Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Merger or Acquisition (August 2012)
48 slides from Graincorp Limited Class A's merger presentation, Aug 28, 2012
Slide 1: Acquisition of Gardner Smith & Integro Foods Investor Presentation
Acquisition of Gardner Smith & Integro Foods Investor Presentation 28 August 2012 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER This investor presentation (Presentation) has been prepared by GrainCorp Limited (ABN 60 057 186 035) (GNC) in relation to a pro-rata renounceable entitlement offer (Entitlement Offer) of new ordinary shares in GNC (New Shares) under sections 708AA and 708 of the Corp
Slide 3: Important Notice and Disclaimer (cont'd)
IMPORTANT NOTICE AND DISCLAIMER (cont’d) Future performance This Presentation contains certain forward looking statements. Forward looking statements should or can generally be identified by the use of forward looking words such as “anticipate”, “believe”, “expect”, “forecast”, “estimate”, “will”, “
Slide 4: Important Notice and Disclaimer (cont'd)
IMPORTANT NOTICE AND DISCLAIMER (cont’d) Financial data All amounts are presented in Australian dollars unless otherwise stated. The pro forma financial information and past financial information provided in this Presentation is for illustrative purposes only, and is not represented as being indicat
Slide 5: Important Notice and Disclaimer (cont'd)
IMPORTANT NOTICE AND DISCLAIMER (cont’d) Disclaimer To the maximum extent permitted by law, GNC, the underwriter and their receptive affiliates, related bodies corporate, officers, employees and representatives (including agents and advisors), make no representation or warranty, express or implied,
Slide 6: Acquisition overview
Acquisition overview • Agreement to acquire Gardner Smith Group (“Gardner Smith”) and Integro Foods (“Integro”) for a Transaction combined enterprise value of approximately $472 million(1) overview − 7.4x LTM EBITDA of $64 million(2) (excluding synergies) or 7.0x including synergies • Estimated tran
Slide 7: Strengthening our integrated business
Strengthening our integrated business Acquisition enhances our “end to end” grain supply chain business through: • Scale and insight → a leading position in Australia’s canola and edible oils processing market • Strategic assets → adds valuable bulk liquid port terminals to our portfolio which prese
Slide 8: Creating a leading integrated edible oils business
Creating a leading integrated edible oils business The combination of Gardner Smith and Integro creates an integrated and competitive offering: • Oil processing scale → a leading canola crusher and edible oil refiner • Bulk liquid terminals scale → a leading bulk port handler of import and export ed
Slide 9: Strategic rationale
Alison Watkins Managing Director and CEO Strategic rationale Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 10: Strategic rationale
Strategic rationale Compelling strategic fit with complementary assets and capabilities • Creates Australia and New Zealand’s leading integrated edible oils business with scale and insight • Extends core capabilities in well established business model → canola oilseed and downstream processing • S
Slide 11: Compelling strategic fit – Consistent with our business model
Compelling strategic fit – Consistent with our business model Grows our integrated and international ‘end to end’ grain supply chain model • Leveraging our core capabilities in soft commodity supply chain management and procurement • Complementary customer base → food and feed companies and export m
Slide 12: Compelling strategic fit – Complementary assets and footprint
Compelling strategic fit – Complementary assets and footprint Portfolio of strategically located processing facilities and bulk liquid terminals • Complementary geographical footprint with our existing Australian businesses and assets • Assets located near canola growing regions, domestic customers
Slide 13: Creating an integrated business to capture value along the oil supply chain
Creating an integrated business to capture value along the oil supply chain The combination of the two edible oil businesses creates an integrated and competitive offering • Natural fit between oilseed crushing and edible oil refining • Leverage complementary activities from bulk liquid terminals, u
Slide 14: Diversification through expanded presence in canola and processing
Diversification through expanded presence in canola and processing Diversification of earnings Expanded presence in canola EBITDA breakdown by segment(1) Canola production in Australia(2) (Million tonnes) Oils Country & 15% Logistics 17% 2.8 2.9 Malt 2.4 25% Ports 1.8 1.9 28% 1.2 2008 2009 2010 2011
Slide 15: Generating value for shareholders
