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Strictly private & confidential | ![]() | |||||
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Project Figaro
Discussion materials
November 30, 2004
Deutsche Bank Securities Inc., a subsidiary of Deutsche Bank AG, conducts investment banking and securities activities in the United States.
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Contents
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Section | ![]() | |||||||||
1 | ![]() | Valuation analysis of Figaro | ![]() | 1 | ||||||
2 | ![]() | Approach to the Special Committee | ![]() | 9 | ||||||
Appendix | ![]() | |||||||||
I | ![]() | Change-of-control transaction mechanisms | ![]() | 14 | ||||||
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Section 1
Valuation analysis of Figaro
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Overview
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• | Deutsche Bank has been asked to consider how Figaro's Special Committee would evaluate a potential offer to the minority shareholders |
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• | Figaro's Special Committee will rely heavily on its financial advisers to assess the fairness of any proposal by Danisco |
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− | Financial advisers will deliver a public fairness opinion |
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• | In assessing the fairness of the offer, the financial advisers to the Figaro Special Committee will consider the valuation parameters associated with |
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− | Comparable publicly-traded companies |
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− | Discounted cash flow |
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− | Comparable M&A transactions |
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− | Premia analysis |
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• | Figaro's previous auction process will also be relevant in assessing the fairness of Danisco's proposal |
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− | Reasonably broad auction with a number of parties contacted |
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− | [Confidential treatment requested] was the only party to submit an offer |
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− | [Confidential treatment requested]'s offer was non-cash and at a substantial discount to market |
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Implied valuation matrix
Set out are the implied premia and acquisition multiples for Figaro at a range of discounts and premiums to market
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($ in millions) | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
Price per share | ![]() | Financial data | ![]() | $14.00 | ![]() | Current price $16.20 | ![]() | $17.00 | ![]() | $18.00 | ![]() | $19.00 | ![]() | $20.00 | ||||||||||||||||
Premium to: | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
Current price | ![]() | $16.20 | ![]() | (13.6%) | ![]() | 0.0% | ![]() | 4.9% | ![]() | 11.1% | ![]() | 17.3% | ![]() | 23.5% | ||||||||||||||||
Fully diluted shares outstanding | ![]() | ![]() | 68.6 | ![]() | 68.6 | ![]() | 68.6 | ![]() | 69.4 | ![]() | 69.4 | ![]() | 69.4 | |||||||||||||||||
Less: proceeds from options | ![]() | ![]() | ($99) | ![]() | ($99) | ![]() | ($99) | ![]() | ($112) | ![]() | ($112) | ![]() | ($112) | |||||||||||||||||
Fully diluted equity value | ![]() | ![]() | $862 | ![]() | $1,013 | ![]() | $1,067 | ![]() | $1,137 | ![]() | $1,206 | ![]() | $1,275 | |||||||||||||||||
Net debt | ![]() | ![]() | 77 | ![]() | 77 | ![]() | 77 | ![]() | 77 | ![]() | 77 | ![]() | 77 | |||||||||||||||||
Total enterprise value | ![]() | ![]() | $939 | ![]() | $1,090 | ![]() | $1,145 | ![]() | $1,214 | ![]() | $1,283 | ![]() | $1,353 | |||||||||||||||||
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Total enterprise value/ | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
LTM revenue | ![]() | $403.1 | ![]() | 2.3x | ![]() | 2.7x | ![]() | 2.8x | ![]() | 3.0x | ![]() | 3.2x | ![]() | 3.4x | ||||||||||||||||
LTM EBITDA | ![]() | $68.8 | ![]() | 13.6x | ![]() | 15.8x | ![]() | 16.6x | ![]() | 17.6x | ![]() | 18.6x | ![]() | 19.7x | ||||||||||||||||
