Olam Group Limited · SGX:VC2
Olam — Merger or Acquisition (February 2012)
22 slides from Olam's merger presentation, February 2012
Slide 1: Olam expands Packaged Foods in Africa with acquisition of Titanium Holding
Olam expands Packaged Foods in Africa with acquisition of Titanium Holding Building Relevant Scale : Delivering the Olam Strategy 1
Slide 2: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements This presentation may contain statements regarding the business of Olam International Limited (‘Olam’) and its subsidiaries (‘Group’) that are of a forward looking nature and are therefore based on management’s assumptions about future developments. Such
Slide 3: Presentation outline
Presentation outline Transaction Overview Investment Rationale Strategic Fit Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 3
Slide 4: Presentation outline
Presentation outline Transaction Overview Investment Rationale Strategic Fit Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 4
Slide 5: Transaction Overview
Transaction Overview Olam to acquire 100% equity interests of Titanium Holding Company The SA, thereby acquiring the leading player in the Biscuits and Candies Transaction categories in Nigeria for US$167Mn (subject to working capital at close) The transaction represents a transformational opportuni
Slide 6: Presentation outline
Presentation outline Transaction Overview Investment Rationale Strategic Fit Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 6
Slide 7: Investment is aligned to our 2009 strategic plan
Investment is aligned to our 2009 strategic plan Building Relevant Scale : Delivering the Olam Strategy 7
Slide 8: Packaged Foods is a growing and important platform in Olam's strategic plan
Packaged Foods is a growing and important platform in Olam’s strategic plan Olam’s Packaged Food Business Strategy Build regional brand and market leadership in a minimum of 5 core packaged food categories by building deep consumer insights and a innovative pipeline of products that uniquely service
Slide 9: Why Africa?
Why Africa? Growing share of the world’s Population, Consumption and GDP growth will come from Africa in the next 2 decades The changing demographic profile, increasing urbanization of the population and greater discretionary spending power are driving strong growth in the processed / packaged food
Slide 10: Africa will exhibit the highest growth in population
Africa will exhibit the highest growth in population – It will double from 1 B to 2 B by Year 2050 Increase: 1.1 B, % growth: 26 % Increase: 0.2 B, Increase: 1.0 B, % growth: 12% % growth: 94% UN median population forecasts Building Relevant Scale : Delivering the Olam Strategy 10
Slide 11: Africa offers one of the highest growth rates for FMCG products
Africa offers one of the highest growth rates for FMCG products. Nigeria ranks No 2 in the world between 2001 and 2020 2001-2010 ‘10 Size : 54 B 2011-2020 ‘20 Size : 125 B Euromonitor data – Includes Food , Non Food and Beverages Building Relevant Scale : Delivering the Olam Strategy 11
Slide 12: Strategic Choice of Markets and Categories
Strategic Choice of Markets and Categories Choice within African Markets: Since significant front end investments are required in setting up Sales and Distribution infrastructure, as well as in the initial brand building efforts; we have decided to focus on a few large markets in Phase 1 of our stra
Slide 13: Strategic Choice of Markets and Categories
Strategic Choice of Markets and Categories Choice of Categories across these markets: There are hundreds of packaged food categories within and across these markets. We’ve gone through a detailed exercise of evaluation and identified target categories, based on the following filters: Market Size and
Slide 14: Large sized opportunity pipeline within identified categories and focus markets
Large sized opportunity pipeline within identified categories and focus markets Current Market Size Growth Category ($M) Rate (%) Tomato Paste 343 8-10% Nigerian market size $600Mn Biscuits 828 10-12% Pasta 587 10-12% Seasonings 747 6-8% Nigerian market size 180Mn Candies 273 12-15% Instant Noodles
Slide 15: Presentation outline
Presentation outline Transaction Overview Investment Rationale Strategic Fit Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 15
Slide 16: Olam's Current Footprint
Olam’s Current Footprint Started operations in 2007 in Nigeria with launch of Tasty Tom® tomato paste and currently present across multiple categories – Tomato Paste / Seasonings / Pasta / Biscuits / Noodles in key West African markets (Nigeria / Ghana / Ivory Coast / MBTN Cluster) 2nd largest playe
Slide 17: What we have built
What we have built Strong background and local context built over two decades of operating history in the region Investments have already been made in market research and consumer immersions designed to gain deep consumer insight, leading to focused and relevant product development that is better su
Slide 18: Overview of OK Foods brand franchise
Overview of OK Foods brand franchise Building Relevant Scale : Delivering the Olam Strategy 18
Slide 19: Acquisition synergies
Acquisition synergies The Olam Advantage The OK Foods Advantage Sales & Distribution infrastructure with a Leading player in both biscuits and candy in direct reach to 80% of first tier channel Nigeria with a strong 5 year revenue CAGR members across Nigeria of 26% Channel / Brand / Cost synergies S
Slide 20: Presentation outline
Presentation outline Transaction Overview Investment Rationale Strategic Fit Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 20
Slide 21: Financial Impact
Financial Impact Olam’s investment of US$167Mn to be funded from internal accruals and borrowings Transaction done at 8.1x EV EBITDA which compares favourably with the last transaction in the sector which was done at 10.5x Expected to deliver EBITDA margins of 17%-18% and an equity IRR of 29% Transa
Slide 22: Thank You!
Q&A Thank You! Building Relevant Scale : Delivering the Olam Strategy 22