Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Tyco International — Merger or Acquisition (March 2012)
34 slides from Johnson Controls International's merger presentation, Mar 28, 2012
Slide 1: Pentair and Tyco Flow: A Powerful Combination, A Stronger Future
> PENTAIR PENTAIR AND TYCO FLOW. A Powerful Combination, A Stronger Future MARCH 28, 2012 PENTAIR TYCO OW |
Slide 2: Presenters: Randall J. Hogan and Edward D. Breen
> PENTAIR Randall J. Hogan Chairman and Chief Executive Officer Pentair, Inc. tyco Edward D. Breen Chairman and Chief Executive Officer Tyco International, Ltd. PENTAIR TYCO FLOW
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS FORWARD-LOOKING STATEMENTS ‘This presemation may contain catain statements abou Penta, ne. "Penta, Te How Conta international is. (Tye Flow") and Tyo Inaational. (Tyen" tat ate forwards ‘bokng statment” within the meaning ofthe US. Private Secures Utgation Relorm Act of 19
Slide 4: Great Industrial Combination
GREAT INDUSTRIAL COMBINATION A World-Leading ~$7.7B* Industrial Growth Company Well-Po: ned to Serve the “New” New World Growing Population and Wealth of Developing Economies Strong from the Start - More Global, More Diverse and More Scale Stronger in the Future - Substantial Synergies Expected with
Slide 5: Transaction Summary
TRANSACTION SUMMARY Structure and Consideration Ownership {new Pentair) Governance Company Financial Benefits Conditions and Expected Closing Stock-for-stock exchange using Reverse Morris Trust structure The Tyco Flow Control business will be distributed to Tyco International shareholders through a
Slide 6: Edward D. Breen, Tyco International
tycao Edward D. Breen Chairman and Chief Executive Officer Tyco International, Ltd. PENTAIR TYCO FLOW 6
Slide 7: Transaction Consideration
TRANSACTION CONSIDERATION « Implies total value for Tyco Flow of ~$4.9B", before the benefit of synergies - 52.5% ownership in the total merged company - Pentair assumes $275M of Tyco’s net debt and $94M of minority interest * Expected close at the end of September 2012, consistent with overall timi
Slide 8: Significant Benefits to Tyco Shareholders
SIGNIFICANT BENEFITS TO TYCO SHAREHOLDERS * Majority Ownership of the Highly Attractive Tyco Flow/Pentair Combined Company ~ Stronger, more attractive competitor than Tyco Flow on standalone basis ~ Forms a premier global leader in flow, filtration & equipment solutions - Greater exposure to higher
Slide 9: Randall J. Hogan, Pentair
> PENTAIR Randall J. Hogan Chairman and Chief Executive Officer Pentair, Inc.
Slide 10: Two Global Leaders
TWO GLOBAL LEADERS > PENTAIR tyco Flow Control Emerging Presence in Industrial JE"EX=="=NSE Tiny A Global Leader in Industrial Fluid Processing Solutions PROCESS SOLUTIONS Valves and Controls A Global Leader in Water Flow EXTENDS WATER Strong Regional Leader in Water and Filtration Applications OFFE
Slide 11: Strong Strategic Fit
STRONG STRATEGIC FIT Technical PENTAIR Products, SALES BY SEGMENT “30% Water & Fluid Soluti Projected 2012 Sales: ~$3.78 Water & Environ, TYCO FLOW SALES BY SEGMENT Projected 2012 Sales: ~$4.08* Valves & Controls, ~60% COMBINED COMPANY SALES 2012 pro forma PROJECTED SALE Equipment Protection Solutio
