Acciona Sa · BME:ANA
Acciona Sa — Merger or Acquisition (September 2006)
31 slides from Acciona Sa's merger presentation, Sep 26, 2006
Slide 1: Acquisition of 10% stake in Endesa, S.A.
Acquisition of 10% stake in Endesa, S.A. September 26, 2006
Slide 2: Disclaimer
Disclaimer This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of Spanish Applicable Law regarding securities markets. These statements appear in a number of places in this document and include statements regarding the intent
Slide 3: Table of contents
Table of contents 1. Key Transaction Terms 2. Transaction Rationale 3. Financial Impact 4. Acciona´s value creation track record 5. Conclusions
Slide 4: Key Transaction Terms
Key Transaction Terms • Market acquisition of 10% stake in Endesa at €32 per share, representing a total investment of €3,388 million • Acciona to become one of the reference shareholders of Endesa • Acquisition cost of €3,388 million financed through a bridge facility to be refinanced on a non reco
Slide 5: Transaction Rationale
Transaction Rationale • Acciona: a global leader in renewable energies • Strategic acquisition, strong commitment with energy sector • Attractive growth prospects for global power sector • Strong fundamentals for Spanish electricity demand and tariff increases • Endesa: a global leader • Business Pl
Slide 6: Attractive Growth Prospects
Attractive Growth Prospects • World primary energy demand is projected to expand by 60% by 2030 • Global power sector will need 4,800 GW of new capacity by 2030 representing investments above $9.0 trillion World Primary Energy Demand (Mtoe) Generation Capacity (GW) 2003-2030 7000 History Projections
Slide 7: Spanish Power Sector Fundamentals
Spanish Power Sector Fundamentals • Spain is the 5th largest power market in Europe • Electricity demand CAGR 4% forecast for 2006 - 2010 • To eliminate tariff deficit electricity prices should increase 3% - 6% CAGR in 2006 -2010 • Full tariff liberalisation by 2011 Spanish electricity market demand
Slide 8: Endesa Company Overview
Endesa Company Overview • Endesa is a global leader in the electricity sector: #1 in Spanish 46GW of total installed capacity #3 in Italian 185,264 GWh produced #3 in French 23 million of costumers #1 in Latam • Endesa holds a privileged position in the Spanish utility market: 38% sh
Slide 9: Global Leader
Global Leader EV(€ billion) Global installed capacity (GW) EDF 134 EDF 125 E.On 84 Suez 58 RWE 83 E.On 54 Enel 66 Enel 53 Suez 62 Endesa 46 Endesa 53 RWE 34 Iberdrola 38 Iberdrola 27
Slide 10: Global Leader
Global Leader Geographic presence EBITDA 2005 Latam 31% Spain and Portugal 54% Europe 15%
Slide 11: Endesa Company Overview
Endesa Company Overview Iberia Electricity Spain Gas Generation (Capacity) Hydro 5,379 MW Commercialization Conventional fossil-fuel 12,632 MW 12% market share Nuclear 3,397 MW 18,558 GWh sold Renewables & Co-gen 1,007 MW Total 22,416 MW Supply 6 bcm supply contracts Production 100,868 GWh Shares in
Slide 12: Endesa Company Overview
Endesa Company Overview Europe Poland Inst. Capacity 330 MW Energy dist. 1,698 GWh France Inst. Capacity 2,477 MW Production 8,689 GWh Italy Energy dist. 16,310 GWh Inst. Capacity 6,590 MW Production 23,362 GWh Energy dist. 30,911 GWh Turkey Inst. Capacity 120 MW Morocco Inst. Capacity 400MW Europe
