Acquisition of GE Water

Transcription

1 Acquisition of GE Water Stepping up into the Industrial Water Services Market March 8 th, 2017

2 Disclaimer Certain information included in this press release and other statements or materials published by SUEZ are not historical facts but are forward-looking statements. These forward-looking statements are based on current beliefs, expectations and assumptions, including, without limitation, assumptions regarding present and future business strategies (including the successful integration of GE Water & Process Technologies within the Group and potential related synergies) and the environment in which SUEZ operates. They involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements, or industry results or other events, to be materially different from those expressed or implied by these forward-looking statements. Forward-looking statements speak only as of the date of this press release and, subject to any legal requirement, SUEZ expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements included in this press release to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Such forward looking statements are for illustrative purposes only. Forward-looking information and statements are not guarantees of future performances and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of SUEZ. Actual results could differ materially from those expressed in, or implied or projected by, forward-looking information and statements. These risks and uncertainties include those discussed or identified under Chapter 4 Risk factors in the Registration Document (Document de Référence) of SUEZ which has been filed with the French Financial Markets Authority on April 4, 2016 under number D This press release includes only summary information and does not purport to be comprehensive. No reliance should be placed on the accuracy or completeness of the information or opinions contained in this press release. Information related to GE Water & Process Technologies (including 2016 financial figures) set out in this press release are based on information provided to SUEZ by GE Water & Process Technologies within the context of the acquisition process. These financial figures have not been audited or subject to a limited review by the auditors of SUEZ. This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction. 2 I

3 Agenda Introduction I Stepping up into the Industrial Water Services Market Jean-Louis Chaussade, CEO Section 1 Section 2 Section 3 I GE Water: Unparalleled Industrial Water Platform Jean-Louis Chaussade, CEO I A Major Step Forward in Accelerating SUEZ s Strategy Jean-Louis Chaussade, CEO I A Value Enhancing Transaction Christophe Cros, CFO Conclusion I A Strategic Acquisition Jean-Louis Chaussade, CEO 3 I

4 Stepping up into the Industrial Water Services Market Jean-Louis CHAUSSADE Chief Executive Officer

5 SUEZ to Acquire GE Water (1) and Become Major Player in Industrial Water Services Transaction in line with group s strategy, expanding offer for industrial clients, reinforcing international footprint and boosting digital and innovation platform. All cash transaction, for an enterprise value of 3.2bn (2), with strategic partner CDPQ A compelling value proposition for SUEZ shareholders: EPS accretive on year 1, with strong revenue and cost synergies ; double-digit accretion based on run-rate cost synergies Unanimous support from the Board of Directors of SUEZ Bridge financing fully secured, to be refinanced through a capital increase, straight and hybrid debt SUEZ main shareholders, Engie, Criteria CaixaHolding and Caltagirone, confirmed intention to participate in the capital increase 5 I Notes: 1) GE Water stands for GE Water & Process Technologies 2) $3.4bn assuming EURUSD of 1.06

6 GE Water: Unparalleled Industrial Water Platform Jean-Louis CHAUSSADE Chief Executive Officer

7 Unparalleled Industrial Water Platform 1 GE Water: Broadening an Unparalleled Industrial Water Solutions & Services Platform 2 Leading presence across the entire industrial water value chain 3 Operating in key growing industrial verticals with large blue-chip client portfolio 4 GE Water enhances strong R&D and innovation capabilities 5 A leading digital platform driving client retention 6 Complementary geographic footprint and strong go-to-market capabilities 7 An international and highly experienced management team 7 I

8 1 GE Water: Broadening an Unparalleled Industrial Water Solutions & Services Platform Services c.$1.4bn Systems c.$0.7bn Integrated chemical treatment solutions for utilities operations, hydrocarbon processing and industrial applications Equipment and technology solutions for water and wastewater treatment, water reuse and outsourcing Water Treatment Chemical Solutions Oil & Gas Process Chemical Treatment Industrial Process Chemical Treatment Services Projects Analytical Instruments Products Advanced cooling, wastewater, boiler water, and membrane chemistry for all industries Integrated solutions for refining, oil & gas production chemicals Dust control, fuel treatment and scale control services Water treatment outsourcing and mobile water solutions Dedicated longterm and spot service contracts Technology, products, and process engineering expertise Total organic carbon monitoring products and services for pharma, water and wastewater Filters, membranes, reverse osmosis equipment, electroseparation technologies Integrated Digital Services Offering Recurring Sales: 65% of Total Sales 8 I

9 2 Leading Presence Across the Entire Industrial Water Value Chain Industrial Water Solutions Instrumentation Equipment & Systems Engineering, Procurement and Construction Operations & Maintenance Chemical Water Treatment and Related Services Monitoring / Analytics / Digital Services Water Present No/Limited Presence 9 I

10 3 Operating in Key Growing Industrial Verticals with Large Blue-Chip Client Portfolio Food & Beverage O&G Upstream Power Mining O&G Downstream Micro Electronics Pharma & Cosmetics Market Dynamics Global Annual Expenditures 2016 ( bn) Expected average annual growth ) 0.8 (1) 4.3% 12.3% 3.4% 5.9% 2.2% 5.6% (1) 6.9% (1) Market Positioning Solutions/ Services Offering WATER Key Clients Longstanding relationship with a diversified and balanced portfolio of blue-chip clients Source: Expected average annual growth from GWI 10 I Note: 1) Based on total capex spend only

