For personal use only

Transcription

1 Takeover offer for Alesco 1 May 2012

2 Agenda 1 Overview of the Offer 2 Benefits for Alesco Shareholders 3 Strategic Rationale 4 Impacts on DuluxGroup 5 Summary Appendix

3 1. Overview of the Offer

4 Offer Overview Transaction overview Offer consideration DuluxGroup today announced that it intends to make an all-cash offer to acquire all of the ordinary shares that it does not already own in Alesco Under the offer, Alesco shareholders will receive $2.00 cash per Alesco share Represents a 43% premium to Alesco s last close and a 37% premium to the 3- month VWAP 1 Existing DuluxGroup holding DuluxGroup has acquired 19.96% of Alesco s shares The shareholding was acquired from some of Alesco s largest shareholders last night for $2.00 in cash, the same amount that will be offered to Alesco shareholders This will make DuluxGroup the largest shareholder in Alesco Funding Offer conditions Committed debt financing in place to fully fund the acquisition The offer will be subject to various conditions, including 90% minimum acceptance and confirmation of earnings and liabilities 1. As at 30 April

5 2. Benefits for Alesco Shareholders

6 Benefits for Alesco Shareholders Receive a substantial premium for Alesco shares 43% to last close and 37% to the 3-month VWAP 1 Certain value, with 100% cash consideration Support of Alesco s major shareholders Some of Alesco s largest shareholders have sold DuluxGroup a 19.96% interest in Alesco at the offer price of $2.00 Attractive exit from a company whose share price has significantly underperformed relative to the market index No brokerage fees payable by shareholders who accept 1. Up to and including 30 April

7 Attractive Offer Premium Offer premium relative to recent Alesco trading prices 1 $ % premium 38% premium 32% premium 37% premium 46% premium $1.80 $1.60 $1.40 $2.00 $1.20 $1.40 $1.45 $1.51 $1.46 $1.37 $1.00 $0.00 $0.80 Offer price Last close 5-day VWAP 1-month VWAP 3-month VWAP 6-month VWAP 1. Up to and including 30 April

8 Alesco Share Price Underperformance Alesco s share price has significantly underperformed the S&P / ASX Small Ordinaries Index over the past five years For personal use only Alesco share price versus S&P / ASX Small Ordinaries Index (rebased) 1 $16.00 $14.00 $12.00 $10.00 Share price $8.00 $6.00 $ % underperformance $2.00 $0.00 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Alesco ($) S&P / ASX Small Ordinaries Index (rebased) 1 1. S&P / ASX Small Ordinaries index rebased to Alesco s share price of $13.14 at start of examined period (30 April 2007). 7

9 3. Strategic Rationale

10 Strategic Rationale Highlights The Garage Doors & Openers and Construction Products & Equipment divisions are the core focus of DuluxGroup s interest in Alesco, and together contribute the majority of Alesco s earnings DuluxGroup intends to conduct a review of the Cabinet & Window Products and Appliances businesses, immediately following acquisition, on both a strategic and financial level. Following this review, DuluxGroup will make an informed decision as to whether to retain or divest these businesses Garage Doors & Openers Construction Products & Equipment Cabinet & Window Products and Appliances Subject to Strategic Review 9

11 Strategic Rationale Highlights Compelling strategic rationale for a combination of DuluxGroup and Alesco Grows DuluxGroup s market leading positions in Australia and New Zealand by leveraging DuluxGroup s core strengths as expert marketers of premium branded products that go to market through extensive trade and consumer channels Garage Doors & Openers Construction Products & Equipment Resilient markets Local industry with limited imports Exposure to residential consumer markets with a significant proportion relating to existing homes Exposure to new end markets including infrastructure, commercial and industrial markets Technological expertise provides competitive advantage Leadership positions Market leader in Australia Well known consumer brands Leading market position Product breadth Consumer driven product with aesthetics and brand trust a key purchase driver Opportunity to leverage DuluxGroup brand and colour capability Logical extension to DuluxGroup s specialty adhesives and performance coatings Channel breadth Largest accredited dealer network (over 100 accredited dealers 1 ) Opportunity to leverage DuluxGroup s trade distribution network capability to build stronger dealer relationships Opportunity to extend DuluxGroup products into new end markets Opportunity to bring Parchem technology into DuluxGroup s retail and residential markets Leverage DuluxGroup s trade distribution network and capability Financial discipline Expected to be EPS accretive in the first full year of ownership (excluding one-off transaction related costs) Synergy potential beyond corporate costs Post-transaction debt metrics to remain comfortable 1. Source: Alesco website 10

