Mergers and Acquisitions Financial Statement Analysis & Valuation Dr. Ralf Schremper – Member of the Executive Board ProSiebenSat1 Media SE LMU | May 31, 2016 | Page 1 | June, 2015 |
Agenda 1 ProSiebenSat.1 Media SE at a Glance 2 Global M&A Trends 3 M&A Objectives & Process 4 Enterprise Value, Equity Value, Purchase Price 5 Transaction Documents (SPA & SHA) | Page 2 | Page 2 | June, 2015 | | May, 2016 |
ProSiebenSat.1 business segments Broadcasting Content Production 1 2 3 Digital & Adjacent German-speaking & Global Sales Digital Entertainment Format Development Free-to-Air Television Digital Commerce TV Content Production Basic Pay TV Ventures Digital Production Distribution Adjacent Global Sales | Page 3 | Page 3 | June, 2015 | | May, 2016 |
Key financials P7S1 Group in FY 2015 – Strong revenue and EBITDA growth Consolidated revenues (in EUR m) Recurring EBITDA (in EUR m) +9.2% +13.4% 3,260.7 925.5 847.3 2,875.6 FY 2014 FY 2015 FY 2014 FY 2015 | Page 4 | Page 4 | June, 2015 | | May, 2016 | Note: Continuing operations
Key financials P7S1 segments in FY 2015 – Strong revenue and EBITDA growth across all segments In EUR m Broadcasting German-speaking Digital & Adjacent Content Production & Global Sales Revenue Recurring EBITDA Revenue Recurring EBITDA Revenue Recurring EBITDA +4.3% +4.5% +38.6% +31.6% +29.7% +30.9% 2,152.1 734.3 846.4 170.2 262.2 25.0 2,062.7 702.8 202.2 19.1 129.3 610.7 FY 2014 FY 2015 FY 2014 FY 2015 FY 2014 FY 2015 FY 2014 FY 2015 FY 2014 FY 2015 FY 2014 FY 2015 | Page 5 | Page 5 | June, 2015 | | May, 2016 |
P7S1 benefits from a successful twofold M&A strategy M&A activity 2012 - Q1 16 Cash investments EUR 508m EUR 122m EUR 57m EUR 26m EUR 27m 2012 2013 2014 2015 Q1 2016 Media investments Q1: 31 (#) 2) YE: 30 (#) 1) YE: 27 (#) YE: 21 (#) YE: 11 (#) Note: M&A spend based on net purchase price and earn-out payments as well as bond redemption (etraveli). Media | Page 6 | Page 6 | June, 2015 | | May, 2016 | investments partially with minor cash contribution; figures shown represent cumulative number of deals at year-end/end of Q1 2016 1) As of December 31, 2015 2) As of March 31, 2016
M&A activities with a strong financial track record External revenues LTM Q1 2016 vs. LTM at entry (EURm) M&A spend ~EUR 980m ~50% until end of External EBITDA March 2016 LTM Q1 2016 vs. LTM at entry 2) (EURm) ~2x Weighted average age of our portfolio 1) <2 years Note: Based on M&A transactions until end of March 2016 across all segments. M&A spend based on net purchase price and other transaction related payments (e.g. etraveli bond repayment) but excl. future earn-out | Page 7 | Page 7 | June, 2015 | | May, 2016 | and put payments. Foreign currencies translated at constant rates. Entry LTM figures partly based on local GAAP and management reports. Games as per business unit. 1) Age of assets within our portfolio since acquisition, weighted with invested capital per asset, respectively; 2) LTM entry EBITDAs include air-time cost (for Red Arrow companies partly based on full year); LTM Q1 2016 EBITDAs exclude airtime cost; EBITDA partly entity based.
