Procter & Gamble Company (the) · NYSE:PG
Procter & Gamble Company (the) — Merger or Acquisition (April 2011)
40 slides from Procter & Gamble Company (the)'s merger presentation, Apr 5, 2011
Slide 1: Merger of Pringles Snack Business with Diamond Foods
Merger of Pringles Snack Business with Diamond Foods April 2011
Slide 2: Important Information
2 Important Information This document contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including projections of Diamond's results. The words "anticipate," "expect," "believe," "goal," "plan," "intend," "estimate," "may," "will," "would" and simi
Slide 3: Additional Information
3 Additional Information In connection with the proposed transaction between Diamond and P&G, Diamond will file a registration statement on Form S-4 with the SEC. This registration statement will include a proxy statement of Diamond that also constitutes a prospectus of Diamond, and will be sent to
Slide 4: Overview
Overview Transaction Summary Transaction Rationale Pringles Overview Diamond Foods Overview Summary 4
Slide 5: Transaction Summary
5 Transaction Summary Diamond Foods to merge the Pringles snack business from Procter & Gamble into the Company for consideration of $1.5 billion in Diamond common stock, plus the assumption of approximately $850 million of Pringles debt Reverse Morris Trust transaction structure Existing Diamond sh
Slide 6: Transaction Rationale
Transaction Rationale Diamond
Slide 7: Transaction Rationale: World Class Platform for Global Growth
7 Excellent Strategic Fit - Platform for Growth Financially Compelling - Double-digit EPS Accretive, Margin Expansion and Significantly Enhanced Free Cash Flow Generation Diamond will be the #1 pure play Global Snack Food ompany Improves Product Mix with Iconic Profitable $1 Billion+ Brand Enhances
Slide 8: Strong Strategic Fit - Platform for Growth
8 #2 Global Potato Chip & Crisp Franchise(1) Iconic Brand Equity Sold in Over 140 Countries Premium Positioning Outside the U.S. Attractive Margin Structure World Class Manufacturing & Supply Chain Build, Acquire and Energize Brands Diamond Foods Focused Portfolio Strong Strategic Fit - Platform for
Slide 9: Financially Compelling - Margin Expansion and De-levering
10 1st Qtr Diamond Today 15 Pro Forma Diamond 17 1st Qtr Diamond Today 26.5 Pro Forma Diamond 32 2011 2012 Diamond Today 3.9 Pro Forma Diamond 2012 3.5 Pro Forma Diamond 2013 3 Positive earnings impact - Double digit EPS accretive Enhances blended margin profile - Gross margin and EBITDA expansion o
Slide 10: Catapults Diamond Into the #2 Position in Global Snacks
11 Catapults Diamond Into the #2 Position in Global Snacks Diamond will be the #1 pure play, global snack food company KDV Group Source: Euromonitor 2009 Global Sweet & Savory Snacks Category. Top Global Companies Top Global Brands
Slide 11: Expands Near-Term Addressable Market
12 Expands Near-Term Addressable Market Sources: Euromonitor, IRI, Nielsen and Company estimates. (1) Includes Potato Chips and Extruded Snacks as per Euromonitor. Nuts Microwave Popcorn Potato Chips & Crisps (ROW)(1) Potato Chips & Crisps (U.S. & UK)(1) Potato Chips (U.S. & UK) Microwave Popcorn To
Slide 12: Strengthened Product & Geographic Portfolio Mix
Sales Culinary 0.24 Snack 0.58 In-shell 0.04 Other 0.14 Sales North America 0.79 Western Europe 0.16 ROW 0.05 13 Strengthened Product & Geographic Portfolio Mix On a pro forma basis, Diamond will have 83% of sales in the attractive, growth snack category Transaction also transforms Diamond into a tr
Slide 13: Provides Enhanced Global Reach & World Class Infrastructure
14 Provides Enhanced Global Reach & World Class Infrastructure Provides access to the fastest growing markets with significant growth opportunities Source: Euromonitor - $ in Millions. Chips / Crisps represents potato chips and extruded snacks. Total Diamond actual sales (captures potato chips, popc
Slide 14: Increases Scale and Leverages Diamond's Existing Infrastructure
15 Increases Scale and Leverages Diamond's Existing Infrastructure
Slide 15: Diversifies Retail Channel Mix
16 Diversifies Retail Channel Mix Source: (Pringles) Corporate Consumer Market Knowledge (CMK), Diamond estimates Global Potato Chip Industry Grocery 0.25 Mass 0.48 C-Store 0.12 Club 0.04 Other 0.11 Pringles Channel Mix Diamond Snack Channel Mix Today Global Potato Chip Industry Grocery 0.75 Mass 0.
