Covidien — Merger or Acquisition (October 2014)
29 slides from Covidien's merger presentation, Oct 8, 2014
Slide 1: London Investor Meetings
Filed by Medtronic, Inc. (SEC File No.: 001-07707) pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Covidien plc Form S-4 File No.: 333-197406 Date: October 8, 2014 London Investor Meetings Octob
Slide 2: Medtronic Positioned to Execute
Medtronic Positioned to Execute Creating Long-Term Value in Healthcare • Improving operational execution to deliver consistent results • Uniquely positioned to expand our market-leading franchises through three differentiated strategies: 1. Therapy Innovation: Delivering strong launch cadence of mea
Slide 3: Medtronic Today
Medtronic Today Pumps and Sensors Pacing MDT Financial Formula Advanced MiniMed® Energy 530G Defibrillation Revenue Mid-Single 1 Advisa MRI™ Growth Digits PEAK® PlasmaBlade Viva™CRT-D Operating & Financial Pain Stim Atrial Leverage Fibrillation 200 –400 bps 1 EPS Growth Faster than Restore® Sensor P
Slide 4: Delivering on Commitments
Delivering on Commitments And Strengthening our Competitive Position FY14 FY14 Guidance Actual Highlights • Meaningful product launches including TM the MiniMed®530G, Reveal LINQ Revenue and CoreValve® +3 -4% +3.6% Growth • FY14 Emerging Markets growth of 14% • Established Cardiocom® and Cath Lab Ma
Slide 5: Medtronic Q1 FY15 Financial Results
Medtronic Q1 FY15 Financial Results Reported on August 19, 2014 Revenue $4.3 billion • Overall, Q1 represented balanced growth, with strong performances % Growth, as reported +5% in some areas offset by challenges % Growth, constant FX +4% in others • US markets driving growth: grew GAAP Net Earning
Slide 6: Medtronic Growth Strategies
Medtronic Growth Strategies Strategies to Address Universal Healthcare Needs Universal Medtronic Sources of Growth HC Needs Strategies GROWTH VECTOR #1: Strong upcoming Improve launch cadence of clinical New Therapies innovative outcomes Therapy therapies Innovation GROWTH VECTOR #2: Unlocking massi
Slide 7: Growth Vector #1: New Therapies
Growth Vector #1: New Therapies 1 Medtronic R&D Pipeline Micra™ 200 projects expected to CE Mark: By end of FY15 generate $30B+ in incrementalSelect IN.PACT® Admiral®SFA revenue over 5 years from Launches US: Q1 CY15 time of product launch Resolute Onyx™ CE: Launch, Jan CY15 Evolut™R (26/29mm) CE Ma
Slide 8: Growth Vector #2: Emerging Markets
Growth Vector #2: Emerging Markets Making Changes to Realize Opportunity 1 EM SG&A Spend Enhanced Focus & Millions Premium Resources +16% Value • Increased investment CAGR $638 $475 • BU and region alignment and responsibility Underserved 2 Smarter Deployment / EM Premium: Targeting Attractive Oppor
Slide 9: Growth Vector #3: Integrated Health Solutions
Growth Vector #3: Integrated Health Solutions Quantifying Value & Quantifying Value & Examples Expanding Offerings Expanding Offerings Understand • AdaptivCRT® Core Therapies Economic Value of • SmartShock® T2 Diabetes Partnership Innovation Broaden Innovation Time Horizon to Wrap-Around Ensure Valu
Slide 10: Growth Vectors Expected to Deliver Mid-Single Digit Growth
Growth Vectors Expected to Deliver Mid-Single Digit Growth FY14 MDT FY15E MDT FY14 to FY15 Mid-Term Sources of Growth Growth Growth / Contribution Change Expectations Contribution GROWTH VECTOR #1 New Low-to 180 bps Mid-Single +150 to 350 bps -30 to +170 bps +150 to 350 bps Therapies GROWTH VECTOR #
Slide 11: Executing on Operating Expense Reduction Initiatives
Executing on Operating Expense Reduction Initiatives PRODUCT COSTREDUCTION Mfg./Supply FY08-FY12: FY13-FY17: Chain $1B ~$1.2B Process • Defensive:Mitigate pricing pressure & New Product Accomplished 1 maintain 75-76% gross margins Architectures DRM Maintained • Offensive:Enable product tiering & Gro
Slide 12: Rewarding Shareholders with Distributions
Rewarding Shareholders with Distributions Cash Priorities to Shareholders Overview DIVIDENDS $1.20 • S&P 500 Dividend Aristocrat Index member; 35 years of consecutive dividend increases $0.80 • Dividend more than doubled over the past 5 years $0.40 • Over $1 billion in dividend payments in FY14 $0.0
Slide 13: Generating Significant Free Cash Flow
Generating Significant Free Cash Flow $25B+ $21B FY10-FY14 FY15-FY19F • Expected adjusted FCF generation over next 5 years equal to 1 40% of current market cap • Consistently generate > 20% FCF / revenue • Returning 50%+ of FCF to shareholders • Remain focused on improving U.S. cash Note: Non-GAAP r
