Davide Campari-Milano N.V. · MIL:CPR
Davide Campari-Milano — Merger or Acquisition (December 2001)
33 slides from Davide Campari-Milano's merger presentation, Dec 13, 2001
Slide 1: Acquisition of Skyy Spirits, LLC
SLIDE 1 Acquisition of Skyy Spirits, LLC Conference Call Milan, 13 December 2001
Slide 2: Disclaimer
SLIDE 2 Disclaimer This document has been prepared by Davide Campari – Milano S.p.A. solely for information purposes and for use in presentations of the Group’s strategies and developments. The information contained herein has not been independently verified. No representation or warranty, express o
Slide 3: Executive Summary
SLIDE 3 Executive Summary • Campari announces today the acquisition of a further 50% stake in Skyy Spirits LLC, reaching a total ownership of 58.9% of SKYY Vodka share capital, net of dilutive effect deriving from a further 4% stock compensation assigned to management members • Skyy Spirits, based i
Slide 4: Agenda
SLIDE 4 AGENDA • Vodka market overview • Overview of Skyy Spirits, LLC • Deal terms • Acquisition rationale and strategic issues for Campari • Q&A Appendices
Slide 5: Vodka market overview
SLIDE 5 Vodka market overview
Slide 6: Global branded vodka consumption
SLIDE 6 Global branded vodka consumption Global branded vodka volume 66 37 US branded vodka volume* 64 36 62 60 35 58 56 34 54 33 52 50 32 1995 1996 1997 1998 1999 2000E Branded vodka market US vodka consumption Note: * 9-ltr cases million Source: Canadean, brokers’ estimates • The branded distilled
Slide 7: Geographical breakdown of branded vodka market
SLIDE 7 Geographical breakdown of branded vodka market UK 9% Brazil 5% Canada 4% Germany 3% Finland 3% S Africa 2% Spain 2% US 54% Italy 2% Sweden 2% Note: excl. Eastern European countries Source: Impact Databank and brokers’ estimates Others 14% • The US represents by far the largest market for bra
Slide 8: Top vodka brands sales performance
SLIDE 8 Top vodka brands sales performance 29.0 1.4 28.5 1.2 28.0 9 ltr. cases mn. 9 ltr. cases mn. 1.0 27.5 27.0 0.8 26.5 0.6 26.0 0.4 25.5 25.0 0.2 1997 1998 1999 2000E Top 5 world-wide branded vodka brands Total Skyy Source: Impact Databank • Top 5 world-wide premium vodka brands: CAGR 1997/00E 2
Slide 9: Major operators in the branded vodka market
SLIDE 9 Major operators in the branded vodka market Brand Company Volumes 1996 1997 1998 1999 2000E 9-ltr cases Total Total Total Total Total of which: mn. US volumes Smirnoff UDV Diageo 15.0 15.3 15.9 16.2 15.9 39% Absolut V&S Vin & Spirit AB 5.4 5.5 5.9 6.7 7.3 64% Gordon's Vodka UDV Diageo 2.3 2.
Slide 10: Major operators in the US vodka market
SLIDE 10 Major operators in the US vodka market Brand US volumes Retail price 9-ltr cases mn. USD Absolut 4.7 16.99 Gordon's Vodka 1.1 15.99 Skyy Vodka 1.1 14.99 Smirnoff 6.1 9.99 Stolichnaya 1.2 9.99 Finlandia 0.3 8.49 Source: Impact Databank • SKYY Vodka’s retail price enhances its position among
Slide 11: Overview of Skyy Spirits, LLC
SLIDE 11 Overview of Skyy Spirits, LLC
Slide 12: Company overview
SLIDE 12 Company overview • Skyy Spirits, LLC is an innovative, dynamic global spirits company launched by Maurice Kanbar in 1992 in San Francisco (California) with the introduction of the exceptionally pure SKYY Vodka • The Company is privately-held and owns the SKYY Vodka and Skyy Citrus brands •
Slide 13: A recent history of strong growth
SLIDE 13 A recent history of strong growth 1998 1999 2000 • Built on-premise • Capital restructure • Awarded presence and of company to LLC importation rights off-premise • Campari takes to Cinzano distribution minority interest • Introduced Skyy Citrus • Set consistent price • Assigned USA • Increa
Slide 14: Outlook on 2001 results
SLIDE 14 Outlook on 2001 results • Expected sales of total 1.9 million 9ltr cases in 2001 (CAGR 1998/01E: 41.8%), of which SKYY Vodka 1.4 million (CAGR 1998/01E: 29.8%) • Expected net turnover of USD 112 million in 2001 (CAGR 1998/01E: 49.4%) • Expected income before taxes of USD 28 million (CAGR 19
Slide 15: Skyy Spirits' strategy
SLIDE 15 Skyy Spirits’ strategy • Maintain a premium proprietary brand focus and expand in the US and international markets with selected portfolio • Develop as niche player and achieve strong on-premise presence • Regularly deliver innovation through all aspects of the business • Share strategic go
Slide 16: SKYY Vodka - Product overview
SLIDE 16 SKYY Vodka - Product overview • Premium vodka distilled in America using a unique four-step distillation process and three-steps filtration system for ultimate smoothness (no more headaches!) • SKYY Vodka, whose production is outsourced to local operators, is distributed by over 100 wholesa
