Britvic — Merger or Acquisition (June 2015)
32 slides from Britvic's merger presentation, June 2015
Slide 1: Q3 trading update and acquisition of Empresa Brasileira de Bebidas e Alimentos SA – ebba
Q3 trading update and acquisition of Empresa Brasileira de Bebidas e Alimentos SA – “ebba” 1
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION IS BEING PROVIDED TO YOU SOLELY FOR YOUR USE AT INVESTOR/ANALYST]MEETINGS TO BE HELD IN CONNECTION WITH THE POTENTIAL TRANSACTIONS DESCRIBED IN THIS PRESENTATION (WHICH INCLUDE A POTENTIAL OFFERING OF SECURITIES IN BRITVIC PLC (THE “COMPANY”)) AND MAY NOT BE REPRODUCED O
Slide 3: Disclaimer
Disclaimer This presentation is only directed at the limited number of invitees who: (A) if in the European Economic Area (“EEA”), are persons who are “qualified investors” as defined under the Prospectus Directive (Directive 2003/71/EC and amendments thereto, including Directive 2010/73/EU, to the
Slide 4: Agenda
Agenda ¾ Q3 trading update ¾ Acquisition of ebba 4
Slide 5: Q3 trading update – solid revenue growth in continued challenging market conditions
Q3 trading update – solid revenue growth in continued challenging market conditions Group Group EBIT guidance revenue volume +2.0% of £164m to +1.0% £173m ARP ‐1.0% £322.3m re‐affirmed ¾ Solid group performance, despite continued challenging trading conditions ¾ Lapping strong group performance last
Slide 6: Acquisition of ebba
Acquisition of ebba 6
Slide 7: A unique opportunity to acquire a high quality business in Brazil
A unique opportunity to acquire a high quality business in Brazil (1) ¾ # 1 supplier of liquid concentrates (dilutes) and # 2 RTD nectar drinks in Brazil ¾ Two leading brands – Maguary and dafruta (2) ¾ Maguary has 90% brand awareness ¾ National presence ¾ Strong management team retained ¾ Enterpris
Slide 8: Next step in executing our growth strategy
Next step in executing our growth strategy Leverage our Exploit global portfolio in GB & Embed a Build trust and opportunities in Ireland winning culture respect in our kids, family and communities Innovate to meet adult categories Improve operating changing consumer margin needs 8
Slide 9: Exploit global opportunities in kids, family and adult categories
Exploit global opportunities in kids, family and adult categories Britvic has leading Proven marketing, Brazil offers a large and ebba unlocks this brands and business category & technical attractive market opportunity capability expertise and a track record of successful innovation 9
Slide 10: Brazil represents an exciting growth opportunity
Brazil represents an exciting growth opportunity 10
Slide 11: Immediate access to a large-scale growth market
Immediate access to a large-scale growth market Soft Drinks Market Retail Sales Value R$84.3bn (£17.6bn) (1) ¾ 6th largest soft drinks market globally (R$84.3bn/£17.6bn) ¾ Retail Sales Value growth CAGR of 13.6% over last 5 years ¾ Volume growth CAGR of 4.0% over last 5 years ¾ Largest concentrates
Slide 12: Kids, family & adults categories have untapped potential in Brazil
Kids, family & adults categories have untapped potential in Brazil (1) Britvic believes: (1) ¾ Juice drinks category under-indexes in share ¾ Liquid dilutes category has lacked investment ¾ Kids category is commoditised and lacks brand leadership ¾ No discernible adults category ¾ Lack of engaging s
Slide 13: Short-term headwinds, but long-term growth prospects are strong
Short-term headwinds, but long-term growth prospects are strong ¾ Forecast GDP decline in 2015(1), falling consumer confidence index ¾ GDP growth expected to recover from next year(1) ¾ Looking forward (2014 to 2019) soft drinks are forecast to grow ¾ Total soft drinks market volume forecast +3.1% C
Slide 14: Overview of ebba
ebba® oO Overview of ebba o Making life's everyday moments more enjoyable BRITV Ic
Slide 15: Leading national brands
Unique opportunity to acquire a high quality business Leading Well national established brands infrastructure Strong Broad market management presence team 15
Slide 16: Maguary – a household name with 90% brand awareness
Maguary – a household name with 90% brand awareness(1) ¾ The number 1 liquid dilutes brand (2) ¾ The 11th largest soft drinks brand (2) ¾ 31% market value share of liquid dilutes ¾ Extended reach into RTD nectar drinks category (2) ¾ 10% market value share of RTD nectar drinks ¾ Brand also available
Slide 17: dafruta – complements Maguary, enabling liquid dilutes category leadership
dafruta – complements Maguary, enabling liquid dilutes category leadership ¾ Strong regional heartland ¾ Established in the 1980’s as a mid-range price offering (1) ¾ The number two liquid dilutes brand in the market (1) ¾ 20% market value share of liquid dilutes ¾ Also available as an RTD in nectar
