Fletcher Building Limited · NZX:FBU
Fletcher Building — Merger or Acquisition (September 2002)
29 slides from Fletcher Building's merger presentation, Sep 18, 2002
Slide 1: Acquisition of Laminex Industries
Fletcher Building Limited Acquisition of Laminex Industries 18 September 2002 This presentation has been prepared for investors in New Zealand and Australia and may not be released in the United States. This presentation does not constitute an offer of securities for sale to the public in New Zealan
Slide 2: Agenda
Agenda • Transaction Overview • Strategic Rationale • Laminex Overview • Funding Approach • Financial Impact of Acquisition • Summary Page 2
Slide 3: Transaction Overview
Transaction Overview • Fletcher Building (“FBU”) has agreed to acquire Laminex Industries, the Australasian market leader in decorative laminates and wood panels • Purchase price is A$645m (NZ$750m), with additional contingent payment up to A$20m, based on Laminex FY03 EBITDA performance • Transacti
Slide 4: Background to Acquisition
Background to Acquisition • FBU has considered a number of Australian acquisition opportunities complementary to its core NZ building materials operations • FBU has clearly defined acquisition criteria – No adverse industry competitive response expected – Leading market position (No. 1 or No. 2 in s
Slide 5: Laminex Provides
Laminex Provides • Quality assets with good industry structure • Leading market position with strong “icon” brands • Existing management team led by John Nolan remaining in place • Synergies from integration with existing FBU panels manufacturing & distribution, and fixed cost efficiencies • Larger
Slide 6: Key Terms of Transaction
Key Terms of Transaction Purchase Price A$645 million payable on completion, +/- working capital adjustments on completion date Contingent Purchase Up to A$20 million: Adjustment • A$6 million if FY03 EBITDA reaches A$95 million • A$2 million for each additional A$1m million EBITDA above A$98 millio
Slide 7: Overview of Fletcher Building
Overview of Fletcher Building June 2002 Operating Earnings (EBIT) NZ$M Concrete & Construction Building Products Distribution 30 141+ 34 A building materials manufacturer with two special channels to market Page 7
Slide 8: Overview of Fletcher Building – June 2002
Overview of Fletcher Building – June 2002 Operating Operating NZ$M Revenue Earnings Funds Building Products 820 85 433 Distribution 686 34 101 Concrete 470 60 416 Construction 871 30 (95) Other (4) 134 2847 205 989 Equity including minority (book value) 591 Capital Notes 230 Net Debt 168 Total Capit
Slide 9: Overview of Fletcher Building – June 2002
Overview of Fletcher Building – June 2002 June 2002 EPS after unusual items (cps) 27.0 Dividend (fully tax credited) (cps) 14 Payout Ratio 52% Net Debt + Capital Notes / Total Capitalisation 40% EBITDA / Interest on Net Debt 5.4 Net Debt / EBITDA 1.4 Page 9
Slide 10: Fletcher Wood Panels / Scott Panel & Hardware
Fletcher Wood Panels / Scott Panel & Hardware FWP FWP – Annual revenue c $200m Penrose Plyco Doors Hardboard mfg FWP Hamilton LPM FWP Decorating Kumeu Particleboard mfg Particleboard flooring mfg FWP Taupo MDF mfg Particleboard FWP mtg Christchurch MDF Mouldings SP&H -13 branches - Annual revenue c
Slide 11: Overview of Laminex
Overview of Laminex • Laminex is the leading marketer, distributor and producer of premium decorated boards in Australia and New Zealand • Leading market position in “value-added” boards – high recognition of key “Laminex”, “Formica” and “Formex” brands – estimated 65% share of HPL segment in Austra
Slide 12: Overview of Laminex
Overview of Laminex • Dedicated distribution network strengthens competitive position – Extensive Australian distribution network with 30 Service Centres and 13 other distribution points – FBU’s “Scott Panel & Hardware” chain is New Zealand’s exclusive distributor of Laminex and one of the major dis
Slide 13: Laminex - Key Facilities
Laminex - Key Facilities Welshpool - MDF 112k m3 Gympie - LPM 2.0 million m2 - MDF 220k m3 - LPM 2.0 million m2 Papakura - HPL 3.0 million m2 - Treating 13.0 million m2 Dardanup - Particleboard 220k m3 - LPM 7.5 million m2 - Treating 26.3 million m2 Ballarat Cheltenham - LPM 5.0 million m2 - HPL 3.4
Slide 14: Laminex - Sales Mix
Laminex - Sales Mix Laminex Group FY02 Sales Mix by Product MDF & Particleboard Exports HPL 14% 18% Assorted Products 13% Colour Decorated Panels White and Raw 29% Particleboard 17% White and Raw MDF 9% Page 14
