Schneider Electric SE · EURONEXT:SU
Schneider Electric — Merger or Acquisition (May 2018)
29 slides from Schneider Electric's merger presentation, May 2, 2018
Slide 1: Schneider Electric to acquire Larsen & Toubro's Electrical & Automation business with Temasek
Schneider Electric, partnering with Temasek, has reached an agreement to buy Larsen & Toubro’s Electrical & Automation business and will combine it with its Low Voltage & Industrial Automation Products business in India May 2nd, 2018
Slide 2: Disclaimer
Disclaimer All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed des
Slide 3: Schneider Electric in India, one of the leading players in a growth market
Schneider Electric in India, one of the leading players in a growth market Schneider Electric – Investor Relations Page 3
Slide 4: Schneider Electric, one of the leading players in India since 1963
Schneider Electric, one of the leading players in India since 1963 A strong domestic market and a hub for exports Strong footprint in India Group’s 4th largest market in 2017 Strong portfolio of activities Revenues in 2017 20,000+ people Low Voltage & Industrial Automation Employees Employees 24 Fac
Slide 5: Schneider Electric - Touching Lives Everyday in India
Schneider Electric - Touching Lives Everyday in India Providing Supporting Digitizing & Making India Enabling Access to Critical Smartening Green & Safe Social Energy Infrastructure India Inclusion 700K Largest water 1st ~3 GW of 135K Households treatment plant in Integrated Solar capacity Rural cit
Slide 6: Low Voltage and Industrial Automation – contributing to Indian economy
Low Voltage and Industrial Automation – contributing to Indian economy One of World’s largest Hotel Chain OEM Manufacturers ▪ Surat’s Diamond industry relies on ▪ Uses Schneider products across its ~100 Schneider powered Diamond cutting & properties in India Polishing machines ▪ Schneider’s Protecti
Slide 7: India, an attractive growth opportunity for the group
India, an attractive growth opportunity for the group STRONG LONG-TERM POTENTIAL STRONG POLICY PUSH Make In India Government Initiative To Make India A Global Innovation & ~5 trillion $ GDP by 2025 Addition of ~800 USD Billion over next 3 years Manufacturing Hub SIGNIFICANT INVESTMENTS 450 Billion $
Slide 8: India, an attractive growth opportunity for the group
India, an attractive growth opportunity for the group Strong drivers for Energy Management Market growth for Energy Management offers in India ▪ Strong Urbanization (50% of population in cities by 2025) CAGR High-single digit ▪ Electricity consumption expected to grow by c.7%-8% CAGR till 2022 to do
Slide 9: Make in India opens opportunity as innovation and manufacturing hub
Make in India opens opportunity for India to act as an innovation and manufacturing hub for the local market as well as for global markets Make In India ▪ Promote investments in the manufacturing sector ▪ Make India a hub for design & manufacturing needs of both domestic as well as international mar
Slide 10: Larsen & Toubro Electrical & Automation (L&T E&A) Business
Larsen & Toubro Electrical & Automation (“L&T E&A”) Business Schneider Electric – Investor Relations Page 10
Slide 11: L&T E&A, one of the leading players in Energy Management and Industrial Automation in India
L&T E&A, one of the leading players in the Energy Management and Industrial Automation market in India A Strong presence in India Revenues by geography 2017 Other geographies ▪ L&T E&A is a division of L&T, a major technology, (mainly Middle-East, Malaysia) engineering, construction, manufacturing a
Slide 12: Attractive portfolio of Energy Management and Industrial Automation technologies
With an attractive portfolio of Energy Management and Industrial Automation technologies for the Indian market… Core Energy Management & Industrial Automation offers Serving customers across India Main Divisions: Electrical Standard Low Voltage Switchgear Products for Electrical products (ESP) Safet
Slide 13: Strengths in the Indian Energy Management and Industrial Automation market
And strengths in the Indian Energy Management and Industrial Automation market ✓ Recognized player in Indian Low Voltage ✓ Extensive ecosystem of partners covering 260 cities in India ✓ One of the leading system Integrators in India in Electrical & Control Automation across sectors Strong business a
Slide 14: Combining Schneider Electric's global platform with L&T E&A's domestic reach
Combining Schneider Electric’s strong global technology platform, digital offers and global presence with L&T E&A’s wide domestic reach, end-to-end R&D and manufacturing capabilities specific to Indian market Schneider Electric – Investor Relations Page 14