LTM EBIT | ![]() | $32.5 | ![]() | 28.9x | ![]() | 33.6x | ![]() | 35.3x | ![]() | 37.4x | ![]() | 39.5x | ![]() | 41.7x | ||||||||||||||||
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2004E revenue | ![]() | $409.0 | ![]() | 2.3x | ![]() | 2.7x | ![]() | 2.8x | ![]() | 3.0x | ![]() | 3.1x | ![]() | 3.3x | ||||||||||||||||
2004E EBITDA | ![]() | $75.6 | ![]() | 12.4x | ![]() | 14.4x | ![]() | 15.1x | ![]() | 16.1x | ![]() | 17.0x | ![]() | 17.9x | ||||||||||||||||
2004E EBIT | ![]() | $37.9 | ![]() | 24.8x | ![]() | 28.8x | ![]() | 30.2x | ![]() | 32.0x | ![]() | 33.9x | ![]() | 35.7x | ||||||||||||||||
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2005E revenue | ![]() | $434.6 | ![]() | 2.2x | ![]() | 2.5x | ![]() | 2.6x | ![]() | 2.8x | ![]() | 3.0x | ![]() | 3.1x | ||||||||||||||||
2005E EBITDA | ![]() | $66.0 | ![]() | 14.2x | ![]() | 16.4x | ![]() | 17.3x | ![]() | 18.4x | ![]() | 19.4x | ![]() | 20.5x | ||||||||||||||||
2005E EBIT | ![]() | $26.3 | ![]() | 35.7x | ![]() | 41.1x | ![]() | 43.5x | ![]() | 46.2x | ![]() | 48.8x | ![]() | 51.4x | ||||||||||||||||
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Note: 2004 and 2005 projections based on management figures. | ![]() | ![]() | ![]() | ![]() | ||||||||||||||||||||||||||
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Average price paid per share
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Assumptions | ||||||
Current Stock price | ![]() | $ | 16.20 | |||
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Total shares outstanding | ![]() | 59.66 | ||||
Eastman shares | ![]() | 25.00 | ||||
Danisco shares | ![]() | 25.00 | ||||
Minority shares | ![]() | 9.66 | ||||
Total options outstanding | ![]() | 9.85 | (1) | |||
(1) Includes 0.118 million options exercisable above a share price of $20.00 | ||||||
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The analysis shows the total acquisition price and implied weighted average per share price paid based on various prices paid to Eastman and the minority shareholders
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Total acquisition price | ![]() | ||||||||||||||||||||||||||||||||||||||
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![]() | ![]() | Market discount/premium | ![]() | $16.00 (1.2%) | ![]() | $17.00 4.9% | ![]() | $18.00 11.1% | ![]() | $19.00 17.3% | ![]() | $20.00 23.5% | ![]() | $21.00 29.6% | ![]() | $22.00 35.8% | |||||||||||||||||||||||
(EMN price/ share) | ![]() | $13.00 | ![]() | (19.8 | %) | ![]() | $ | 523.8 | ![]() | $ | 542.4 | ![]() | $ | 561.6 | ![]() | $ | 581.0 | ![]() | $ | 600.4 | ![]() | $ | 619.8 | ![]() | $ | 639.2 | |||||||||||||
$13.50 | ![]() | (16.7 | %) | ![]() | $ | 536.3 | ![]() | $ | 554.9 | ![]() | $ | 574.1 | ![]() | $ | 593.5 | ![]() | $ | 612.9 | ![]() | $ | 632.3 | ![]() | $ | 651.7 | ![]() | ||||||||||||||
$14.00 | ![]() | (13.6 | %) | ![]() | $ | 548.8 | ![]() | $ | 567.4 | ![]() | $ | 586.6 | ![]() | $ | 606.0 | ![]() | $ | 625.4 | ![]() | $ | 644.8 | ![]() | $ | 664.2 | ![]() | ||||||||||||||
$14.50 | ![]() | (10.5 | %) | ![]() | $ | 561.3 | ![]() | $ | 579.9 | ![]() | $ | 599.1 | ![]() | $ | 618.5 | ![]() | $ | 637.9 | ![]() | $ | 657.3 | ![]() | $ | 676.7 | ![]() | ||||||||||||||
$15.00 | ![]() | (7.4 | %) | ![]() | $ | 573.8 | ![]() | $ | 592.4 | ![]() | $ | 611.6 | ![]() | $ | 631.0 | ![]() | $ | 650.4 | ![]() | $ | 669.8 | ![]() | $ | 689.2 | ![]() | ||||||||||||||
$15.50 | ![]() | (4.3 | %) | ![]() | $ | 586.3 | ![]() | $ | 604.9 | ![]() | $ | 624.1 | ![]() | $ | 643.5 | ![]() | $ | 662.9 | ![]() | $ | 682.3 | ![]() | $ | 701.7 | ![]() | ||||||||||||||
$16.00 | ![]() | (1.2 | %) | ![]() | $ | 598.8 | ![]() | $ | 617.4 | ![]() | $ | 636.6 | ![]() | $ | 656.0 | ![]() | $ | 675.4 | ![]() | $ | 694.8 | ![]() | $ | 714.2 | ![]() | ||||||||||||||
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Average price/share | ![]() | ||||||||||||||||||||||||||||||||||||||
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![]() | ![]() | Market discount/premium | ![]() | $16.00 (1.2%) | ![]() | $17.00 4.9% | ![]() | $18.00 11.1% | ![]() | $19.00 17.3% | ![]() | $20.00 23.5% | ![]() | $21.00 29.6% | ![]() | $22.00 35.8% | |||||||||||||||||||||||
