Reliance Worldwide Corp. Ltd. · ASX:RWC
Reliance Worldwide — Merger or Acquisition (May 2018)
44 slides from Reliance Worldwide's merger presentation, May 24, 2018
Slide 1: Acquisition of John Guest and Entitlement Offer
RELIANCE WORLDWIDE CORPORATION LIMITED ACN 610855877 Acquisition of John Guest and Entitlement Offer Investor Presentation 24 May 2018 Not for release or distribution in the United States
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This investor presentation (Presentation) is dated 24 May 2018 and has been prepared by Reliance Worldwide Corporation Limited ACN 610 855 877 (RWC). This Presentation has been prepared in relation to: • RWC’s acquisition of John Guest Holdings Limited (John Guest) (t
Slide 3: Important Notice and Disclaimer (cont'd)
Important Notice and Disclaimer (cont’d) Information about John Guest Certain information in this Presentation has been sourced from John Guest, its representatives or associates. While steps have been taken to review that information, no representation or warranty, expressed or implied, is made as
Slide 4: Agenda
Agenda 1. Acquisition summary 4 2. Overview of John Guest 8 3. Strategic rationale 13 4. Integration plan 22 5. RWC trading update 24 6. Acquisition funding 26 7. Entitlement Offer 29 8. Key risks 32 9. International offer restrictions 38 Reliance Worldwide Corporation Limited
Slide 5: 1. Acquisition summary
1. Acquisition summary Reliance Worldwide Corporation Limited PAGE 4
Slide 6: Overview
Overview Reliance Worldwide Corporation (“RWC”) has entered into an unconditional agreement to acquire John Guest Holdings Limited (“John Guest”) for £687.5 million (A$1.22 billion1) with completion to occur in June 2018 Acquisition following settlement of the institutional component of the Entitl
Slide 7: Overview (cont'd)
Overview (cont’d) Total purchase price of £687.5 million (A$1.22 billion1) RWC is undertaking a 1 for 1.98 equity offering to raise up to approximately A$1.10 billion Conducted via a pro-rata accelerated non-renounceable entitlement offer (“Entitlement Offer”) Institutional component underwr
Slide 8: Attractive acquisition aligned with RWC's M&A strategy
Attractive acquisition aligned with RWC’s M&A strategy RWC M&A strategy John Guest alignment with RWC’s strategy Target innovative Highly engineered plastic PTC range which, like RWC’s SharkBite range of brass PTC fittings, is a solutions that make end- users more efficient high growth product t
Slide 9: 2. Overview of John Guest
2. Overview of John Guest Reliance Worldwide Corporation Limited PAGE 8
Slide 10: Overview of John Guest
Overview of John Guest Global leader in plastic PTC technology, selling ~145 million fittings in CY17 Headquartered in the UK, with ~1,300 employees and exporting worldwide Generates demand via an end user focus with a diversified customer base across three end markets: Plumbing & Heating; Wat
Slide 11: John Guest is a highly attractive PTC business focused on fluid transfer
John Guest is a highly attractive PTC business focused on fluid transfer Plumbing & Heating Water Quality & Fluid Dispense Industrial PTC (53% of CY17A revenue) (35% of CY17A revenue) (12% of CY17A revenue) #1 global supplier in the Plumbing & Heating Leading plastic PTC supplier for application in
Slide 12: John Guest global footprint
John Guest global footprint Manufacturing facilities Bracknell UK 73,000 SQFT Paris, France West Drayton, UK (HQ) 11,600 SQFT 235,000 SQFT Hayes UK Maidenhead, UK 38,000 SQFT Bielefeld, Germany 68,000 SQFT 64,700 SQFT Launceston, UK Poznan, Poland 33,000 SQFT 3,500 SQFT České Budějovice, Incheon, So
Slide 13: John Guest has a strong track record of financial performance
John Guest has a strong track record of financial performance Revenue (£m)1 Adjusted EBITDA (£m)1 and margin (%) £168.6m £150.4m £55.4m £135.9m £47.0m £39.9m 31.3% 32.9% 29.4% CY15 CY16 CY17 CY15 CY16 CY17 CAGR (constant currency)2 +7.6% CAGR (constant currency)2 +8.7% John Guest has a track record
Slide 14: 3. Strategic rationale
3. Strategic rationale Reliance Worldwide Corporation Limited PAGE 13
Slide 15: Strategically compelling acquisition, positioning RWC for continued growth
