Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Merger or Acquisition (June 2014)
20 slides from Tyson Foods's merger presentation, Jun 9, 2014
Slide 1: Tyson Foods Offer for Hillshire Brands
Tyson Foods Offer for Hillshire Brands June 9, 2014
Slide 2: Meeting Participants
2 MEETING PARTICIPANTS • Donnie Smith President & Chief Executive Officer • Dennis Leatherby Chief Financial Officer • Jon Kathol Vice President Investor Relations
Slide 3: Cautionary Statement Regarding Forward Looking Statements
3 CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS Among the factors that may cause actual results and experiences to differ from anticipated results and expectations in forward-looking statements are the following: the risk that the recently announced binding offer to acquire The Hillshire
Slide 4: Agenda
4 AGENDA Transaction Summary Financial Performance Transaction Rationale
Slide 5: Current Situation
5 CURRENT SITUATION Hillshire Brands has conducted a bidding process that concluded on Sunday June 8, 2014 As part of that process, Tyson submitted a binding offer to acquire Hillshire Brands for $63 / share in cash If the Pinnacle / Hillshire Brands agreement is terminated, Tyson expects that
Slide 6: Value Creation for Shareholders
6 VALUE CREATION FOR SHAREHOLDERS Would create ~$40B consumer-centric, insights-driven marketing organization with superior supply chain capabilities Strong portfolio of iconic, market-leading brands Hillshire’s branded foods portfolio would transform Tyson’s private label prepared foods offering
Slide 7: Transaction Summary
7 TRANSACTION SUMMARY • Would be an $8.55 billion transaction • Includes Hillshire Brands outstanding net debt • Tyson financing through combination of debt and equity • Effective adjusted LTM EBITDA multiple of 16.7x or 10.5x including $300 million synergies • Tyson would expect to maintain its inv
Slide 8: Growth Strategy
8 GROWTH STRATEGY Accelerate Grow domestic value-added chicken sales Grow prepared foods sales Grow international chicken production Innovate Products and services Consumer insights Cultivate Talent development to support Tyson’s growth and long-term future This acquisition would acceler
Slide 9: Hillshire Has Market Leading Brands
9 HILLSHIRE HAS MARKET LEADING BRANDS Focused Portfolio of Brands… …with leading share in core retail categories Source: Symphony IRI Group, Total US Multi-Outlet, 52 weeks ending 1/5/14. Market Share in Leading Categories HSH Share Relative Market Brand Category Position Share Breakfast Sausage #1
Slide 10: Expansion of Tyson Branded Portfolio
10 EXPANSION OF TYSON BRANDED PORTFOLIO - I N C LU D E S F O U R $ 1 B + B R A N D S . . . . Tyson Brands Hillshire Brands
Slide 11: Increased Presence in Value-Added Frozen Categories
11 INCREASED PRESENCE IN VALUE-ADDED FROZEN CATEGORIES Source: IRI U.S. Multi Outlet frozen category sales data for 52 weeks ending May 26, 2014 / figures in billions. Tyson would be #2 Player in the frozen category in Retail based on LTM Sales
Slide 12: Would Be Complementary to Tyson's Portfolio
Beef 23% Pork 22% Chicken 56% Prepared 5% International (6%) Beef 37% Pork 14% Chicken 28% Prepared 18% International 3% Beef 41% Pork 15% Chicken 31% Prepared 9% International 4% Beef 19% Pork 19% Chicken 47% Prepared 20% International (5%) 12 WOULD BE COMPLEMENTARY TO TYSON’S PORTFOLIO LTM 3/29/14
Slide 13: Would Provide Significant Lift to Prepared Foods' Segment Margins
Pro Forma Combined (Adj.) ($1,924MM) (Op Income Margin = 4.9%) Beef 23% Pork 22% Chicken 56% Prepared 5% International (6%) Beef 19% Pork 19% Chicken 47% Prepared 20% International (5%) LTM 3/29/14 Operating Income Contribution Tyson ($1,608MM) (Op Income Margin = 4.5%) 13 WOULD PROVIDE SIGNIFICANT
Slide 14: Strong Combined Financials
LTM 3/29/14 Pro Forma ($ in millions) Tyson Foods Hillshire Combined Financials Net Sales $35,418 $3,983 $39,401 EBITDA $2,100 $511 $2,611 EBITDA % 5.9% 12.8% 6.6% Sales By Channel 14 STRONG COMBINED FINANCIALS Food Service 26% Consumer Products/Retail 74% Food Service 33% Consumer Products/Retail 4
Slide 15: Purchase Price and Implied Multiple
15 PURCHASE PRICE AND IMPLIED MULTIPLE Source: (1) Equity value based on an offer price of $63 per share and 126.97M fully diluted shares outstanding. (2) Based on Hillshire Brands LTM 3/29/14 Adjusted EBITDA. Equity Value (1) $7,999 Net Debt $553 Aggregate Value $8,552 Hillshire Adjusted EBITDA (2)
Slide 16: Financial Rationale
16 FINANCIAL RATIONALE Strong Financial Returns Marginally accretive (cash basis) in first full fiscal year, substantially accretive thereafter Estimated total annual synergies in excess of $300 million −Transaction is expected to generate synergies in the first full fiscal year with the total sy
Slide 17: Appendix
17 APPENDIX
Slide 18: EBITDA Reconciliation
18 EBITDA RECONCILIATION (In millions) Tyson Foods, Inc. (Unaudited) Twelve Months Ended March 29, 2014 Net income 966$ Less: Interest income (9) Add: Interest expense 125 Add: Income tax expense 522 Add: Depreciation 478 Add: Amortization 18 EBITDA 2,100$ Hillshire Brands Twelve Months Ended March
Slide 19: Operating Income Reconciliation
19 OPERATING INCOME RECONCILIATION (In millions) Twelve Months Ended (Unaudited) March 29, 2014 Tyson Foods Operating Income 1,608$ Hillshire Brands Operating Income 296 Adjustments: Total restructuring actions excluding accelerated depreciation 69 Accelerated depreciation 17 Other significant items
Slide 20: Operating Income % Reconciliation
20 OPERATING INCOME % RECONCILIATION (In millions) (Unaudited) Operating Operating Sales Income Margin Tyson Foods - Prepared Foods 3,445$ 77$ 2.2% Hillshire Brands 3,983 296 Adjustments: Total restructuring actions excluding accelerated depreciation 69 Accelerated depreciation 17 Other significant