Delta Galil Industries Ltd. · TASE:DELG
Delta Galil Industries — Merger or Acquisition (June 2019)
20 slides from Delta Galil Industries's merger presentation, June 2019
Slide 1: Unique Opportunity to Acquire Fashion Bra Leader
UNIQUE OPPORTUNITY TO ACQUIRE FASHION BRA LEADER JUNE 2019
Slide 2: . םלשות ןכא , Bogart תצובק לש השיכרל סחיב 10.6.2019 - המ הרבחה לש
כל הנכלל במצגת זו הינו בכפוף לכך שהעסקה נשוא הדיווח המיידי של החברה מה 10.6.2019-ביחס לרכישה של קבוצת ,Bogartאכן תושלם. המצגת עשויה לכלול מידע אחר ו/או מידע המוצג באופן שונה מהאופן בו הוצג בדיווחי החברה וכוללת מידע בדבר התוכנית האסטרטגית ביחס לחברה הנרכשת ותוכניות הצמיחה של החברה.
Slide 3: Deal Highlights
BOGART PRESENTATION | JUNE 2019 DEAL HIGHLIGHTS
Slide 4: Deal Highlights
DEAL HIGHLIGHTS Bogart is a leader in the design, development and manufacturing of lingerie & swimwear One of the largest bra players in the world Vertical producer with Cut & Sew, Lace, and Pad owned factories Preferred strategic partner for worldwide leading brands 2018 Net Sales of $230
Slide 5: Deal Highlights
DEAL HIGHLIGHTS Delta is acquiring 100% of the shares for $1 Assuming financial debt of $105M Includes $26M loans given to date Includes up to $50M of additional cash Delta will infuse in the business Closing is expected in the beginning of Q3/2019 Earn out with a minimum EBITDA target o
Slide 6: Business Description
BUSINESS DESCRIPTION
Slide 7: Bogart Group
BUSINESS DESCRIPTION BOGART GROUP Founded in 1993 and known for strong design and development capabilities Factories in China, Thailand and Myanmar with around 9,000 employees Leading customers in the US, European and Asian markets : Victoria’s Secret, HBI group, LA SENZA, PVH, JOCKEY & ADORE
Slide 8: Brunet: Lace Manufacturer
BUSINESS DESCRIPTION BRUNET: LACE MANUFACTURER Established in 1911 in Calais, France. Acquired by Bogart in 2004. Moved to China in 2006 Leading lace manufacturer dedicated to premium brands Library of patented vintage French lace 2018 sales $22 million (95% to 3rd party customers) Doubl
Slide 9: Brunet Heritage
BRUNET HERITAGE
Slide 10: Customers
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Slide 11: B&B: Pad Manufacturer
BUSINESS DESCRIPTION B&B: PAD MANUFACTURER Established in 2010 Leading Pad manufacturer dedicated to top intimate apparel brands 2018 sales $10 million (50% to 3rd party customers) Double Digit EBITDA margin Headcount – 200 employees
Slide 12: Financial Data
FINANCIAL DATA
Slide 13: Bogart Group Net Sales & EBITDA ($M)
BOGART GROUP NET SALES & EBITDA ($M) 232 230 20.6 12.2 2017 2018 Net Sales Adj EBITDA Decrease in 2018 EBITDA due to liquidity issues during H2 2018 leading to lower production and sales volumes and increased airfreight. 2018 was also effected by negative ex-rate (RMB and THB) Source Bogart manageme
Slide 14: Valuation ($M)
VALUATION ($M) Enterprise Value / Purchase Price / Assumed debts 105 2018 Adjusted EBITDA 12.2 2017 Adjusted EBITDA 20.6 2018 EBITDA Multiple 8.6 2017 EBITDA Multiple 5.1 Estimated Working Capital (AT CLOSING) 20 Fixed Assets (March 2019) 32 * Delta already infused $26M included in the $105M
Slide 15: Financing & Bonds Covenants
FINANCING & BONDS COVENANTS USING OUR BANK FACILITIES DELTA WILL INFUSE UP TO ADDITIONAL $50M AFTER THE DEAL BEFORE THE DEAL (March 2019) (as of March. 2019 Pro-forma) Estimated Net Debt ($ million) 362 444 Net Debt / CAP 40.2% 45.0% Bonds Covenant Net debt/CAP > 60% * Excluding IFRS16
Slide 16: Net Financial Debt to EBITDA
NET FINANCIAL DEBT TO EBITDA 3.2 2.7 2.4 2.0 1.8 1.6 1.4 Pro- 1.1 forma 0.7 0.7 0.8 0.7 Jun. 2012 Jul. 2012 Dec. 2012 Dec. 2013 Dec. 2014 Dec. 2015 Sep. 2016 Dec. 2016 Dec. 2017 Sep. 2018 Dec. 2018 Mar. 2019 After After DGPB After Eminence Including Schiesser acquisition acquisition Bogart acquisiti
Slide 17: Deal Rationale
DEAL RATIONALE
Slide 18: Strategic Reasoning
STRATEGIC REASONING COMPELLING INVESTMENT CASE FOR DELTA Acquiring significant know-how and core capabilities in the cut & sew bra category Delta is a leader in seamless bras and shapewear but an insignificant player in the bigger cut & sew bra category Current USA market: $11.5B (2018 NPD Rep
Slide 19: Synergies
SYNERGIES Strengthening Delta’s ladies intimate footprint in the lingerie categories Enhancing Delta’s bra assortment in our current direct to consumer channels for our own brands Selling Bras to Delta’s existing customers Selling Delta’s core products like seamless and sleepwear to Bogart’s
Slide 20: Summary
SUMMARY Unique strategic opportunity to acquire leading bra designer & manufacturer Strengthen Delta’s position in the intimates market Grow bra sales for our own brands Strengthen Delta’s relationship with Victoria’s Secret Deal Accretive in 2020
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