(EMN price/ share) | ![]() | $13.00 | ![]() | (19.8 | %) | ![]() | $ | 14.00 | ![]() | $ | 14.40 | ![]() | $ | 14.70 | ![]() | $ | 15.10 | ![]() | $ | 15.50 | ![]() | $ | 15.90 | ![]() | $ | 16.30 | |||||||||||||
$13.50 | ![]() | (16.7 | %) | ![]() | $ | 14.30 | ![]() | $ | 14.70 | ![]() | $ | 15.10 | ![]() | $ | 15.40 | ![]() | $ | 15.80 | ![]() | $ | 16.20 | ![]() | $ | 16.60 | ![]() | ||||||||||||||
$14.00 | ![]() | (13.6 | %) | ![]() | $ | 14.70 | ![]() | $ | 15.00 | ![]() | $ | 15.40 | ![]() | $ | 15.80 | ![]() | $ | 16.10 | ![]() | $ | 16.50 | ![]() | $ | 16.90 | ![]() | ||||||||||||||
$14.50 | ![]() | (10.5 | %) | ![]() | $ | 15.00 | ![]() | $ | 15.30 | ![]() | $ | 15.70 | ![]() | $ | 16.10 | ![]() | $ | 16.50 | ![]() | $ | 16.80 | ![]() | $ | 17.20 | ![]() | ||||||||||||||
$15.00 | ![]() | (7.4 | %) | ![]() | $ | 15.30 | ![]() | $ | 15.70 | ![]() | $ | 16.00 | ![]() | $ | 16.40 | ![]() | $ | 16.80 | ![]() | $ | 17.20 | ![]() | $ | 17.50 | ![]() | ||||||||||||||
$15.50 | ![]() | (4.3 | %) | ![]() | $ | 15.70 | ![]() | $ | 16.00 | ![]() | $ | 16.40 | ![]() | $ | 16.70 | ![]() | $ | 17.10 | ![]() | $ | 17.50 | ![]() | $ | 17.90 | ![]() | ||||||||||||||
$16.00 | ![]() | (1.2 | %) | ![]() | $ | 16.00 | ![]() | $ | 16.30 | ![]() | $ | 16.70 | ![]() | $ | 17.10 | ![]() | $ | 17.40 | ![]() | $ | 17.80 | ![]() | $ | 18.20 | ![]() | ||||||||||||||
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Comparable publicly-traded companies
Genencor's closest peers include Novozymes and Lonza
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![]() | ![]() | ![]() | ![]() | Enterprise value as a multiple of | ![]() | Price/consensus EPS | ||||||||||||||||||||||||||||||||||||||||
![]() | Share price 11/30/04 | ![]() | Equity value | ![]() | Enterprise value | ![]() | Sales | ![]() | EBITDA | ![]() | EBIT | ![]() | ||||||||||||||||||||||||||||||||||
2004E | ![]() | 2005E | ![]() | 2004E | ![]() | 2005E | ![]() | 2004E | ![]() | 2005E | ![]() | 2004E | ![]() | 2005E | ![]() | |||||||||||||||||||||||||||||||
Bayer AG | ![]() | € 24.15 | ![]() | 17,638 | ![]() | 29,873 | ![]() | 1.1x | ![]() | 1.0x | ![]() | 7.6x | ![]() | 6.9x | ![]() | 17.3x | ![]() | 13.7x | ![]() | 22.6x | ![]() | 19.7x | ||||||||||||||||||||||||
Degussa | ![]() | € 32.03 | ![]() | 6,586 | ![]() | 10,557 | ![]() | 0.9x | ![]() | 0.9x | ![]() | 6.7x | ![]() | 6.6x | ![]() | 11.7x | ![]() | 10.3x | ![]() | 15.0x | ![]() | 14.1x | ||||||||||||||||||||||||
DSM | ![]() | € 45.55 | ![]() | 4,600 | ![]() | 5,237 | ![]() | 0.7x | ![]() | 0.7x | ![]() | 5.1x | ![]() | 4.7x | ![]() | 10.6x | ![]() | 8.5x | ![]() | 13.9x | ![]() | 11.0x | ||||||||||||||||||||||||
DuPont | ![]() | $45.46 | ![]() | 45,763 | ![]() | 50,844 | ![]() | 1.9x | ![]() | 2.0x | ![]() | 10.6x | ![]() | 9.3x | ![]() | 15.4x | ![]() | 10.8x | ![]() | 19.5x | ![]() | 16.7x | ||||||||||||||||||||||||
Lonza | ![]() | CHF 61.90 | ![]() | 2,062 | ![]() | 2,710 | ![]() | 1.9x | ![]() | 1.7x | ![]() | 10.4x | ![]() | 8.4x | ![]() | 18.2x | ![]() | 13.3x | ![]() | 19.6x | ![]() | 14.1x | ||||||||||||||||||||||||
Novozymes | ![]() | DKK 264.00 | ![]() | 19,166 | ![]() | 20,480 | ![]() | 3.3x | ![]() | 3.1x | ![]() | 12.7x | ![]() | 12.1x | ![]() | 18.8x | ![]() | 17.5x | ![]() | 23.2x | ![]() | 21.5x | ||||||||||||||||||||||||
![]() | ![]() | ![]() | Mean | ![]() | 1.6x | ![]() | 1.6x | ![]() | 8.8x | ![]() | 8.0x | ![]() | 15.3x | ![]() | 12.3x | ![]() | 19.0x | ![]() | 16.2x | |||||||||||||||||||||||||||
![]() | ![]() | ![]() | Median | ![]() | 1.5x | ![]() | 1.4x | ![]() | 9.0x | ![]() | 7.7x | ![]() | 16.4x | ![]() | 12.1x | ![]() | 19.6x | ![]() | 15.4x | |||||||||||||||||||||||||||
Note: Equity value and enterprise value in millions. | ![]() | |||||||||||||||||||||||||||||||||||||||||||||
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Comparable transactions - food ingredients
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![]() | ![]() | ![]() | ![]() | Enterprise value as a multiple of: | ||||||||||||||||||||||
Announcement date | ![]() | Target | ![]() | Bidder | ![]() | Enterprise value | ![]() | Sales | ![]() | EBITDA | ![]() | EBIT | ||||||||||||||
Jul-04 | ![]() | CP Kelco | ![]() | JM Huber | ![]() | US$1,100m (est) | ![]() | 2.20x | ![]() | 9.9x | ![]() | NA | ||||||||||||||
