General Mills, Inc. · NYSE:GIS
General Mills — Merger or Acquisition (February 2018)
19 slides from General Mills's merger presentation, Feb 23, 2018
Slide 1: Acquisition of Blue Buffalo
GENERAL MILLS AC Q U I S I T I O N O F B LU E B U F FA LO February 23, 2018
Slide 2: Forward Looking Statements
Forward Looking Statements Certain information contained in this presentation that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words
Slide 3: Today's Presenters
Today’s Presenters Jeff Harmening │ General Mills Chief Executive Officer Billy Bishop │ Blue Buffalo Chief Executive Officer Don Mulligan │ General Mills EVP, Chief Financial Officer 2
Slide 4: General Mills to Acquire Blue Buffalo
General Mills to Acquire Blue Buffalo ▪ All-cash Acquisition at $40.00 per Share (23% premium)(1) Enterprise Value of $8.0 Billion ▪ Blue Buffalo is the Leader in the Fast-growing Wholesome Natural Pet Food Category Scale & Profitability: $1,275 Million in Net Sales | 25% Adjusted EBITDA Margin(
Slide 5: Compelling Strategic Logic & Financial Returns
Compelling Strategic Logic & Financial Returns Reshapes Our Portfolio and Supports Our Consumer First Strategy Compelling Establishes General Mills as the Leader in Wholesome Natural Pet Food Strategic Category Logic Leverages Our Extensive Capabilities in Sales, Supply Chain, and R&D Immediately Ac
Slide 6: Important Milestone in Portfolio Reshaping
Important Milestone in Portfolio Reshaping ($ in billions) Meaningfully Impacts Portfolio… …By Adding a New Category with Growth Exposure Global Category Retail Sales(4) 5-YR CAGR(5) Snacks Sweet/Savory Snacks $295 Billion +MSD All Other (2) 20% 23% RTE Cereal $23 Billion +LSD $16.8 (1) Ice Cream 4%
Slide 7: Highly Attractive U.S. Pet Food Market
Highly Attractive U.S. Pet Food Market $30 Billion U.S. Category $29.7 $28.6 $27.6 $26.7 Humanization of Pets Continues to $25.0 $26.0 $24.0 Drive Premiumization US Retail Sales ($ in billions) $22.4 $21.7 $20.0 Health and Wellness Trends in Category $18.9 Mirror Broader Packaged Food Branded Catego
Slide 8: Blue Buffalo is the Leader in Wholesome Natural
Blue Buffalo is the Leader in Wholesome Natural BLUE Brand Leadership Wholesome Natural Still in Early Innings 2016 U.S. Pet Food Retail Sales One of the Largest Pet Food Brands with the Strongest Brand Equity 9% Private Label 31% 4x the Size of Next Largest Wholesome 16% Nestlé-Purina Natural Pet F
Slide 9: The Authentic Brand Committed to Making Life Better for Pets
The Authentic Brand Committed to Making Life Better for Pets Developed by Pet Parents High Quality, for Pet Parents Natural Ingredients Dedicated to Consumer Commitment to Pet Cancer Education and Dialogue Research and Awareness Love them like family. Feed them like family.® 8
Slide 10: Exceptional Growth Fueled by Mission and Brand
Exceptional Growth Fueled by Mission and Brand Blue Buffalo Net Sales ($mm) Blue Buffalo Adjusted EBITDA ($mm)(1) 2017: Entered the FDM 2014: channel Partnered with 2015: e-Commerce IPO retailers $1,275 $319 2012: Expanded $1,150 7% FDM further into $276 independent $1,027 pet and specialty $918 $22
Slide 11: General Mills + Blue Buffalo Combination
General Mills + Blue Buffalo Combination Enhances Blue Buffalo’s Growth Strategy Grow Market Share in the U.S. Capitalize on Increase our select Grow with our Drive awareness share of under- international younger pets and consideration Make BLUE penetrated opportunities and younger pet with pet pare
Slide 12: Updated General Mills Segment Reporting
Updated General Mills Segment Reporting Pet Convenience North America Europe & Asia & Latin Stores & Retail Australia America Foodservice 11
Slide 13: Combining Capabilities Creates Value
Combining Capabilities Creates Value ▪ History of Successful Acquisitions of Natural & Organic Brands (e.g. Annie’s, Lärabar, and EPIC) ▪ Differentiated, Strategic Customer Relationships Across Channels, Particularly in FDM ▪ Industry-leading Sales Force with Category Management and Shopper Insights
Slide 14: Transaction Process Highlights
Transaction Process Highlights ▪ $40.00 per Share All-cash Offer Consideration ▪ $8.0 Billion Enterprise Value ▪ Approved by Both Boards of Directors ▪ Invus and Bishop Family Shareholders, Representing More than 50% of Blue Approvals Buffalo’s Outstanding Shares, Have Approved the Transaction ▪ No
Slide 15: Financial Impact
Financial Impact ▪ Enhances Growth Profile: Organic Net Sales +50-80bps; Adj. Operating Profit +80-100bps ▪ Financing with a Combination of Debt, Cash on Hand and Equity Backed by Committed Bridge Facility from Goldman Sachs Permanent Financing Will Include Approximately $1.0 Billion in Equity ▪
Slide 16: Compelling Strategic Logic & Financial Returns
Compelling Strategic Logic & Financial Returns Reshapes Our Portfolio and Supports Our Consumer First Strategy Compelling Establishes General Mills as the Leader in Wholesome Natural Pet Food Strategic Category Logic Leverages Our Extensive Capabilities in Sales, Supply Chain, and R&D Immediately Ac
Slide 17: Non-GAAP Measures
Non-GAAP Measures ▪ This presentation includes measures that are not defined by GAAP. For each of these non-GAAP financial measures, we have included on the following slides a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure. These non-GAAP
Slide 18: Blue Buffalo Reconciliation of Adjusted EBITDA
Blue Buffalo Reconciliation of Adjusted EBITDA (Fiscal Years, $ in Millions) 2017 2016 2015 2014 2013 2012 2011 2010 Net sales $1,274.6 $1,149.8 $1,027.4 $917.8 $719.5 $523.0 $345.5 $190.0 Net income $193.5 $130.2 $89.4 $101.9 $78.2 $65.5 $25.8 $23.3 Interest expense 11.1 14.6 15.1 13.9 20.6 10.2 0.
Slide 19: Blue Buffalo Reconciliation of Adjusted EBITDA
Blue Buffalo Reconciliation of Adjusted EBITDA (Fourth Quarter, $ in Millions) 2017 2016 Net income $53.6 $34.8 Interest expense 2.2 3.4 Interest income (0.7) (0.1) Provision for income taxes 21.5 22.0 Depreciation and amortization 2.7 2.4 EBITDA 79.4 62.5 Litigation expenses (a) (0.2) 1.3 Stock-bas
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