Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Avago Technologies LTD | d934860d8k.htm |
| EX-99.2 - EX-99.2 - Avago Technologies LTD | d934860dex992.htm |
| EX-99.1 - EX-99.1 - Avago Technologies LTD | d934860dex991.htm |
 Your
Imagination, Our Innovation Avago to Acquire Broadcom
Creates World’s Leading Diversified Communications Semiconductor Company
Investor Presentation May 28, 2015
Exhibit 99.3 |
 Your
Imagination, Our Innovation Cautions Regarding Forward-Looking Statements
Forward-Looking Statements
Page 1
This communication contains forward-looking statements (including within the
meaning of Section 21E of the United States Securities Exchange Act of 1934, as
amended, and Section 27A of the United States Securities Act of 1933, as amended)
concerning Avago, Broadcom, Pavonia Limited (“HoldCo”), Safari Cayman
LP (“New LP”), the proposed transactions and other matters. These
statements may discuss goals, intentions and expectations as to future plans, trends, events,
results of operations or financial condition, or otherwise, based on current beliefs of
the management of Avago and Broadcom, as well as assumptions made by, and
information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,”
“plan,” “could,” “would,” “should,”
“estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or
similar words, phrases or expressions. These forward-looking
statements are subject to various risks and uncertainties, many of which are outside the parties’ control.
Therefore, you should not place undue reliance on such statements.
Factors which could cause actual results to differ from those projected or contemplated
in any such forward-looking statements include, but are not limited to, the
following factors: (1) the risk that the conditions to the closing of the transaction
are not satisfied, including the risk that required approvals from the shareholders
of Avago or Broadcom for the transaction are not obtained; (2) litigation relating to
the transaction; (3) uncertainties as to the timing of the consummation of the
transaction and the ability of each party to consummate the transaction; (4) risks that
the proposed transaction disrupts the current plans and operations of Avago or
Broadcom; (5) the ability of Avago and Broadcom to retain and hire key personnel; (6) competitive responses to the proposed transaction; (7) unexpected costs,
charges or expenses resulting from the transaction; (8) potential adverse reactions or
changes to business relationships resulting from the announcement or completion
of the transaction; (9) the combined companies’ ability to achieve the growth prospects and synergies expected from the transaction, as well as delays,
challenges and expenses associated with integrating the combined companies’
existing businesses and the indebtedness planned to be incurred in connection
with the transaction; and (10) legislative, regulatory and economic
developments. The foregoing review of important factors that could cause actual events to
differ from expectations should not be construed as exhaustive and should be read in
conjunction with statements that are included herein and elsewhere, including
the risk factors included in Broadcom’s and Avago’s most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K, respectively, and
Broadcom’s and Avago’s more recent reports filed with the SEC. Neither
Broadcom nor Avago undertakes any intent or obligation to publicly update or revise any
of these forward looking statements, whether as a result of new information, future
events or otherwise, except as required by law. |
 Your
Imagination, Our Innovation Strategically and Financially Compelling
Transaction Significantly enhances long-term shareholder value for both
companies Creates world’s leading diversified communications semiconductor
company Non-GAAP metrics exclude, where applicable, amortization of
intangibles, restructuring charges, stock-based compensation, discontinued operations and
loss on extinguishment of debt.
