturing sites* Similar litigation profile to Imperial Note: *excludes Seville cigarette factory as closure announced 10
Slide 11: Altadis 2006 results
Altadis 2006 results Economic sales* EBITDA €3,970m €1,148m 5% 3% 27% 30% 43% 46% 22% 24% Cigarette Cigar Logistics Other Note: figures for year ended 31 December 2006; *as defined by Altadis 11
Slide 12: Altadis cigarette (1)
Altadis cigarette (1) 2006 cigarette volumes: 112bn* By market 21% 25% 11% By brand 19% 34% 22% 11% 13% Spain Russia 13% France Rest of Europe 7% Morocco Other 11% 13% Gauloises Fortuna Balkan Star Ducados Marquise Other Note: *excludes fine cut tobaccos and brands licensed to Imperial totalling c.7
Slide 13: Altadis cigarette (2)
Altadis cigarette (2) Gauloises Blondes Sold 21.4bn sticks in FY06 Major markets: France, Germany, Austria and Middle East Q1, 2007 recovery in France and Middle East Fortuna Sold 15.1bn sticks in FY06 Major markets: Spain, Morocco, France and Italy Recovery in Spain following increase i
Slide 14: Altadis cigar
Altadis cigar World No.1 in cigars - market leader in US, Spain and France Key US premium brands - Montecristo, Romeo y Julieta, H. Upmann Key US mass market brands - Backwoods, Dutch Masters, Phillies 50% interest in Corporacion Habanos 14
Slide 15: Altadis logistics
Altadis logistics Servicing > 510k PoS in Western Europe and Morocco Tobacco 47% of total FY06 Logistics economic sales Positions in Spain, Portugal and Italy (through Logista) as well as in France and Morocco FY06 economic sales by market Spain & 5% Portugal 16% France 46% Italy 33% Morocco 1
Slide 16: The Enlarged Group: a stronger no.4 cigarette player
The Enlarged Group a stronger no.4 cigarette player Sales of FMC sticks PMI 1,015bn BAT 930bn JT & Gallaher 603bn Enlarged Group 312bn Imperial Tobacco 200bn* Altadis 112bn** KT&G 94bn Note: figures for 2006; *including 14bn for Commonwealth Brands; **excludes fine cut tobaccos and brands licensed t
Slide 17: The Enlarged Group: broadens geographic footprint
The Enlarged Group broadens geographic footprint Current ITG Net Revenue £3.3bn 34% 25% 5% 17% Proforma Net Revenue £6.0bn 14% 2% 3% 29% 14% 12% 9% 14% 12% 10% UK Germany Spain & Portugal France Rest of W Europe US Rest of World Note: 2006 numbers plus Commonwealth and using exchange rates of $1.95
Slide 18: The Enlarged Group: strong cigarette brand fit
The Enlarged Group strong cigarette brand fit Imperial Altadis 18
Slide 19: The Enlarged Group: strong cigarette positions in Europe
The Enlarged Group strong cigarette positions in Europe FMC Market Imperial Combined Volumes Current Combined Market Market (bn sticks) Share (%) Share (%) Position UK 49 46.4 46.4 1 Germany 93 21.2 26.9 2 Spain 87 5.4 36.6 1 France 56 3.9 28.5 2 Russia 337 5.6 11.4 4 Italy 89 1.3 3.0 4 Note: Imperi
Slide 20: The Enlarged Group: enhanced cigarette shares
The Enlarged Group enhanced cigarette shares FMC Market Imperial Combined Volumes Current Combined Market Market (bn sticks) Share (%) Share (%) Position Morocco 14 - 87.0 1 Poland 73 16.6 24.0 2 Cambodia 6 0.1 18.1 3 Finland 5 - 16.1 2 Belgium 10 10.1 16.0 3 Austria 14 7.3 14.3 3 Netherlands 12 10.
Slide 21: The Enlarged Group: strong tobacco and cigar brands
The Enlarged Group strong tobacco and cigar brands Imperial Altadis Fine cut tobaccos Cigars Snus Cigars 21
Slide 22: The Enlarged Group: logistics
The Enlarged Group logistics Attractive and complementary business - continue to be run on a standalone basis Good margins Strongly cash generative No final decision on acquisition of Logista minority - offer to buy out minority or reduce to below 30%* Note: *percentage specified under propo
Slide 23: The Enlarged Group: management and employees
The Enlarged Group management and employees Antonio Vázquez and Jean-Dominique Comolli invited to join the Imperial Board Headquarters in Bristol - continued presence in Madrid and Paris Swift integration of two businesses 23
Slide 24: Imperial Acquisitions: a track record of value creation
Imperial Acquisitions a track record of value creation (2006) (2007) (2006) (2005) £6.2bn invested (2007) (2004) (1997) (2002) (1998) (2001) (2000) (2000) (2000) (1999) 24
Slide 25: Summary
Summary A great strategic fit Meets our established acquisition criteria Strengthens position as world’s no.4 Major enhancement to operating platform and scale Mature and developing market opportunities Stronger & more diversified brand and product portfolios Revenue benefits and subst
Slide 26: Proposed Acquisition of Altadis
Proposed Acquisition of Altadis 18 July 2007 Imperial Tobacco Group PLC
Slide 27: Appendices
Appendices
Slide 28: Enterprise Value & Multiples
Enterprise Value & Multiples €bn €bn Offer equity value (252.4m shares at €50/share) 12.6 (+) Altadis net debt (Q1 2007) 2.6 (+) Minorities 1.0 Total adjustments to equity value 3.6 Enterprise value 16.2 FY06 EV/EBITDA 14.1x FY07 EV/EBITDA (consensus*) 13.1x FY06 P/E 27.9x FY07 P/E (consensus*) 22.4
Slide 29: Estimated Timetable
Estimated Timetable principal events EVENT TIMING Offer filed with CNMV 18 July 2007 Imperial shareholder circular posted 18 July 2007 Last date for receipt of proxies for Imperial EGM 11 August 2007 Imperial EGM 13 August 2007 Expected approval of offer by CNMV and offer acceptance period commences
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