May-04 | ![]() | Mannheimer et al | ![]() | Kerry Group | ![]() | EUR170m | ![]() | 1.55x | ![]() | 11.3x | ![]() | NA | ||||||||||||||
Apr-04 | ![]() | Diana Ingredients | ![]() | Electra Partners | ![]() | EUR270m | ![]() | 1.68x | ![]() | 8.7x | ![]() | NA | ||||||||||||||
Mar-03 | ![]() | Rhodia Food | ![]() | Danisco | ![]() | EUR320m | ![]() | 1.52x | ![]() | 10.1x | ![]() | NA | ||||||||||||||
Mar-03 | ![]() | Quest Food Ingredients | ![]() | Kerry Group | ![]() | US$440m | ![]() | 1.84x | ![]() | 12.2x | ![]() | NA | ||||||||||||||
Jul-02 | ![]() | Haarmann & Reiner | ![]() | EQT | ![]() | EUR1,660m | ![]() | 1.85x | ![]() | 11.5x | ![]() | 21.0x | ||||||||||||||
Jan-02 | ![]() | FIS | ![]() | Givaudan | ![]() | EUR510m | ![]() | 1.88x | ![]() | 13.0x | ![]() | 15.0x | ||||||||||||||
Jun-01 | ![]() | Noviant | ![]() | JM Huber | ![]() | US$400m | ![]() | 2.00x | ![]() | NA | ![]() | 9.8x | ||||||||||||||
Sep-00 | ![]() | Bush Boake Allen | ![]() | International Flavours & Fragrances | ![]() | US$964m | ![]() | 1.91x | ![]() | 13.1x | ![]() | 19.2x | ||||||||||||||
Sep-00 | ![]() | Copenhagen Pectin/Kelco | ![]() | CP Kelco | ![]() | US$1,245m | ![]() | 2.65x | ![]() | NA | ![]() | NA | ||||||||||||||
Apr-99 | ![]() | Pronova | ![]() | FMC | ![]() | US$197m | ![]() | 2.00x | ![]() | 8.5x | ![]() | 10.0x | ||||||||||||||
Apr-99 | ![]() | Nutra Sweet | ![]() | JW Childs | ![]() | US$400m | ![]() | 1.50x | ![]() | 4.0x | ![]() | 5.5x | ||||||||||||||
Mar-99 | ![]() | Cultor | ![]() | Danisco | ![]() | US$1,268m | ![]() | 0.85x | ![]() | 9.8x | ![]() | 31.4x | ||||||||||||||
Dec-98 | ![]() | Ingredient Technology | ![]() | Chr Hansen Holding | ![]() | US$103m | ![]() | 1.08x | ![]() | NA | ![]() | 9.5x | ||||||||||||||
Feb-98 | ![]() | Gist-Brocades | ![]() | DSM NV | ![]() | Eur1,357m | ![]() | 1.21x | ![]() | 8.2x | ![]() | 15.0x | ||||||||||||||
Aug-97 | ![]() | Protein Technologies Int | ![]() | DuPont | ![]() | US$1,500m | ![]() | 3.45x | ![]() | NA | ![]() | 18.3x | ||||||||||||||
Apr-97 | ![]() | Quest International | ![]() | ICI | ![]() | US$2,000m | ![]() | 1.76x | ![]() | 10.7x | ![]() | 17.9x | ||||||||||||||
Feb-97 | ![]() | Tastemaker | ![]() | Roche | ![]() | US$1,100m | ![]() | 3.44x | ![]() | 14.7x | ![]() | 18.3x | ||||||||||||||
Oct-95 | ![]() | Food Science Group (US) | ![]() | Cultor (Finland) | ![]() | US$353m | ![]() | 1.16x | ![]() | NA | ![]() | 11.4x | ||||||||||||||
Dec-94 | ![]() | Kelco (US) | ![]() | Monsanto (US) | ![]() | US$1,075m | ![]() | 3.50x | ![]() | 10.6x | ![]() | 13.8x | ||||||||||||||
Oct-94 | ![]() | Bio-Industries and rendering businesses (France) | ![]() | SKW Trostberg/VIAG (Germany) | ![]() | FF4,400m | ![]() | 1.26x | ![]() | NA | ![]() | 13.3x | ||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||
![]() | ![]() | ![]() | Min: | ![]() | 0.85x | ![]() | 4.0x | ![]() | 5.5x | |||||||||||||||||
![]() | ![]() | ![]() | Max: | ![]() | 3.50x | ![]() | 14.7x | ![]() | 31.4x | |||||||||||||||||
![]() | ![]() | ![]() | Median: | ![]() | 1.84x | ![]() | 10.6x | ![]() | 15.0x | |||||||||||||||||
![]() | ![]() | ![]() | Mean: | ![]() | 1.92x | ![]() | 10.4x | ![]() | 15.3x | |||||||||||||||||
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Premia analysis
Selected minority interest acquisitions1
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Date announced | ![]() | Target/ acquirer | ![]() | % owned by acquirer prior to transaction | ![]() | % acquirer attempted to purchase in the transaction | ![]() | Implied premium to stock price | ||||||||||||||||||
1-day prior | ![]() | 1-day prior | ![]() | 1-day prior | ![]() | |||||||||||||||||||||
3/9/1999 | ![]() | Sun Energy Partners LP / Kerr-McGee Corp | ![]() | 98.2 | % | ![]() | 1.8 | % | ![]() | 41.6 | % | ![]() | 43.8 | % | ![]() | 50.9 | % | |||||||||
3/21/1999 | ![]() | Spelling Entertainment Group / Viacom Inc | ![]() | 80.9 | ![]() | 19.1 | ![]() | 8.3 | ![]() | 43.2 | ![]() | 54.5 | ||||||||||||||
3/24/1999 | ![]() | Knoll Inc / Warburg, Pincus Ventures Inc | ![]() | 58.2 | ![]() | 41.8 | ![]() | 83.6 | ![]() | 51.9 | ![]() | 46.4 | ||||||||||||||
4/1/1999 | ![]() | Aqua Alliance Inc / Vivendi SA | ![]() | 77.8 | ![]() | 22.2 | ![]() | 28.9 | ![]() | 19.0 | ![]() | 101.7 | ||||||||||||||
4/12/1999 | ![]() | Meadowcraft Inc / Investor Group | ![]() | 73.0 | ![]() | 27.0 | ![]() | 65.0 | ![]() | 63.3 | ![]() | 77.8 | ||||||||||||||
