(PDF) English - KUKA Aktiengesellschaft

Public tender offer for
all shares of Swisslog Holding AG
Presentation on September 26, 2014
Dr. Till Reuter, CEO of KUKA AG
Hans Ziegler, President of the Board of Directors of Swisslog Holding AG
KUKA Aktiengesellschaft | September 26, 2014
Page 1
Public tender offer
Key parameters
 Price of CHF 1.35 per Swisslog share
Offer
 Corresponds to a purchase price of CHF 338 million1 (EUR 279 million2) and an enterprise
value of CHF 353 million3 (EUR 292 million)
 15.4% premium on 60-day average price4 of CHF 1.17
Premium4
 8.9% premium on closing price as of 24 September 2014 of CHF 1.24
 25.0% premium on consensus analyst target price of CHF 1.08
 28.6% premium on 3-year average price4 of CHF 1.05
 66 2/3% ownership achieved by end of offer period
Terms
 No material negative developments of Swisslog’s business during the offer period
 Approvals by competent merger control authorities
 Swisslog Board of Directors will recommend to their shareholders to accept the offer
Other agreements
Offer period
 Tender agreement with Grenzebach Maschinenbau GmbH (62.847.602 shares)
 Tender agreement with Swoctem GmbH (37.781.547 shares)
 Planned publication of offer document on 6 October
 Planned offer period from 21 October to 17 November5
Calculated based on total number of Swisslog shares (251.3 million), less treasury shares (1.0 million) 2 Calculated based on exchange rate of EUR 1 / CHF 1.21 3 Using Swisslog’s figures: cash and cash
equivalents of CHF 33.4 million, financial liabilities of CHF 30.1 million (both based on last publicly available figure as of 30 June 2014), and pension provisions of CHF 18.2 million (last publicly available figure as of 31
December 2013) 4 Volume-weighted 5 KUKA reserves the right to extend the offer period
1
KUKA Aktiengesellschaft | September 26, 2014
Page 2
KUKA AG
Overview of the acquirer
2013 sales revenues: EUR 1,775 million
2013 EBIT: EUR 120 million
KUKA Robotics
7,990 employees
(EBIT margin: 6.8%)
KUKA Systems
Sales revenues: EUR 754 million
Sales revenues: EUR 1,046 million
EBIT: EUR 77 million (margin: 10.2%)
EBIT: EUR 61 million (margin: 5.8%)
 Leading supplier of automated production and
assembly solutions for industrial manufacturing
processes
 One of the world’s leading suppliers of industrial
robots including mobile platforms and software
KUKA Aktiengesellschaft | September 26, 2014
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Swisslog Holding AG
Overview of the company
2013 sales revenues: EUR 523 million1
2013 EBIT: EUR 17 million2
Warehouse & Distribution Solutions (WDS)
2,225 employees
(EBIT margin: 3.2%)
Healthcare Solutions (HCS)
Sales revenues: EUR 349 million
Sales revenues: EUR 175 million
EBIT: EUR 9 million (margin: 2.7%)
EBIT: EUR 13 million (margin: 7.4%)
• Leading automation solutions for warehouse and
distribution centres that enable customers to
deliver the right products to the right place at the
right time
• Automation solutions for hospitals
• Positioned as systems integrator combining own
products with those of third parties
• Stepping up activities in high-growth automated
medication management systems market
• Special expertise in material flow software
solutions
• Very strong position in North America, with
robust growth particularly in Asia
1
Calculated based on exchange rate of EUR 1 / CHF 1.21
KUKA Aktiengesellschaft | September 26, 2014
2 Includes
• Particularly strong position in pneumatic tube
systems for hospitals
headquarter costs of EUR 5 million
Page 4
Swisslog Holding AG
Supplier of solutions for complex automation tasks
Warehouse & Distribution Solutions (WDS)
Healthcare Solutions (HCS)
• Storage and retrieval
machines for pallet and
small-part high-bay
warehouses
• Hospital pneumatic
tube systems for
transporting drugs,
laboratory samples and
blood products
• Driverless container
transportation systems
(laundry, meals)
• Warehouse systems:
from small parts to
single items to pallets
KUKA Aktiengesellschaft | September 26, 2014
• Automation solutions
for hospital pharmacies
• Ensuring the right
medications reach the