Slide 17: SKYY Vodka - Brand positioning
SLIDE 17 SKYY Vodka - Brand positioning • More than a product – more than just a bottle of vodka; a lifestyle experience: an expression of innovation, quality and style • Strong positioning – Target: young, educated, urban, culturally and ethnically diverse, confident, stylish, sophisticated, social
Slide 18: SKYY Vodka US sales - Depletion/shipment summary
SLIDE 18 SKYY Vodka US sales - Depletion/shipment summary 1.40 1.28 1.32 1.20 1.05 1.10 1.00 ( 9 ltr mn. cases) 0.79 0.80 0.80 0.69 0.68 0.59 0.56 0.60 0.40 0.20 - 1997 1998 1999 2000 2001* Depletions Shipments * 2001 FY estimates; 2001 YTD as of 30 November • Growth in shipments well balanced with
Slide 19: SKYY Vodka US sales - Top Markets
SLIDE 19 SKYY Vodka US sales - Top 10 Markets FLORIDA 8% S. CALIFORNIA 8% N. CALIFORNIA 7% OTHER TEXAS 48% 7% NEW YORK CITY 4% ILLINOIS 4% NEW JERSEY MASSACHUSET PENNSYLVANIA GEORGIA 4% TS 4% 3% 3% Note: 9Ltr Cases Depletions 2001 YTD as of 30 August
Slide 20: Skyy Spirits - Profitability breakdown by product 2001
SLIDE 20 Skyy Spirits - Profitability breakdown by product 2001 Net turnover breakdown by Net contribution breakdown by brand category 2001 brand category 2001 Campari Agency Campari brands brands brands 7% 7% 3% Agency brands 24% Skyy 69% Skyy 90% • Skyy accounts for 69% of total net sales and 90%
Slide 21: Skyy Spirits - Financial highlights
SLIDE 21 Skyy Spirits - Financial highlights US dollar (‘000 ) 1998-2000 1998 1999 2000 Net turnover 33,576 68,342 103.5% 94,585 38.4% COGS * (8,660) (29,989) (40,560) Gross margin 24,915 38,354 53.9% 54,024 40.9% % margin on net turnover 74% 56% 57% Commissions (1,435) (1,732) (1,992) A&P (8,945) (
Slide 22: Skyy Spirits Management Team
SLIDE 22 Skyy Spirits Management Team Anthony Foglio* President & CEO Gerry Ruvo* Keith Greggor* Snr V.P. Sales COO Sales Structure Marketing Stucture Mitch Wortzman Roberta Pike David Hadick CFO HR & Office Mgr Director of Operations * denotes “Management Team” • High quality and commitment of mana
Slide 23: Deal terms
SLIDE 23 Deal terms SKYY VODKA
Slide 24: Skyy Spirits LLC - Shareholding after closing
SLIDE 24 Skyy Spirits LLC - Shareholding after closing Management team * 11.0% Maurice Kanbar 30.1% Campari Group * Assuming assignment of stock compensation to management members (4%) 58.9% • Consideration for 50% stake in Skyy Spirits: USD 207.5 mn.
Slide 25: Deal terms I - Price adjustment
SLIDE 25 Deal terms I - Price adjustment • Price adjustment: Target of profit before taxes (PBT) of USD 36 million in 2002 – USD 34 mn. < PBT < USD 37.8 mn. : no adjustment – in other cases: proportional adjustment based on the target PBT
Slide 26: Deal terms II - Put/Call options
SLIDE 26 Deal terms II - Put/Call options Call option Put option Campari Maurice Kanbar Exercise time (T):16/01/2005 < T < 31/12/2006 Strike price:10x pro-quota PBT in the last FY closed before exercise time Floor price based on equity value of USD 415 mn. if 2002PBT >= USD 36 mn. Management team Ex
Slide 27: Acquisition rationale and strategic issues for Campari
SLIDE 27 Acquisition rationale and strategic issues for Campari
Slide 28: Acquisition rationale
SLIDE 28 Acquisition rationale • Campari’s mission is to develop its future as global niche beverage company • Campari stated growth strategy is through organic growth and selective acquisition • Campari will build critical mass through selective market involvement and series of distribution partner
Slide 29: Strategic issues for Campari
SLIDE 29 Strategic issues for Campari • Strengthening in the premium spirits segment • Expanding internationally in the fastest growing markets • Playing a leading role in the consolidation of the spirits industry Delivering shareholder value through higher profitability and strategic strengthening
Slide 30: Questions & Answers
Questions & Answers Website: www.skyy.com
Slide 31: Appendices
SLIDE 31 Appendices SKYY VODKA
Slide 32: Skyy Spirits management bios
SLIDE 32 Skyy Spirits management bios Anthony P. Foglio, President/CEO Anthony (Tony) Foglio, joined SKYY Spirits in January 1998 to help founder Maurice Kanbar grow SKYY into a leading-edge global spirits company. Mr. Foglio has 28 years of experience in the alcohol beverage industry and was named
Slide 33: Skyy Spirits management bios (cont.)
SLIDE 33 Skyy Spirits management bios (cont.) Gerard M. Ruvo, Senior Vice President Sales Gerard (Gerry) Ruvo joined Skyy in 1998 to build a comprehensive sales structure and is an Officer of SKYY Spirits, LLC. Ruvo has 24 years experience in beverage alcohol sales management holding positions of in
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