Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Hillshire Brands Co | d723906d8k.htm |
| EX-99.1 - EX-99.1 - Hillshire Brands Co | d723906dex991.htm |
 Acquisition of Pinnacle Foods
May 12, 2014
Exhibit 99.2 |
 2
This presentation contains certain forward-looking statements with respect to the
financial condition, results of operations and business of Hillshire Brands
and the combined businesses of Pinnacle and Hillshire Brands and certain plans
and objectives of Hillshire Brands with respect thereto, including the expected benefits of the proposed merger .
These forward-looking statements can be identified by the fact that they do not
relate only to historical or current facts. Forward-looking statements
often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”,
“goal”,
“believe”,
“hope”,
“aim”,
“continue”,
“will”,
“may”,
“would”,
“could”
or
“should”
or
other
words
of
similar
meaning
or
the
negative
thereof.
There
are
several
factors
which
could
cause
actual
plans
and
results
to
differ
materially
from those expressed or implied in forward-looking statements. Such factors
include, but are not limited to, the expected closing date of the transaction;
the possibility that the expected synergies and value creation from the proposed merger
will not be realized, or will not be realized within the expected time period; the
risk that the businesses will not be integrated successfully; disruption from
the merger making it more difficult to maintain business and operational
relationships; the risk that unexpected costs will be incurred; changes in economic
conditions, political conditions, trade protection
measures,
licensing
requirements
and
tax
matters;
the
possibility
that
the
merger
does
not
close,
including,
but not limited to, due to the failure to satisfy the closing conditions, including
the receipt of approval of both Hillshire Brands’
stockholders
and
Pinnacle
Foods’
stockholders;
and
the
risk
that
financing
for
the
transaction
may
not
be
available on favorable terms. These forward-looking statements are based on
numerous assumptions and assessments made by Hillshire Brands in light of its
experience and perception of historical trends, current conditions, business
strategies,
operating
environment,
future
developments
and
other
factors
it
believes
appropriate.
By
their
nature,
forward-looking statements involve known and unknown risks and uncertainties
because they relate to events and depend on circumstances that will occur in
the future. The factors described in the context of such forward-looking
statements
in
this
announcement
could
cause
Hillshire
Brands’
plans
with
respect
to
Pinnacle
Foods,
actual
results,
performance or achievements, industry results and developments to differ materially
from those expressed in or implied by such forward-looking statements.
Although it is believed that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will
prove to have been correct and persons
reading
this
announcement
are
therefore
cautioned
not
to
place
undue
reliance
on
these
forward-looking
statements
which
speak
only
as
at
the
date
of
this
announcement.
Hillshire
Brands
assumes
no
obligation
to
update
the
information contained in this announcement (whether as a result of new information,
future events or otherwise), except as
required
by
applicable
law.
A
further
list
and
description
of
risks
and
uncertainties
can
be
found
in
Hillshire
Brands’
Annual Report on Form 10-K for the fiscal year ended June 29, 2013 and in its
reports on Form 10-Q and Form 8-K. Disclosure
|
 SEAN
CONNOLLY President & CEO |
 4
•
Creates $7 billion company with iconic brands and leading positions
in frozen, refrigerated and grocery categories
•
Unites complementary companies focused on brand building and
innovation while maintaining lean cost structure
•
Will deliver enhanced scale, margin expansion and input cost
diversification
•
Compelling
financial
impact
–
expect
immediate
accretion,
significant
synergies and meaningful revenue opportunities
•
Strong combined cash flows will enable continued investment to
support growth and drive long-term shareholder returns
Key Elements of the New Hillshire
Brands |
 5
1)
Including
Pinnacle
Foods’
outstanding
net
debt
2) Based on Pinnacle Foods’
2013 adjusted EBITDA (including the full realization of the Wish-Bone
acquisition synergies), the expected run-rate cost synergies related to
the transaction and Pinnacle Foods’ tax assets with an estimated
present value of approximately $390 million
3) Certain affiliates of Blackstone own 51% of Pinnacle Foods common stock; Vote
subject to terms and conditions of voting agreement Transaction Summary
•
Immediately accretive to EPS; 15%+ accretive in year 3
•
$140 million in cost synergies by end of year 3
•
Margin accretive and broader revenue opportunities
•
Diversified combined input cost basket
•
Expected to close by September 2014, subject to regulatory and
shareholder approvals
•
Blackstone
has
agreed
to
vote
its
shares
in
favor
of
transaction
(3)
•
Retain Hillshire Brands name
•
Headquartered in Chicago
•
Sean Connolly will serve as President and CEO
•
Hillshire Brands will appoint representative from Blackstone to its board
•
$6.6 billion
(1)
transaction
•
$18 per share in cash plus 0.5 Hillshire Brands shares
•
Effective
EBITDA
multiple
of
9.6x
(2)
Structure and
Consideration
Expected
Financial
Benefits
Timing and
Shareholder
Support
Organizational
Structure |
 6
1) Specialty includes snacks, private label and foodservice
Pinnacle Foods Today
Revenue
Composition
Top
Brands
$2.6
Billion
Frozen
Grocery |
 7
Source: Company filings, Wall Street research, FactSet and I/B/E/S, as of May 9,
2014 Note: Dollars in billions
1) Pro forma for Wish-Bone acquisition
2) Per
IRI
U.S.