Broad portfolio of category-leading franchises
Levered to numerous secular growth trends
$750 million of run rate cost synergies
Immediately accretive to non-GAAP EPS and free cash flow
Page 2 |
 Your
Imagination, Our Innovation Creates a Global Semiconductor Leader
LTM Revenue ($B)
Source: Company filings as of May 27, 2015
Combined enterprise value of $77 billion
Page 3
$55.9
$27.5
$15.1
$13.2
$10.5
$8.5
$7.3
$6.9
$6.6
$6.6 |
 Your
Imagination, Our Innovation World’s Leading Diversified Communications
Semiconductor Company
Avago
(1)
LTM Rev: $6.6B
Wired Infrastructure
Enterprise Storage
Wireless Comm
Industrial & Other
Broadband &
Connectivity
Infrastructure &
Networking
LTM Rev: $8.5B
LTM Rev: $15.1B
Enterprise Storage
Wireless Comm
Wired Infrastructure
Industrial & Other
Broadcom
Combined
(2)
(1) Avago financials are pro forma for a full year of impact from the acquisition of
Emulex and PLX (2)
Page 4
Infrastructure & Networking and Broadband are included in Wired Infrastructure
segment; Connectivity is included in Wireless segment
|
 Your
Imagination, Our Innovation Broad Portfolio of Category-Leading Franchises
Leading
Positions
Key Customers
Page 5
RF
Fiber Optics
ASIC
Optocouplers
HDD
Storage
Connectivity
Wireless
Combo
Set Top Box
Broadband
Ethernet
Switching
PHY |
 Your
Imagination, Our Innovation Levered to Numerous Secular Growth Trends
LTE Transition
Datacenter Spending
IP Traffic
Connected Home / IoT
LTE Phone Growth (Units M)
Global IP Traffic (PB per Month)
Hardware Datacenter Spending ($M)
Shipments
of
Connected
Home
Devices
(Units
M)
Source:
Gartner 2014
Source:
Cisco VNI 2014
Source:
Gartner 2014
Source:
Gartner 2014
2020E
Page 6
467
1,316
2014
2019E
$9,397
$15,731
2014
2017E
62,476
131,553
2014
2018E
643
3,789
2014 |
 Highly
Profitable Financial Model ($ in B)
(5/03/2015)
(1)
(3/31/2015)
Long-term
model
Revenue
$6.6
$8.5
$15.1
5% CAGR
Gross margin
59%
55%
57%
60%
R&D % of revenue
15%
23%
20%
16%
SG&A % of revenue
6%
7%
7%
4%
Operating Income
$2.5
$2.1
$4.6
Op. Income margin
38%
24%
30%
~40%
EBITDA
$2.7
$2.2
$4.9
EBITDA margin
41%
26%
33%
~43%
+
Sustainable and
growing revenue
Proven operating
model with industry
leading margins
$750M of annual run
rate synergies within
18 months of closing
Strong cash flow
generation & liquidity
Track record of rapid
deleveraging
(1) Pro forma for LSI, PLX and Emulex transactions
(2) Depreciation estimated as 3% of revenues
Page 7
(2)
Your Imagination, Our Innovation
Note: Financials presented on non-GAAP basis, excluding stock-based
compensation, amortization of intangible assets, and other non-recurring expenses |
 Your
Imagination, Our Innovation Transaction Overview
Per Share
Consideration
Sources of Financing
Expected Closing
Timetable
Approval Process
Approval by Avago and Broadcom shareholders required
Certain regulatory approvals
~140 million shares and share equivalents
~$9 billion of new debt
~$8 billion of estimated combined company’s cash
By the end of the first calendar quarter of 2016, subject to customary closing
conditions Shareholders can elect:
Final elections subject to proration based on total transaction consideration
Transaction
Consideration
$37 billion of total transaction consideration
Broadcom shareholders expected to own 32% of combined company
(1) Based on Avago closing share price of $141.49 on May 27, 2015; (2) Restricted
equity security that is the economic equivalent off 0.4378 ordinary shares of Avago that
will not be transferable or exchangeable for a period of one to two years from the
closing of the transaction Page 8
–
–
–
$54.50 in cash; or
–
0.4378 ordinary shares; or
–
0.4378 restricted equity securities
(2)
; or
–
A combination of the above
~$17 billion in cash
Economic
equivalent
of
~140
million
Avago
shares
(current
value
of
~$20
billion
(1)
) |
 Your
Imagination, Our Innovation Transaction Financing
Credit Facility
$15.5 billion of new term loans at closing ($6.5 billion to refinance existing
debt facilities and $9 billion of new debt)
$500 million revolving credit facility (undrawn)
Facility allows for dividends and share repurchases
Pro Forma
Capitalization
Statistics
($B)
xLTM EBITDA
(w/ $750M
Synergies)
Gross Debt
$15.5
2.7x
Cash
$1.3
0.2x
Net Debt
$14.2
2.5x
Page 9 |
 Your
Imagination, Our Innovation No Offer or Solicitation
This
communication
is
not
intended
to
and
does
not
constitute
an
offer
to
sell
or
the
solicitation
of
an
offer
to
subscribe
for
or
buy
or
an
invitation
to
purchase
or subscribe for any securities or the solicitation of any vote in any jurisdiction
pursuant to the proposed transactions or otherwise, nor shall there be any sale,
issuance
or
transfer
of
securities
in
any
jurisdiction
in
contravention
of
applicable
law.
