National Grid Plc · LSE:NG.
National Grid — Merger or Acquisition (March 2021)
22 slides from National Grid's merger presentation, Mar 18, 2021
Slide 1: Proposed acquisition of Western Power Distribution and Strategic Portfolio Repositioning
Proposed acquisition of Western Power Distribution and Strategic Portfolio Repositioning London, 18 March 2021
Slide 2: Cautionary statement
Cautionary statement This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securit
Slide 3: John Pettigrew, Chief Executive
John Pettigrew Chief Executive
Slide 4: Transforming our business, leading the energy transition
Transforming our business, leading the energy transition Our priorities A strategic transformation Deliver for our customers efficiently Significantly improves strategic positioning Grow organisational and long term growth capabilities Empower our people to be at the heart of Puts National Grid at t
Slide 5: Transformative strategic fit
Transformative strategic fit • Combined transaction agreed with PPL Corporation: – Acquisition of Western Power Distribution (WPD) for equity value of £7.8bn – UK’s largest electricity distribution network operator Increased – Sale of our Rhode Island business for equity value of $3.8bn electricity
Slide 6: Accretive earnings and stable credit metrics
Accretive earnings and stable credit metrics Attractive financial returns for shareholders • Strong growth profile of WPD and potential for outperformance Following completion of three deals • Expected strong cash flow and returns greater than cost of capital Superior growth opportunity • Valuation
Slide 7: WPD business summary
WPD business summary One-off opportunity to gain a scale position in UK electricity distribution UK’s largest electricity distribution Key highlights network operator (DNO) WPD East Midlands RAV FY20: £2,524m £8.8bn 5% 1 Customers: 2.7m Estimated RAV Annual RAV CAGR Area: 16,000km² FY2022 delivered
Slide 8: WPD a leading Distribution Network Operator
WPD a leading Distribution Network Operator Strong regulatory Customer satisfaction track record with 9.9% Average RIIO-ED1 weighted score by DNO group2 Ofgem RoRE operational 9.2 fast tracked during performance RIIO-ED1 over ED1 to date1 ED1 Leading Highly experienced DNO 1 DNO 2 DNO 3 DNO 4 DNO 5
Slide 9: A strong strategic fit
A strong strategic fit Strong Improved Net zero Benefits of electricity growth outlook delivery diversity demand growth maintained 9 | National Grid plc | Proposed acquisition of WPD and Strategic Portfolio Repositioning | 2021
Slide 10: Increases electricity footprint
Increases electricity footprint • A changing energy landscape – Increased renewable generation UK electricity demand growth1 – Growth in electric vehicle penetration GWh – Electric heating solutions for homes, offices and buildings Hydrogen • Electricity demand potentially doubles by 2050 Buildings
Slide 11: An improved growth outlook
An improved growth outlook Capital investment by segment2 (£bn) WPD brings high quality assets with attractive growth 8 c.5% RAV CAGR over 6 years 1 7 6 Delivering a cleaner, smarter 5 energy system 4 Investment expected to rise 3 c.20% from ED1 to ED2 2 5-7% 1 0 Group asset growth underpinned FY15
Slide 12: Delivering net zero
Delivering net zero A holistic approach • Faster more efficient delivery across transmission and A shared vision to reduce own emissions distribution • Smarter networks to deliver more renewable energy National Grid WPD connections 80% reduction • Net zero aims in • Electric vehicle charging infrast
Slide 13: Electricity-oriented portfolio with regulatory diversity
Electricity-oriented portfolio with regulatory diversity National Grid remains National Grid today1 Post-transactions National Grid2 geographically balanced with the US regulatory assets c.40% of the Group 45% UK 53% 46% US 39% Step-change in electricity’s 9% NGV 3 8% portfolio contribution to be c.
Slide 14: Rhode Island business summary
Rhode Island business summary Divestment does not materially change National Grid US asset mix or growth Key highlights Geographic footprint • Largest electricity transmission & distribution service provider Electric and gas as well as a natural gas distribution company in Rhode Island service areas
Slide 15: Andy Agg, Chief Financial Officer
Andy Agg Chief Financial Officer
Slide 16: Transaction details
Transaction details WPD Rhode Island UK Gas Transmission £7.8bn equity value 1 £2.7bn consideration 1 £6.4bn March 2022 RAVe 2 £6.4bn assumed net debt £1.0bn ($1.4bn) assumed net debt1 • £8.8bn March 2022 RAVe2 • Partially repays cost of • Intention to sell majority interest, • Attractive growth pro
Slide 17: Financial impact
Financial impact Financing Funding overview (equity basis) • Bridge facility in place to fully cover WPD purchase National Grid Contribution • Proceeds from Rhode Island and UK Gas Transmission businesses to repay bridge facility1 £7.8bn £2.7bn • UK Gas Transmission sale process expected to be launc
Slide 18: Delivering further value for shareholders
Delivering further value for shareholders Further significant upside potential Valuation of WPD reflects • Conservative assumptions on baseline returns Further upside potential • Opportunities to drive outperformance on totex – Strong track record of delivery • Opportunities on incentives Sharing be
Slide 19: Timetable and regulatory considerations
Timetable and regulatory considerations Overall timeline summary Timing of key steps WPD Calendar 2021 Calendar 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 • Shareholder meeting to approve acquisition of WPD expected by the end of April 2021 Transaction announcement • Technical filings to be submitted with FCA and Na
Slide 20: Conclusion
Conclusion Transforms National Grid’s strategic position • Increased focus on electricity • One-off opportunity to establish scale UK Electricity Distribution • Enhances 5-7% growth for longer Foundation for growth and shareholder returns • Earnings accretive • Expect to maintain current credit rati
Slide 21: Q&A
Q&A To ask a question, please dial in as below United Kingdom (Local) 020 3936 2999 United Kingdom (Toll Free) 0800 640 6441 United States (Local) 1 646 664 1960 All other locations +44 20 3936 2999 Participant Access Code: 946437
Slide 22: 22 | National Grid plc | Proposed acquisition of WPD and Strategic Portfolio Repositioning
22 | National Grid plc | Proposed acquisition of WPD and Strategic Portfolio Repositioning | 2021