Proposed Acquisition of Altadis. 18 July 2007 Imperial Tobacco Group PLC

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Transcription:

Proposed Acquisition of Altadis 18 July 2007 Imperial Tobacco Group PLC

Gareth Davis Chief Executive

Disclaimer This presentation includes certain forward looking statements that identify expectations of future events or results. All statements based on future expectations rather than historical facts are forward looking statements that involve a number of risks and uncertainties and Imperial Tobacco cannot give assurance that such statements will prove to be correct. Nor should any such statement within this presentation be interpreted to mean that future earnings per share will necessarily be higher than historical earnings per share. Without prejudice to the generality of the foregoing, this presentation may be deemed to include forward looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. This presentation should be read in conjunction with our periodic interim and annual reports and registration statements filed with the Securities and Exchange Commission, copies of which are available upon request from Imperial Tobacco Group PLC, PO Box 244, Upton Road, Bristol BS99 7UJ, UK. 3

Transaction Summary Proposed offer of 50 per Altadis share in cash - equity value of 12.6bn ( 8.5bn * ) - Enterprise Value of 16.2bn ( 11.0bn * ) To be recommended by Altadis board Financed by new debt and a rights issue Additional value from operational efficiencies, non-core asset divestments and tax structuring Operational efficiencies of c. 300m pa Returns expected to exceed WACC by second full financial year of ownership Note: * illustrative exchange rate used of 1.4757 = 1 4

Strategic Rationale A great strategic fit Meets our established acquisition criteria Strengthens position as world s no.4 Major enhancement to operating platform and scale Mature and developing market opportunities Stronger & more diversified brand and product portfolios Revenue benefits and substantial cost savings Significant value for Imperial shareholders 5

Process Considerations Process driven by Spanish takeover laws - new laws effective from 13 August 2007 Offer document filed with CNMV today - approval expected in September Shareholder approval required at EGM - shareholder circular to be posted today Anti-trust clearance requirements - EU Commission and US Hart-Scott Rodino Potential completion in Q1 FY08 6

Funding Debt New bank facilities of 9.2bn - refinance certain existing Imperial & Altadis facilities - additional borrowings for acquisition No material change to average cost of debt Equity 5.4bn standby underwriting & equity bridge facility Estimated 5bn rights issue within 12 months - sized at launch to retain investment grade 7

Key Financials Price represents EV/EBITDA multiple of 14.2x * - 11.1x * including synergies and costs 32% premium to 12 March 2007 closing price ** Returns expected to exceed WACC - by the second full financial year of ownership - approaching WACC in first full financial year EPS enhancement expected in first full financial year of ownership - returns more favourable than buybacks Adjusted tax rate of c.26.5% for Enlarged Group Note: * based on results to 31 December 2006 pre exceptional costs; ** since when 1.10 per share has been paid to Altadis shareholders in dividends; WACC estimated to be c.6.5% 8

Operational Efficiencies Operational efficiencies of c. 300m * pa by end of second full financial year - lower production and purchasing costs - sales and marketing synergies - rationalisation of corporate overheads Estimated one-off cash costs of c. 470m Sale of non-core assets of 650m Note: * operating efficiencies are in addition to the 70m unrealised savings announced as part of Altadis restructuring plans in 2003 and 2006 9

Altadis overview Three core businesses - cigarettes, cigars, logistics Well known cigarette and cigar brands Broad international presence c.27,400 employees 27 manufacturing sites * Similar litigation profile to Imperial Note: *excludes Seville cigarette factory as closure announced 10

Altadis 2006 results Economic sales * 3,970m EBITDA 1,148m 30% 5% 43% 27% 3% 46% 22% 24% Cigarette Cigar Logistics Other Note: figures for year ended 31 December 2006; * as defined by Altadis 11

Altadis cigarette (1) 2006 cigarette volumes: 112bn * 21% By market 25% 11% 11% 13% 19% 34% By brand 22% Spain France Morocco Russia Rest of Europe Other 7% 11% 13% 13% Gauloises Fortuna Balkan Star Ducados Marquise Other Note: * excludes fine cut tobaccos and brands licensed to Imperial totalling c.7bn stick equivalents 12

Altadis cigarette (2) Gauloises Blondes Sold 21.4bn sticks in FY06 Major markets: France, Germany, Austria and Middle East Q1, 2007 recovery in France and Middle East Fortuna Sold 15.1bn sticks in FY06 Major markets: Spain, Morocco, France and Italy Recovery in Spain following increase in MIOD* Note: * minimum incidence of duty 13

Altadis cigar World No.1 in cigars - market leader in US, Spain and France Key US premium brands - Montecristo, Romeo y Julieta, H. Upmann Key US mass market brands - Backwoods, Dutch Masters, Phillies 50% interest in Corporacion Habanos 14

