Treasury Wine Estates Limited · ASX:TWE
Treasury Wine Estates — Merger or Acquisition (October 2015)
39 slides from Treasury Wine Estates's merger presentation, Oct 14, 2015
Slide 1: TWE announces acquisition of Diageo's wine business and entitlement offer
For personal use only TWE announces acquisition of Diageo’s wine business and entitlement offer 14 October 2015 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only Disclaimer This investor presentation (Presentation) has been prepared by Treasury Wine Estates (ABN 24 004 373 862) (TWE). This Presentation has been prepared in relation to TWE’s acquisition of the majority of assets from Diageo Plc’s US and UK
Slide 3: Important notice and disclaimer
Important notice and disclaimer For personal use only Financial information for Diageo Wine contained in this presentation has been derived from financial statements and other financial information made available by Diageo Wine in connection with the acquisition. Such financial information does not
Slide 4: Transaction highlights
Transaction highlights For personal use only
Slide 5: The transaction – snapshot
The transaction – snapshot For personal use only TWE to acquire majority of assets from Diageo Plc’s US and UK wine operations (Diageo Wine)1 Transaction value of US$600 million comprising a cash payment of US$552 million (A$754 million) and the assumption of capitalised leases of US$48 million (A$6
Slide 6: The transaction – strategically compelling
The transaction – strategically compelling For personal use only Strategic highlights • Acquisition is expected to immediately double TWE’s Americas Luxury and Masstige1 Net Sales Revenue (NSR) • Provides immediate access to increased supply of Luxury and Masstige fruit; TWE positioned to accelerate
Slide 7: The transaction – financially enhancing
The transaction – financially enhancing For personal use only Financial highlights for TWE • Compelling purchase price; implying a transaction multiple of 7.9x Diageo Wine’s EBITDAS1 (before synergies) for the twelve months to 30 June 2015 • Expected to deliver TWE at least US$25 million (A$34 milli
Slide 8: Diageo Wine poised to benefit from TWE's strategic roadmap
Diageo Wine poised to benefit from TWE’s strategic roadmap For personal use only Brand-led marketing Clearly defined portfolio strategy organisation Portfolio of award winning wines with global appeal Brand prioritisation, investment and focus Reinvigorated brand investment Investment bias
Slide 9: Overview of Diageo Wine
Overview of Diageo For personal use only Wine
Slide 10: Diageo Wine's US sales business – Strong Luxury and Masstige focus
Diageo Wine’s US sales business – Strong Luxury and Masstige focus For personal use only Summary Key acquired brands2 • US wine market fundamentals are highly attractive: market in volume Brand Sourcing and value growth (+3% and +5%, respectively)1 type Brand Description Locations • Diageo US is an
Slide 11: Diageo Wine's UK sales business – A leading market player
Diageo Wine’s UK sales business – A leading market player For personal use only Summary Acquired brands1 • Diageo UK is a leading distributor in the UK commercial wine market, Brand Description Sales Region with ~86% of NSR generated in the UK and the remainder internationally, largely in Western Eu
Slide 12: Diageo Wine's supply chain – Efficient and capital-light
Diageo Wine’s supply chain – Efficient and capital-light For personal use only Overview Sourcing model by region1 (Tons) • Diageo operates a capital-light supply chain model − ~1% of US in-take from owned vineyards1 US volume2 UK volume − 100% of UK volume sourced from bulk wine suppliers Owned Bulk
Slide 13: Anticipated transaction cash synergies
Anticipated transaction cash synergies For personal use only The acquisition is expected to deliver at least US$25 million (A$34 million) of annual cash synergies before FY20, through the elimination of costs and additional supply chain optimisation savings Synergy Detail • Optimisation and improved
Slide 14: Pro forma key financials
Pro forma key For personal use only financials
Slide 15: TWE pro forma key financials
TWE pro forma key financials For personal use only The combined entity is expected to have an attractive earnings profile and strong balance sheet Selected pro forma normalised FY15 P&L items1 Selected pro forma FY15 capital metrics Revenue TWE Impact of the Pro-forma A$m, 30-Jun-2015 standalone acq
Slide 16: Acquisition terms and funding
Acquisition terms and For personal use only funding
Slide 17: Acquisition terms and funding
Acquisition terms and funding For personal use only • Total transaction value of US$600 million comprising a cash payment of US$552m (A$754 million) and the assumption of capitalised leases of US$48 million (A$66 million) Purchase price • Total funding task of US$662 million (A$905 million), includi
Slide 18: Fully underwritten pro-rata accelerated renounceable entitlement offer