Multi-Outlet
data
for
52
weeks
ending
April
20,
2014
for
all
frozen
categories
Improved scale both overall and in key
Frozen categories
LTM Frozen Retail Sales
(2)
CY13A Sales
7
Significantly improves overall scale
Combined Frozen platform would be the
#3 branded player
$18.2
$18.1
$17.4
$14.8
$8.9
$8.4
$6.6
$5.7
$4.1
$4.0
$2.6
$2.3
$1.9
$1.1
$7.2
$3.3
$2.9
$2.4
$2.0
$1.9
$1.8
$1.6
$1.3
$1.2
$1.2 |
 Shared
Company
Values:
Brand
Building,
Lean
Structure
“Become the most innovative
branded food company in the U.S.” “Reinvigorating Iconic Brands” Two Complementary
Organizations 8 |
 The New
Hillshire Brands Portfolio Highlights
Three >$1B Brands
One >$500M Brand
Three >$250M Brands
Three Up-and-Coming Brands
Refrigerated
Frozen
Grocery
9 |
 Source: Company filings and IRI U.S. Multi-Outlet data for the 52 weeks ended
March 30, 2014 Leading Market Shares
Brand
Category
Market
Position
IRI Market Share %
Breakfast Sausage
#1
30%
Frozen Protein Breakfast
#1
54%
Smoked Sausage
#1
25%
Lunchmeat
#3
9%
Frozen Vegetables
#1
26%
Hot Dogs
#1
22%
Cake / Brownie Mixes & Frostings
#2
24%
Shelf-Stable Pickles
#1
35%
Frozen Complete Bagged Meals
#1
29%
Table Syrups
#2/#3
21%
Italian Dressing
#1
25%
10 |
 11
New Avenues for Further Growth
Combined Scale and Co-Branding
Applying Hillshire’s Scale and Capabilities to
Pinnacle Brands
Coupling Hillshire’s Brands and Innovation
Capabilities With Pinnacle’s Scale
Frozen
Refrigerated
Center Store
Grocery |
 Stronger
Margin Profile and More Diversified Input Costs
Operating Income Margin
Input Cost Diversification
(2)
~10%
~15%
35%
25%
65%
75%
(1)
12
Note: Figures based on Hillshire’s FY’14 year to date 1) Estimate includes
three quarters’ impact of $140 million in expected run-rate synergies
2) Estimate represents approximate contribution to FY2013 total COGS Protein
Other |
 13
1) SG&A as % of sales is adjusted to exclude certain items for
comparability 2) Excludes MAP and distribution
(2)
(incl expected
synergies)
Lean Cost Structure
(2)
Adjusted Core SG&A as % of Sales
(1) |
 14
Meaningful Cost Synergies Drive Strong
Accretion
•
Estimated cost synergies of approximately $140 million by end of
Year 3
-
Primarily derived from supply chain enhancements and
consolidation of overhead expenses
•
Approximately $180 million in estimated costs to achieve synergies
•
Integration teams from both organizations ready to go; will
implement plans to achieve synergies and facilitate a smooth
integration after closing
•
Expected to be immediately accretive to EPS; 15%+ accretive in
year 3 |
 15
•
Compete in attractive and profitable categories
•
Disciplined investment in brand building and
innovation
•
Cost efficiencies help fund growth agenda
•
Potential to deliver significant shareholder return
Building Upon Core Investment Thesis
Elements of Core Investment Thesis
Transaction Impact |
 MARIA
HENRY EVP & CFO |
 17
Acquisition Metrics
(1) Represents approximate value calculated against the 10 day average
closing price of Hillshire Brands as of May 9, 2014. Transaction consideration
includes $18.00 in cash plus 0.5 Hillshire Brands shares per Pinnacle Foods share.