Altadis logistics Servicing > 510k PoS in Western Europe and Morocco Tobacco 47% of total FY06 Logistics economic sales Positions in Spain, Portugal and Italy (through Logista) as well as in France and Morocco FY06 economic sales by market 16% 5% Portugal France 46% Spain & Italy 33% Morocco 15

The Enlarged Group a stronger no.4 cigarette player Sales of FMC sticks PMI BAT JT & Gallaher 1,015bn 930bn 603bn Enlarged Group 312bn Imperial Tobacco Altadis 200bn * 112bn ** KT&G 94bn Note: figures for 2006; * including 14bn for Commonwealth Brands; ** excludes fine cut tobaccos and brands licensed to Imperial 16

The Enlarged Group broadens geographic footprint Current ITG Net Revenue 3.3bn 34% 25% 5% 17% Proforma Net Revenue 6.0bn 14% 2% 3% 29% 14% 12% 9% 14% 12% 10% UK Germany Spain & Portugal France Rest of W Europe US Rest of World Note: 2006 numbers plus Commonwealth and using exchange rates of $1.95 and 1.50 = 1 17

The Enlarged Group strong cigarette brand fit Imperial Altadis 18

The Enlarged Group strong cigarette positions in Europe FMC Market Imperial Combined Volumes Current Combined Market Market (bn sticks) Share (%) Share (%) Position UK 49 46.4 46.4 1 Germany 93 21.2 26.9 2 Spain 87 5.4 36.6 1 France 56 3.9 28.5 2 Russia 337 5.6 11.4 4 Italy 89 1.3 3.0 4 Note: Imperial estimates; market volumes for 12 months to 31 March 2007; current cigarette shares are average for six months to 31 March 2007 19

The Enlarged Group enhanced cigarette shares FMC Market Imperial Combined Volumes Current Combined Market Market (bn sticks) Share (%) Share (%) Position Morocco 14-87.0 1 Poland 73 16.6 24.0 2 Cambodia 6 0.1 18.1 3 Finland 5-16.1 2 Belgium 10 10.1 16.0 3 Austria 14 7.3 14.3 3 Netherlands 12 10.5 12.7 3 Czech Rep 26 11.9 12.2 3 Greece 31 8.2 9.0 6 Switzerland 12 0.8 2.4 4 Argentina 40-1.7 4 Note: Imperial estimates; market volumes for 12 months to 31 March 2007; current cigarette shares are average for six months to 31 March 2007 20

The Enlarged Group strong tobacco and cigar brands Imperial Altadis Fine cut tobaccos Cigars Snus Cigars 21

The Enlarged Group logistics Attractive and complementary business - continue to be run on a standalone basis Good margins Strongly cash generative No final decision on acquisition of Logista minority - offer to buy out minority or reduce to below 30% * Note: * percentage specified under proposed new Spanish takeover laws 22

The Enlarged Group management and employees Antonio Vázquez and Jean-Dominique Comolli invited to join the Imperial Board Headquarters in Bristol - continued presence in Madrid and Paris Swift integration of two businesses 23

Imperial Acquisitions a track record of value creation (2006) (2007) (2006) (2005) 6.2bn invested (2007) (2004) (1997) (2002) (2001) (1998) (2000) (2000) (2000) (1999) 24

Summary A great strategic fit Meets our established acquisition criteria Strengthens position as world s no.4 Major enhancement to operating platform and scale Mature and developing market opportunities Stronger & more diversified brand and product portfolios Revenue benefits and substantial cost savings Significant value for Imperial shareholders 25

Acquisition of Altadis 18 July 2007 Imperial Tobacco Group PLC

Appendices

Enterprise Value & Multiples Offer equity value (252.4m shares at 50/share) (+) Altadis net debt (Q1 2007) (+) Minorities Total adjustments to equity value Enterprise value FY06 EV/EBITDA FY07 EV/EBITDA (consensus * ) FY06 P/E FY07 P/E (consensus * ) bn 2.6 1.0 bn 12.6 3.6 16.2 14.1x 13.1x 27.9x 22.4x * Source: Reuters Knowledge

Estimated Timetable principal events EVENT Offer filed with CNMV Imperial shareholder circular posted Last date for receipt of proxies for Imperial EGM Imperial EGM Expected approval of offer by CNMV and offer acceptance period commences Altadis EGM Expected closing of offer Expected payment to Altadis shareholders Launch of rights issue TIMING 18 July 2007 18 July 2007 11 August 2007 13 August 2007 September 2007 November 2007 November 2007 1-2 weeks after closing Within 12 months 29