Slide 13: Endesa Company Overview
Endesa Company Overview Latin America Colombia Inst. Capacity 2,657 MW Customers 2.1 mn Peru Brazil Inst. Capacity 1,429 MW Inst. Capacity 1,039 MW Customers 0.9 mn Customers 4.6 mn Chile Inst. Capacity 4,477 MW Customers 1.4 mn Argentina Inst. Capacity 4,493 MW Customers 2.2 mn Latam 2005 Revenues
Slide 14: Business Plan 2005 - 2009
Business Plan 2005 - 2009 • Key financial targets: EBITDA: CAGR 10-11% Net Income: CAGR 12% Dividend policy: ¾ Ordinary 12% CAGR ¾ 100% of capital gains from disposals Gearing: < 1,4x • Investment Plan of €14,600 million: • Spain and Portugal €10,300 million • Latin America €2,500 million •
Slide 15: Business Plan 2005 - 2009
Business Plan 2005 - 2009 EBITDA (€m) Net Income (€m)* 9000 3000 CAGR 13% 8,330 CAGR: 18% 2,880 8000 2500 2,420 7000 6,930 6,020 6000 2000 1,841 5000 4,521 1500 4000 1,253 3000 1000 2000 500 1000 0 0 4 5 T T 4 5 T T 6 9 0 0 6 9 0 0 0 0 0 0 0 0 0 0 0 0 2 2 0 0 2 2 2 2 2 2 *Excludes capital gains from
Slide 16: New Financial Targets
New Financial Targets EBITDA (€m) Net Income 9000 8,330 3500 8000 +11% 3000 3,000 2,800 7000 6,930 +21% +3% 2500 +36% 6000 2000 5000 4000 1500 7,500 2,400 3000 6,725 2,200 1000 2000 500 1000 0 0 2006T 2009T 2006T 2009T Previous target New target Previous Target New Target Dividend payment 06 -09* 80
Slide 17: Business Plan 2005 - 2009
Business Plan 2005 - 2009 • Key financial targets to be achieved through: Increased activity: ¾ Generation (+19%) ¾ Distribution ¾ Supply Increased margins Improved operating efficiency ¾ Contribution margin ¾ Cost improvement Regulatory improvement
Slide 18: Business Plan 2005 - 2009
Business Plan 2005 - 2009 EBITDA (€m) 8,330 +8% CAGR +15% 29% 6,930 2,370 +9% CAGR 6,020 30% 2,080 1,878 31% +11% 1,370 16% Latin America 1,100 16% +11% CAGR 887 15% Europe +24% 55% 54% 4,590 3,266 3,750 +6% CAGR 54% Iberia +15% 2005 2006T 2009T Source: Endesa 1H 2006 results managment presentation
Slide 19: Strong Commitment to Value Creation
Strong Commitment to Value Creation • EBITDA CAGR 10-11% • Net income CAGR 12% + €7,000 million • Ordinary dividend growth • Conservative gearing ratio < 1.4x • Management team highly aligned with share price performance
Slide 20: Business Plan 2005 - 2009
Business Plan 2005 - 2009 Endesa Growth in renewables • 462 MW under construction • 1,365 MW with concluded administrative proceedings • 2,688 MW under administrative proceedings Endesa Spanish Renewables Plan (MW) 3500 3,000 3000 2500 CAGR:20% 2000 1500 1,200 1000 500 0 2004 Target 2009
Slide 21: Acciona Energía
Acciona Energía 30 June 2006 (Total Installed MW) P&L (€ m) 2004 2005 (%) Spanish Wind Power 2,221 International Wind Power 415 Sales 317 531 67.5% Total Wind Power 2,636 EBITDA 122 238 94.9% Mini-hydro 59 Biomass 33 Margin 38.5% 44.8% Solar 3 Cogeneration 115 EBT 49 139 183.1% Total Other Energies
Slide 22: Transaction Rationale: Strategic Investment
Transaction Rationale: Strategic Investment • A key shareholder of Endesa • Global Energy market with very attractive growth prospects • Attractive fundamentals of Spanish electricity market: Demand growth rates Significant tariff increases Full liberalisation by 2011 Strong growth in renewa