Strategically compelling acquisition, positioning RWC for continued growth into the future 1 Creates 2 Transforms 3 Extension and a global leader in PTC technology, with global RWC’s UK business, provides a strong platform for further growth in diversification distribution and strong regional Europe
Slide 16: Creates a global leader in PTC technology
1 Creates a global leader in PTC technology… Americas EMEA Asia Pacific USA Canada UK Europe Australia Brass PTC #1 #1 Launched Minimal #1 Plastic PTC #1 #1 #1 Top 2-3 #1 PEX pipe Top 3 Launched Top 2 N.A. #2 Water heater #1 #1 #1 N.A. #1 valves1 Shading represents key changes arising from the acqui
Slide 17: With global distribution and strong regional manufacturing capabilities
1 …with global distribution and strong regional manufacturing capabilities United Kingdom Manufacturing 3 Paris, France Distribution 4 Distribution 1 R&D 1 Bielefeld, Germany Vaughan, Ontario Distribution 1 Distribution 1 Poznan, Poland Distribution 1 Las Vegas, Nevada České Budějovice, Incheon, Sou
Slide 18: Transforms RWC's UK business and platform for growth in Europe
2 Transforms RWC’s UK business, provides a strong platform for further growth in Europe, and combines with RWC’s powerful existing positions in North America and Asia Pacific Estimated impact on RWC EMEA segment1 (A$ millions) RWC presence in continental Europe2 RWC (Pre-acquisition) RWC (Post-acqui
Slide 19: Extension and diversification of RWC's geographic, product and channel exposure
3 Extension and diversification of RWC’s geographic, product and channel exposure RWC (pre-acquisition)1 RWC (post-acquisition)1,2 EMEA 8% APAC 15% APAC 20% Revenue by Americas geography 53% EMEA 32% Americas 72% Other Other 9% Pipe 9% 10% Pipe 12% Brass PTC Revenue by 40% product Valves Valves 14%
Slide 20: Enhances and accelerates RWC's portfolio of organic growth opportunities
4 Enhances and accelerates RWC's portfolio of highly attractive organic growth opportunities Common end-user focus RWC and John Guest both Enhanced R&D focus their demand generation capabilities on the end user This is done by identifying, Strong R&D capability critical to understanding and so
Slide 21: Significant synergies through operating efficiency, integration and cross-selling
5 Significant synergies through improved operating efficiency, integration benefits and cross-selling opportunities John Guest significantly larger in the UK than RWC, while RWC significantly larger in the US than John Guest Integration Integration of businesses within each region expected to ge
Slide 22: Financially attractive acquisition accretive to margins and earnings
6 Financially attractive acquisition accretive to margins and earnings Would materially Acquisition transforms RWC’s scale and is expected to be accretive to margins on a pro forma basis enhance RWC’s RWC’s pro forma CY17A EBITDA margin would be expected to increase by ~4 percentage points1 scal
Slide 23: 4. Integration plan
4. Integration plan Reliance Worldwide Corporation Limited PAGE 22
Slide 24: A clear integration plan has been developed
A clear integration plan has been developed Detailed due diligence completed on John Guest as part of acquisition by a large cross-function team from RWC RWC will be applying the same integration principles that have served it well in the past Most recently with the successful Holdrite acquisi
Slide 25: 5. RWC trading update
5. RWC trading update Reliance Worldwide Corporation Limited PAGE 24
Slide 26: RWC FY2018 trading update
RWC FY2018 trading update Business and operational update Continued market penetration of SharkBite PTC fittings and accessories in the Americas The Americas segment realised a positive benefit in sales and EBITDA, predominantly in the third quarter of FY2018, driven by unseasonably cold weather
Slide 27: 6. Acquisition funding
6. Acquisition funding Reliance Worldwide Corporation Limited PAGE 26
Slide 28: Acquisition funding and terms
Acquisition funding and terms Key acquisition terms Purchase price Purchase price of £687.5 million, equivalent to A$1.221 billion RWC is undertaking a 1 for 1.98 equity offering to raise up to approximately A$1.10 billion Conducted via a pro-rata accelerated non-renounceable Entitlement Offer