12 Strategic Rationale Garage Doors & Openers DuluxGroup s core strengths are closely aligned to key success factors for GD&O Garage Doors & Openers key success factors Management of leading brands Predicting and meeting consumer preferences for important aesthetics-driven purchases DuluxGroup key strength? DuluxGroup value add Proven track record of managing leading brands Opportunity to leverage DuluxGroup s marketing expertise Opportunity to cross-leverage DuluxGroup s brand and colour capabilities (e.g. colour consultants) to provide complete exterior colour service across the home Understanding trade and end consumer channels Strong understanding of the trade and end consumer base in residential homes market Strong relationships with architects and specifiers relevant to architectural renovation, new housing and commercial sectors Opportunity to provide better tools to help dealers be more productive and improve the customer experience Management and optimisation of large trade distribution networks Build stronger dealer networks by using DuluxGroup s extensive trade distribution network capability which reaches more than 35,000 customers via 230 trade outlets, including 72 DuluxGroup Trade Centres, and via direct relationships with residential and commercial industry specialists such as architects, specifiers, project managers and developers Local manufacturing and supply chain expertise Proven track record of excellence 11

13 Strategic Rationale Construction Products & Equipment Opportunities to extend DuluxGroup s and Parchem s product ranges and cross-sell products into new end markets Parchem s positions in the commercial and infrastructure markets provide new channels for DuluxGroup s Acratex, protective coatings and Selleys products Opportunity to utilise Parchem technology to grow in retail and residential markets End market extension Retail Residential Commercial Infrastructure Product extension Extension of DuluxGroup s brands and products into new end markets Extension of Parchem technology into DuluxGroup s main end markets Leverage DuluxGroup s trade network capability 12

14 Strategic Rationale Earnings Diversification DuluxGroup remains predominantly an Australasian paints company, however, the proposed acquisition increases earnings diversification across end markets and products Provides DuluxGroup with new sources of revenue and earnings growth DuluxGroup pro forma sector exposure 1 DuluxGroup pro forma FY11 revenue 1 Commercial / Industrial / Infrastructure 19% (20% excl. C&WP and A 2 ) Selleys Yates 17% (19% excl. C&WP and A 2 ) Alesco 33% (22% excl. C&WP and A 2,3 ) C&WP and A 2 15% CP&E 15% 25% 10% New Housing 20% (16% excl. C&WP and A 2 ) Preacquisition 75% GD&O 30% Preacquisition 30% Retail Paints 20% (23% excl. C&WP and A 2 ) Postacquisition Maintenance & Home Improvement 62% (64% excl. C&WP and A 2 ) Other Coatings 10% (12% excl. C&WP and A 2 ) Postacquisition Trade Paints 20% (23% excl. C&WP and A 2 ) 1. Based on FY11 revenue from Alesco FY11 Annual Report and DuluxGroup FY11 Annual Report. Post-acquisition revenue excludes DuluxGroup estimates of Parbury and Dekorform revenue. 2. Cabinet & Window Products and Appliances. 3. Note: Appliances division has some retail exposure. Source: DuluxGroup company reports, Alesco company reports. Trade Retail 13

15 4. Impacts on DuluxGroup

16 Financial Impacts and Funding Financial impacts Expected to be EPS accretive to DuluxGroup in the first full year of ownership 1 Potential for synergies over and above corporate cost synergies 19.96% interest in Alesco ($38m) funded from existing debt facilities Funding In addition to existing debt capacity, DuluxGroup has $270m of new committed financing facilities in place to fund the acquisition Post-transaction pro forma leverage (net debt / EBITDA) is expected to be approximately 2.4x. DuluxGroup intends to reduce leverage to below 2.0x over time 1. Excluding one-off transaction related costs. 15

17 5. Summary

18 Summary An attractive offer for Alesco shareholders Certainty of value and attractive offer premium Compelling strategic rationale for DuluxGroup Expected to be EPS accretive in the first full year of ownership 1 DuluxGroup has a holding of 19.96% of Alesco s shares, making it the largest shareholder DuluxGroup has approached Alesco's Chairman seeking an opportunity to discuss the offer Further information regarding the offer will be contained in the Bidder s Statement to be provided shortly 1. Excluding one-off transaction related costs. 17

19 Investor and Media Contacts Investor contact: Stuart Boxer Chief Financial Officer DuluxGroup Media contact: Lisa Walters Corporate Affairs Manager DuluxGroup or

20 Appendix

21 Garage Doors & Openers Overview Australia and New Zealand s largest manufacturer of garage doors and openers Overview Market leader with strong brands Manufacturing capacity of 400,000 doors and 500,000 openers annually Manufacturing and sales presence across Australia and New Zealand, as well as a manufacturing presence in China Channels to market include dealers, builders, prefab channels, industrial channels and direct sales FY11 revenue of $171.5m, EBIT of $22.1m End markets Non-residential construction 18% Renovation 37% New housing 45% Products Key brands Key customers Garage doors Sectional doors and rolling doors Speciality doors Industrial doors Openers Residential sectional door and rolling door openers Residential gate openers Industrial rolling door openers / sectional door openers Accredited and independent dealers Builders Industrial / commercial customers Individual / retail customers Source: public information available from Alesco s ASX announcements and company websites. FY11 revenue and EBIT sourced from Alesco s FY11 annual report. 20

