Cdw Holding Limited · SGX:BXE
Cdw — Merger or Acquisition (June 2006)
17 slides from Cdw's merger presentation, Jun 26, 2006
Slide 1: CDW Holding Limited Special General Meeting
TRANSACTION ADVISORY SERVICES CDW Holding Limited Special General Meeting Proposed Acquisition of the entire issued and paid-up capital of Tomoike Industrial Co., Ltd. 26 June 2006 0
Slide 2: Background
Background The purpose of this Special General Meeting is to obtain the approval of shareholders of CDW Holding Limited (“CDW”) in relation to the proposed acquisition by Tomoike Industrial (H.K.) Limited (the “Purchaser”), a wholly-owned subsidiary of CDW, of the entire share capital of Tomoike Ind
Slide 3: Background (continued)
Background (continued) Japan Tomoike was incorporated in Sakai City, Osaka Prefecture, Japan in 1959 and has several sale offices located in Osaka, Nara, Tokyo, Mie and Hiroshima, Japan. Japan Tomoike also operates two factories, in Nara and Mie, Japan. Mr Kunikazu Yoshimi, the Chief Executive Offic
Slide 4: Background (continued)
Background (continued) Japan Tomoike is principally engaged in the business of: (i) supplying precision components for LCD Products including LCD backlight units and related components for LCD Products. LCD backlight units are used in the manufacture of LCD modules found in mobile communication, con
Slide 5: Purchase Consideration
Purchase Consideration Subject to shareholders’ approval, the Purchaser will acquire 100% of the issued share capital of Japan Tomoike for a purchase consideration of between 642 million JPY to 1.4 billion JPY, depending on the business performance of Japan Tomoike for the financial years ended/endi
Slide 6: Purchase Consideration (continued)
Purchase Consideration (continued) The purchase consideration was arrived at after taking into account, inter alia: • the net income of Japan Tomoike for the financial year ended 31 May 2005 of approximately 261.3 million JPY; • an independent valuation exercise conducted on Japan Tomoike to arrive
Slide 7: Purchase Consideration (continued)
Purchase Consideration (continued) First Tranche • shares representing 51.37% of Japan Tomoike, representing a controlling interest, will be acquired at a cash consideration of 642 million JPY • comprises the entire stake held by the management of Japan Tomoike and a portion of the stake held by Mr
Slide 8: Purchase Consideration (continued)
Purchase Consideration (continued) The Second Tranche Consideration Amount shall be the lower sum of the amounts derived from the formulas below: Formula 1 Second Tranche Average of audited NPAT for the Consideration Amount = financial year ended 31 May 2006 and the financial year ending 31 May 2007
Slide 9: Rationale for Proposed Acquisition
Rationale for Proposed Acquisition CDW’s Acquisition of Japan Tomoike Japan Tomoike’s Strengths Earnings Accretive • Technical Know-how • Market Intelligence Stronger Integration CDW Japan Tomoike Cost Competitiveness Expertise in Procurement + + Scalable and Close Proximity Extensive Sales and Mark
Slide 10: Rationale for Proposed Acquisition (continued)
Rationale for Proposed Acquisition (continued) (1) Earnings accretion • The Proposed Acquisition is expected to be earnings accretive for the CDW Group (“Group”). Scenario A (Acquisition of approximately 51.37% of the equity interest of Japan Tomoike) Before acquisition After acquisition of of 51.37
Slide 11: Rationale for Proposed Acquisition (continued)
Rationale for Proposed Acquisition (continued) (1) Earnings accretion (continued). Scenario B (Acquisition of 100% of the equity interest of Japan Tomoike) After the acquisition of 100% of Japan Tomoike Second Tranche Before the Second Consideration acquisition of Tranche Amount settled 100% of Cons
Slide 12: Rationale for Proposed Acquisition (continued)
Rationale for Proposed Acquisition (continued) (2) Stronger integration between CDW Group and Japan Tomoike • Supply of raw materials and semi-finished goods by Japan Tomoike to the Group. • A network of sales and marketing offices with access to principal operating facilities of customers in Japan.
Slide 13: Financial Information
Financial Information (1) Historical financial performance Japan Tomoike Income Statement financial year financial year five months ended 31 May ended 31 May ended 31 Oct JPY'000 2004 2005 2005 Revenue 6,835,351 8,052,669 2,779,030 Profit before tax 519,669 450,823 180,974 Income tax (218,031) (189,
Slide 14: Financial Information (continued)
Financial Information (continued) (2) Financial position Japan Tomoike Balance Sheet JPY'000 As at 31-Oct-05 Property, Plant & Equipment 407,887 Intangibles 4,230 Investments and other assets 365,592 Cash and bank balances 996,211 Total Current Assets 2,348,556 Short-term borrowings 363,650 Bonds (c
Slide 15: Prospects
Prospects • New projects for Japan Tomoike in the near future include the supply of backlight components for LCD televisions, large-sized LCD panels and high definition LCD panels • In May 2006, Japan Tomoike began supplying LCD backlight units manufactured using cold cathode fluorescent lamps (“CCF
Slide 16: Comparable Companies
Comparable Companies As set out in the report by the Independent Financial Adviser, the EV/EBITDA multiple implied by the maximum purchase consideration falls below the median of EV/EBITDA multiples of the comparable companies. The PE multiple implied by the maximum purchase consideration also falls
Slide 17: Relevant information
Relevant information This presentation is a summary of the detailed information contained in CDW’s Circular to Shareholders dated 8 June 2006. Shareholders are referred to the Circular for relevant information in relation to the Proposed Acquisition. 16