Mercury Systems Inc · NASDAQ:MRCY
Mercury Systems — Merger or Acquisition (March 2016)
14 slides from Mercury Systems's merger presentation, Mar 23, 2016
Slide 1: Proposed Carve-out Acquisition from Microsemi Corporation
© 2016 Mercury Systems, Inc. Proposed Carve-out Acquisition from Microsemi Corporation Mark Aslett President & CEO Gerry Haines EVP & CFO March 23rd 2016
Slide 2: Forward-looking safe harbor statement
2 © 2016 Mercury Systems, Inc. Forward-looking safe harbor statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the transactions described herein. You can identify these s
Slide 3: Agenda
3 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Agenda • Transaction overview • Acquisition strategic rationale • Review of acquired businesses • Financial summary • Closing comments • Q&A
Slide 4: Transaction overview
4 © 2016 Mercury Systems, Inc. Transaction overview Acquiring 3 defense oriented businesses from Microsemi Corporation Embedded Security, RF and Microwave, Custom Microelectronics Delivers growth, increased profitability, and strong cash flow generation Acquired businesses ~$100 million in revenue a
Slide 5: Acquisition strategic rationale
5 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Acquisition strategic rationale • Creates Defense industry’s largest commercial embedded secure processing company • Adds secure solid-state storage capabilities to Mercury’s industry-leading pre-integrated sensor processing subsystems • Ne
Slide 6: Acquisition provides strong fit with Mercury's strategy
6 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Acquisition provides strong fit with Mercury’s strategy • Pioneering next generation defense electronics company: commercially funded R&D; designed and made in the USA • Best-in-class portfolio of pre-integrated sensor processing capabiliti
Slide 7: Carve-out Embedded Security business
7 © 2016 Mercury Systems, Inc. Carve-out Embedded Security business Extends leadership in secure embedded processing applications Capabilities • Complementary to recent LIT* acquisition • Secure system-on-chip (SoC) rooted hardware protection • Anti-tamper detection, prevention, reaction • Cryptogra
Slide 8: Carve-out RF and Microwave business
8 © 2016 Mercury Systems, Inc. Carve-out RF and Microwave business Nearly doubles existing RF and Microwave business Capabilities • Millimeter-wave RF up to 100GHz • GaN-based power amplifiers and subsystems for Radar and EW • Analog and digital mixed signal SoC • Custom modules for AESA antennas •
Slide 9: Carve-out Custom Microelectronic Solutions business
9 © 2016 Mercury Systems, Inc. Carve-out Custom Microelectronic Solutions business Improves security capabilities and trusted microelectronic manufacturing Capabilities • Secure system-on-chip (SoC) capabilities • Trusted manufacturing for advanced secure SoC design, assembly, packaging and test • R
Slide 10: Carve-out business markets, customers and programs
10 © 2016 Mercury Systems, Inc. • Missiles • Airborne • Paveway, MALD, SDB II, Phalanx, Condor, F-35 • Precision Guided Munitions • PGK - Precision Guidance Kit • Airborne • AWACS, P-8, KC-46A • EW, Ground Radar • F16, G/ATOR • Avionics • F35 Carve-out business markets, customers and programs Existi
Slide 11: Well aligned with strategy to strengthen and grow our core
11 © 2016 Mercury Systems, Inc. Well aligned with strategy to strengthen and grow our core Additional revenue synergy opportunities • Acquired capabilities are complementary; little or no overlap with Mercury’s • Leverages MRCY’s channel, strategic customer relationships and program installed base •
Slide 12: Financial summary
12 © 2016 Mercury Systems, Inc. Financial summary • $300 million purchase price • ~10.4x Sept 27, 2015 carve-out pro-forma adjusted EBITDA net of tax benefit • ~7.6x net of expected run-rate cost synergies Attractive Purchase Price Pre and Post Synergies Significant Margin and Earnings Accretion • S
Slide 13: Financial summary cont'd
13 © 2016 Mercury Systems, Inc. Financial summary cont’d • Use ~$50 million cash from balance sheet plus • Committed $265 million Term Loan A at (LIBOR + 300 bps) • Over $30 million cash and $75 million undrawn revolver provides ample liquidity Committed Financing at Attractive Rates and Ample Liqui
Slide 14: Summary
14 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Summary • Transforms top and bottom line financials • Substantial cost synergies and revenue opportunities • Significant adjusted EPS and EBITDA margin accretion • Expect to raise target to 22 – 26% adjusted EBITDA margin • Conservatively