5/5/1999 | ![]() | Thermo Power Corp / Thermo Electron Corp | ![]() | 69.3 | ![]() | 30.7 | ![]() | 5.5 | ![]() | (1.5 | ) | ![]() | 41.2 | |||||||||||||
5/7/1999 | ![]() | J Ray McDermott SA / McDermott International Inc | ![]() | 63.0 | ![]() | 37.0 | ![]() | 16.8 | ![]() | 13.1 | ![]() | 19.3 | ||||||||||||||
5/21/1999 | ![]() | ThermoSpectra (Thermo Instr) / Thermo Instrument Systems Inc | ![]() | 85.5 | ![]() | 14.5 | ![]() | 39.1 | ![]() | 43.8 | ![]() | 61.0 | ||||||||||||||
10/21/1999 | ![]() | Student Loan Corporation / Citigroup Inc | ![]() | 80.0 | ![]() | 20.0 | ![]() | 11.5 | ![]() | 11.6 | ![]() | 0.8 | ||||||||||||||
11/5/1999 | ![]() | PEC Israel Economic Corp / Discount Investment Corp | ![]() | 56.3 | ![]() | 43.7 | ![]() | 0.2 | ![]() | 1.0 | ![]() | 2.8 | ||||||||||||||
12/1/1999 | ![]() | Boise Cascade Office Products / Boise Cascade Corp | ![]() | 80.5 | ![]() | 19.5 | ![]() | 43.5 | ![]() | 55.3 | ![]() | 60.0 | ||||||||||||||
12/8/1999 | ![]() | Robertson-Ceco Corp / Heico Companies LLC | ![]() | 69.2 | ![]() | 30.8 | ![]() | 46.0 | ![]() | 43.8 | ![]() | 41.5 | ||||||||||||||
1/19/2000 | ![]() | Conning Corp / Metropolitan Life Insurance Co | ![]() | 56.6 | ![]() | 43.4 | ![]() | 15.6 | ![]() | 38.9 | ![]() | 52.1 | ||||||||||||||
1/19/2000 | ![]() | Life Technologies Inc (Dexter) / Dexter Corp (pending) | ![]() | 70.0 | ![]() | 30.0 | ![]() | 8.9 | ![]() | 11.4 | ![]() | 18.1 | ||||||||||||||
1/31/2000 | ![]() | Thermedics Detection Inc / Thermedics(Thermo Electron) | ![]() | 88.2 | ![]() | 11.8 | ![]() | 0.8 | ![]() | 0.8 | ![]() | 14.3 | ||||||||||||||
1/31/2000 | ![]() | Thermo BioAnalysis (Thermo) / Thermo Instrument Systems Inc | ![]() | 70.1 | ![]() | 29.9 | ![]() | 51.4 | ![]() | 55.6 | ![]() | 53.4 | ||||||||||||||
1/31/2000 | ![]() | Thermo Optek Corp / Thermo Instrument Systems Inc | ![]() | 90.0 | ![]() | 10.0 | ![]() | 6.7 | ![]() | (5.1 | ) | ![]() | 41.2 | |||||||||||||
1/31/2000 | ![]() | Thermo Sentron Inc (Thermedics) / Thermedics(Thermo Electron) | ![]() | 80.5 | ![]() | 19.5 | ![]() | 7.4 | ![]() | 6.9 | ![]() | 6.9 | ||||||||||||||
1/31/2000 | ![]() | ThermoQuest Corp / Thermo Instrument Systems Inc | ![]() | 85.4 | ![]() | 14.6 | ![]() | 36.0 | ![]() | 47.0 | ![]() | 61.9 | ||||||||||||||
3/14/2000 | ![]() | Howmet International Inc / Alcoa Inc | ![]() | 81.1 | ![]() | 18.9 | ![]() | 13.5 | ![]() | 12.8 | ![]() | 14.3 | ||||||||||||||
3/17/2000 | ![]() | Vastar Resources Inc / BP Amoco PLC | ![]() | 80.1 | ![]() | 19.9 | ![]() | 16.2 | ![]() | 35.0 | ![]() | 69.4 | ||||||||||||||
3/23/2000 | ![]() | Homestead Village Inc / Security Capital Group Inc | ![]() | 72.3 | ![]() | 27.7 | ![]() | 49.1 | ![]() | 56.2 | ![]() | 98.8 | ||||||||||||||
3/27/2000 | ![]() | Hartford Life (ITT Hartford) / Hartford Fin Svcs Group Inc | ![]() | 80.4 | ![]() | 19.6 | ![]() | 18.7 | ![]() | 40.3 | ![]() | 43.3 | ||||||||||||||
4/24/2000 | ![]() | Cherry Corp / Investor Group | ![]() | 51.0 | ![]() | 49.0 | ![]() | 103.1 | ![]() | 109.1 | ![]() | 70.3 | ||||||||||||||
7/20/2000 | ![]() | JLK Direct Distribution Inc / Kennametal Inc | ![]() | 83.0 | ![]() | 17.0 | ![]() | 48.9 | ![]() | 94.4 | ![]() | 68.7 | ||||||||||||||
8/28/2000 | ![]() | 800-JR Cigar Inc / Investor Group | ![]() | 78.4 | ![]() | 21.6 | ![]() | 20.9 | ![]() | 18.9 | ![]() | 18.2 | ||||||||||||||
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1 Source: SDC as at November 1, 2004. Based on transactions involving a US target announced in the last five years, where the acquirer prior to the transaction owned more that 50% of the outstanding stock of the target and sought to acquire all the remaining outstanding stock for either cash or stock.
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Valuation analysis of Figaro | ![]() | Section 1 | ||||
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Premia analysis (continued)
Selected minority interest acquisitions1
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Date announced | ![]() | Target/ acquirer | ![]() | % owned by acquirer prior to transaction | ![]() | % acquirer attempted to purchase in the transaction | ![]() | Implied premium to stock price | ||||||||||||||||||