22 Construction Products & Equipment Overview A leading manufacturer and distributor of products and equipment to the Australian and New Zealand concrete and construction markets Overview Parchem is a leading player in the Australian construction chemicals market Sales presence across Australia and New Zealand Owns or has exclusive distribution arrangements for most of the brands sold through the business and manufactures around 50% (by value) of products sold Majority (69%) of business direct to user (15% trade stores, 16% resellers) FY11 revenue of $112.0m, EBIT of $8.3m End markets Non-residential construction 68% Includes infrastructure, commercial and industrial sectors New housing 26% Renovation 6% Products Key brands Key customers Construction Products Jointing systems and water stops Concrete repair, grouts and protective engineering coatings Industrial flooring and surface treatments Waterproofing and architectural coatings Construction Equipment Soil and concrete compaction equipment Concrete vibrators, pumps and finishing Surface preparation equipment (e.g. grinding, polishing) Specifiers Consulting engineers Asset owners / developers Contractors and applicators Decorative Surfaces Stamped and stencil concrete Decorative internal concrete / polymer flooring Source: public information available from Alesco s ASX announcements and company websites. FY11 revenue and EBIT sourced from Alesco s FY11 annual report. 21

23 Cabinet & Window Products and Appliances Leading supplier and distributor of cabinet hardware, windows, doors and glazing and industrial products to specialised trade industries Overview End markets 1 Supplies the cabinet and furniture making industry, window, door and glazing and industrial markets in Australia and New Zealand #1 supplier of hardware to kitchen cabinet makers #1 supplier of hardware, components and industry specific tools and consumables to the domestic and commercial window and door market Over 25 branches across Australia, with new Functional Design and Selection Centre showrooms to be rolled out across the country Robinhood (part of Appliances division) is a leading Australasian brand of niche kitchen and laundry appliance products Renovation 47% Non-residential construction 8% New housing 44% Products Distributed brands Key customers Cabinet hardware Drawer systems and hinges Home products including furniture handles and knobs, kitchen accessories, decorative lighting, sinks and basins Office, shop and wardrobe systems Sealants, adhesives and fasteners Tools and accessories Window, door and glazing Window and door hardware Security products Glass and glazing Sealants, adhesives and fasteners Safety equipment, storage and handling Cabinetmakers Builders Window and door fabricators Glaziers Specifiers and architects 1. End market split for Cabinet & Window Products only. Source: public information available from Alesco s ASX announcements and company websites. 22

24 Important Notice The material in this presentation is a summary of the proposed takeover offer (Offer) for Alesco by DuluxGroup Limited (DuluxGroup). The presentation includes an overview of the mechanics, key terms and perceived benefits to DuluxGroup of the Offer. The information is current as at the date of release, 1 May Further details about the Offer are set out in DuluxGroup s announcement of the Offer released to ASX s companies announcement platform on 1 May 2012 and will be contained in the Bidder s Statement prepared on behalf of DuluxGroup. This presentation also contains certain information concerning Alesco, its business and assets which has been prepared by DuluxGroup using publicly available information (together Alesco Information) and none of Alesco or its officers, employees, agents or advisors has independently verified any Alesco Information contained in this presentation. While every effort is made to provide accurate and complete information, no representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, synergies, benefits, returns or statements in relation to future matters contained in the presentation (forward-looking statements). Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of DuluxGroup and its Directors) which may cause the actual results or performance of DuluxGroup to be materially different from any future results or performance expressed or implied by such forward looking statements. To the maximum extent permitted by law, DuluxGroup disclaims any responsibility for the accuracy or completeness of any information contained in this presentation including any forward-looking statements and disclaims any responsibility to update or revise any information or forward-looking statement to reflect any change in DuluxGroup s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based. This presentation provides information in summary form only and is not intended to be complete. It does not constitute an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any securities and the information contained in this presentation should not be relied upon by investors or potential investors in making an assessment of DuluxGroup, Alesco or the Offer or in assuming any liability or other obligation. Investors or potential investors in the securities of DuluxGroup or Alesco should read the Bidder s Statement and Target s Statement prepared on behalf of DuluxGroup and Alesco respectively for further information in respect of the Offer, and should consider seeking independent advice before making any decision in relation to the Offer. This presentation should also be read in conjunction with other publicly available material relating to DuluxGroup. Further information including historical results and a description of the activities of DuluxGroup is available on our website, To the maximum extent permitted by law, neither DuluxGroup nor its related bodies corporate, Directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any direct, indirect or consequential loss arising from the use of this presentation or its contents or otherwise arising in connection with it. Parchem Construction Supplies, B&D, Garador, DOMINATOR, B&D Doors & Openers, Automatic Technology, Emer-Proof, Emer-Clad, DURAFLOOR Industrial Flooring, Vandex, Index, Corkjoint, Flextool, DT Fauxtex, Stampcrete and ColourThru, are trade marks of, or are used by, an Alesco Group company. FOSROC is a registered trade mark of Fosroc International Limited, used under licence by an Alesco Group company. Blum, Hera, Lamello, VAUTH-SAGEL, Bohle, TRUTH Hardware, DOW CORNING, LOCKWOOD, ASSA ABLOY, breezway, Oliveri and Whitco are brands distributed by an Alesco Group company. 23