Attached files
| file | filename |
|---|---|
| 8-K - DARLING INGREDIENTS INC. | mm11-0810_8k.htm |
| EX-2.1 - EX.2.1 - AGREEMENT AND PLAN OF MERGER - DARLING INGREDIENTS INC. | mm11-0810_8ke0201.htm |
| EX-10.1 - EX.10.1 - ROLLOVER AGREEMENT - DARLING INGREDIENTS INC. | mm11-0810_8ke1001.htm |
| EX-99.2 - EX.99.2 - PRESS RELEASE - DARLING INGREDIENTS INC. | mm11-0810_8ke9902.htm |
EXHIBIT 99.1
Combining Darling with Griffin creates America’s largest independent
renderer and recycler serving the nation’s food industry
renderer and recycler serving the nation’s food industry
Key considerations:
National platform with scale
Diversified base of raw material supply
Entrenched customer relationships
Insulation from commodity price fluctuations
through raw material pricing formulas
Global distribution of finished products
High free cash flow generation
Strong balance sheet
Experienced management team
Key Highlights
2
National Platform
with Scale
with Scale
Largest independent
rendering provider with
operations nationwide
rendering provider with
operations nationwide
Breadth to service
national accounts
national accounts
Diverse mix of beef, pork and
poultry raw materials and the
largest recycler of bakery
waste
poultry raw materials and the
largest recycler of bakery
waste
Pricing formulas insulate from
commodity price fluctuations
commodity price fluctuations
Diversified Base of
Material Inputs
Material Inputs
Permits by local
governments to operate
each plant
governments to operate
each plant
Comply with complex food
safety regulations
safety regulations
Regulatory
Compliance and
Permitting
Compliance and
Permitting
Both Darling and Griffin
senior management have
an average of more than
25 years of industry
experience
senior management have
an average of more than
25 years of industry
experience
Experienced
Management Team
Management Team
Created value-added feed
formulations that improve
digestibility and caloric
content
formulations that improve
digestibility and caloric
content
Implementing next-
generation green diesel
technology to open a new
market for fats and oils
generation green diesel
technology to open a new
market for fats and oils
Culture of Innovation
Average length of top ten
supply relationships is
24+ years
supply relationships is
24+ years
Processing plants
generally within 100 miles
of supplier facilities
generally within 100 miles
of supplier facilities
Long-term
Relationships with
Raw Material Suppliers
Relationships with
Raw Material Suppliers
Competitive Strengths
3
The only independent recycling/rendering company with a national footprint
— Network of 45 processing facilities from coast to coast
Darling’s National Platform
4
Darling 2009
Diversifies into Poultry and Bakery
Diversification of raw material supply, providing Darling with
greater exposure to poultry
greater exposure to poultry
— Griffin is one of the three largest non-captive US processors of
poultry by-products
poultry by-products
— Reduces Darling’s reliance on beef as their #1 raw material source
— Poultry consumption growth outpaces other protein consumption
Entry into bakery recycling business
— Griffin is the largest US producer of bakery by-products
— High margin due to lower processing requirement and high caloric
content of finished product
content of finished product
Complementary footprint resulting in increased scale and broader
geographic presence
geographic presence
— Fills in Darling’s footprint in the southeast United States
— Greater customer diversification
— Provides entry into new products and premium feed formulations
— Scale arbitrage on fat and grease volume
Improves feedstock sourcing alternatives for Valero renewable
fuels JV
fuels JV
— Poultry fat works well to Louisiana
— Doubles feedstock available in the eastern region
Operating cost synergy and revenue enhancement potential
— Formulation and branding opportunities
— Overhead reductions
Poultry
11%
Cooking oil
12%
Beef/Pork
77%
Poultry
47%
Cooking oil 11%
Bakery
32%
Beef/Pork 10%
Poultry
29%
Cooking oil
11%
Bakery 21%
Beef/Pork
40%
Strategic rationale
Griffin 2009
Pro Forma 2009
Acquisition Rationale
5
6
Griffin Industries Business Model
Commodity Products
(<45% of 2009 Sales)
Griffin Premium, Value
-
Added, or Branded Products
(>55% of 2009 Sales)
Raw
Materials
Poultry By
-
Products
Beef & Pork By
-
Products
Spent Cooking Oil
Bakery & Snack Food Waste
Bakery Feed
Yellow Grease, Tallow,
Poultry Grease, Feed Fats
Meat & Bone Meal,
Poultry Meal,
Feather Meal,
Blood Meal
Griffin’s premium, branded organic
fertilizer
Unique service program that allows
small feed mills and large farms to
purchase fats and other feed
additives direct from Griffin
Griffin’s clean
-
burning biodiesel
produced from rendered animal by-
products and recycled cooking oil
Griffin’s premium poultry meal
processed at lower temperatures to
increase digestibility and palatability
Griffin’s branded high quality
animal protein designed for dairy
cows
Griffin’s high quality pet
-
food additive
made from chicken by-products
Griffin’s branded grease product
that can be burned for fuel