Slide 12: Serving Highly Attractive Growth Sectors
SERVING HIGHLY ATTRACTIVE GROWTH SECTORS DIVERSE VERTICALS SECULAR TRENDS DRIVING DEMAND -” Industrial a v Performance & Quality Y Efficiency v Hazardous Energy Y Efficiency v Unconventional Y Technology Industrial, ~35% Residential, ~20% Global Water ¥ Scarcity Y Regulation ¥ Sustainability Infrast
Slide 13: Expanded Global Reach
EXPANDED GLOBAL REACH ~40% ~25% US & CANADA ~359% FAST GROWTH ¥ Significant US Residential ia REGIONS Installed Base DEVELOPED ¥ Rising GDP and V US Industrial Sector REST OF WORLD See eStGh priving Strength . Infrastructure, Energy Y Continued Increase in & Water Demands Demand for Oil and Gas, ¥ R
Slide 14: Positioned to Serve the "New" New World
POSITIONED TO SERVE THE “NEW” NEW WORLD ‘Needs and Wants Are Driving Demand >4 Billion Reaching Middle Class Globally Energy Infrastructure/Industry (Transportation and Manufacturine %}PENTAIR & tyco Flow Control Resource Scarcity Quality of Life Industrialization Infrastructure Presence, Breadth an
Slide 15: Value Creation Roadmap
VALUE CREATION ROADMAP CLEAR VISION, CONSISTENT STRATEGY Clear, Simple, Global Vision based on “New” New World Shareholder Value Creation Has Always Been Our #1 Goal PERFORM ATA. HIGHER LEVEL Focus on Key Value Creation Metrics: ~ Organic Sales Growth + Key Acquisiti — Op Margin Expansion ~ Prioriti
Slide 16: Substantial Value-Creation Opportunities
SUBSTANTIAL VALUE-CREATION OPPORTUNITIES * Both Companies’ Shareholders Expected to Benefit From Structure — Tax-Free Distribution and Merger + Immediate, Substantial Synergies Anticipated — 1/3 of Synergies ‘Day One’ with One Corporate Structure + Greater Tax Efficiencies — $250M Expected Annual Sy
Slide 17: Integration Leadership
INTEGRATION LEADERSHIP INTEGRATION TEAM Reporting Directly to Chairman/CEO Integration Team Will Consist of INTEGRATION LEADER ~25 — 40 Proven Leaders Program Management Office (PMO) Leder by runcton (SB) « Peinary Focus Structure, cae e ry oe @ Standardization, Indirect | a Spend, Direct Materials
Slide 18: Pentair Integrated Management System
PENTAIR INTEGRATED MANAGEMENT SYSTEM RAPID Building Growth Capabilities GROWTH PROCESS. Es PENTAIR GLOBAL Attracting and Developing Top Talent TALENT SYSTEM Safety, Quality, Delivery, Cost and Cash Focus ae Proven PIMS Framework To Drive Value onan a conan |
Slide 19: Revenue Synergies ... Further Upside
REVENUE SYNERGIES ... FURTHER UPSIDE orn snessrnunsers Increased Penetration & Systems Content Greater Emerging Market Presence Benefits from Scale & Technology Platforms Leverage Service Footprint to Grow Aftermarket & Recurring Revenue »> PENTAIR ba wciadl + Olland Gas Valves Sovran oe + Protectiv
Slide 20: A "Win-Win" Combination
A “WIN-WIN” COMBINATION PENTAIR SHAREHOLDERS More exposure to attractive markets and customers Expected higher earnings and greater end-market diversity in future Stronger balance sheet with greater financial flexibility Ability to leverage PIMS across larger enterprise Tax-free merger with more eff
Slide 21: John L. Stauch, Pentair CFO
> PENTAIR John L. Stauch Chief Financial Officer Pentair, Inc.