1-day prior | ![]() | 1-week prior | ![]() | 4-weeks prior | ![]() | |||||||||||||||||||||
9/21/2000 | ![]() | Hertz Corp / Ford Motor Co | ![]() | 81.0 | % | ![]() | 19.0 | % | ![]() | 46.4 | % | ![]() | 42.7 | % | ![]() | 12.0 | % | |||||||||
10/27/2000 | ![]() | Azurix Corp (Enron Corp) / Enron Corp | ![]() | 64.9 | ![]() | 35.1 | ![]() | 135.1 | ![]() | 135.1 | ![]() | 134.1 | ||||||||||||||
12/14/2000 | ![]() | NPC International Inc / O Gene Bicknell | ![]() | 60.5 | ![]() | 39.5 | ![]() | 11.3 | ![]() | 6.8 | ![]() | 32.0 | ||||||||||||||
3/26/2001 | ![]() | CSFBdirect / CSFB | ![]() | 82.0 | ![]() | 18.0 | ![]() | 140.0 | ![]() | 102.0 | ![]() | 73.9 | ||||||||||||||
5/23/2001 | ![]() | Unigraphics Solutions Inc / Electronic Data Systems Corp | ![]() | 78.5 | ![]() | 21.5 | ![]() | 52.9 | ![]() | 68.8 | ![]() | 80.8 | ||||||||||||||
5/30/2001 | ![]() | Bacou USA Inc / Bacou SA | ![]() | 67.4 | ![]() | 32.6 | ![]() | 21.8 | ![]() | 17.3 | ![]() | 11.3 | ||||||||||||||
6/6/2001 | ![]() | Liberty Financial Cos Inc / Liberty Mutual Insurance Co | ![]() | 65.6 | ![]() | 34.4 | ![]() | 24.8 | ![]() | 40.1 | ![]() | 40.4 | ||||||||||||||
8/21/2001 | ![]() | Spectra Physics Inc / Thermo Electron Corp | ![]() | 73.4 | ![]() | 26.6 | ![]() | 27.8 | ![]() | (0.6 | ) | ![]() | (7.9 | ) | ||||||||||||
10/1/2001 | ![]() | NCH Corp / Investor Group | ![]() | 54.3 | ![]() | 45.7 | ![]() | 34.0 | ![]() | 33.6 | ![]() | 18.8 | ||||||||||||||
10/10/2001 | ![]() | TD Waterhouse Group Inc / Toronto-Dominion Bank | ![]() | 88.8 | ![]() | 11.2 | ![]() | 53.2 | ![]() | 49.1 | ![]() | 32.9 | ||||||||||||||
11/9/2001 | ![]() | Thermo Fibergen Inc / Kadant Inc | ![]() | 95.3 | ![]() | 4.7 | ![]() | 7.6 | ![]() | 3.7 | ![]() | 1.2 | ||||||||||||||
1/11/2002 | ![]() | Market America Inc / Investor Group (pending) | ![]() | 77.0 | ![]() | 23.0 | ![]() | 6.0 | ![]() | 7.4 | ![]() | 7.4 | ||||||||||||||
2/19/2002 | ![]() | Travelocity.com Inc / Sabre Holdings Corp | ![]() | 65.5 | ![]() | 34.5 | ![]() | 45.8 | ![]() | 40.3 | ![]() | 22.5 | ||||||||||||||
3/18/2002 | ![]() | Meemic Holdings Inc / ProAssurance Corp | ![]() | 81.2 | ![]() | 18.8 | ![]() | 11.5 | ![]() | 23.3 | ![]() | 36.1 | ||||||||||||||
7/26/2002 | ![]() | International Specialty Prods / Samuel J Heyman | ![]() | 77.9 | ![]() | 22.1 | ![]() | 4.3 | ![]() | 1.7 | ![]() | 33.8 | ||||||||||||||
8/14/2002 | ![]() | First Banks America Inc,TX / First Banks Inc, St Louis, MO | ![]() | 93.8 | ![]() | 6.2 | ![]() | 0.9 | ![]() | (2.3 | ) | ![]() | 1.1 | |||||||||||||
12/13/2002 | ![]() | Seminis Inc / Savia SA de CV (Pulsar) | ![]() | 73.4 | ![]() | 26.6 | ![]() | 48.2 | ![]() | 45.4 | ![]() | 45.4 | ||||||||||||||
4/7/2003 | ![]() | INRANGE Technologies Corp / Computer Network Technology | ![]() | 91.0 | ![]() | 9.0 | ![]() | 4.1 | ![]() | 26.2 | ![]() | 22.9 | ||||||||||||||
6/2/2003 | ![]() | Ribapharm Inc / ICN Pharmaceuticals Inc | ![]() | 79.6 | ![]() | 20.4 | ![]() | 23.0 | ![]() | 23.8 | ![]() | 50.2 | ||||||||||||||
11/7/2003 | ![]() | barnesandnoble.com Inc / Barnes & Noble Inc | ![]() | 72.9 | ![]() | 27.1 | ![]() | 35.6 | ![]() | 32.6 | ![]() | 27.1 | ||||||||||||||
2/20/2004 | ![]() | Johnson Outdoors Inc / JO Acquisition Corp (pending) | ![]() | 52.1 | ![]() | 47.9 | ![]() | 6.2 | ![]() | 6.2 | ![]() | 13.3 | ||||||||||||||
5/24/2004 | ![]() | WFS Financial Inc / Westcorp (pending) | ![]() | 84.0 | ![]() | 14.0 | ![]() | 3.5 | ![]() | 6.2 | ![]() | 5.1 | ||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||
![]() | Low | ![]() | 52.1 | % | ![]() | 1.8 | % | ![]() | 0.2 | % | ![]() | (5.1 | )% | ![]() | (7.9 | )% | ||||||||||
![]() | Average | ![]() | 75.7 | ![]() | 24.2 | ![]() | 31.9 | ![]() | 33.7 | ![]() | 39.2 | |||||||||||||||
![]() | Median | ![]() | 78.4 | ![]() | 21.6 | ![]() | 22.4 | ![]() | 33.1 | ![]() | 38.3 | |||||||||||||||
![]() | High | ![]() | 98.2 | ![]() | 47.9 | ![]() | 140.0 | ![]() | 135.1 | ![]() | 134.1 | |||||||||||||||
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1 Source: SDC as at November 1, 2004. Based on transactions involving a US target announced in the last five years, where the acquirer prior to the transaction owned more that 50% of the outstanding stock of the target and sought to acquire all the remaining outstanding stock for either cash or stock.
