Pilgrim's Pride Corporation · NASDAQ:PPC
Pilgrim's Pride — Merger or Acquisition (May 2014)
22 slides from Pilgrim's Pride's merger presentation, May 27, 2014
Slide 1: Proposal to Acquire Hillshire Brands
Pilgrim’s Pride Corporation (NASDAQ: PPC) Proposal to Acquire Hillshire Brands May 27, 2014
Slide 2: Forward Looking Statements
Forward Looking Statements Statements contained in this presentation that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim’s Pride Corporation and its management are considered forward-looking statements. These forward-looking statement
Slide 3: Today's Agenda
Today’s Agenda Transaction Overview Pilgrim’s-Hillshire Key Financial Metrics JBS Perspective
Slide 4: Compelling Value for Hillshire and PPC Shareholders
Compelling Value for Hillshire and PPC Shareholders Creation of a branded, protein-focused company with strong, consistent earnings and complementary competencies: US$12B+ in combined revenues and $1.4B in LTM EBITDA PPC strong operational efficiency systems and process Hillshire iconic brands, inno
Slide 5: Proposal Summary
Proposal Summary Transaction Terms $45.00 per Hillshire Brands share All cash Valuation and Financing $6.4 billion(1) transaction value, including Hillshire’s net debt as of 3/29/14 25% premium to Hillshire’s 10 day VWAP following the announcement of Pinnacle transaction Implied LTM EBITDA multiple
Slide 6: Today's Agenda
Today’s Agenda Transaction Overview Pilgrim’s-Hillshire Key Financial Metrics JBS Perspective
Slide 7: PPC - Global, Vertically Integrated Poultry Producer
PPC- Global, Vertically Integrated Poultry Producer Sales 79% in U.S., 11% in Mexico, 10% to export 3,900 growers, 36 hatcheries, 28 feed mills 35,700 employees; based in Greeley, Colorado LTM SALES .392 EBITDA/% MARGIN 93/10.6% BRANDS US Sales by Channel Retail 50% Foodservice 50% CUSTOMERS Foodser
Slide 8: Hillshire Brands Snapshot
Hillshire Brands Snapshot HILLSHIRE BRANDS Substantially all sales in U.S. (99%), Headquartered in Chicago, Illinois 89% branded sales/11% unbranded in FY 2013 13 food processing facilities (10 meat and 3 bakery) and 5 distribution centers in U.S. ~9,100 employees; LTM Sales $4bn /Oper. Income $0.4b
Slide 9: PPC-Hillshire Combined
PPC-Hillshire Combined PILGRIM’S PRIDE HILLSHIRE BRANDS COMBINED LTM SALES $8.4 $4.0 $12.4 LTM EBITDA $0.9 $0.5 $1.4 (1) % MARGIN 10.6% 11.6% 11.0% SALES BREAKDOWN PORTFOLIO OF BRANDS Meat 67% Meat-Centric 20% Bakery & Other 13% Meat 89% Meat- Centric 6% Bakery & Other 4% (1) Not including synergies
Slide 10: Top Consumer Packaged Meats Companies
Top Consumer Packaged Meats Companies LTM Revenue LTM Operating Income $3.3 $4.0 $8.4 $9.0 $8.4 $12.4 LTM Operating Margin (1) $0.3 $0.4 $0.8 $0.9 $0.8 $1.1 (1) 9.4% 9.6% 9.1% 9.8% 9.0% Source: Company filings, FactSet as of May 23, 2014. (1) Represents Kraft Foods’ Refrigerated Meals segment, also
Slide 11: PPC-Hillshire Portfolio
PPC-Hillshire Portfolio PRODUCT PORTFOLIO REDUCED VOLATILITY THROUGH DIVERSIFICATION CHANNELS WELL-BALANCED BETWEEN RETAIL AND FOODSERVICE Branded 73% Non-branded 27% Foodservice and Other 51% Retail 49%
Slide 12: Synergy Opportunities
Synergy Opportunities SG&A PROVEN HISTORY OF EFFICIENT INTEGRATION Shared Services optimization Consolidation of Distribution/ Brokers Leverage marketing and sales infrastructure OPERATIONAL EXCELLENCE UNIQUE RESULT-ORIENTED CULTURE Labor Management Zero Based Budgeting Cold Storage/ Freight Consoli
Slide 13: Proven History of Efficient Integration
Proven History of Efficient Integration PPC SG&A Evolution ($mm and % of Sales) De-layering: Closer to customers Shared Service Center consolidation Zero-Base Budget PPC Operational Improvements ($mm) $642MM Operational Improvements 2011-2013 in PPC Result oriented culture with commitment at every l
Slide 14: Top Line Growth – Brand Extensions
Top Line Growth – Brand Extensions Brand Category Hillshire Share Position Relative Market Share Breakfast Sausage #1 2.8X Frozen Protein Breakfast #1 8.6X Smoked Sausage #1 2.8X Lunchmeat #3 0.3X Hot Dogs #1 1.1X Corn Dogs #1 1.3X Super Premium Sausage #1 1.8X Extend Hillshire brands into more cate
Slide 15: Today's Agenda
Today’s Agenda Transaction Overview Pilgrim’s-Hillshire Key Financial Metrics JBS Perspective
Slide 16: Indicative Purchase Price Build
Indicative Purchase Price Build ($ in millions, except per share data) Offer Price $45.00 % Premium to 10 day VWAP following May 12th Announcement 25% Fully Diluted Shares Outstanding 126.0 Implied Equity Value $5,671 Gross Financial Debt $942 Cash (389) Net Debt $553 Termination Fee $163 Enterprise
Slide 17: Rapid De-Leveraging Through Strong Cash Flow Generation
Rapid De-Leveraging Through Strong Cash Flow Generation Expected Leverage at close Expected Leverage at 12/ 2015 3.5X 4.2X Evolution of Leverage (Net Debt/ EBITDA) Medium term goal under 2.5X leverage
Slide 18: Today's Agenda
Today’s Agenda Transaction Overview Pilgrim’s-Hillshire Key Financial Metrics JBS Perspective
Slide 19: Proposed Transaction Aligned with JBS Global Strategy
Proposed Transaction Aligned with JBS Global Strategy Rationale Branding Associating quality and branding to increase client loyalty Value added products Customized and further processed products for the end users Sales and distribution platform Expanding a global distribution platform to reach end
Slide 20: Proposed Acquisition Accretive to JBS Shareholders
Proposed Acquisition Accretive to JBS Shareholders Creates a platform for strong growth in branded value added products with higher margins in the largest consumer market in the world Accelerates JBS value added sales opportunities in existing businesses through Hillshire’s culture of brand building
Slide 21: Rapid De-Leveraging Through Strong Cash Flow Generation
Rapid De-Leveraging Through Strong Cash Flow Generation Evolution of Leverage (Net Debt/ EBITDA) Expected Leverage at close 4.10X Expected Leverage at 12/ 2015 3.25X Medium term goal under 2.5X leverage
Slide 22: Compelling Value for Hillshire and PPC Shareholders
Compelling Value for Hillshire and PPC Shareholders Creation of a branded, protein-focused company with strong, consistent earnings and complementary competencies: US$12B+ in combined revenues and $1.4B in LTM EBITDA PPC strong operational efficiency systems and process Hillshire iconic brands, inno