Griffin’s high energy content
animal feed additive
Poultry
47%
Bakery
32
%
Cookie® Meal
Flash
Dried
Poultry Meal
Pet
-
Grade
Poultry Meal
Beef &
Pork
Pork
10%
Spent
Cooking
Cooking
Oil
11%
Griffin Industries Overview
7
100% of rendering business under formula pricing
100% of bakery business under formula pricing
Over 60% of restaurant cooking oil customers under
formula pricing agreements
Contracts typically 3-5 years
Griffin Procurement and Risk Management
8
Griffin Industries Premium Products
Strategic focus on premium and value-added products
Griffin is able to drive premium pricing
through differentiated and value-added
products
through differentiated and value-added
products
(As a % of total sales)
2005
2009
+65%
+70%
+75%
Commodity Feed
Grade Poultry Meal
Griffin Pet
-
Grade
Poultry Meal
Griffin Poultry Meal
(Flash Dried)
Griffin Low Ash
Poultry Meal
Expanded premium, value-added and branded
sales from 25% in 2005 to 57% in 2009
sales from 25% in 2005 to 57% in 2009
Enhanced nutritional content, consistency and
customization drives premium pricing
customization drives premium pricing
Processing capacity and proprietary equipment
and methods allow Griffin to focus on raw
material segregation which facilitates the
production of specialized, custom blends
and methods allow Griffin to focus on raw
material segregation which facilitates the
production of specialized, custom blends
Premium products pricing relative to commodity meals
Expansion of premium, value-added and branded sales
2005
2009
25%
57%
Value-added products sell for a
significant premium to commodity
products
significant premium to commodity
products
9
Griffin’s Operating Divisions
Operating segment overview
2009 sales mix by segment2
Rendering
59%
59%
1Restaurant cooking oil raw material volumes are divided between the Rendering (92%) and Bakery Feeds (8%) divisions
2 Other includes Hides & Skins (2%), Fertilizer (1%), and Biodiesel (1%)
Export 9%
Other 5%
Bakery
26%
Rendering
Bakery Feeds
Hides &
Skins
Export
Fertilizer
Biodiesel
Jay Gee
Year Established
1943
1993
1976
1986
1995
1999
1978
Processing Facilities
12 facilities
9 facilities
2 facilities
1 facility
1 facility
1 facility
2 facilities
Transfer Stations
24
3
N/A
N/A
N/A
N/A
N/A
Raw Material Processing and Production
& Sale of Finished Goods
Production & Sale of Finished Goods
Support
Bakery
32%
Spent
Cooking Oil
11%
Beef/Pork
10%
Poultry
47%
2009 raw materials mix1
10
Fills in the U.S. Southeast Footprint
Griffin Industries
Darling International
Darling and Griffin locations
Griffin locations only
Darling locations only
11
Similar Size Companies
12
Griffin will operate as a wholly-owned subsidiary of Darling
and over time will create synergies through:
and over time will create synergies through:
Routing improvements (Florida, Georgia, Indiana, Ohio in 2011)
Implementation of best practices from Darling and Griffin to achieve
plant processing efficiencies
Scale arbitrage on fat & grease volume for green diesel opportunity
Expanded footprint to better serve national accounts
SG&A reduction opportunities
Transaction Synergy Potential
13
Successful Acquisition
Integration Track Record
Integration Track Record
2004
2005
2006
2007
2008
2009
July
07
07
Dec
08
08
Aug
08
08
Oct
05
05
FL, GA
KC metro
NYC metro
GA
GA
So CA
Burrows Industries, Inc.
dba Minuteman Pumping
dba Minuteman Pumping
Ace Grease
Service
Service
J&R
Rendering, Inc.
Rendering, Inc.
Southeastern Maintenance &
Construction Inc.
Construction Inc.
National
By-Products, LLC
By-Products, LLC
API Recycling,
div of American
Proteins Inc.
div of American
Proteins Inc.
Boca
Transport, Inc.
Transport, Inc.
Midwest
US
US
2010
Sanimax USA
June
10
NE, KS
Nebraska
By-Products
Dec
09
Great Lakes
Since 2004, Darling has acquired and integrated 9 companies investing a total of $212 million
Feb
09
Dec
04
May
06
14
Griffin Enhances Existing Management Team
Griffin
Name
Years at Griffin
Robert Griffin
President & CEO
37
37
Years in Industry
Martin Griffin
Chief Operating Officer
30
30
Anthony Griffin
Chief Financial Officer
17
17
Thomas Griffin
Senior Vice President
31
31
William Reagor
President of Bakery Division
17
17
Rick Elrod
Executive Vice President
26
26
Darling
Name
Years at Darling
Randy Stuewe
Chairman & CEO
8
27
Years in Industry
John Muse
EVP & CFO
13
40
John Sterling
EVP, Secretary & GC
3
13
Michael Rath,
EVP Commodities
& Risk Management
& Risk Management
2
24
Neil Katchen
EVP, Operations
40
40
Dr. Ross Hamilton
VP Technology &
Government Affairs
14
14
15
Transaction Overview
Transaction Overview
Transaction Overview
|
Target &
Purchase Price |
Griffin Industries (“Target”)
One of the largest independent providers of value-added rendering, bakery feed and
cooking oil recycling services $840mm purchase price
|
|
|
Capital Structure
|
$325mm Revolver due 2015
$300mm Term Loan B due 2016
$250mm High Yield Bond due 2018
$100mm Equity to Target
|
|
|
Acquisition
Rationale |
Diversification of raw material supply
Entry into bakery recycling business
Complementary footprint in the southeast
|
|
|
Projected Closing
|
Week of December 13th
|
|
17