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Approach to the Special Committee | ![]() | Section 2 | ||||
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Section 2
Approach to the Special Committee
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Approach to the Special Committee | ![]() | Section 2 | ||||
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Negotiations with Special Committee
![]() | ![]() |
• | Role of the Figaro's Special Committee |
![]() | ![]() | ![]() |
− | Seek to negotiate a transaction that is "fair" to minorities |
![]() | ![]() | ![]() |
− | Special Committee and advisers negotiate on behalf of minorities |
![]() | ![]() | ![]() |
− | Price needs to be within a range of what a willing seller and buyer would agree upon, but does not have to be the "best" possible price |
![]() | ![]() |
• | Negotiations with Figaro's Special Committee |
![]() | ![]() | ![]() |
− | Special Committee will seek to demonstrate the transaction was negotiated in good faith and at arms length |
![]() | ![]() | ![]() |
− | likely to be multiple rounds of negotiations |
![]() | ![]() | ![]() |
− | Special Committee will view Danisco's first offer as a starting point for negotiation |
![]() | ![]() | ![]() |
− | Special Committee will be keen to demonstrate they "extracted value" by negotiating a higher price |
![]() | ![]() | ![]() |
− | Special Committee wants to avoid any suggestion it "rushed to an agreement" |
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Approach to the Special Committee | ![]() | Section 2 | ||||
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Negotiations with Special Committee (continued)
![]() | ![]() |
• | Role of the advisors to Figaro's Special Committee |
![]() | ![]() | ![]() |
− | Special Committee's lawyers and bankers are typically heavily involved in negotiating a going-private transaction due to the high level of scrutiny from regulators / shareholders |
![]() | ![]() | ![]() |
− | Involvement of advisers assists in demonstrating the transaction is fair and was negotiated in good faith and at arms length |
![]() | ![]() | ![]() |
− | Financial adviser will deliver a fairness opinion on the transaction |
![]() | ![]() | ![]() |
− | We would expect the advisers to Figaro's Special Committee to be heavily involved in negotiations with Danisco |
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Approach to the Special Committee | ![]() | Section 2 | ||||
![]() |
Script for discussion
Danisco should start with a first offer at a modest premium to market and leave room for negotiation of value with Figaro's Special Committee
We believe $17 per share is a reasonable price to start the discussion
![]() | ![]() |
• | Danisco wants to acquire 100% of Figaro |
![]() | ![]() |
• | Offer to Figaro minority shareholders |
![]() | ![]() | ![]() |
− | $17 per share in cash |
![]() | ![]() |
• | Status of Eastman discussions |
![]() | ![]() | ![]() |
− | Danisco has had discussions with Eastman |
![]() | ![]() | ![]() |
− | Eastman is supportive of a transaction to take the company private |
![]() | ![]() | ![]() |
− | No agreement at this stage, although both parties are optimistic an agreement can be reached in the near future |
![]() | ![]() | ![]() |
− | Agreed value likely to be at a discount to the current market price |
![]() | ![]() |
• | Key conditions |
![]() | ![]() | ![]() |
− | Danisco can acquire the Eastman stake |
![]() | ![]() | ![]() |
− | Danisco is assured of acquiring 100% / 90% acceptance tender offer condition |
![]() | ![]() | ![]() |
− | Danisco can retain key management personnel |
![]() | ![]() | ![]() |
− | Any required government or regulatory approvals |
![]() | ![]() |
• | Timing |
![]() | ![]() | ![]() |
− | Danisco would like to announce a transaction in December |
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Approach to the Special Committee | ![]() | Section 2 | ||||
![]() |
Script for discussion (continued)
Key points to support the attractiveness of the offer to Figaro's minority shareholders
![]() | ![]() |
• | Offer to Figaro's minority shareholders is highly attractive |
![]() | ![]() |
• | Figaro's auction process resulted in only one offer - from [Confidential treatment requested] |
![]() | ![]() |
• | [Confidential treatment requested]'s offer was non-cash and at a substantial discount to market |
![]() | ![]() |
• | Danisco's proposal is all cash and represents more than a 30% premium to [Confidential treatment requested]'s offer |
![]() | ![]() |
• | The offer to the minorities represents a substantial premium to the likely purchase price of Eastman shares |
![]() | ![]() |
• | The proposal implies a generous valuation for Figaro |
![]() | ![]() | ![]() |
− | 15.1x 2004E EBITDA |
![]() | ![]() | ![]() |
− | 17.3x 2005E EBITDA |
![]() | ![]() |
• | Consistent with comparable publicly-traded companies and transactions |
![]() | ![]() |
• | Premium to current market price |
![]() | ![]() | ![]() |
− | stock price has been inflated by takeover speculation |
![]() | ![]() | ![]() |
− | 7.4% premium to 90-day average |
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Change-of-control transaction mechanisms | ![]() | Appendix I | ||||
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Appendix I
Change-of-control transaction mechanisms
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Change-of-control transaction mechanisms | ![]() | Appendix I | ||||
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One-step versus two-step transactions
A public company acquisition can be accomplished through either a one-step (merger), or a two-step (tender/exchange offer) transaction
Generally, a public company acquisition structured as a two-step transaction is attractive primarily because it may deliver control of the Target in a shorter period of time
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![]() | Comments | ||||||||||||||||
One step acquisition or Merger | ![]() | • | ![]() | An acquisition of the Target that is consummated through the exchange of the Target's shares for the acquisition consideration | |||||||||||||
• | ![]() | May require Acquirer board approval1 | ![]() | ||||||||||||||
• | ![]() | May require Target board and shareholder approval | ![]() | ||||||||||||||
• | ![]() | Shareholder approval is sought at a special shareholders meeting | ![]() | ||||||||||||||
• | ![]() | The required shareholder approval percentage depends upon the Target's articles of incorporation and corporate bylaws, as well as the applicable state takeover statute | ![]() | ||||||||||||||
• | ![]() | To obtain shareholder approval, the Target is required to solicit proxies from shareholders (proxy statement requires SEC approval) | ![]() | ||||||||||||||
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Two-step acquisition or Tender / exchange offer | ![]() | • | ![]() | An acquisition of the Target that is consummated in two steps: a tender/exchange offer followed by a merger | |||||||||||||
• | ![]() | In the first step, the Acquirer commences a tender offer for the shares of the Target | ![]() | ||||||||||||||
![]() | − | ![]() | documents for such an offer do not require prior SEC approval or the Target's shareholder vote | ![]() | |||||||||||||
![]() | − | ![]() | the offer is conditioned upon enough shares being tendered to give the Acquirer sufficient voting power to ensure the approval of the merger in the second step | ![]() | |||||||||||||
• | ![]() | In the second step, the Acquirer obtains shareholder approval for the merger and the Target shareholders who did not tender their shares receive the merger consideration (the "squeeze-out") | ![]() | ||||||||||||||
![]() | − | ![]() | in the event the Acquirer acquires sufficient shares of the Target in the first step (90 percent in Delaware), the merger does not require the approval of the Target's remaining shareholders ("short form" merger) | ![]() | |||||||||||||
![]() |
1 Requires Acquiror shareholders approval if Acquiror is to issue new shares equal to at least 20 percent (if NYSE or NASDAQ company) of outstanding shares or if Acquiror will amend its charter in connection with the merger.