Agenda 1 ProSiebenSat.1 Media SE at a Glance 2 Global M&A Trends 3 M&A Objectives & Process 4 Enterprise Value, Equity Value, Purchase Price 5 Transaction Documents (SPA & SHA) | Page 8 | Page 8 | June, 2015 | | May, 2016 |
Increasing Global M&A Deal Momentum Global and EMEA Announced M&A Volume, USD Tn EMEA $5.0 $4.7 Global $3.9 $3.5 $3.5 $3.3 $3.1 $3.1 $2.9 $2.8 $2.8 $2.6 $2.7 $2.4 $2.3 $2.1 $1.8 $1.5 $1.4 $1.4 $2.7 $1.1 $0.8 $2,0 $0.6 $1,5 $0.5 $1,4 $1,2 $0.4 $0.4 $1,2 $1,1 $0.3 $1,1 $0.3 $1,0 $0,9 $0,9 $0,8 $0,8 $0,8 $0,8 $0,8 $0,6 $0,6 $0,6 $0,6 $0,4 $0,3 $0,2 $0,2 $0,2 $0,2 $0,1 $0,1 $0,1 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Global CAGR 09-15 = 12% Peak-to-Trough: 2 Yrs Peak-to-Trough: 2 Yrs Peak-to-Trough: 2 Yrs EMEA CAGR 09-15 = 5% Global 15- 16* ∆ = ( -38%) Trough-to-Peak: 9 Yrs Trough-to-Peak: 5 Yrs EMEA 15- 16* ∆ = ( -18%) # of USD 1bn+ Deals 60 72 48 50 61 102 145 179 259 311 440 543 289 239 246 359 477 673 831 504 349 501 500 496 512 600 726 561 39 29 22 25 21 22 40 51 69 88 160 214 100 116 115 131 198 270 367 254 130 170 187 159 189 186 189 141 2016 numbers are annualized | Page 9 | Page 9 | June, 2015 | | May, 2016 | Note: Region announced M&A volume based on target location Source: Dealogic – Updated 4 th May 2016
Asia Outbound M&A is Surging M&A Activity by Regional Flow (2016 YTD), Volume (USD bn), % Change versus 2015 YTD USD 15.3bn (+38%) USD 54.2bn USD 2.9bn (-34%) (-80%) EMEA AMERICAS ASIA USD 152.0bn (-40%) USD 30.8bn USD 77.7bn (+29%) (+151%) USD 51.7bn (+120%) Note: Flows based on target and acquiror region | Page 10 | Page 10 | June, 2015 | | May, 2016 | Source: Dealogic – Updated 4 th May 2016
Stock consideration becomes more popular when valuations rise; current multiples are above long-term averages Firm Value/EBITDA (Quarterly) Firm Value/EBITDA (Annually) Median Median 12-Year Avg 17-Quarter Avg 12,2 12,1 11,9 11,9 12,7 11,8 11,6 12,3 11,2 12,0 11,9 11,7 11,9 11,9 10,7 11,4 10,6 11,3 11,0 10,2 10,9 10,1 10,5 10,3 9,6 10,1 9,4 9,5 8,6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 12 13 14 15 16 YTD Data based on USD 100m+ deals with a public target and Acquirer seeking to acquire at least 50% in deal and to own at least 90% after deal | Page 11 | Page 11 | June, 2015 | | May, 2016 | Note: Excludes deals in the Fin. Institutions & Real Estate sectors Source: Citi, Thomson Reuters
Cash deals have higher premiums than stock deals All-Cash Deals All-Stock Deals 4-Week % Premium – Median 4-Week % Premium – Median 15-Year Avg 15-Year Avg 43,4 42,5 38,2 37,7 36,8 36,5 33,9 35,6 34,4 32,7 32,5 30,2 29,4 29,0 26,7 26,7 28,4 28,2 26,4 24,2 23,7 25,5 25,5 23,5 22,2 20,2 18,2 18,0 17,6 13,7 12,0 10,3 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 YTD YTD Cash deals with higher premiums because sellers do not participate from long term value creation due to synergies as in stock deals Based on an analysis of public company takeover premiums for deals larger than USD 500m by Citi's M&A Deal Intelligence team. Premiums are adjusted for pre-announcement rumors within one month or confirmed sale | Page 12 | Page 12 | June, 2015 | | May, 2016 | processes/merger talks within six months. Excludes deals in the Financial Institutions sector Source: Citi
Agenda 1 ProSiebenSat.1 Media SE at a Glance 2 Global M&A Trends 3 M&A Objectives & Process 4 Enterprise Value, Equity Value, Purchase Price 5 Transaction Documents (SPA & SHA) | Page 13 | Page 13 | June, 2015 | | May, 2016 |
M&A activities address various objectives Strengthen long-term competitiveness and generate sustainable shareholder value Strengthen Drive value Build or Enhance Fill up own ad growth and through active strengthen scale through space profitability portfolio key capabilities internationali- P7S1 management and enablers zation E.g. Target with E.g. Unlock hidden E.g. Create full offer E.g. Lower regional E.g. Lower higher growth and asset value clusters, access IP dependence opportunity cost, margins monetization Create value Beat adverse Exploit market Access capable Use excess through government imperfection teams cash synergies policy General E.g. 1 + 1 = 3 E.g. Requirement E.g. Cheaper labor E.g. Tap into E.g. Achieve higher for local content or cost of raw scarce talent and returns than saving materials technical skill or reinvestment Relevant areas for case study | Page 14 | Page 14 | June, 2015 | | May, 2016 |
Historical financial performance since 2009 fueled by M&A-driven transformation D&A programmatic growth via M&A 12/2012: 01/2011: TV and radio maxdome is fully stations in consolidated Scandinavia sold 07/2011: 06/2010: Dutch and Belgian N24 is sold investments sold 08/2015: 01/2014: Verivox Exit of KKR and acquired Permira 08/2014: 10/2015: Eastern etraveli European acquired portfolio sold | Page 15 | Page 15 | June, 2015 | | May, 2016 |
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