Linamar Corporation · TSX:LNR
Linamar — Merger or Acquisition (December 2017)
29 slides from Linamar's merger presentation, Dec 14, 2017
Slide 1: Linamar's Acquisition of the MacDon Group of Companies
Linamar’s Acquisition of the MacDon Group of Companies Expanding and Diversifying Our World Class Manufacturing Platform December 14, 2017
Slide 2: Forward Looking Information, Risk and Uncertainties
Forward Looking Information, Risk and Uncertainties Certain information regarding Linamar set forth in this presentation and oral summary, including managements assessment of the Company’s future plans and operations may constitute forward-looking statements. This information is based on current exp
Slide 3: Acquisition Well Aligned with Linamar's Strategy
Acquisition Well Aligned with Linamar’s Strategy Enhances Position as a Global Diversified Manufacturer ✓ Agriculture/Food is a key long term growth market globally given the growing & developing global population Linamar has a long history in the agriculture market Further diversifies Linamar
Slide 4: Transaction Overview
Transaction Overview Linamar has agreed to acquire 100% of the shares of Moray Marketing Ltd. (“MacDon”) on a debt-free basis, for C$1,200 million (less the assumption of small transaction related expenses) Acquisition Estimated purchase price multiple compares favourably with those of both prec
Slide 5: MacDon – Company Snapshot
MacDon – Company Snapshot Founded Key Products • 1949 • Rigid and Flexible Draper Headers and Self-Propelled Windrowers Headquarters Facilities • Winnipeg, Manitoba, Canada • ~1 million square feet total Geographic Footprint • 11 owned and 6 leased, all manufacturing in Winnipeg • Sells to over 40 C
Slide 6: MacDon – Product Portfolio
MacDon – Product Portfolio Product Description Attached to a self-propelled windrower or combine Used to cut and process crops through combine feeder house or left in field for further curing Draper Headers Predominantly used for harvesting soybeans, wheat, canola, rice, oats, dry edible beans
Slide 7: MacDon Manufacturing & Operations
MacDon Manufacturing & Operations Red Deer, Alberta Moscow, Russia Winnipeg, Manitoba Regina, Saskatchewan Madison, Wisconsin Germany (MacDon Europe in progress) Kansas City, Missouri Curitiba, Manufacturing and Headquarters Brazil Sales & Parts Distribution Research & Development Product Support Se
Slide 8: North American Distribution Strength with Global Opportunity
North American Distribution Strength with Global Opportunity Primary Distribution Channels North American Distribution Network Revenue by Channel (2016) Established North American distribution network o Established in 1986 OEM International 10.0% o Maintain strong, direct Export relationships with
Slide 9: Operating Structure
Operating Structure GLOBAL Operating Groups SUPPORT Powertrain / Driveline Industrial Corporate Headquarters Linamar Machining Linamar Linamar Montupet Linamar Skyjack Linamar Agriculture & Assembly Seissenschmidt Light Metal Casting Forging Frank Hasenfratz Linamar Technology and Machining & Traini
Slide 10: Strategic Rationale for Acquisition
Strategic Rationale for Acquisition Provides growth, greater business stability and resilience by further diversifying Linamar’s business beyond traditional automotive powertrain / Enhances Position as a driveline manufacturing Global Diversified Linamar has a long standing history in the agricu
Slide 11: Enhances Position as a Global Diversified Manufacturer
Enhances Position as a Global Diversified Manufacturer Jim Jarrell
Slide 12: Key Global Issues/Trends
Key Global Issues/Trends Global Population Growth Aging Population 1. 7 billion today, 9 – 11 1. More people in EU over 65 than billion by 2050. under 65 in the next couple of years 2. What is carrying capacity 2. Every 7 seconds another person of planet / do we have turns 65 in the US resources? 3.
Slide 13: Vision 2100 – Building an Action Plan for the Future
Vision 2100 – Building an Action Plan for the Future Manufacturing and Materials Development to Support all Markets Transportation Infrastructure Food Global Addressable Markets: Global Addressable Markets: Global Addressable Market: Automotive Scissors, Booms, Telehandlers Agriculture Harvesting, S
Slide 14: Why Food and Agriculture?