right patients at the
right time
Page 5
Highlights of the planned transaction
Excellent fit with KUKA
1
Creating a global automation powerhouse
2
Access to attractive growth markets warehouse logistics and healthcare
3
Diversification of customer segments: enhanced stability of revenue and earnings
base through increase of General Industry sector share from 30% to around 50%
4
Additional sales potential for Swisslog through connection with KUKA’s
technology and sales platforms
5
Value growth potential for KUKA shareholders thanks to revenue and cost
synergies as well as margin boost at Swisslog
KUKA Aktiengesellschaft | September 26, 2014
Page 6
1
Creating a global automation powerhouse
Swisslog complements KUKA perfectly
KUKA Systems
Industries1
Healthcare
Aerospace
Automotive
Solution
Reis
Technical
Solutions
Cell
Service Robotics
Medical
Robotics
Industrial
Robotics
Component
Swisslog
Systems
Warehouse
Logistics
KUKA Robotics
Integrated software solutions and modular product platform
Robotics
expertise
Systems and
process
expertise
Application
and industry
expertise
Global market access
1
In planning stage
KUKA Aktiengesellschaft | September 26, 2014
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Systems and
process
expertise
2
Access to attractive growth markets for KUKA
GI is a growth market for automation
Growth markets for automation in General Industry (GI)
 Rising cost pressure, growing
quality demands
Logistics
 Increasing number of models /
products (e.g. E-commerce
offerings)
E-commerce
Healthcare
 Avoiding errors (e.g.
medications in hospitals)
 Shortening processes and
cycles (e.g. logistics)
 Interconnection (Internet of
Things)
Production logistics
KUKA Aktiengesellschaft | September 26, 2014
3C
Page 8
 Relatively low level of
penetration in some cases (e.g.
3C-market)
3
More stable revenue and earnings base through diversification of customer segments
More stability thanks to higher share of General Industry
Segments
Robotics
42%
KUKA
before
transaction
(2013)
End markets
Regions
Metal and electrical Other
engineering
10%
4%
Asia
16%
Automotive
suppliers
8%
Machine tools
and plant
engineering
10%
Automotive
67%
Europe
(except
Germany)
23%
North America
28%
Systems
58%
KUKA and
Swisslog
after
transaction
(2013)
Swisslog
23%
Robotics
32%
Pharmaceutical 2%
Germany
33%
Asia
16%
Other 3%
Food products 4%
Germany
29%
Retail / wholesale 7%
Hospitals 7%
Systems
45%
KUKA Aktiengesellschaft | September 26, 2014
General
Industry
26%
Page 9
Automotive
51%
Europe
(except
Germany)
26%
North America
29%
4
Additional sales potential for Swisslog through connection with KUKA
Innovation / Technology
Robots create definitive value added
3. Robot revolution
Mobile and multipurpose robots including
new applications
1. Robot revolution
Industrial automation
(movement of objects
from A to B)
KUKA Aktiengesellschaft | September 26, 2014
2. Robot revolution
Sensitive, safetyoriented, robot-based
automation (LBR iiwa)
Page 10
4. Robot revolution
Intelligent and
perceptive
robotics systems
(efficient use
of Big Data
for industrial
applications)
4
Additional sales potential for Swisslog through connection with KUKA
Solution
General Industry
KUKA Aktiengesellschaft | September 26, 2014
Page 11
Service Robotics
Consumer Goods
Machine Tool
Electronics
Healthcare
Logistics
Aerospace
Cell
Automotive
Component
Additional General Industry sectors
Expansion into high-growth industries
4
Additional sales potential for Swisslog through connection with KUKA
KUKA drives more growth for Swisslog
How KUKA and Swisslog match together
Vision for Swisslog
 Creation of integrated, cross-disciplinary
software and material flow solutions
Enterprise
Resource
Planning
 Swisslog with strong position in
warehouse management and material
flows
ERP
(e.g. SAP)
Communication
TCP / IP, UDP
Warehouse
management /
Material flow
software
HCS
Med
Portal
HCS
Trans
Portal
WDS
Ware
house
Mgmt
KUKA
Solution
Auto
motive
Log Mgmt
Communication
WM6 platform
Ethercat,
TCP / IP, UDP
App AGV Fleet
App X App X App X
Core
App AGV
Apps /
management Vehicle Coord Sys. Core Ext.