Fully underwritten 2 for 15 pro-rata accelerated renounceable entitlement offer For personal use only • Fully underwritten 2 for 15 pro-rata accelerated renounceable entitlement offer to raise Structure and size approximately $486m • Approximately 87 million new TWE fully paid ordinary shares to be
Slide 19: Indicative Entitlement Offer timetable
Indicative Entitlement Offer timetable For personal use only Event Date Announcement of acquisition and Entitlement Offer and trading halt Wed, 14-Oct-2015 Announcement of completion of Institutional Entitlement Offer and trading halt lifted Mon, 19-Oct-2015 Retail entitlements commence trading on A
Slide 20: Trading update
For personal use only Trading update
Slide 21: Trading update
Trading update For personal use only • In addition to our recent updates on supply chain optimisation1 and our overhead reduction program2, we would like to update the market on recent trading and outlook for FY16 • TWE continues to execute against its strategic roadmap by driving top line sales mom
Slide 22: Appendix A: Risks
For personal use only Appendix A: Risks
Slide 23: Key risks
Key risks For personal use only This section includes details of the key risks attaching to an investment in shares in TWE. These risks may affect the future operating and financial performance of TWE and the value of TWE shares. Before deciding whether to invest in TWE shares, you should consider w
Slide 24: Key acquisition risks
Key acquisition risks For personal use only Risk Description Completion risk Completion of the acquisition is subject to obtaining Hart-Scott Rodino antitrust approval in the US, no breach of warranty by the Diageo Wine vendors that has a material adverse effect and no intervention by a regulatory b
Slide 25: Key acquisition risks (continued)
Key acquisition risks (continued) For personal use only Risk Description Operational The combination of two businesses of the size of TWE and Diageo Wine carries risk, including potential delays or costs in implementing necessary implementation changes, and difficulties in integrating various operat
Slide 26: Key share and Entitlement Offer risks
Key share and Entitlement Offer risks For personal use only Risk Description Risks associated There are general risks associated with investments in equity capital. The trading price of TWE shares may fluctuate with movements in equity with an capital markets in Australia and internationally. This m
Slide 27: Key general risks
Key general risks For personal use only Risk Description Competition TWE operates in a competitive business environment in Australia and internationally. Each of the markets in which TWE operates is characterised by competition on the basis of quality, price and brand awareness which can be heighten
Slide 28: Key general risks (continued)
Key general risks (continued) For personal use only Risk Description Economic Changes in the general domestic and international economic climate may have an adverse impact on the operating and financial performance of climate TWE. These general economic conditions are influenced by such factors as g
Slide 29: Key general risks (continued)
Key general risks (continued) For personal use only Risk Description Accounting Changes in accounting or financial reporting standards may adversely impact the reported financial performance of TWE. Litigation Exposure to litigation brought by third parties such as customers, regulators, employees o
Slide 30: Appendix B: Selling restrictions
Appendix B: For personal use only Selling restrictions
Slide 31: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only The Entitlements may only be exercised by eligible shareholders, persons with a registered address in Australia or New Zealand and certain categories of institutional investors in United Kingdom, Canada (Ontar
Slide 32: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only International Offer Restrictions This document does not constitute an offer of entitlements ("Entitlements") or new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawf
Slide 33: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the Entitlements or the New Shares purchased pursuant
Slide 34: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only European Economic Area – Belgium, Denmark, Germany, Luxembourg and Netherlands The information in this document has been prepared on the basis that all offers of Entitlements and New Shares will be made pursua
Slide 35: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been author
Slide 36: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only Italy The offering of the Entitlements and the New Shares in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa, "C
Slide 37: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The Entitlements and the New Shar
Slide 38: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only Sweden This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor ma
Slide 39: Restrictions on eligibility criteria to exercise Retail Entitlements
Restrictions on eligibility criteria to exercise Retail Entitlements For personal use only United Kingdom Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (
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