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Approach to the Special Committee | ![]() | Section 2 | ||||
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Post-tender offer merger with Target
After Acquiror acquires a majority of Target's shares in the two-step (tender/exchange offer) transaction, Acquiror acquires the remainder of the equity interest through a merger in which remaining Target shareholders receive the merger consideration
![]() | ![]() |
• | In a friendly transaction, the merger agreement is signed before Acquirer begins its tender offer for Target shares |
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• | The merger is customarily structured so that a subsidiary of Acquirer is the corporation with which Target merges |
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• | If less than 90 percent of Target shares are acquired in the tender offer, the merger is subject to Target shareholder approval |
![]() | ![]() | ![]() |
− | Target's charter and bylaws determine what percent minimum shareholder approval is necessary to consummate the merger |
![]() | ![]() | ![]() |
− | Under Target's charter, or if state law provides otherwise, Acquiror is permitted to vote its own shareholdings in Target in favor of the merger |
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− | Target shareholders who disapprove of the merger and follow specified statutory procedures will be entitled to seek the appraised value of their shares ("appraisal rights") |
![]() | ![]() |
• | Before the merger can be consummated, it is necessary to send Target shareholders a proxy or information statement |
![]() | ![]() | ![]() |
− | The proxy statement contains, among other things, a full description of Target, full financial statements of Target, and enough information to enable Target shareholders to make an informed decision as to whether or not to seek appraisal rights |
![]() | ![]() | ![]() |
− | The proxy statement and its content requires SEC approval |
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Change-of-control transaction mechanisms | ![]() | Appendix I | ||||
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Post-tender offer merger with Target (continued)
The two methods of accomplishing the second step merger differ significantly in execution timeline
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![]() | Comments | ||||||||||
Short form merger | ![]() | • | ![]() | Typically requires 90 percent ownership of Target's stock | |||||||
• | ![]() | Must be permitted under relevant state law | ![]() | ||||||||
• | ![]() | Is quicker and less complicated than long-form merger | ![]() | ||||||||
• | ![]() | Does not require shareholder approval | ![]() | ||||||||
• | ![]() | Takes less than one month | ![]() | ||||||||
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Long form merger | ![]() | • | ![]() | Typically executed when Acquiror has less than 90 percent ownership of Target's stock | |||||||
• | ![]() | Must effect traditional merger transaction | ![]() | ||||||||
• | ![]() | Shareholder consent | ![]() | ||||||||
• | ![]() | Solicitation of proxies | ![]() | ||||||||
• | ![]() | Takes from four to six months | ![]() | ||||||||
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Change-of-control transaction mechanisms | ![]() | Appendix I | ||||
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Illustrative timetable
Because of the need for rapid execution, acquisitions not subject to inherent regulatory delays are typically structured as two-step transactions. The tender/exchange offer can close as early as 20 business days from the commencement date
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![]() | One-step acquisition | ![]() | Two-step acquisition | |||||||||||||||
Day 1 | ![]() | • | ![]() | Sign merger agreement | ![]() | • | ![]() | Sign merger agreement | ||||||||||
![]() | • | ![]() | Announce transaction | ![]() | • | ![]() | Announce transaction | |||||||||||
Day 5 | ![]() | • | ![]() | File proxy statement with the SEC | ![]() | • | ![]() | File schedule TO with the SEC and deliver to Target | ||||||||||
![]() | • | ![]() | File HSR | ![]() | • | ![]() | File HSR | |||||||||||
![]() | ![]() | ![]() | • | ![]() | Commence tender offer by giving security holders the means to tender into the offer | |||||||||||||
Day 15 | ![]() | ![]() | ![]() | • | ![]() | Target files schedule 14D-9 setting out its position on the offer with the SEC and sends to Acquiror(1) | ||||||||||||
Day 20 | ![]() | ![]() | ![]() | • | ![]() | HSR waiting period expires (unless earlier terminated, or agencies request additional information, in which case waiting period lasts until 10 days after the information is furnished)(2) | ||||||||||||
Day 35 | ![]() | • | ![]() | HSR waiting period expires (unless earlier terminated, or agencies require additional information, in which case waiting period lasts until 30 days after the information is furnished) | ![]() | • | ![]() | Tender offer must remain open for at least 20 business days (offer may be extended), at the end of which the acquirer is free to acquire the Target's shares (if HSR process is completed) | ||||||||||
![]() | ![]() | ![]() | • | ![]() | If enough shares are tendered to permit short form merger, complete merger(3) | |||||||||||||
Day 40 | ![]() | • | ![]() | Receive SEC comments | ![]() | • | ![]() | If the minimum conditions are met to carry the merger, file an information statement(4) with the SEC for the second step merger | ||||||||||
Day 43 | ![]() | • | ![]() | Respond to SEC comments | ![]() | ![]() | ||||||||||||
Day 45 | ![]() | • | ![]() | Receive SEC approval | ![]() | |||||||||||||
![]() | • | ![]() | Mail merger material to Target's shareholders | ![]() | ||||||||||||||
![]() | • | ![]() | Set Target shareholders meeting date | ![]() | ![]() | |||||||||||||
Day 50 | ![]() | ![]() | ![]() | • | ![]() | Receive SEC approval | ||||||||||||
![]() | ![]() | ![]() | • | ![]() | Mail merger material to Target's shareholders | |||||||||||||
![]() | ![]() | ![]() | • | ![]() | Set Target shareholders meeting date | |||||||||||||
Day 70 | ![]() | ![]() | ![]() | • | ![]() | Target shareholders vote within 20 calendar days | ||||||||||||
![]() | ![]() | ![]() | • | ![]() | Complete merger | |||||||||||||
Day 75 | ![]() | • | ![]() | Target shareholders vote within 20 business days | ![]() | |||||||||||||
![]() | • | ![]() | Complete merger | ![]() | ![]() | |||||||||||||
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(1) | The schedule 14D-9 is often filed simultaneously with the schedule TO in friendly transactions. |
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(2) | In the case of an exchange offer, the HSR waiting period and additional information request period can both last up to 30 days. |
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(3) | The SEC has recently introduced the option of including a "subsequent offer period" provision into tender/exchange offers, which allows the Acquiror to extend the offer for a period of no less than 3 business days and no more than 20 business days without granting withdrawal rights to those that have already tendered into the offer; this is typically used by Acquirors who are seeking to acquire the percentage necessary to effect a short-form merger. |
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(4) | The Acquiror can also file a proxy statement (as opposed to an information statement) which requires at least 20 business days before a shareholder vote. |