Slide 16: Pringles Overview
Pringles Overview Diamond
Slide 17: Pringles Highlights
18 Pringles Highlights Pringles is an iconic $1.4 billion dollar global snack brand with strong consumer equity #2 Global potato chip & crisp company(1) Attractive and balanced geographic profile with presence in 140 countries Product portfolio includes the core Pringles potato crisps in a canister,
Slide 18: Leader in Brand Awareness
19 Note: Aided brand awareness. Leader in Brand Awareness: Pringles' Top 3 Sales Countries $2 billion invested in brand building over the past decade has contributed to Pringles awareness and strength United States Germany United Kingdom
Slide 19: Strong Equity in the Social Media Space
20 Strong Equity in the Social Media Space Top 10 global brand on Facebook joining other iconic brands such as Coca-Cola, Starbucks and Disney Nearly 11 million likes 70 -100 wall posts per day Allows for user interaction and posting of material, giving users the chance to spread the brand to friend
Slide 20: Access to High-Growth Developing Markets
21 Access to High-Growth Developing Markets Projected CAGR Mexico 0.06 Thailand 0.062 Russia 0.067 China 0.086 Turkey 0.099 Brazil 0.101 Market CAGR Pringles CAGR Mexico 0.058 0.07 Thailand 0.059 0.071 Russia 0.13 0.097 China 0.073 0.024 Turkey 0.064 0.065 Brazil 0.124 0.218 Source: Euromonitor Pota
Slide 21: Opportunity to Increase Regional Share
22 Opportunity to Increase Regional Share Source: Euromonitor 2009. Represents the dollar share of potato chip and extruded snacks category. Opportunity to increase share in high growth developing markets Pringles Market Share by Region
Slide 22: Long Track Record of Product Innovation
23 Long Track Record of Product Innovation Dedicated R&D team of 75+ employees 4 main functions Product Research: Consumer studies & testing Formula Design: Product formulation and development Process Development: Application of new products on the production lines, local production lines and effici
Slide 23: Strong Global Distribution Network
24 U.S. (1) Strong Global Distribution Network Long term relationships with key distributors around the world Scaleable model for future expansion Provides significant flexibility and enhanced market access P&G Corporate Sales Force Distributors & Sales Brokers Japan Russia MELRISE UAE ABA / AAW Sou
Slide 24: Best in Class Global Manufacturing Capabilities
25 Best in Class Global Manufacturing Capabilities Two state-of-the-art manufacturing facilities Highly efficient & automated Maximum flexibility and capabilities "Local Investment Line" sites with reduced capital investment requirements Improves time to market Reduces exchange rate risk and elimina
Slide 25: Ability to Efficiently Customize Flavors and Packaging by Region
26 Ability to Efficiently Customize Flavors and Packaging by Geographic Region Crisps are cut and roasted before seasoning Once cooled, the crisps are seasoned 2 step process allows for flavors tailored to local markets Seasoned crisps are transferred through the line and placed into cans Ability to
Slide 26: Innovative Marketing Campaigns
27 Innovative Marketing Campaigns
Slide 27: Diamond Foods Overview
Diamond Foods Overview Diamond
Slide 28: Transformation into a Branded Snack Player
29 Created new snack nut brand in 2004 Fastest growing major brand in snack nuts More than doubled market share in last 3 years Increased scale with snack buyer and in snack aisle Non-core brand under prior owner Increased share and scale in snack aisle Margin and EPS accretive Transformation into a