Slide 23: Financial Analysis
Financial Analysis Nº of shares 105.9 million Price per share € 32 Total investment € 3,388 % acquired 10 % Average cost of LT debt 4.85 % After tax cost LT debt 3.15 % Implied multiples* EV/EBITDA P/E Yearly Div. Yield 05-09 (%) 8.3 x 5.4% 6.9 x 11.7 x 11.3 x 3.7% 1.7% 06T 09T 06T 09T Ordinary Extr
Slide 24: Comparable multiples analysis in Iberian market
Comparable multiples analysis in Iberian market Implicit Endesa price in terms of Implicit Endesa price in terms of EV/EBITDA P/E 60 50 56.1 52.7 50.8 51.5 45 50 46,9 44.9 40 43.7 35 40 36.4 30 30 25 20 20 15 10 10 5 0 0 2006 2006 Union Fenosa Iberdrola EDP Average Union Fenosa Iberdrola EDP Average
Slide 25: Comparable multiples analysis in Iberian market
Comparable multiples analysis in Iberian market Implicit Endesa price in terms of Implicit Endesa price in terms of EV/EBITDA P/E 50 47.3 50 45.2 42.9 45 41.4 45 39.3 38.4 40 40 35 31.8 35 33.0 30 30 25 25 20 20 15 15 10 10 5 5 0 0 2007 2007 Union Fenosa Iberdrola EDP Average Union Fenosa Iberdrola
Slide 26: Comparable multiples analysis in Iberian market
Comparable multiples analysis in Iberian market Implicit Endesa price in terms of Implicit Endesa price in terms of EV/EBITDA P/E 60 50 44.6 43.0 49.1 45 41.2 50 46.6 40 42.5 35.9 35 40 31.8 30 30 25 20 20 15 10 10 5 0 0 2008 2008 Union Fenosa Iberdrola EDP Average Union Fenosa Iberdrola EDP Average
Slide 27: Comparable transactions analysis
Comparable transactions analysis Implicit Endesa price in terms of Implicit Endesa price in terms of EV/EBITDA P/E * 70 70 57.4 Average 60 60 48.3 50 45.7 50 46.1 Average 41.9 40 40 37.7 38.2 30.8 30 30 20 20 10 10 0 0 05 06* * 05 05 06 * * 05 ACS/U.Fenosa Suez/Electrabel ACS/U.Fenosa Suez/Electrabe
Slide 28: Financial Impact
Financial Impact EPS Accretion/ Dilution * 20% 10% 14.6% 13.7% 12.4% 0% 2007E 2008E 2009E * No synergies nor goodwill considered. Consolidation per Dividend accounting method Source: Dividends according to Endesa’s Business Plan on an avg yearly basis The statement as to financial accretion/dilution
Slide 29: Financial Impact
Financial Impact Balance sheet Acciona pre- Acciona post- (€million) Endesa Endesa 30.06.06 30.06.06 Net Equity 3,647 3,647 Total Assets 13,031 16,419 Corporate debt 2,551 3,207 Non recourse debt 1,918 4,650 Cash 1,199 1,199 Total Net Debt 3,270 6,658 Corporate Net Gearing 0.37x 0.55x Total Net Debt
Slide 30: ACCIONA´s Value Creation Track Record
ACCIONA´s Value Creation Track Record Shareholder´s IRR 120 112.0 120 112.0 IRR*: 32 % IRR*: 50 % 100 100 80 11.4x 80 2,1x 60 60 53.8 40 40 20 9.8 20 0 0 1997 2006 2004 2006 * Including dividends Value created Airtel (€m) Acciona Energy (€m)* FCC (€m) 3500 6000 5,307 IRR: 76 % 2,900 IRR: 62 % 1400 I
Slide 31: Conclusions
Conclusions • A unique opportunity to invest in excellent energy assets in a leading company • Strategic acquisition: • Key shareholder in a global utility • Significant step in Acciona´s strategy to become a key player in the energy market • Consistent with our growth strategy in the electricity se