Bae Systems Plc · LSE:BA.
Bae Systems — Merger or Acquisition (March 2005)
20 slides from Bae Systems's merger presentation, Mar 7, 2005
Slide 1: United Defense Industries Analyst Presentation
United Defense Industries Analyst Presentation 7 March 2005 0
Slide 2: Key points
Key points • Agreed transaction to acquire United Defense Industries Inc (“UDI”) for $4,192 million (£2,207 million) in cash(1) • Significant step in BAE Systems’ strategy to grow as the premier transatlantic aerospace and defence company • Combined business would create a leading international posi
Slide 3: Overview of UDI
Overview of UDI • A leading producer of land systems and combat vehicles • Major supplier of naval guns • A leading provider of non-nuclear ship repair and overhaul services to the US Navy 2004A Bradley Mk45 Revenue: $2,292m Naval Gun PBIT: $293m Margin: 12.8% Employees: c.8,000(1) Ship Repair FCS M
Slide 4: Summary rationale
Summary rationale • Significant step in BAE Systems’ strategy to grow as the premier transatlantic aerospace and defence contractor • Creates a leading global land systems business with significant synergy potential • UDI land systems positions complement existing BAE Systems North America capabilit
Slide 5: Leading Global Land Systems business
Leading Global Land Systems business • US-headquartered business, led by highly regarded and experienced UDI management team • Deep understanding of its customers in the US, UK, Sweden and worldwide • Large installed base of >130,000 vehicles for through-life support and upgrades • Significant posit
Slide 6: Key beneficiary of DoD mission environment
Key beneficiary of DoD mission environment • UDI is benefiting from increasing momentum toward land forces in DoD mission and funding outlook Affordable • Budget constraints and combat priorities driving evolutionary transformation transformation of military platforms for net-enabled operations Forc
Slide 7: Business overview
Business overview Defense Systems 2004 Revenue: $1,719m 2004 PBIT: $277m(2) • Bradley fighting vehicles • FCS – manned ground vehicles, M2A3 Bradley Non-Line-of-Sight cannons & armed robotic vehicles • Naval ordnance / Vertical NLOS-C Launching System • Combat, engineering and recovery vehicles / as
Slide 8: Defense Systems
Defense Systems Ground combat vehicles Bradley Family of Vehicles (BFV) • Prime contractor on BFV since 1981; 7,000+ vehicles produced • Significant revenue potential: – Significant upgrade opportunity to support Army restructuring – Future technology insertion Bradley – $81bn Defense Supplemental f
Slide 9: Defense Systems: Other major businesses
Defense Systems Other major businesses Mk 45 Naval Weapon Systems • Provider of naval gun systems for US surface combatant fleet • Mk41 missile vertical launching system (VLS) • Mk45 gun system for US Navy’s current class of destroyers (DDG51) • Strong position in gun systems on both planned US next
Slide 10: Ship Repair and Maintenance
Ship Repair and Maintenance • A leading provider of non- nuclear naval ship repair and overhaul to the US Navy • US Navy accounts for more than 90% of sales • Locations of shipyards are closely mapped to US naval bases: • Norfolk, Virginia • San Diego, California • San Francisco, California • Pearl
Slide 11: UDI has leading technological capabilities
UDI has leading technological capabilities • UDI is a leader in advanced land combat vehicle and artillery systems, naval weapon systems and precision ordnance • Integration of complex weapons, comms and Bradley M2A3 battlefield systems • Software development and digitisation upgrades for Stryker Re
Slide 12: Attractive fit with BAE Systems businesses
Attractive fit with BAE Systems businesses • UDI complements BAE Systems’ land systems, through-life support and C4ISR capabilities • Broad land systems product base and global reach: • Combat and support vehicles, artillery systems, ordnance M777 Field • In-production systems, through-life support,
Slide 13: UDI financial performance
UDI financial performance Summary financials 2004 revenue analysis Defense Systems 2002 2003 2004 ($1,719m) Ship Repair & Maintenance Revenue ($m) 1,725 2,053 2,292 ($573m) PBIT ($m)(1) 180 239 293 Margin 10.4% 11.6% 12.8% Bradley Naval VLS Family of Ordnance 7% Vehicles FD EPS ($ per share) 2.55 2.
Slide 14: Overview of proposed acquisition
Overview of proposed acquisition • Acquisition of UDI by BAE Systems for $75 per share in cash • 29% premium to Friday’s closing price Valuation • Values UDI’s equity at $3,974m (£2,092m) and the total enterprise at $4,192m (£2,207m)(1) • Transaction to be implemented by way of a single-step merger
Slide 15: Financing
Financing • Consideration to be funded from a combination of existing internal resources, a new debt facility and an equity placing • New debt facility of $3bn underwritten by Goldman New debt Sachs Credit Partners L.P. and Dresdner Bank AG facility • Underwritten, non pre-emptive cash placing of 15
Slide 16: Financial effects on Group
Financial effects on Group • Earnings impact • Expected to be accretive to BAE Systems’ EPS immediately, with a step up expected in first full year (2006)(1) • Return on investment • Expected to deliver returns in excess of Group’s cost of capital in second full year (2007) • Balance sheet impact •
Slide 17: Summary
Summary • Agreed transaction to acquire UDI for $4,192 million (£2,207 million) in cash(1) • Significant step in BAE Systems’ strategy to grow as the premier transatlantic aerospace and defence company • Combined business would create a leading international position in the attractive and fast growi
Slide 18: Q&A
Q&A BAE SYSTEMS 17
Slide 19: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer or invitation to acquire or dispose of any securities or investment advice in any jurisdiction. Not for release, publication or distribution in or into the United States, Canada, Australia, Japan or the Re
Slide 20: Disclaimer (cont'd)
Disclaimer (cont’d) This presentation includes “forward-looking statements”. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding BAE Systems’ financial position, business strategy, plans and objectives of management f