No
offer
of
securities
shall
be
made
except
by
means
of
a
prospectus
meeting
the
requirements
of
Section
10
of
the
United
States
Securities
Act
of
1933,
as
amended.
Subject
to
certain
exceptions
to
be
approved
by
the
relevant
regulators or certain facts to be ascertained, the public offer will not be made
directly or indirectly, in or into any jurisdiction where to do so would constitute a
violation of the laws of such jurisdiction, or by use of the mails or by any means or
instrumentality (including without limitation, facsimile transmission, telephone
and the internet) of interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction. Important Additional Information
Will be Filed with the SEC HoldCo will file with the SEC a registration statement
on Form S-4, which will include the joint proxy statement of Avago and Broadcom that also constitutes a
prospectus of HoldCo and New LP (the “joint proxy
statement/prospectus”). INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN
THEIR ENTIRETY CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT AVAGO, BROADCOM, HOLDCO, NEW LP, THE PROPOSED
TRANSACTIONS
AND
RELATED
MATTERS.
Investors
and
shareholders
will
be
able
to
obtain
free
copies
of
the
joint
proxy
statement/prospectus and other documents filed with the SEC by the parties through the
website maintained by the SEC at www.sec.gov. In addition, investors
and
shareholders
will
be
able
to
obtain
free
copies
of
the
joint
proxy
statement/prospectus
and
other
documents
filed
with
the
SEC
by
the
parties
by
contacting Avago Investor Relations at (408) 435-7400 or
investor.relations@avagotech.com (for documents filed with the SEC by Avago, HoldCo or New LP)
or andrewtp@broadcom.com (for documents filed with the SEC by Broadcom).
Participants in the Solicitation
Avago,
Broadcom,
HoldCo
and
New
LP
and
their
respective
directors
and
executive
officers
may
be
deemed
to
be
participants
in
the
solicitation
of
proxies
from the shareholders of Avago and Broadcom in respect of the proposed transactions
contemplated by the joint proxy statement/prospectus. Information
regarding the persons who are, under the rules of the SEC, participants in the
solicitation of the shareholders of Avago and Broadcom in connection with the
proposed
transactions,
including
a
description
of
their
direct
or
indirect
interests,
by
security
holdings
or
otherwise,
will
be
set
forth
in
the
joint
proxy
statement/prospectus
when
it
is
filed
with
the
SEC.
Information
regarding
Avago’s
directors
and
executive
officers
is
contained
in
Avago’s
Annual
Report
on
Form
10-K
for
the
year
ended
November
2,
2014
and
its
Proxy
Statement
on
Schedule
14A,
dated
February
20,
2015,
and
information
regarding
Broadcom’s
directors and executive officers is contained in Broadcom’s Annual Report on Form
10-K for the year ended December 31, 2014 and its Proxy Statement on
Schedule
14A,
dated
March
27,
2015,
each
of
which
are
filed
with
the
SEC
and
can
be
obtained
free
of
charge
from
the
sources
indicated
above.
Important Additional Information
Page 10 |