DS M in motion: driving focused growth Partnership for Polymer Intermediates & Composite Resins Invest or Presentat ion 16 March 2015
S afe harbor statement This present at ion may cont ain forward-looking st at ement s wit h respect t o DSM’ s fut ure (financial) performance and position. S uch st atements are based on current expect ations, estimates and proj ections of DS M and informat ion current ly available t o t he company. DS M caut ions readers t hat such st at ements involve cert ain risks and uncert aint ies t hat are difficult t o predict and t herefore it should be underst ood t hat many fact ors can cause act ual performance and posit ion to differ mat erially from t hese st at ement s. DS M has no obligat ion t o updat e t he st at ement s cont ained in t his present at ion, unless required by law. A more comprehensive discussion of the risk factors affect ing DS M’ s business can be found in t he company’ s lat est Annual Report , which can be found on t he company’ s corporate websit e, www.dsm.com Page Page 1
Highlights of the transaction • Royal DS M and CVC Capital Partners (CVC) have announced an agreement for a partnership for DS M’ s act ivit ies in Polymer Int ermediat es (Caprolactam and Acrylonit rile) and Composite Resins through the formation of a new company, provisionally called NewCo • NewCo will be 65% owned by CVC and 35% by DS M, with 1,950 employees • Pro-forma third-party sales of NewCo in 2014 amounted to €2.1 billion wit h a 2014 EBITDA of €106 million • The ent erprise value of t he t ransact ion is €600 million plus an earn-out of up t o €175 million • Financing of NewCo will primarily be t hrough an equit y cont ribut ion from bot h shareholders, third part y financing and a €100 million bridge loan provided by DS M • Estimated net cash proceeds at closing to DS M of €300-350 million • DS M will recognize an initial book loss of approximately €130 million after tax and non- cont rolling int erest s, as an except ional it em in Q1 2015 • Closing, subj ect to cust omary condit ions and approvals, is expect ed in Q3 2015 Page Page 2
Further details of the deal • DS M will cont ribut e its global caprolactam business (Europe, North America, its 60% stake in DNCC (China) and the caprolactam licensing business), DS M’ s acrylonitrile business and DS M’ s Composite Resins business including its 75% st ake in JDR (China) • DS M’ s 65% stake in the service organizat ion S itech S ervices held via it s caprolact am and acrylonit rile businesses will also be transferred • NewCo will cont inue to supply at least 80% of DS M Engineering Plastics’ caprolact am needs in Europe and Nort h America for t he coming 15 years via a drawing rights cont ract , effect ively maint aining DS M Engineering Plast ics’ backward int egrat ion. In China DS M Engineering Plastics will cont inue to be supplied by NewCo as t oday. This secures an ongoing strat egic and competit ive position for the polyamide 6 business in which DS M is a global leader • NewCo will operat e as an independent company wit h t hree business unit s: caprolactam, acrylonitrile and composite resins. Pro-forma t hird party sales of NewCo amount ed to €2.1 billion in 2014 wit h an EBITDA of €106 million (excluding non cont rolling int erest ), including EBITDA from Sit ech Services of €19 million and caprolact am licensing income Page Page 3
S trategic rationale for DS M • Delivers on the strategic actions DS M announced for these businesses and is a decisive st ep in furt her opt imizing DSM’ s port folio and reducing our cyclicalit y • We have found a good part ner in CVC after a careful process in which we evaluated all opt ions. We believe t he part nership wit h CVC is t he best way forward for t hese businesses • This partnership secures a long-t erm competitive supply position of caprolactam for DS M Engineering Plastics • As a 35% shareholder in NewCo, DS M will be able to benefit from any improvements in the businesses that will become part of NewCo • DS M can now fully focus on improving t he operat ional performance of it s Nut rit ion and Performance Mat erials businesses, complemented by accelerat ed actions to improve efficiencies and reduce costs • This transaction is geared towards value creation for these businesses and is consist ent wit h our commit ment t o cont inue t o generat e value for our st akeholders and deliver on our st rat egy DS M delivers on the strategic actions it announced for these businesses Page 4 Page
