Attached files
| file | filename |
|---|---|
| 8-K - 8-K - OM GROUP INC | d8k.htm |
| EX-2.1 - EX-2.1 - OM GROUP INC | dex21.htm |
| EX-99.1 - EX-99.1 - OM GROUP INC | dex991.htm |
| EX-10.1 - EX 10.1 - OM GROUP INC | dex101.htm |
 Vacuumschmelze (VAC)
Acquisition
July 5, 2011
Exhibit 99.2 |
 Forward-Looking Statements
This presentation may include forward-looking statements for purposes of the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based upon specific
assumptions and are subject to uncertainties and factors relating to the
company's operations and business environment, all of which are difficult to
predict and many of which are beyond the control of the company.
These uncertainties and
factors could cause actual results of the company to differ materially from those
expressed or implied in the forward-looking statements contained in the
foregoing discussion. A more complete disclosure about forward-looking
statements can be found in our most recent annual report on Form 10-K.
The company undertakes no obligation to update any forward-looking
statements as a result of future developments or new information. 2
|
 Agenda
Transaction Overview
VAC -
Company Overview
Transaction Rationale
Financial Summary
3 |
 Transaction Overview |
 OM
Group acquisition of VAC creates meaningful expansion into adjacent and high
growth markets Agrees to acquire VAC Holding GmbH from One Equity
Partners Leading producer of advanced materials and integrated magnetic
solutions Market leader in solar inverter technology and positioned to grow
with wind energy output
Supplier of technically differentiated products to automotive, electrical
distribution and retail sectors
Contributes complementary value-added specialty products with strong recurring
cash flows and an attractive growth profile
Purchase price of €700mm to be funded through equity, available cash and
new credit facilities
Maintain financial strength and flexibility
Expected closing in 3Q 2011 subject to customary regulatory approvals
5 |
 …
and delivers on our strategic objectives to transform
through diversification
VAC participates in attractive market sectors
Above GDP underlying organic growth potential
High margin potential through product differentiation
Enhances position and expertise in innovative technologies serving
diverse range of end markets
Maintains global exposure while fortifying presence in key regions
Moves us closer to the end user
Customer partnership in new product development
Enables OMG to enhance value-add proposition
6 |
 VAC
– Company Overview |
 A
global business with diverse and attractive end markets Founded in 1923
Headquarters: Hanau, Germany
Employees: 4,500 worldwide
160 R&D scientists and engineers
Manufacturing facilities: 7
Three divisions:
Materials & Parts (MP) -
#1 market position globally
Cores & Components (CC) -
#1 market position globally
Permanent Magnets (PM) -
#1 market position in Europe; #5 market position
globally
Customer base of over 1,600 with no one customer accounting for
more than 9% of sales
End markets: Aerospace, Automation & Drives, Automotive,
Electronic Article Surveillance, Energy Conversion & Distribution,
Electrical Installation Technology & Industrial Technology
Strong senior management with 27 years’
industry experience
Company Description
Q1 2011 LTM Sales by Segment
Q1 2011 LTM Sales by Geography
MP
34%
PM
27%
CC
39%
Total Net Sales (unaudited): €389m
(1)
Germany
34%
Europe
(ex-Germany)
34%
Asia
19%
Americas
13%
Total Net Sales (unaudited): €389m
(1)
8
(1) VAC financial results presented on IFRS basis |
 Global footprint supports strong regional demand and furthers
portfolio diversification
9
Hanau, Germany
Employees:
1,350
Global Headquarters
R&D Center
Manufacturing
Technology Base
BUs: MP, PM, CC
Ulvila, Finland
Employees:
70
Neorem (since 2007)
BUs: PM
Shenyang, China
Employees:
1,100
Established in 2001
BUs: CC
Beijing, China
Employees:
430
SANVAC Joint Venture
(since 2005)
BUs: PM
Horna Stred, Slovakia
Employees:
1,100
NAFTA Sales Headquarters
Employee: 21
Elizabethtown, KY