Slide 22: Financially Compelling
FINANCIALLY COMPELLING * Transaction Consideration ~$4.9B* (54.58 inequity; 275M in net debt and $94M in minority interest assumed) — ~8.8x Expected SpinCo Tyco Flow 2012 EBITDA”, plus Day 1 Cost Avoidance — Favorable to Both Pentair’s and Tyco Flow’s Shareholders + Expect Highly Accretive to Earnin
Slide 23: Transaction Consideration
TRANSACTION CONSIDERATION TYCO FLOW EBITD IMPLIED EBITDA MULTIPLES ~$555M ~$515M Includes OM stand: Corp Costs 2012 at 2012 at 2012 “Spinco” “Spinco” “Spinco” “Spinco” EBITDA EBITDA + "Day 1” Cost Avoidance + Tyco Flow Segment EBITDA Margin ~15%+ + Tyco Ownership in Combined Co. 52.5% * Corporate Co
Slide 24: Value Creation Potential
VALUE CREATION POTENTIAL ANTICIPATED PRE-TAX SYNERGIES RUN-RATE SYNERGY ESTIMATE + Operating/G&A Cost Synergies: ~$160M ~$250M — Direct/Indirect Sourcing Opportunities — Lean/PIMS in Factories: Deploy in Tyco Flow — IT/Finance/HR Standardization — Management and Regional Business Integration Corp Co
Slide 25: Cost Synergy Drivers
COST SYNERGY DRIVERS * Direct/Indirect Sourcing SCS D NOTRE — Benefit from Global Procurement and Indirect Sourcing Capabilities ~$250M — Leverage Company-Wide Standard Vendor Lists tox — Insource/Resource Common Buys Syrergis + Operations / Lean ~$200M Direct! — PIMS Works ... Proven Processes Util
Slide 26: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION PRO FORMA EBITDA PROJECTION CAPITAL ALLOCATION ‘OF COMBINED COMPANY (OF COMBINED COMPANY “$1.78 ° Target Solid Investment Grade Rating ~$1.3B * Committed to Dividend Growth eer (36 straight Years of increases) ~$1.18 iil — Expect Dividend to equal $0.88/share at start exp
Slide 27: Exciting Value Creation Potential
EXCITING VALUE CREATION POTENTIAL Estimated + Expect Long Term Sales Growth of ~5 to 7% 2013 Revenue >$8B pe 6 . . aoe + Enriched Mix of Businesses, Verticals and Geographies + Opportunity to Deploy Capital Structure to Drive Growth 2013 EBITDA ~$1.3B in Platforms and Return Cash to Shareholders Com
Slide 28: Randall J. Hogan, Pentair
> PENTAIR Randall J. Hogan Chairman and Chief Executive Officer Pentair, Inc.
Slide 29: Combined Pentair and Tyco Flow
COMBINED PENTAIR AND TYCO FLOW BY PLATFORM ‘COMBINED 2012 pro forma PROJECTED SALES MIX Equipment Protection Solutions, "25% Flow Control, 30% » Mega Trends in Favor of Combination * Complementary Extension of Product Offerings & Solutions BY GEOGRAPHY ‘COMBINED 2012 proforma PROJECTED SALES MIX Wes
Slide 30: In Summary
IN SUMMARY * Two Global Industrial Leaders - Strong Alignment with Mega Trends - Positive 2012 and Beyond Outlook for Both Companies * Combined Strengths = Unique Value Creation Potential — $7.7B* Global Industrial Leader Serving High Growth, Attractive Markets — Leading Company with Strong Filtrati
Slide 31: Appendix
> PENTAIR Appendix
Slide 32: Transaction Structure
TRANSACTION STRUCTURE “REVERSE MORRIS TRUST” TRANSACTION Step 1 >\$275M net debt pushdown Other Tyco Businesses Tyco Flow Control Tyco Shareholders Pentair Shareholders Step 2 ‘Tyco Flow Control (Changes name to Penta) Pentair + “Reverse Morris Trust” allows for a tax-free distribution of Tyco Flow
Slide 33: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Pentair and Subsidiaries Reconciliation of the GAAP "As Reported” to the "Adjusted" yon-GAAP for the years ending December 31 (Unaudited) ‘Total Pentair Estimated* Estimated Estimated Inmilions, except pershare date 2012 2013, 2015 Netsales 5 705 Ts x70 ‘Operating inc
Slide 34: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Reconcilation of Non-GAAP Financial Measures Flow Control Business of Tyco International Ltd." aad, Subiact = Eguals: Yearended Gr ended Qt. ended Last 12 ‘Sept. 202011 Dee. 30,2011 Dee. 24,2010 Months Not Income $925 $62 $187 $200 Income from discontinued operations
Tyco International — Merger or Acquisition (March 2012) on 6ix