Slide 18: Broad market presence and well-established infrastructure
Broad market presence and well-established infrastructure ¾ Brands have broad national presence with regional heartlands ¾ National distribution network and sales force presence Ceara ¾ Strong route to market and leading presence in major retailers ¾ Two production locations in the states of Ceara a
Slide 19: Strong management team retained to deliver the business case
Strong management team retained to deliver the business case Food and Beverage Industry ► Hired as Chief Executive Officer at ebba in 2011 João Caetano de Mello Neto 4 years 24 years ► Previously held senior management positions at consumer goods CEO companies that include 14 years at The Muller Dri
Slide 20: Potential to create significant value
Potential to create significant value 20
Slide 21: Strong growth trajectory with short-term market headwinds
Strong growth trajectory with short-term market headwinds 2012 to 2014 growth driven by: R$M(1) 2012 2013 2014 ¾ Successful innovation launches and distribution gains Net Revenue 292.4 419.7 437.2 ¾ With limited marketing investment EBITDA 30.6 43.6 45.0 2015 outturn: EBIT 23.8 33.7 32.7 ¾ Revenue e
Slide 22: Potential to deliver significant shareholder value from leveraging previous international experience
Potential to deliver significant shareholder value from leveraging previous International experience (1) ¾ Ambition to at least double ebba EBITDA by 2020 ¾ Opportunity for significant margin expansion ¾ Short term focus will be on strengthening the business ¾ Targeting sustainable cost savings of a
Slide 23: A clear framework to create value
A clear framework to create value ¾ Focus on developing the kids, family and adult categories ¾ Re-invest cost savings in marketing, A&P, people and infrastructure ¾ Deploy Britvic best practice – marketing, category and revenue management expertise ¾ Extend brands into new sub-categories ¾ Introduc
Slide 24: Clear integration plan in place
Clear integration plan in place ¾ Will operate as a standalone business unit ¾ João Caetano to sit on Britvic Executive Committee ¾ Integration focused on key areas: ¾ Marketing, innovation and category management ¾ Supply chain ¾ Delivery of cost savings ¾ Legal, risk and financial governance ¾ Pro
Slide 25: Transaction highlights
Transaction highlights Financial Highlights (1) ¾ Enterprise value of R$580m (£120.8m) , acquisition effective cost of R$545.4m (£113.6m) (1) ¾ Effective acquisition cost multiple of 12.1x EV / EBITDA ¾ Expected to: ¾ Be marginally EPS dilutive in years 1 & 2 after equity placing ¾ Be EPS accretive
Slide 26: Funding
Funding ¾ Enterprise value of R$580m (£120.8m), acquisition effective cost R$545.4m (£113.6m) ¾ Consideration of R$193.8m on signing and final payment of R$193.8m on second anniversary of completion (1) ¾ Debt repayment of R$192.5m ¾ 4.97% equity placing, to finance: ¾ Acquisition of ebba – initial
Slide 27: Proven capability in France
Proven capability in France 27
Slide 28: In 2010 we acquired Fruité in France
In 2010 we acquired Fruité in France ¾ Strong category presence but restricted to syrups and juice ¾ Strong brand equity but limited marketing spend available to drive further growth ¾ National presence in France with minimal sales outside of France ¾ Committed management team restrained by size of
Slide 29: Acquisition by Britvic in 2010 was the catalyst for growth
Acquisition by Britvic in 2010 was the catalyst for growth Accessing new Deploying revenue Marketing Bringing successful category profit management investment to innovation to market pools principles build brand equity 29
Slide 30: We have delivered a strong commercial & financial performance
We have delivered a strong commercial & financial performance Revenue Brand Brand growth 2x contribution contribution the market margin CAGR +150bps +7.1% Teisseire Fruit Shoot #1 Total market was #7 and now in the kids juice value share #3 soft drink drinks category +160bps brand 30 Source: Britvic
Slide 31: Summary
Summary ¾ Unique opportunity to acquire a business with leading brands in a scale growth market ¾ Leveraging our brand portfolio and capability to drive substantial growth ¾ Strong management team retained ¾ Ambition to at least double ebba EBITDA by 2020 31
Slide 32: Q&A
Q&A Participant dial-in numbers • Location you are dialling in from Number you should dial • United Kingdom 020 3059 8125 • All other locations + 44 20 3059 8125 • Participant Password “Britvic” - must quoted to the Operator in order to gain access to the conference