• NewCo’s businesses at a glance • Impact on DS M’s financials • CVC at a glance • DS M’s strat egy Page Page 5
S ites & employees in scope of NewCo The Netherlands Caprolactam, Acrylonit rile ( Sittard-Geleen ) Composit e Resins ( Schoonebeek, Zwolle ) France ~575 employees Composit e R esins Compiegne ~75 employees Germany / Switzerland Composite Resins Bruchsal, Head office Composite Resins in Schaffhausen ~35 employees US / Georgia China DCNA Augusta Head office DFI/ Caprolactam ~350 employees in Shanghai DNCC Nanjing Italy Composite Resins Nanjing Composite Resins Filago ~850 employees ~ 85 employees ~ 1,950 employees worldwide will be transferred from DS M to NewCo Page 6 Page
Caprolactam business at a glance • Total t hird party sales of ~€1.3bn (2014) • Key locations: � DNCC: 400kt in Nanj ing (China ); 40% owned by S inopec � 270kt in Sit t ard – Geleen (The Net herlands) � DCNA: 250kt in August a (US ), incl. 45kt drawing right s Shaw � Headoffice in Shanghai (China) • DS M’s caprolact am business holds a 19% share in S itech Netherlands • Including licensing of t echnology • Main product is caprolact am (920kt ), by-product is ammonium sulfat e (1.7Mt ) • Main applications are: text iles, floor coverings (carpet s), engineering plastics, industrial yarns and film Augusta, Georgia (US) Nanj ing (China) S ittard-Geleen (NL) Page 7 Page
Acrylonitrile business at a glance • S ales of ~€450m (2014) • Manufact uring locat ion: a 280kt plant wit h t wo lines, and head office, based in S itt ard - Geleen (The Net herlands) • DS M Acrylonit rile holds a 46% share in S itech Net herlands • Main product s are acrylonit rile, ammonium sulfat e, hydrogen cyanide, sodium cyanide and acet onit rile • Main applicat ions are: � Acrylic fibers mainly for textiles � ABS / S AN for aut omot ive, domest ic � Acrylamide for water treatment and enhanced oil recovery � S ynthet ic rubber copolymers � Carbon fiber precursors for aircraft, windturbines, aut omot ive Page 8 Page
Composite Resins business at a glance • S ales of ~ €250m (2014) • Includes Composit e Resins Europe and Composit e Resins Asia, Jinling DS M Resins, a 75% partnership with S inopec in Nanj ing • 4 production locations: � Schoonebeek, The Net herlands � Compiegne, France � Filago, Italy � Nanj ing, China • Head office in S chaffhausen (S wit zerland) • Main product s are unsat urat ed polyest er resins, vinyl est er, gelcoat s and sizing & binders • Main applicat ions are: � Building & infrast ruct ure � Transport at ion, marine � Tanks, pipes Page 9 Page
• NewCo’s businesses at a glance • Impact on DS M’s financials • CVC at a glance • DS M’s strat egy Page Page 10
Impact on DS M’ s financials • Estimated net cash proceeds at closing t o DS M of €300-350 million, which DS M will use for net debt reduct ion • This cash amount result s from t he Ent erprise Value of €600m (excluding t he earn-out of up t o €175 million) minus: � A bridge loan of €100 m which DS M will provide to Newco � DS M’s equit y reinvestment for the 35% stake in Newco � The usual cash adj ust ment s relat ed t o working capit al and debt -like it ems • An init ial book loss of approximat ely €130 million, aft er t ax and non-cont rolling int erest s, will be recognized as an except ional it em in Q1 2015. This reflect s t he est imat ed valuat ion of the assets on a fair value less cost to sell basis , t aking int o account t he specific t erms of t he t ransact ion including t he drawing right s • DS M’s caprolactam, acrylonit rile and composit e resins businesses will be classified as asset s held for sale in Q1 2015 • From t he closing dat e onwards, DS M will present t he invest ment in NewCo as an associat e, account ed in accordance wit h t he equit y met hod Page 11 Page
Recommend
More recommend