Generating value for shareholders Improved • Expected to be EPS accretive(1) and reduce earnings volatility earnings profile • Integration of businesses represents a significant opportunity to generate value through: − Linking complementary edible oil supply chain assets and commodity management − O
Slide 16: GrainCorp Oils
Sam Tainsh General Manager, GrainCorp Oils GrainCorp Oils Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 17: Creating a new business unit – GrainCorp Oils
Creating a new business unit – GrainCorp Oils • Sam Tainsh, currently head of GrainCorp Marketing, to lead and integrate GrainCorp Oils • Klaus Pamminger, previously Trading Manager – Marketing, appointed as General Manager Marketing • Retention of key managers and staff from Gardner Smith and Integ
Slide 18: Gardner Smith – a leading oilseed processor and bulk liquid handler
Gardner Smith – a leading oilseed processor and bulk liquid handler Gardner Smith overview • Second largest oilseed crusher in Australia → More than 300,000 tonnes p.a. crushing capacity • A leading bulk liquid port terminal network in Australia / NZ(1) → Over 200,000m3 storage capacity • Complement
Slide 19: Integro – a leading refiner and packager of edible fats and oils
Integro – a leading refiner and packager of edible fats and oils Integro overview • Australia and NZ’s largest refiner and packager of edible fats and oils → ~280,000 tonnes p.a. capacity Operations • 3 refining facilities in Australia and NZ → ~40% market share of edible oil refining, producing ~23
Slide 20: Financials and acquisition funding
Alistair Bell Chief Financial Officer Financials and acquisition funding Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 21: Historical financial performance
Historical financial performance Gardner Smith and Integro EBITDA ($m) • Variability in Gardner Smith earnings typically driven by movements in oilseed crush margins and volumes − Pacific Terminals is a large relatively stable contributor to Gardner Smith, with high $72 $72 levels of capacity utilis
Slide 22: Committed acquisition funding
Committed acquisition funding Gardner Smith • Between $110-121 million scrip consideration issued to Gardner Smith vendors consideration • Issue price of $9.79 per share, calculated based on the 5-day VWAP adjusted for the impacts of the Entitlement Offer(1) • Shares issued to Gardner Smith vendors
Slide 23: GrainCorp FY12 guidance and FY13 outlook update
GrainCorp FY12 guidance and FY13 outlook update FY12 • Segment guidance Guidance − Storage & Logistics → 12.2mmt country receivals, ~10.5mmt exports (bulk and containers) and ~4.0mmt carry-out − Marketing → strong domestic and export sale programs − Malt → 1.35mmt sales and ~$80/t EBITDA(1) • Upper
Slide 24: Entitlement Offer
Entitlement Offer Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 25: Entitlement Offer details
Entitlement Offer details Offer Size(1) • 1-for-11 fully underwritten pro-rata Entitlement Offer to raise approximately $159 million • Record date is 7:00pm on 3 September 2012 Offer Price • $8.80 per New Share representing a 10.1% discount to TERP of $9.79(1) Offer • Eligible institutional sharehol
Slide 26: Entitlement Offer timetable
Entitlement Offer timetable Event Date Announcement of Acquisition and Entitlement Offer 28 August 2012 Institutional Entitlement Offer opens 28 August 2012 Institutional Entitlement Offer closes 30 August 2012 Institutional Bookbuild 30 August 2012 Record date under the Entitlement Offer 7:00pm Syd
Slide 27: Conclusion
Conclusion Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 28: Strategic rationale
Strategic rationale Compelling strategic fit with complementary assets and capabilities • Creates Australia and New Zealand’s leading integrated edible oils business with scale and insight • Extends core capabilities in well established business model → canola oilseed and downstream processing • S
Slide 29: Appendix
Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 30: Pro forma capital structure
Pro forma capital structure • Half year ended 31 March 2012 represents seasonal peak for grain inventory cycle for both GrainCorp and Gardner Smith − Average drawings under oilseed and trade inventory financing was $82 million for Gardner Smith for year ended 31 March 2012 (comprising $45 million tr
Slide 31: Gardner Smith historical financial performance
Gardner Smith historical financial performance • Gardner Smith EBITDA adjusted to exclude edible oil and grain trading (“Trading”) contribution − Gardner Smith and Integro oil procurement and trading activities to be reorganised in GrainCorp Oils and grain and pulse trading to be integrated into Gra
Slide 32: Risk factors
Risk factors Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 33: Risks relating to GrainCorp's business and industry sector