Slide 15: Transaction overview
Transaction overview • L&T E&A1 would be acquired for an Enterprise Value (EV) of INR 14,000 Cr (c. €1.75bn) . Based on Schneider Proposed Electric’s estimate, this reflects a multiple of c. 2.5x sales and c. 15x3 the estimated EBITDA in Fiscal Year 2019 transaction (ending March 2019) taking into a
Slide 16: Partnering with Temasek
We are partnering with Temasek, an investment company with deep expertise and extensive networks in Asia Global investor anchored in Asia ▪ Established in 1974, Temasek is a globally diversified investment company headquartered in Singapore and wholly- owned by the Singapore Ministry of Finance Rest
Slide 17: L&T E&A and Schneider Electric - complementary strengths
L&T E&A and Schneider Electric - complementary strengths Schneider Electric Strong complementarity L&T E&A LV + Industrial Automation products • 60+ Years in India • 50+ Years in India Strong history in India • Recognized player in LV Products • Global leader in Energy Highly complementary product i
Slide 18: Complementarity in Product offering through Target Segments and Applications
Complementarity in Product offering through Target Segments and Applications STRONG PRODUCT COMPLEMENTARITY STRONG SEGMENT COMPLEMENTARITY (Examples) Air Circuit Breaker SCHNEIDER ELECTRIC L&T E&A App connectivity for Alerts, Diagnostics & Custom-Built for Indian market and Predictive maintenance co
Slide 19: Complementary coverage providing great access across India
Complementary coverage providing great access across India: From Tier 1 to Tier 2 & 3 Cities, Urban & Semi-Urban areas, Towns and Rural areas Jammu & A Strong combined Srinagar Pan India Network Amritsar/Jalandhar Shimla Ludhiana Chandigarh Haridwar Karnal/Panipat/Sonipat Meerut Rudrapur Gurgaon Agr
Slide 20: L&T E&A will enable India as the fourth global hub
L&T E&A will enable the Group to establish India as the “fourth” global hub for Schneider to cater to the growing Indian market and global markets Adding to our capabilities in India Fourth Global Hub L&T E&A efficient local manufacturing ▪ 5 factories in India ▪ High quality, international standard
Slide 21: Establishing a strong company offering competitively priced innovative products
We are establishing a strong company to offer competitively priced innovative products and solutions to customers in India and in global markets Recognized Brands & expertise Attractive characteristics Established player in LV and IA1 across segments LV & IA1 products Combining S.E strong global tec
Slide 22: Transaction and structure to create value
Transaction and structure to create value Schneider Electric – Investor Relations Page 22
Slide 23: Partnering with Temasek to create a strong platform for growth in India
We are partnering with Temasek to create a strong platform for growth in India through the combination of Schneider Electric LV & IA and L&T E&A DEAL STRUCTURE ▪ Combined business held through JV with Schneider Electric and Temasek owning respectively 65% and 35% assuming a cash-free and debt free a
Slide 24: Transaction multiple compares favorably to Indian competitors' valuation
Transaction multiple compares favorably to the Indian stock market valuation of our global and local competitors Trading Multiples based on EV / FY 18 / 19E EBITDA As of April 27th, 2018 EV/EBITDA FY18 EV/EBITDA FY19 32.3 27.0 26.2 25.9 23.1 22.8 21.8 21.5 19.7 18.1 Competitor 1 Competitor 2 Competi
Slide 25: No change of our capital allocation priorities
No change of our capital allocation priorities Transaction meets our financial returns criteria No change of our capital allocation priorities ▪ Meets the group return criteria: ▪ Adjusted EPS1 accretive in year 1 ▪ c. 50% payout ratio with progressive dividend ▪ ROCE matching WACC in year 3 ▪ c. €1
Slide 26: Schneider Electric invests for the future in India
Schneider Electric invests for the future in India India becomes the third largest country for Schneider Electric, at par with France Strengthening our presence in India India becomes the third largest market for the Group, on par with France One of the leading players in Low Voltage & Industrial 20
Slide 27: Disclaimer
Disclaimer All forward-looking statements are Schneider Electric management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed des
Slide 28: Contacts
Contacts Amit Bhalla– Head of Investor Relations Tel: +44-20-7592-8216 amit.bhalla@schneider-electric.com Alexis Denaud –Investor Relations Director Tel: +33-1-41-29-51-24 alexis.denaud@schneider-electric.com Schneider Electric – Investor Relations Page 28
Slide 29: Life Is On | Schneider
Lifels On | Schneider GeElectric
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