Bae Systems Plc · LSE:BA.
Bae Systems — Merger or Acquisition (January 2020)
14 slides from Bae Systems's merger presentation, Jan 20, 2020
Slide 1: BAE Systems Proposed Acquisitions of GPS Business and Radios Business
1 BAE Systems Proposed Acquisitions of: Collins Aerospace’s Military Global Positioning Systems business “GPS Business” and Raytheon’s Airborne Tactical Radios business “Radios Business” 20 January 2020 Beta SENSITIVE
Slide 2: Cautionary statement
2 Cautionary statement All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems and its strategy, plans and objectives and the markets and economies in
Slide 3: Proposed Acquisitions of the GPS and Radios businesses - Overview
3 Proposed Acquisitions of the GPS and Radios businesses - Overview • Acquisition of the GPS business for $1.925bn gross; tax(1) benefit of c.$365m • Acquisition of the Radios business for $275m gross; tax(2) benefit of c.$50m • Unique opportunity only resulting from the Raytheon/UTC merger - regula
Slide 4: Proposed acquisition of the GPS and Radios businesses
4 Proposed acquisition of the GPS and Radios businesses • Positive backdrop for BAE Systems to take advantage of this unique opportunity • Strong order backlog and programme visibility • Cash generation improving • Operational performance improvement • Improved UK political clarity • Robust balance
Slide 5: Proposed acquisition of GPS Business - $1.925bn
5 Proposed acquisition of GPS Business - $1.925bn • Leading military GPS receiver solution provider • Broad installed base – on over 280 platforms and >1.5 million units shipped • Attractive technology and well positioned for next generation upgrades • Low integration risk with minimal disruption ex
Slide 6: GPS Business - Highly attractive and complementary
6 GPS Business - Highly attractive and complementary • Significant growth expected, underpinned by: • US Congress mandate • Priority investment to address evolving threats • Alignment to US defense strategy • Strong financial track record and outlook • Highly complementary fit with our Electronic Sy
Slide 7: Leading global provider of military GPS receiver solutions
7 GPS Business - Leading global provider of military GPS receiver solutions Key Segments and Products Business Description Segments Applications Example Products • Industry leading technology offerings • Extensive patent and IP portfolio • Guided bombs • > 1.5 million devices fielded on 280 platform
Slide 8: Technology and innovation leader for decades
8 GPS Business - Technology and innovation leader for decades History Current Industry leading product Innovation Milestones performance / technology Low power Current/ • Highest performing M-Code capabilities, with the first 2010s successful M-Code precision guided munition integration • Currently
Slide 9: Strong technology and solution portfolio
9 GPS Business - Strong technology and solution portfolio Technology Portfolio Capabilities Key Highlights • Custom low power digital signal processing Custom GPS and design Scalable from low power to high Anti-Jam ASIC • GPS acquisition and tracking channels performance in a single device designs •
Slide 10: GPS Business - Financial history and outlook
10 GPS Business - Financial history and outlook Financials -$m: Revenue EBITDA 400 359 200 332 300 254 150 127 111 190 98 200 100 60 100 50 0 0 2017 2018 2019E 2020E 2017 2018 2019E 2020E Revenue EBITDA Financial outlook: • Revenue growth CAGR 10%+ expected over next 4 years • US Congress has mandat
Slide 11: GPS Business - Transaction financials and timeline
11 GPS Business - Transaction financials and timeline • Consideration of $1.925bn (gross) • tax benefit (1) of c.$365m • EBITDA multiple: 15x - 2020E • EBITDA implied multiple post tax benefit: 12x - 2020E Strong • Expected to be immediately accretive to: Financials • Earnings per share • Margins •
Slide 12: Proposed acquisition of the Radios Business - $275m
12 Proposed acquisition of the Radios Business - $275m • Leading airborne tactical radio solution provider Revenue(1) by Geography 6% • Produces a range of battle-proven airborne radios and waveforms US 20% International • Significant installed base on US platforms and allied nations 74% Internation
Slide 13: Radios Business - Transaction financials and timeline
13 Radios Business - Transaction financials and timeline • Consideration of $275m gross • tax benefit (1) of c.$50m • EBITDA multiple: low double digit • Expected to be immediately accretive to: Strong • Earnings per share Financials • Margins • Cash • Revenue growth near term outlook strong • Expec
Slide 14: BAE Systems Strategy and Capital Allocation
14 BAE Systems Strategy and Capital Allocation • Strategy remains consistent • Portfolio enhancing to our highest performing division in the largest global defence market • High quality technology based assets • Strong visible growth profiles with sustainable margins and high cash conversion • Commi