Why Food and Agriculture? Attractive Demographic and Economic Fundamentals ✓ Global food demand continues to grow supported by rising population Agriculture is a large and dynamic market Linamar has a long history in the Agricultural Equipment sector ✓ First entry into the sector in the 1980
Slide 15: Linamar Has Long History in the Agricultural Sector
Linamar Has Long History in the Agricultural Sector Linamar MacDon During 1980’s During 1990’s Current 2017 Linamar operates two Produced combines for Design, engineering and Owned White Farm brands in Corn and Massey Fergusson and manufacturing of MacDon Equipment Sunflower harvesting acquired Oros
Slide 16: Complementary Product Lines
Complementary Product Lines Hay Grain Harvesting Harvesting Corn Sunflower Draper Headers Pick Up Rotary Mower Headers Headers / Grain Tables Heads Headers Combined business covers a wide crop range of Header Harvesting product lines © Linamar Corporation 16
Slide 17: Enhances Position as a Global Diversified Manufacturer
Enhances Position as a Global Diversified Manufacturer POWERTRAIN / DRIVELINE INDUSTRIAL PRODUCTS Mobile Industrial Equipment | Fabricated Assemblies | Engine | Transmission | Driveline | Body Agriculture Equipment Increasing Linamar sales to MARKETS AUTOMOTIVE OFF-HIGHWAY COMMERCIAL VEHICLE INDUSTR
Slide 18: Market and Technology
Market and Technology Mark Stoddart
Slide 19: MacDon's Industry Leading Business and Market Share
MacDon’ Industry Leading Business and Market Share North American Strong Market Position in Key Product Categories Estimated Market Position Combine FlexDraper® Headers #1 Rigid Draper Headers #1 Self-Propelled Windrowers (mid-horsepower) #1 © Linamar Corporation 19
Slide 20: Technology and Innovation Leader
Technology and Innovation Leader Technology supported by over 100 unique patents with an additional 30+ unique patents pending globally, and a permanent technology-focused staff of 110 FlexDrapers® & Rigid Drapers Self-Propelled Windrowers Hay Products Higher cutting speeds Industry leading ro
Slide 21: Significant Growth Potential and Upside Opportunities
Significant Growth Potential and Upside Opportunities International Expansion ✓ Large untapped addressable global market opportunity with existing Linamar operations MacDon has a global reach and access to key harvesting markets Product Line Expansion ✓ Leverage technology and engineering know
Slide 22: 2018 Market Outlook
2018 Market Outlook POWERTRAIN / DRIVELINE INDUSTRIAL AGRICULTURE AUTOMOTIVE (LV) COMMERCIAL TRUCK North Flat Growth Flat Growth America Europe Flat Moderate Growth Moderate Growth Moderate Growth Asia Flat Decline Moderate Growth Flat Factors influencing production levels consist of: Significan
Slide 23: Financially Attractive Deal
Financially Attractive Deal Dale Schneider
Slide 24: Financially Attractive Transaction
Financially Attractive Transaction Ag Sector Precedent Transactions Strong Date EV EV/ EBITDA Industry leading EBITDA margin ranging from 20% to 25% Financial Ann. Acquirer Name Target Name (C$ mm) LTM EBITDA % Profile Capital expenditure as % of sales of ≤ 3% Jun-17 Deere Wirtgen $6,963 9.5x (1
Slide 25: Linamar Maintaining its Strong Balance Sheet
Linamar Maintaining its Strong Balance Sheet Expected pro forma leverage (net debt to EBITDA) of approximately 1.7x at transaction closing Prudent Strong pro forma cash flow expected to result in de-levering to below 1.0x net debt to EBITDA within 18 – 24 months Financing – Similar de-levering t
Slide 26: Successful Track Record of Integration and Growth Globally
Successful Track Record of Integration and Growth Globally Historical Revenue & EBITDA Key Milestone Transactions 2001 2017E(1) (Pro Forma) Revenue: $1.2 bn Revenue: $7.1 bn EBITDA: $187 mm EBITDA: $1.2 bn Successful entry into access MacDon market with scissor lifts, boom (2017) and telehandlers
Slide 27: Trading Comparables
Trading Comparables Industrial / Aerial Lift Auto Part Peers Agriculture Peers Peers American Average Deere &(1) CNH (1) Linamar BorgWarner Magna Exco Martinrea Tower Terex Oshkosh Average Alamo AGCO Ag Growth Average Axle (excl. LNR) Company Industrial Equity Value $4,429 $14,598 $25,938 $418 $2,40
Slide 28: Expanding and Diversifying Our World Class Manufacturing Platform
Expanding and Diversifying Our World Class Manufacturing Platform ✓ Enhances Position as a Global Diversified Manufacturer ✓ Industry Leading Businesses and Share of Sales ✓ Technology and Innovation Leader ✓ Significant Growth Potential and Upside Opportunities ✓ Agricultural Market Early Stages of
Slide 29: Thank You
Thank You @linamarcorp @linamarcorp Linamar Corporation www.linamar.com Linamar Corporation