Slide 29: RWC balance sheet (post-acquisition, pre Retail Entitlement Offer)
RWC balance sheet (post-acquisition, pre Retail Entitlement Offer) RWC John Guest Pro forma A$ million (as at 31 Dec 2017)1 (as at 31 Dec 2017)2 Acquisition adjustments3 combined group Core Cash 25.0 80.3 105.4 Trade & Other Receivables 112.8 40.5 153.3 Inventory 170.0 26.4 196.4 Other Current Asset
Slide 30: 7. Entitlement Offer
7. Entitlement Offer Reliance Worldwide Corporation Limited PAGE 29
Slide 31: Entitlement Offer details
Entitlement Offer details 1 for 1.98 pro-rata accelerated non-renounceable Entitlement Offer to raise up to approximately A$1.10 billion Entitlement Offer structure and Institutional component underwritten1, representing proceeds to RWC of A$945 million size Up to 265 million New Shares expect
Slide 32: Entitlement Offer timetable
Entitlement Offer timetable Event Date1 Trading halt and announcement of the Acquisition and Entitlement Offer and Thursday, 24 May 2018 Institutional Entitlement Offer opens Institutional Entitlement Offer closes Friday, 25 May 2018 Announcement of results of Institutional Entitlement Offer Monday
Slide 33: 8. Key risks
8. Key risks Reliance Worldwide Corporation Limited PAGE 32
Slide 34: Key Risks
Key Risks This section discusses some of the key risks associated with any investment in RWC, which may affect the value of RWC securities. The risks set out below are not listed in order of importance and do not necessarily constitute an exhaustive list of all risks involved with an investment in R
Slide 35: Key Risks (cont'd)
Key Risks (cont’d) Risks relating to RWC (cont’d) RWC’s IT systems may fail and are subject to attack RWC relies on third party IT software and service providers to support its business operations, including its manufacturing operations (most of which are highly automated). RWC also holds sensitiv
Slide 36: Key Risks (cont'd)
Key Risks (cont’d) Risks relating to the Acquisition Due diligence – information provided by the vendor RWC undertook a due diligence process in respect of John Guest, which relied in part on the review of financial and other information provided by the vendors of John Guest. Despite making reason
Slide 37: Key Risks (cont'd)
Key Risks (cont’d) Risks relating to the Entitlement Offer Risks associated with an investment in shares There are general risks associated with investments in equity capital such as RWC shares. The trading price of RWC shares may fluctuate with movements in equity capital markets in Australia and
Slide 38: Key Risks (cont'd)
Key Risks (cont’d) Risks relating to the Entitlement Offer (cont’d) Debt financing risk RWC has entered into financing arrangements (the Syndicated Loan Facility) pursuant to which financiers have agreed to provide A$750 million of debt financing for, amongst other things, the refinancing of RWC’s
Slide 39: 9. International offer restrictions
9. International offer restrictions Reliance Worldwide Corporation Limited PAGE 38
Slide 40: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new ordinary shares (New Shares) of RWC in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country o
Slide 41: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards
Slide 42: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) This document constitutes an offering of New Shares only in the Provinces of British Columbia, Ontario and Quebec (the Provinces) and to those persons to whom they may be lawfully distributed in the Provinces, and only by persons permitted to sell such New S
Slide 43: Glossary
Glossary IMPORTANT NOTICE: RWC presents financial information in accordance with Australian Accounting Standards. RWC also chooses to include certain non-IFRS financial information in this Presentation. This information has been included to allow investors to relate the performance of RWC to measure
Slide 44: Reliance Worldwide Corporation Limited
Reliance Worldwide Corporation Limited PAGE 43
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