Risks relating to GrainCorp’s business and industry sector Adverse weather conditions and other unpredictable factors may adversely affect the availability and price of agricultural commodities, as well as GrainCorp’s operations Adverse weather conditions have historically caused volatility in the a
Slide 34: Risks relating to GrainCorp's business and industry sector (cont'd)
Risks relating to GrainCorp’s business and industry sector (cont’d) GrainCorp is subject to food and feed industry risks GrainCorp is subject to food and stockfeed industry risks which include, but are not limited to, spoilage, contamination, fumigation or treatment applications which do not meet de
Slide 35: Risks relating to GrainCorp's business and industry sector (cont'd)
Risks relating to GrainCorp’s business and industry sector (cont’d) GrainCorp is subject to global and regional economic downturns and risks relating to turmoil in global financial markets The level of demand for GrainCorp’s services and products is affected by global and regional demographic and ma
Slide 36: Risks relating to the Acquisitions
Risks relating to the Acquisitions To the extent the due diligence information on Integro and/or Gardner Smith is incomplete, incorrect, inaccurate or misleading; there is a risk that the future results of the operations of the Combined Group may differ from GrainCorp’s expectations The information
Slide 37: Risks relating to the Acquisitions (cont'd)
Risks relating to the Acquisitions (cont’d) Risk of termination of the Underwriting Agreement or unavailability of the Acquisition Debt Facility The Underwriting Agreement includes certain rights of the Lead Manager to terminate those arrangements, and the availability of the Acquisition Debt Facili
Slide 38: Risks relating to the Acquisitions (cont'd)
Risks relating to the Acquisitions (cont’d) GrainCorp may not effectively integrate the Acquisitions with its existing business The Acquisitions involve the integration of businesses that have previously operated independently in the case of Gardner Smith and as part of a larger company in the case
Slide 39: Risks related to the Shares
Risks related to the Shares The future price of Shares is subject to the Combined Group’s perceived growth prospects The growth prospects of the Combined Group may be perceived to be less attractive than GrainCorp’s current stand-alone growth outlook, and hence attract a downward re-rating of the ma
Slide 40: International offer restrictions
International offer restrictions Unsaved Document / 6/08/2012 / 15:46 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 41: International offer restrictions
International offer restrictions International Offer Restrictions This document does not constitute an offer of entitlements (Entitlements) or new ordinary shares (New Shares) of the Company in any jurisdiction in which it would be unlawful. Entitlements and New Shares may not be offered or sold in
Slide 42: International offer restrictions (cont'd)
International offer restrictions (cont’d) Statutory rights of action for damages and rescission Securities legislation in certain of the Provinces may provide purchasers with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, when an offering memorand
Slide 43: International offer restrictions (cont'd)
International offer restrictions (cont’d) Language of documents in Canada. Upon receipt of this document, each investor in Canada hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the Entitlements and the New Shares (including for gre
Slide 44: International offer restrictions (cont'd)
International offer restrictions (cont’d) Such offers, sales and distributions have been and shall only be made in France to qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D.744-1, D.754-
Slide 45: International offer restrictions (cont'd)
International offer restrictions (cont’d) Italy The offering of the Entitlements and the New Shares in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa, "CONSOB") pursuant to the Italian securities legisl
Slide 46: International offer restrictions (cont'd)
International offer restrictions (cont’d) New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). The Entitlements and the New Shares in the entitlement offer are not being offered to the public in
Slide 47: International offer restrictions (cont'd)
International offer restrictions (cont’d) This document has been given to you on the basis that you are (i) an existing holder of the Company’s shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that y
Slide 48: International offer restrictions (cont'd)
International offer restrictions (cont’d) United Kingdom Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financia