Fixed exchange ratio was determined to approximate value of $18.00
based
on
10
day
average
closing
price
of
Hillshire
Brands
as
of
May
9,
2014
(2) Reflects
approx.
$390
million
related
to
the
present
value
of
Pinnacle
Foods’
tax
assets
(3) Based on Pinnacle Foods’
2013 adjusted EBITDA (including the full realization of the Wish-Bone
acquisition synergies) Transaction Value
(1)
$6,627
NPV Est. Tax Assets
(2)
~$390
Adjusted Transaction Value
$6,237
Pinnacle Foods’
Adjusted EBITDA
(3)
$507
Expected Total Cost Synergies
$140
Expected Total EBITDA
$647
EBITDA Multiple
9.6x
$ in millions |
 18
1)
Based on Pinnacle Foods’
2013 adjusted EBITDA (including the full realization of the Wish-Bone
acquisition synergies) and the expected run-rate cost synergies related
to the transaction Financing and Liquidity
•
Financing structure
–
Equity consideration $2.1 billion
–
New debt
$4.8 billion
–
Cash on hand
$0.1 billion •
Goldman Sachs has provided
committed financing
•
Pro forma debt-to-EBITDA of
5.0x, including expected
synergies
(1)
•
Strong combined cash flow
provides support for leverage
levels
•
Focused on de-levering post
transaction to return to
investment grade
Financing
Liquidity |
 19
Capital Allocation
•
$0.70/share annual dividend will remain in place
•
Plan to target a payout ratio competitive with peers over time
•
Focused on de-levering to return to investment grade
•
Suspending current share repurchase program
•
Augment growth with opportunistic M&A
•
Overall top priority to support continued organic growth
•
Support of seamless integration of Pinnacle Foods
19
Invest in the
Business
Dividends
Debt Reduction
Share
Repurchase
and M&A |
 Q&A |
 21
Additional Disclosure
Additional Information and Where to Find It
The proposed merger transaction involving Hillshire Brands and Pinnacle Foods will be submitted to the
respective stockholders of Hillshire Brands and Pinnacle Foods for their consideration. In
connection with the proposed merger, Hillshire Brands will prepare a registration statement on
Form S-4 that will include a joint proxy statement/prospectus for the stockholders of Hillshire Brands and
Pinnacle Foods to be filed with the Securities and Exchange Commission (the “SEC”), and each
will mail the joint proxy statement/prospectus to their respective stockholders and file other
documents regarding the proposed transaction with the SEC. Hillshire Brands and Pinnacle Foods
urge investors and stockholders to read the joint proxy statement/prospectus when it becomes
available, as well as other documents filed with the SEC, because they will contain important
information. Investors and security holders will be able to receive the registration statement
containing the proxy statement/prospectus and other documents free of charge at the SEC’s
web site, http://www.sec.gov. These documents can also be obtained (when they are available) free of charge from
Hillshire Brands upon written request to the Investor Relations Department, 400 South Jefferson Street,
Chicago, Illinois 60607, telephone number (312) 614-8100 or from Hillshire Brands’
website, http://investors.pinnaclefoods.com, or from Pinnacle Foods upon
written request to the Investor Relations Department, 399 Jefferson Road, Parsippany, New
Jersey, 07054, telephone number (973) 434- 2924, or from Pinnacle Foods’ website, http://investors.pinnaclefoods.com.
Participants in Solicitation
Hillshire Brands, Pinnacle Foods and their respective directors and executive officers and other
members of management and employees may be deemed to be participants in the solicitation
of proxies from the respective stockholders of Hillshire Brands and Pinnacle Foods in favor of
the merger. Information regarding the persons who may, under the rules of the SEC, be deemed
participants in the solicitation of the respective stockholders of Hillshire Brands and
Pinnacle Foods in connection with the proposed merger will be set forth in the joint proxy
statement/prospectus when it is filed with the SEC. You can find information about Hillshire
Brands’ executive officers and directors in its definitive proxy statement for its
2013 Annual Meeting of Stockholders, which was filed with the SEC on September 12, 2013. You can find
more information about Pinnacle Foods’ executive officers and directors in its definitive
proxy statement for its 2014 Annual Meeting of Stockholders, which was filed with the SEC
on April 30, 2014. You can obtain free copies of these documents from Hillshire Brands and
Pinnacle Foods using the contact information above.
Non-Solicitation
This communication shall not constitute an offer to sell or the solicitation of an
offer to sell or the solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No offer of securities shall
be made except by means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended. |