Coca-Cola FEMSA S.A.B. de C.V — Merger or Acquisition (December 2002)
30 slides from Coca-Cola FEMSA S.A.B. de C.V's merger presentation, Dec 23, 2002
Slide 1: Coca-Cola FEMSA Panamco Acquisition
Coca-Cola FEMSA Panamco Acquisition Presentation for Conference Call and Webcast December 23, 2002
Slide 2: Cautionary Statements
Cautionary Statements FORWARD-LOOKING STATEMENTS This document contains certain “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended. These forward-looking statements relate to Coca-Cola FEMSA, Panamco, their respective businesses, the
Slide 3: Cautionary Statements
Cautionary Statements ADDITIONAL INFORMATION AND WHERE TO FIND IT INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE BUSINESS COMBINATION TRANSACTION THAT IS THE SUBJECT OF THIS PRESS RELEASE CAREFULLY AND IN ITS ENTIRETY WHEN IT IS FILED WITH THE COMMISSION BY PANAMC
Slide 4: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 4
Slide 5: Transaction Overview
Transaction Overview ! Coca-Cola FEMSA is acquiring Panamco in a merger combination for an aggregate value of US$3.6 billion ! Total consideration for Panamco’s equity will amount to US$2.7 billion, representing a weighted average price per Panamco share of US$22.87 ! In addition, Coca-Cola FEMSA wi
Slide 6: Current Operations
Current Operations 2001 Data except where noted, US$ Dollars Mexico Argentina KOFFEMSA Coca-Cola Consolidated Volume (UC): 478MM Volume (UC): 130MM Volume (UC): 608MM Population Served: 30MM Population Served: 11MM Population Served: 41MM Sales: $1,567MM Sales: $343MM Sales: $1,909MM EBITDA: $493MM
Slide 7: Post-Acquisition Coca-Cola FEMSA
Post-Acquisition Coca-Cola FEMSA The combined company will be the preeminent bottler of Coca-Cola products in Latin America ! Largest Soft Drink Operation in Mexico and Latin America — 1.5 billion unit cases of soft drinks (1) — 268 million unit cases of water ! Vast Geographic Footprint — Serving 1
Slide 8: Pro Forma Ownership
Pro Forma Ownership Pro Forma Ownership Structure(1) Public Voting: 46.4% Economic: 39.6% Voting: 53.6% Voting: 0.0% Economic: 45.7% Economic: 14.7% ! FEMSA and The Coca-Cola Company will be important long-term strategic shareholders in the new company ! Coca-Cola FEMSA will be the second largest bo
Slide 9: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 9
Slide 10: Transaction Rationale
Transaction Rationale ! Expanded presence in Mexico, complemented by operations in Central America and opportunities in Brazil, Argentina, Venezuela and Colombia ! Significant synergies to be realized from the integration of Mexican operations alone ! Upside potential due to replication of Coca-Cola
Slide 11: Mexico Makes the Case
Mexico Makes the Case The combination is especially attractive in Mexico ! Coca-Cola FEMSA will have a leading position in the attractive Mexican soft drink market ! In 2001, the combined Mexican volume including CSDs and water was 929MM UCs ! Significant synergies to be realized: — Contiguous terri
Slide 12: Synergies
Synergies ! Significant synergies are expected to be achieved from the integration of operations in Mexico — Manufacturing facilities — Sales and distribution — Corporate overhead — Procurement — Systems ! Expected annual savings 24 months after transaction closing of more than US$70MM ! Identified
Slide 13: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 13
Slide 14: Combined Regional Breakdown – 2001 Data
Combined Regional Breakdown – 2001 Data The activities of the combined company will continue to be anchored in Mexico, complemented by operations in Central America and opportunities in other territories Total Volume(1)(2) Revenues(2) EBITDA(2) 1.9 Billion Unit Cases US$4.6 Billion US$1.1 Billion 3.