Slide 15: Laminex - End Uses
Laminex - End Uses Laminex Group FY02 Sales Mix by Sector Exports Residential 14% 21% Commercial 32% Renovations 33% Source: Laminex Industries management estimates Page 15
Slide 16: Laminex - HPL & Decorated Board Market Shares
Laminex - HPL & Decorated Board Market Shares Laminex HPL Market Share - Australia and NZ Laminex Decorated MDF Market Share - Australia Other 35% Other 20% Laminex 80% Laminex 65% Source: Laminex Industries Management estimates Source: Laminex Industries Management estimates Laminex Decorated Parti
Slide 17: Laminex Earnings
Laminex Earnings Years ended 30 June A$million 2000(A) 2001(A) 2002(A) Sales 380.1 438.0 608.1 EBITDA (before unusuals) 67.7 64.1 88.1 EBIT (before unusuals) 50.3 40.3 57.6 Capex 17.0 10.0 21.0 Notes: 1. Wesfi acquired by Laminex in February 2001 for A$193 million 2. FY01 result adversely impacted b
Slide 18: Market Assumptions for June 2003
Market Assumptions for June 2003 Laminex Market Growth Source of Revenue Assumption Commercial 32% +9% Residential 21% -13% Renovation 33% +10% Export 14% - 100% Page 18
Slide 19: Laminex Earnings
Laminex Earnings Laminex FY03 EBITDA expected to benefit from • 12 months of last year’s progressively achieved Wesfi synergies • additional Wesfi integration benefits • drag through of last December’s price increase • this November’s already advised price increase Page 19
Slide 20: Indicative Financial Impact
Indicative Financial Impact Target Earnings in June Purchase 2002 Agreement A$M A$M A$ Laminex EBITDA 88* 105 Purchase Price 645 665 EV/EBITDA 7.3X 6.3X * Pre-unusuals Page 20
Slide 21: Indicative Financial Impact
Indicative Financial Impact • Additional leverage supported by strong cash flow generation – EBITDA/Interest* expected to trough at about 4.6x, still robust – Debt*/Capitalisation expected to peak at about 52% • FBU expects to achieve synergies between Laminex and Fletcher Wood Panels, but none allo
Slide 22: Acquisition - Additional Details
Acquisition - Additional Details • Assets acquired* A$m Fixed assets & investments 290 Brands 123 Existing Goodwill 58 * excluding working capital and assuming $20 million purchase adjustment • Incremental goodwill on acquisition approximately A$60 million – Total goodwill to be amortised over 20 ye
Slide 23: Acquisition Financing
Acquisition Financing NZ$million Equity Placement* 113 Bank Financing 487 Capital Notes# 150 Total 750 * Base price underwritten # Proposed issue after mid November 2002 settlement • Plus up to A$20 million contingent • The acquisition does not require the raising of additional ordinary equity Page
Slide 24: Laminex – Acquisition Summary
Laminex – Acquisition Summary • Scale entry to Australia with favourable industry dynamics • Leading market position and recognised brands • Quality assets and management • Attractive acquisition parameters • Focus on cash flow generation to create shareholder value • Comprehensive Fletcher Building
Slide 25: Indicative Equity Placement Timetable
Indicative Equity Placement Timetable Wednesday 18 September 2002, New Zealand time 9.00am FBU trading suspended on NZSE & ASX 9.30am Transaction announced to NZSE & ASX 1.00pm Presentation by Fletcher Building CEO, Ralph Waters 2.00pm Bookbuild commences 8.00pm Books close for NZ & Australian insti
Slide 26: Appendix
Appendix Page 26
Slide 27: History of Laminex
History of Laminex October 1998 Laminex Industries closed its Wagga Wagga MDF manufacturing plant. August 1999 Laminex industries acquired the Formica decorative laminates business of CSR and entered into a long term particleboard supply contract with CSR. September 1999 Laminex Industries closed it
Slide 28: Production Facilities
Production Facilities Plant Location Capacity(000) Particleboard Dardanup 220m3 MDF Gympie 220m3 Welshpool 112m3 HPL Cheltenham 3,400m2 Papakura 3,000m2 LPM Ballarat 5,000m2 Gympie 2,000m2 Dardanup 7,500m2 Welshpool 2,000m2 Treating Cheltenham 9,500m2 Papakura 13,000m2 Dardanup 26,300m2 Ballarat 17,
Slide 29: Laminex - Business Mix
Laminex - Business Mix PRODUCT SEGMENT PREMIUM ASSORTED DECORATIVE SURFACES TRADE WOODPANELS PRODUCTS EXPORTS PRODUCTS natural timber veneer panels, cabinet doors, high pressure coloured decorated white and raw vanity units and MDF and laminates (HPL) woodpanels white and raw MDF particleboard compo
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