Slide 14: Commitment to Return 50% of Free Cash Flow
Commitment to Return 50% of 1 Free Cash Flow 2 $ Billions $62B 60 40 2 40% ~$25B+ $12.5B+ 20 O.U.S. Corporate Use Cash $12.5B+ $12.5B+ Buybacks U.S. Return to Cash Dividends Shareholders 0 Current Market Cap Expected Free Cash Flow, Expected Capital Expected Return to Next 5 Years Deployment, Next 5
Slide 15: Covidien Overview
Covidien Overview Highly Strategic and Compelling Acquisition • Accelerates Medtronic’s three core strategies of Therapy Innovation, Globalization, and Economic Value • Covidien’s impressive portfolio of industry-leading products enhances Medtronic’s portfolio, offers greater breadth across clinical
Slide 16: Combination Results in Strategic Diversification
Combination Results in Strategic Diversification MEDTRONIC FY14 REVENUE PRO FORMA REVENUE 9.7% Neurovascular CRDM Airway & Coronary 9.2% 29.4% Vent Patient Monitoring Structural Heart Nursing Care 2.8% CRDM 3.6% Endo 11.2% $17.0B 1.6% Ortho/Spine Patient Care 3.7% 18.2% Neuro 10.3% Surgical Tech 3.9
Slide 17: Covidien Transaction Summary
Covidien Transaction Summary • Acquisition of Covidien for $42.9 billion in cash and Medtronic stock – Covidien shareholders to own ~30% of the combined company at closing Transaction – ~$5 billion of Covidien debt to remain in place; guaranteed by Terms new Irish holding company • Represents per sh
Slide 18: Driving significant shareholder returns
COMPELLING FINANCIAL IMPACT Driving significant shareholder returns • Much stronger platform for diversified growth Revenue Growth • Significant revenue synergy potential from cross-selling • At least $850 million pre-tax annual cost synergies by FY18; quickly achievable Cost Synergies • Back office
Slide 19: Medtronic Financing Plan
Medtronic Financing Plan NEW FINANCING MECHANISM ORIGINAL FINANCING MECHANISM (Announced on October 3, 2014) $13.5 billion intercompany loan from Medtronic OUS subsidiary Medtronic, Inc. raises approximately $16 billion in new external debt $2.8 billion in new external debt Paid to Covidien sharehol
Slide 20: Medtronic Positioned to Execute
Medtronic Positioned to Execute Creating Long-Term Value in Healthcare • Improving operational execution to deliver consistent results • Uniquely positioned to expand our market-leading franchises through three differentiated strategies: 1. Therapy Innovation: Delivering strong launch cadence of mea
Slide 21: Medtronic – Covidien Key Facts / Key Websites
Medtronic – Covidien Key Facts Additional Resources Key Websites • Global MedTech Leader: http://www.globalmedtechleader.com • Medtronic Investor Relations: http://investorrelations.medtronic.com 20 | London Investor Meetings • October 8, 2014
Slide 22: Disclaimers
Disclaimers NO OFFER OR SOLICITATION This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pur
Slide 23: Disclaimers (cont'd)
Disclaimers (cont’d) current expectations depending upon a number of factors affecting New Medtronic's business, Medtronic's business, Covidien’s business and risks associated with the proposed transactions. These factors include, among others, the inherent uncertainty associated with financial proj
Slide 24: Disclaimers (cont'd)
Disclaimers (cont’d) Under the provisions of Rule 8.1 of the Irish Takeover Rules, all ‘dealings’ in ‘relevant securities’ of Covidien by Medtronic or ‘relevant securities’ of Medtronic by Covidien, or by any party acting in concert with either of them, must also be disclosed by no later than 12 noo
Slide 25: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables London Investor Meetings October 2014 24 | London Investor Meetings • October 8, 2014
Slide 26: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables London Investor Meetings October 2014 25 | London Investor Meetings • October 8, 2014
Slide 27: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables London Investor Meetings October 2014 26 | London Investor Meetings • October 8, 2014
Slide 28: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables London Investor Meetings October 2014 27 | London Investor Meetings • October 8, 2014
Slide 29: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables London Investor Meetings October 2014 28 | London Investor Meetings • October 8, 2014