Slide 15: Peer Comparison
Peer Comparison Pro-Forma Coca-Cola Coca-Cola Coca-Cola Coca-Cola Bottler Enterprises FEMSA HBC Amatil Region U.S., Canada Latin Eurasia Asia and and W. Europe America Australia MM Total UC (1) 4,200 1,868(1) 1,086 595 Global KO Volume(2) 23.6% 10.5% 6.1% 3.3% 2001 EBITDA $1,954 $1,036(3) $448 $296
Slide 16: Magnitude of Combined Company
Magnitude of Combined Company 2001 Data (1) 1.9 Billion Total Unit Cases Volume = approx. 29 million liters per day Revenues US$4.6 Billion EBITDA US$1.0 Billion Population Served 167 Million Retailers 1.4 Million Points of Sale Note: (1) Pro Forma. 16
Slide 17: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 17
Slide 18: Integration Approach
Integration Approach We have defined the success of the post merger integration program by the achievement of three objectives: ! One company with operations in nine countries: — After the integration, it is expected that Coca-Cola FEMSA will have a seamless organization with unified systems, proces
Slide 19: Integration Priorities
Integration Priorities For critical areas in the success of the combination, preliminary directional strategies have been defined ! Top priority given its contribution to combined EBITDA (more than 70%) ! Implement unified counter-competitive strategies Mexico ! Integrate KOF´s Mexico and Panamco´s
Slide 20: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 20
Slide 21: Terms of Acquisition Proposal
Terms of Acquisition Proposal ! Holders of Panamco Class A (non-voting) shares, excluding The Coca-Cola Company, will receive cash consideration of US$22.00 per share, representing a premium of 62.5% over the average price of such shares during the past 52 weeks ! Holders of Panamco Series B (voting
Slide 22: Shareholder Rights Offering
Shareholder Rights Offering ! The Board of Directors of Coca-Cola FEMSA approved a Shareholder Rights Offering of the L Shares in order to allow KOF public shareholders to maintain their pre-acquisition ownership level ! Will provide public shareholders an opportunity to subscribe for KOF L shares a
Slide 23: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 23
Slide 24: Valuation Metrics
Valuation Metrics An average price of US$22.87 per Panamco share implies the following valuation multiples ! 1.4x EV / LTM Revenues ! 8.2x EV / LTM EBITDA ! $2.89 EV per 2001 Unit Case — Assumptions(1): " Panamco Shares Outstanding 119.7MM " Market Value of Equity @ $22.87/share US$ 2,737MM " Net De
Slide 25: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 25
Slide 26: Pro Forma Balance Sheet Data
Pro Forma Balance Sheet Data Pro Forma KOF(1) Balance Sheet (US$MM) (As of September 30, 2002) Cash & Equivalents 174(2) Other Current Assets 377 PPE 1,711 Goodwill 2,940 Other Assets 166 Total Assets 5,368 Current Liabilities 539 Total Debt 2,824(2) Other Liabilities 275 Minority Interest 24 Shareh
Slide 27: Pro Forma KOF Income Statement
Pro Forma KOF Income Statement Pro Forma KOF(1) (US$MM) Income Statement FY 2001 9M 2002 Total Revenues 4,558 3,060 EBITDA 1,036 683 Restructuring Charges - 94 EBIT 666 384 Integral Cost of Financing: – Int. Expense (241) (112) – Int. Income 29 1 – Other 222 (71) Other Income (Expenses) (20) (18) EB
Slide 28: Sources and Uses of Funds
Sources and Uses of Funds Uses Sources ($MM) ($MM) Acquisition of PB Shares $2,737.3 KOF Cash $419.5 Cash to repay 2003 Notes 150.0 KOF B Shares subscribed by FEMSA 260.0 Refinancing of PB Debt(1) 313.9 KOF D Shares issued to KO 673.8 Net Cost of Options Exercised 50.5 Acquisition Financing 2,050.0
Slide 29: Coca-Cola FEMSA – Panamco Acquisition
Coca-Cola FEMSA – Panamco Acquisition ! Overview ! Transaction Rationale ! The Combined Company ! Integration Plan ! Transaction Structure ! Valuation Metrics ! Financial Review ! Conclusions 29
Slide 30: Conclusions
Conclusions ! Coca-Cola FEMSA and Panamco together are a formidable combination that will create the preeminent bottler of Coca-Cola products in Mexico and Latin America, the second largest bottler of the global Coca-Cola system and the largest one outside the United States ! This combination has co
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