Controls
(Field / Shopfloor)
Sunrise
RC
KUKA Aktiengesellschaft | September 26, 2014
Sunrise
MbC
Sunrise
Nav
Sunrise
MC
Sunrise
xx
Page 12
 KUKA with market leading position in
innovative control components for
controlling KUKA systems and robots
 Use of integrated solutions as basis for
cost optimisation
 Joint control platform in the KUKA Group
4
Additional sales potential for Swisslog through connection with KUKA
Robots like iiwa are ideal for Swisslog’s markets
Product qualities of the LBR iiwa
 Human-machine cooperation enables automation
without protective barriers
 Sensitivity allows robots to be used more flexibly
 Automation with a small footprint
 Expansion of KUKA low-payload product portfolio
 Easy to operate thanks to manual demonstration
KUKA Aktiengesellschaft | September 26, 2014
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4
Additional sales potential for Swisslog through connection with KUKA
KUKA technology complements Swisslog know-how
Disruptive technology for
Swisslog logistics and
healthcare solutions:
Vision
AGV
 KUKA mobile robots for
highly flexible logistics
solutions
 Logistics processes: robots
hand-in-hand with humans
 KUKA sensitive robots for a
higher level of automation to
the point of order picking
 Sunrise & WM6: uniform
software platform for
optimally aligned logistics
and healthcare solutions with
the potential for new databased business models
 Use of service robots in
hospitals
Uniform software platform via
KUKA Sunrise and Swisslog WM6
KUKA Aktiengesellschaft | September 26, 2014
Page 14
5
Value growth potential for KUKA shareholders
Attractive revenue and cost synergies
Revenue
synergies
Knowledge
transfer
 Use of KUKA products in healthcare and
warehouse distribution projects (to date use of
third-party products)
 Knowledge transfer from KUKA to Swisslog
 End-to-end project management processes and
comprehensive design-to-cost measures
 Optimisation of joint procurement process
Procurement
Locations
 1-2% cost savings feasible considering combined
purchasing volume
 Swisslog can use existing KUKA infrastructure in
various locations
 Notable potential in Asia
Administration
 Use of shared services based on standardised SAP
systems
 Potential generated by simplifying structures
KUKA Aktiengesellschaft | September 26, 2014
Page 15
Synergies of
>CHF 10 million
annually based on
initial estimates
Synergies of CHF 10 million
annually or more based on
initial estimates
5
Value growth potential for KUKA shareholders
5% target margin already attained in Systems business
KUKA Systems EBIT margin
5.8%
Swisslog target
margin: 5%
 Swisslog targets a 5% EBIT margin
(2013: 3.2%)
 KUKA Systems business comparable
to that of Swisslog in many respects
4.7%
 Taking consistent action gave KUKA
Systems margin a boost over the 5%
target announced in 2011
4.0%
2.9%
 Combination of KUKA knowledge
transfer and steps already taken by
Swisslog management lays basis for
future margin increase
 Increase to over 5% realistic as with
KUKA Systems
2010
2010
2011
2011
KUKA Aktiengesellschaft | September 26, 2014
2012
2013
2013
Page 16
Financing the acquisition
Financing has been secured for the acquisition
Financing Concept
 Total amount of financing depends on the number
of Swisslog shares acquired
Borrowing
 Financing of the acquisition:
2/3 of Swisslog shares
(approx. EUR 190
million)
 Financing base is to be laid by a capital
increase: authorised capital allows issuance of
up to c. 1.8 million new shares without
subscription rights
 Utilisation of EUR 120 million to EUR 150 million
own liquid funds
KUKA’s liquidity
 Remaining amount to be secured by debt
financing
Capital increase
 Bridge loan ensures transaction financing
 Impact of transaction on KUKA´s financial ratios
(covenants) uncritical
KUKA Aktiengesellschaft | September 26, 2014
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Swisslog as part of the KUKA Group
Swisslog remains a Swiss brand
 Company remains located in Switzerland
 Swisslog’s traditional brand will be preserved
 Independent division within the KUKA Group
 Close connection between global site and sales structures
 Significant advantages from using KUKA expertise, particularly in technology and project
management
 Swisslog’s culture a fit with KUKA’s culture: focus on people and technologies
KUKA Aktiengesellschaft | September 26, 2014
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Considerations regarding price paid and multiple
Attractive premium for Swisslog shareholders
Implied EV/LTM EBIT multiples1
Implied offer premium
28.6%
25.0%
16.6x
14.5x
15.4%
Premium on
60-day avg.
