Orica Limited · ASX:ORI
Orica — Merger or Acquisition (September 2007)
18 slides from Orica's merger presentation, Sep 24, 2007
Slide 1: Excel Mining Systems Acquisition
Excel Mining Systems Acquisition Graeme Liebelt Managing Director & CEO 24 September 2007
Slide 2: Contents
Contents 1 Transaction Overview 2 Strategic Rationale 3 Overview of Excel Mining Systems 4 Industry Drivers 5 Financial Impact and Funding 6 Minova & Excel Mining Systems Post Acquisition 7 Conclusion 2
Slide 3: 1. Transaction Overview
1. Transaction Overview Orica has agreed to acquire Excel Mining Systems LLC – US leader in support systems for underground coal and hard rock mining Purchased for approximately US$670m (~A$775m) subject to closing adjustments – 9.9 times LTM1 EBITDA (pre-synergies) – 7.3 times LTM1 EBITDA (post
Slide 4: 2. Strategic Rationale
2. Strategic Rationale 1 Strong link to both Minova and Orica 3 Base for global expansion Mining Services Opportunity to expand via Minova’s global Significant mining presence network Common customers Further acquisition opportunities Strong regional overlap Both Minova & Excel are USA l
Slide 5: 3. Overview of Excel Mining Systems: Business Snapshot
3. Overview of Excel Mining Systems Business Snapshot USA leader in support systems for underground coal and hard rock mining – World’s largest roof bolt company – Over 45% share of USA sales Complete product range and regional coverage – Core products include roof bolts, anchors & plates – 6 ma
Slide 6: 3. Overview of Excel Mining Systems: Business Snapshot
3. Overview of Excel Mining Systems Business Snapshot Major end market is underground coal mining, although also has a presence in hard rock mining Sells to all USA regions, including Appalachian, Interior and Western regions Roof bolts make up the majority of Excel Mining Systems’ product sal
Slide 7: 3. Overview of Excel Mining Systems: Regional coverage
3. Overview of Excel Mining Systems Regional coverage Marion, IL Bowerston, OH Cadiz, OH Proctorville, OH Clearfield, UT Grundy, VA Excel Mining Systems Plants Minova Plants Strategically located near customers. Good geographic overlap with Minova. 7
Slide 8: 3. Overview of Excel Mining Systems: Ground Stabilisation Products
3. Overview of Excel Mining Systems Ground Stabilisation Products Bolts & Anchors Accessories Surface Support Systems Rebar resin bolts Steel mine ties Bearing plates Tension bolts Cable truss Dimple plates Mechanical bolts Wire mesh Spider plates HyTec bolts Roof channel Cable Bolts Mo
Slide 9: 3. Overview of Excel Mining Systems: Strong Earnings
3. Overview of Excel Mining Systems Strong Earnings Excel has a track record of growing earnings both through organic growth Sales trend (2004-2007) and acquisitions – 9.9% Sales CAGR (2004 – 2007) Sales CAGR: 9.9% 250 – 14% EBITDA CAGR (2004 – 2007) 200 – Outstanding operating margins 150 US$m
Slide 10: 4. Industry Drivers: Coal will continue to power US electricity
4. Industry Drivers Coal will continue to power US electricity Backbone of US electricity production accounting for >50% of electricity generation Shift to alternate sources not expected ~150 new coal fired power plants planned US Electricial Power - Energy Consumption by 6000 5000 4000 Inpuy
Slide 11: 4. Industry Drivers: Underground Coal Growth
4. Industry Drivers Underground Coal Growth Coal production growth of 1.5% CAGR (2006 – 2030) 600 Total US Underground Coal Growth 507 500 441 389 399 400 379 358 353 354 358 300 200 2% CAGR for Electricity Generation from Coal 100 0 2006 2007 2008 2009 2010 2015 2020 2025 2030 Source: EIA 2007 Pr
Slide 12: 4. Industry Drivers: Consolidation of US Coal Companies
4. Industry Drivers Consolidation of US Coal Companies Substantial consolidation over last 10 years with the top 4 companies now accounting for over 45% of the market Overall profitability of the industry has significantly improved Coal production and prices have increased Consolidation Trends
Slide 13: 5. Financial Impact and Funding
5. Financial Impact and Funding Purchased for approximately US$670m (~A$775m) subject to closing adjustments – 10.1 times LTM EBITA – 9.9 times LTM EBITDA Immediately EPS accretive after all costs Very strong cash flow Achieves Orica’s financial targets Funded by existing debt facilities a
Slide 14: 6. Minova & Excel Post Acquisition: Transaction Strengths
6. Minova & Excel Post Acquisition Transaction Strengths Customer – Excel Mining Systems and Minova are both leaders and share many common customers – Both have long standing relationships with customers – Both businesses have reputations for quality, service and reliability of supply – Expands th
Slide 15: 6. Minova & Excel Post Acquisition: Transaction Benefits
6. Minova & Excel Post Acquisition Transaction Benefits Orica has conducted a detailed review of potential transaction benefits Realisable Benefits Annualised benefits of ~A$58 million are achievable following the acquisition – Tax benefits realised from year 1 – Others progressively achieved ov
Slide 16: 6. Minova & Excel Post Acquisition: Global Expansion Opportunities
6. Minova & Excel Post Acquisition Global Expansion Opportunities Countries serviced by Minova only Countries serviced by Excel Mining Systems & Minova Excel expansion into Minova regions Excel provides a strong base to rapidly expand Joint Minova & Excel expansion into new regions into new regions
Slide 17: 7. Conclusion
7. Conclusion Acquisition is strategically & financially compelling North American leader in underground consolidation − Excel and Minova both have leadership positions in the US − Provides “one stop shop” to customers for both chemicals and bolts − Provides Orica with a very strong strategic posi
Slide 18: Disclaimer
Disclaimer This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an i