Slide 29: Significant Runway Available in Current Diamond Portfolio
Growth Size 0.037 0.212 4.4 Emerald 0.031 0.081 6.3 Kettle -0.075 0.005 0.9 Pop Secret 0.001 -0.013 0.9 Diamond 30 Significant Runway Available in Current Diamond Portfolio Source: Nielsen U.S. FDMx 52 weeks ending February 19, 2011 for Emerald and Pop Secret; Nielsen U.S. Grocery 52 weeks ending Fe
Slide 30: Diamond's Current Global Reach
31 Diamond's Current Global Reach International Sales 2009: ~10% 2011 >20% Sales to over 100 countries with global sourcing expertise Korea Germany Japan Netherlands Spain Sales Sourcing Vietnam Brazil India China Caribbean Canada England Italy Turkey Israel Iceland Australia Singapore Thailand Mexi
Slide 31: Diamond's History of Strong Retail Growth
32 Diamond's History of Strong Retail Growth 22 of 24 Quarters with Year-Over-Year Growth in Retail Sales +21% CAGR
Slide 32: Diamond's Improved Product Mix Building Profitable Platform
33 Diamond's Improved Product Mix Building Profitable Platform Note: Culinary segment includes sales of In-shell segment. (1) 1H 2011. Optimizing Product Mix Expanding Distribution Strategic Acquisitions Leveraging Scale 87%(1) Gross Margin 10.5% 23.7% +1320 bps 49% Total Sales
Slide 33: History of Margin Expansion
34 History of Margin Expansion Note: 2005 Results Pre-IPO. (1) Guidance range as presented on March 8, 2011. (1) (1) Gross Margin Operating Margin
Slide 34: Culture of Product Innovation
35 Culture of Product Innovation Emerald Patented Glazed Process Patent-pending Cocoa and Cinnamon Roast Process Proprietary, on-the-go packaging Sweet and Salty Breakfast on the go! Diamond Recipe ready formats Nut Toppings Patented Glazed Process Pop-Secret Jumbo Kernels Patented Salt Application
Slide 35: History of Brand Building
36 History of Brand Building Advertising Television Print Outdoor Online Sponsorships Movie Sponsorships ING NYC Marathon Emerald Final Five U.S. Olympic Team Content Websites Books Online Video Magazines Retail Point of Purchase Coupons Holiday Packaging In-store Promotion Media Super Bowl XLIV ABC
Slide 36: Superior Value Creation
37 Superior Value Creation Source: FactSet July 21, 2005 to March 21, 2011. Equity Market Value % Change Since July 2005
Slide 37: Summary
Summary Diamond
Slide 38: The Strength of the New Diamond Foods
39 The Strength of the New Diamond Foods Significantly enhanced scale, financial profile and cash flow generation Diamond will be the #1 pure play global snack food company Improved product & geographic mix Enables greater access to high-growth developing markets Highly complementary best-in-class m
Slide 39: Financial Targets
Financial Targets 40 Fiscal Year Ending July 31 2009 2010 2011 Guidance (1) 2012 Combined Company (2) Total Net Sales $571M $680.2M $925-$950M $1,800M - $1,900M EBITDA $61M $85M $138-$143M $300M - $310M EBITDA Margin 11% 13% ~ 15% 16 - 17% EPS $1.47 $1.91 $2.45 - $2.51 $3.00 - $3.10 Diamond Historic
Slide 40: Investment Highlights
41 Investment Highlights Large, Rapidly Growing Markets Expanding Profitability Track Record of Successful Organic & Acquisition Growth Market-Leading Brands Innovative Product Development, Packaging and Promotions Product, Channel and Geographic Diversification Diamond
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