share price2
~10.0x
Premium on
three-year
average price3
Offer price
Premium on
analyst
target price4
1
LTM EBIT is EUR 21.2 million (as of June 30, 2014)
Volume-weighted 60-day average price of CHF 1.17 (as of September 24, 2014)
3 Volume-weighted 3-year average price of CHF 1.05 (as of September 24, 2014)
4 Average analyst target price of CHF 1.08
5 Average of historical LTM multiples for past 3 years. Based on Capital IQ and Bloomberg
2
KUKA Aktiengesellschaft | September 26, 2014
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60-day
average
share price
Three-year
average
LTM EV/EBIT5
Conclusion
“Win-win”
transaction for KUKA and Swisslog
 Creates a global automation powerhouse
 Significantly broadens KUKA´s positioning and creates access to growth markets in which robots and
automation are continually becoming more important
 Enhanced growth potential for Swisslog through access to KUKA structures and expertise, especially
in robotics
 Value growth potential for KUKA shareholders thanks to more stable and diversified earnings sources
as well as revenue and cost synergies
 Transaction is EPS accretive before PPA (purchase price allocation) for KUKA as early as the first
year after closing
 Attractive premium for Swisslog shareholders
KUKA Aktiengesellschaft | September 26, 2014
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Disclaimer
This presentation includes forward-looking statements based on assumptions and estimates by KUKA Aktiengesellschaft management. Although management believes these
assumptions and estimates to be accurate, actual future performance and actual future results can deviate substantially from these assumptions and estimates due to various
factors.
These factors can include changes in general economic conditions, exchange rates and interest rates, as well as market changes. KUKA Aktiengesellschaft assumes no liability
and makes no guarantee that future performance and actual future results achieved will be consistent with the assumptions and estimates expressed here.
The tender offer described or referenced in this presentation (the "Offer") is not directly or indirectly made in the United States of America, the United Kingdom, Japan, Australia,
Canada or Japan nor in any other country or jurisdiction in which such Offer would be illegal, otherwise violate the applicable law or an ordinance or which would require KUKA
Aktiengesellschaft to change the terms or conditions of the tender offer in any way, to submit an additional application to or to perform additional actions in relation to any state,
regulatory or legal authority. It is not intended to extend the Offer to any such country or such jurisdiction. Documents relating to the Offer must neither be distributed in such
countries or jurisdictions nor be sent to such countries or jurisdictions. Such documents must not be used for the purpose of soliciting the purchase of securities of Swisslog
Holding AG by anyone from such countries or jurisdictions. Shareholders of Swisslog Holding AG not resident in Switzerland who wish to accept the Offer must make inquiries
concerning applicable legislation and possible tax consequences. Shareholders should refer to the detailed offer restrictions included in the offer document which is available on
the website of KUKA Aktiengesellschaft.
This publication constitutes neither an offer to sell nor a solicitation to buy or subscribe to securities of KUKA Aktiengesellschaft. Any such offer will be made solely to Qualified
Institutional Buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act").
The information contained herein is not for distribution, directly or indirectly, in or into the United States of America (including its territories and possessions of any State of the
United States of America or the District of Columbia) and must not be distributed to U.S. persons (as defined in Regulation S of the Securities Act) or publications with a general
circulation in the United States of America. This publication is not an offer of securities of KUKA Aktiengesellschaft for sale in the United States of America. The securities of
KUKA Aktiengesellschaft have not been and will not be registered under the Securities Act and may not be offered or sold in the United States of America absent registration or
an exemption from registration under the Securities Act, as amended. KUKA Aktiengesellschaft does not intend to register any portion of any offered securities in the United
States of America or to conduct a public offering of the Securities in the United States of America.
This publication is not an offer of securities of KUKA Aktiengesellschaft for sale in the United Kingdom, Canada, Japan or Australia."
© Copyright 2014 – KUKA Aktiengesellschaft – All rights reserved.
KUKA Aktiengesellschaft | September 26, 2014
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