Asia/ Pacific Region Sales
Headquarters
Employees: 17
Singapore
Sales offices with direct representatives
Source: Company information
Pekan, Malaysia
Employees:
780
Established in 1996
BUs: CC
Sales partners/cooperations
Established in 1997
BUs: CC, MP, PM
European Sales
Headquarters
Employees: 34 |
 VAC
serves a diversified and fast-growing set of end market segments
Aerospace &
Transportation
Automation & Drives
Automotive
Electronic Article
Surveillance &
Communication
Energy Conversion &
Distribution
Electrical
Installation
Technology
Industrial
Technology
Distributors
Other
2%
15%
16%
12%
19%
17%
7%
5%
7%
10
Source: VAC Management. |
 Transaction Rationale |
 VAC’s strategic fit with OMG
Established company driven by technological innovation
Recognized leader in the high-growth end markets it serves
Proven business model which yields attractive, sustainable margins
Product offerings move OMG closer to customer
Highly specialized products with high barriers to entry
Organic and strategic growth opportunities
Favorable positioning in China and other emerging economies
Meets financial criteria
12 |
 VAC
aligns with OMG’s strategic objectives Leverage Existing
Competencies
Process & product know-how in inorganic
materials
Converting key raw materials to technically-
differentiated products and components
Collaboration with customers to add market value
Broaden into
Adjacent Markets
Extends geographic reach in Europe and Asia
Expands position in solar energy
Create New
Growth Platforms
Strong position in wind energy
Creates position in automation, automotive,
energy conversion & distribution, and electrical
installation
13 |
 Financial Summary |
 VAC
meets or exceeds financial acquisition criteria Creates corporate scale with
approximately: $1.9B in net sales
$200M in operating profit
Accretive to earnings
Provides sustainable earnings linked to product innovation
Expands margins
Strong cash flow from operations
Financial synergies
Utilizes European cash balance
Preserves balance sheet strength and flexibility at low leverage
15 |
 Acquisition financing
Purchase price of €700 million (approximately $1 billion)
Implies 8.6x
(1)
EBITDA transaction multiple on 2011E basis
New $900mm credit facilities (USD / €), including new $200mm revolving
credit facility
$50mm of OMG common equity
Remaining closing amounts to come from available cash
New revolver to remain undrawn at closing
Financing commitments to support transaction
BofA Merrill Lynch, PNC and BNP Paribas
Expected Net Debt / EBITDA ratio below 2.0x
16
(1) Multiple based upon EBITDA according to IFRS accounting principles
|
 Continued diversification of OMG’s technology platforms
(1) Unaudited; assumes USD/EUR= 1.45; VAC results presented on IFRS basis
Q1 2011 LTM Sales ($m)
Advanced
Materials
52%
Battery
Technologies
10%
Specialty
Chemicals
39%
Advanced
Materials
35%
Battery
Technologies
7%
Specialty
Chemicals
26%
VAC
32%
OMG Stand-Alone
Pro Forma
(1)
Total Sales: $1.2B
Total Sales: $1.9B
17 |
 €
346
€
389
€
74
€
117
2010
Q1 '11 LTM
Q1 '10
Q1 '11
€
40
€
54
€
5
€
19
2010
Q1 '11 LTM
Q1 '10
Q1 '11
VAC is a profitable, growth company
Sales rebounded from 2009 downturn;
exceeded pre-crisis levels in 2010
Growth from continuous product innovation
and a focused market approach with an
emphasis on fast-growing niches
High single-digit growth expectations
Total Net Sales (€m)
(1)
Operating Profit (€m)
(1)
Attractive Operating Profit margins
exceeding pre-crisis levels
Continuing product mix shift to higher value-
added products
Margin improvement expected in 2011 and
beyond
18
(1) VAC financial results presented on IFRS basis |
 VAC
enhances long-term outlook and earnings growth Favorable long-term
growth characteristics of end markets Healthy organic growth engine driven by
innovative technology Technically differentiated products customers use to
meet exacting performance requirements
Proven capability to successfully integrate acquisitions
Financial discipline and flexibility to enhance shareholder value
19 |
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