Synlait Milk Ltd. · NZX:SML
Synlait Milk — Merger or Acquisition (March 2020)
19 slides from Synlait Milk's merger presentation, Mar 13, 2020
Slide 1: Acquisition of Dairyworks: Summary of Strategic Rationale
For personal use only ACQUISITION OF DAIRYWORKS SUMMARY OF STRATEGIC RATIONALE 12 March 2020
Slide 2: Transaction Overview
TRANSACTION OVERVIEW For personal use only TRANSACTION • Conditional purchase of shares in Dairyworks announced for $112 million in October 2019 OVERVIEW • Price reflective of an approximate 7.1x EBITDA multiple (previously 7.5x) based on last twelve months of forecast earnings to 31 March 2020. Tra
Slide 3: Acquisition Rationale
ACQUISITION RATIONALE For personal use only ATTRACTIVE SECTOR GROWTH OPPORTUNITIES COMPLEMENTARY CULTURE FINANCIALLY SUSTAINABLE • Industry players remain limited and • Utilise Dairyworks innovative, agile • Dairyworks is a nimble and innovative • Equipment and management structure unintegrated in c
Slide 4: Overview of Dairyworks
For personal use only OVERVIEW OF DAIRYWORKS 4
Slide 5: Dairyworks is a market leader
DAIRYWORKS IS A MARKET LEADER … For personal use only STRONG MARKET STRONG WELL STRONG CUSTOMER POSITIONS RECOGNISED BRANDS BASE CHEESE # 1 BUTTER # 2 ICE CREAM # 4 MILK POWDER # 4 5
Slide 6: With a strong product portfolio in consumer dairy
... WITH A STRONG PRODUCT PORTFOLIO For personal use only IN CONSUMER DAIRY DAIRYWORKS PRODUCTS, PROCESSES AND SALES CHANNELS The company produces over 500 products. A snapshot of the product types is set out below Products Inputs Processing Example product types Sales and marketing/distribution Che
Slide 7: Potential to expand into new markets and channels for future growth
... AND POTENTIAL TO EXPAND INTO NEW For personal use only MARKETS AND CHANNELS FOR FUTURE GROWTH GEOGRAPHY SPLIT* CHANNEL SPLIT* CATEGORY SPLIT* 90% New Zealand 75% New Zealand grocery 47% Cheese 8% Australia 15% Food service 25% Butter 2% Rest of world 8% Australia grocery 9% Ice cream 2% Export 1
Slide 8: With a track record of delivering
... WITH A TRACK RECORD OF DELIVERING For personal use only 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2002 2004 2006 2008 2010 2012 2014 2016 2018 Dairyworks was Alpine gained its first Alpine was launched Introduced a new The company moved Automated grate Dairyworks acquired Dairyworks star
Slide 9: Meet the Team
MEET THE TEAM For personal use only • Dairyworks will be a subsidiary Highly experienced FMCG executive team in the business to drive long-term growth of Synlait and operate as a stand-alone business, with its CEO Tim Carter, reporting to Synlait CEO Leon Clement • Dairyworks has an experienced exec
Slide 10: Expected Synergies with Synlait
For personal use only EXPECTED SYNERGIES WITH SYNLAIT 10
Slide 11: Expected Synergies
For personal use only EXPECTED SYNERGIES WHAT DAIRYWORKS BRINGS TO SYNLAIT: 1. Diversification of customers, categories and markets 2. Supply chain synergies over time through vertical integration with Talbot Forest Cheese and working capital benefits 3. Ability to better optimise Synlait’s milk poo
Slide 12: 1. Diversification
1. DIVERSIFICATION For personal use only Acquisition accelerates diversification strategy and further reduces site, customer, category and market concentration risk. Revenue by category Revenue by channel Revenue by geography Before After Before After Before After (Synlait) (Synlait and Dairyworks)
Slide 13: 2. Talbot Forest and Dairyworks are a natural fit
2. TALBOT FOREST AND DAIRYWORKS For personal use only ARE A NATURAL FIT • Talbot Forest is primarily a Example of supply chain synergies over time through vertical integration with Talbot Forest manufacturer of cheese, CURRENT STATE with some processing capability. It processes raw milk into 20kg bl
Slide 14: 3. Stream Optimisation Opportunities
3. STREAM OPTIMISATION OPPORTUNITIES For personal use only • Talbot Forest and Dairyworks provide flexibility to $ / per tonne sell price 12 month average ($NZD) optimise stream returns above base commodity prices 9,000 • By moving closer to the consumer and owning more 8,000 of the value chain, the
Slide 15: 4. Cultural Alignment
4. CULTURAL ALIGNMENT For personal use only MATURITY Founded approximately 10 years ago PURPOSE Dairyworks ‘Make Life Easy’ complements Synlait’s ‘Doing milk differently for a healthier world’ BUSINESS MODEL Disruptive and innovative approach to creating new value CUSTOMERS Track record for building
Slide 16: Financial Overview
For personal use only 16 FINANCIAL OVERVIEW
Slide 17: Transaction Summary and Guidance Update
TRANSACTION SUMMARY AND GUIDANCE UPDATE For personal use only • Synlait announced the conditional purchase of Dairyworks • Synlait will consolidate earnings of Dairyworks upon settlement, for $112 million in October 2019, with the transaction funded by and can now confirm that Dairyworks is expected
Slide 18: Disclaimer
DISCLAIMER For personal use only • This presentation is intended to constitute a summary of certain information about nor is it intended to comply with: (i) the financial or other reporting requirements of Synlait Milk Limited (“Synlait”) or in connection with its purchase of the shares any regulato
Slide 19: Investors and Media contacts
For personal use only INVESTORS MEDIA Hannah Lynch Linda Chalmers Corporate Affairs Manager Senior Communications Advisor – External +64 21 252 8990 +64 21 951 347 hannah.lynch@Synlait.com linda.chalmers@synlait.com