11 4 GE Water Enhances Strong R&D and Innovation Capabilities ~350 scientists and engineers with strong domain expertise Global optimised technology footprint with 12 R&D centers across four continents Large portfolio of c.2,500 patents / applications Current developments in: Zero-liquid discharge solutions Green cooling chemistry New process membranes Highly recognized brands in the industry (Betz, Osmonics, Ionics ) 11 I

12 5 A Leading Digital Platform Driving Client Retention Value-add services to increase efficiency In-House Digital Solution: InSight Cloud based asset management software solutions Asset optimisation, real-time monitoring, Plant Optim. Asset Perf. Analytics Inventory SRC R&D People Process Analysis Integrated digital services ranging from asset monitoring to developed digital customer and predictive service capabilities and digital maintenance sales Data analytics InSight Sensors Data Controllers More than 4,000 customer sites served globally with over 40,000 assets connected Strong value proposition to customers, strengthened customer relationships, drives growth and profitability 12 I

13 6 Complementary Geographic Footprint and Strong Go-to-Market Capabilities GE Water Key Footprint Highlights 130 Countries of operations 30% Presence in emerging markets c. 7,500 employees 29 manufacturing sites & service centres 12 R&D centres bn Combined (SUEZ + GE Water) 2016 Sales North America 1.2bn Europe 0.5bn WATER 0.4bn 10.6bn WATER Industrial Solutions 1.0bn 0.2bn 2.1bn Industrial Solutions 0.2bn East Asia Pacific LATAM 177m MEA 132m WATER 0.5bn 0.4bn 1.9bn WATER Industrial Solutions 118m 59m 0.9bn WATER Industrial Solutions 118m 14m 1.8bn Industrial Solutions 0.1bn Global sales force with c. 3,000 sales, field service representatives and distributors 13 I

14 7 An International and Highly Experienced Management Team Multicultural and international team 7 nationalities represented among the top 20 management team Key experienced managers of GE Water to join SUEZ 15 years of industry experience on average within the management team Strong expertise both in sales, supply chain and digital solutions Smooth transition process Total team will include 7,500 employees from GE Water and 2,000 from SUEZ Leverage strong awareness of SUEZ brand 14 I

15 An Unparalleled Industrial Water Platform Industrial Water Competitive Landscape (Sales in bn (1) ) WATER WATER 15 I Note: 1) Financials converted at: 1.06 EURUSD exchange rate Ecolab: Global Energy division; Xylem: Based on Industrial Water and Public Utilities portions of Water Infrastructure and Applied Water divisions; Danaher: Water Quality; Solenis: latest available; Evoqua: latest available; Pentair: Industrial water focused divisions of the Flow & filtration solutions and Water quality systems segments

16 A Major Step Forward in Accelerating SUEZ s Strategy Jean-Louis CHAUSSADE Chief Executive Officer

17 A Major Step Forward in Accelerating SUEZ s Strategy Industrial Clients o Global leader in water solutions to industrial clients o Expand suite of products and services o Access to large blue-chip customer base o From c. 34% to c. 40% of revenue generated with industrial clients International Development o Market leadership in US and Europe o Strong complementarity in key growth geographies (e.g. Asia and Latin America) o Rebalancing of geographic presence with c.40% generated outside Europe Digital Services o Full lifecycle management capabilities o InSight asset performance management system o Digital Service Centres and enhanced R&D Enhances SUEZ s long term profitable growth profile 17 I

18 Industrial Water: a Dynamic 95bn (1) Market Driven By Strong Market & Regulatory Trends Attractive growth prospects Attractive global industrial water market expected to grow at a 5% p.a. until 2020, exceeding GDP growth Mainly supported by population and industrial growth Alternative water resources solutions Growing need for water reuse solutions in industrial & municipal markets as a result of increasing water costs Strong outsourcing trend Strong outsourcing trend driven by the need for more cost effective solutions Increased infrastructure spending Tightened regulatory requirements regarding emissions and discharge limitations drive increase in infrastructure spending Environmental Awareness Supportive policy environment for circular economy and efficient resource management 18 I Note: 1) As per GWI 2016 data

19 A Dedicated Industrial Water Business Unit with Strong Financial Partner Creation of a Dedicated Industrial Water Business Unit Strategic Partnership with CDPQ Accelerate industrial water development with the creation of a dedicated industrial water business unit SUEZ will combine its industrial solutions assets with GE Water into a new business unit (1) CDPQ is an institutional investor with a strong track record of delivering value through strategic partnerships Shared vision on the long-term prospects of the industrial water market and SUEZ s newly formed industrial water business unit % of SUEZ s proforma revenue by business unit 27% 36% 21% 14% Water Europe Recycling & Recovery Europe International dedicated industrial water business unit 70% ownership Industrial Water 30% ownership SUEZ Industrial Solutions + GE Water Geographic rebalancing towards international operations 19 I Note: 1) Subject to work councils consultation

20 A Value Enhancing Transaction Christophe CROS Chief Financial Officer

21 A Value Enhancing Transaction 1 Significant synergies to be derived from the transaction 2 Compelling valuation supported by solid cash conversion and synergies 3 Strong value creation for SUEZ shareholders 4 Secured financing and solid proforma balance sheet 21 I

22 1 Significant Synergies Identified Run-rate identified Sources of synergies 1 Cost Synergies 65m of EBITDA p.a. Manufacturing Engineering Service Operations Purchasing SG&A 2 Revenue Synergies 200m of revenues p.a. Significant revenue synergies from cross-selling industrial water activities leveraging on SUEZ geographical footprint Additional cross-selling opportunities to be derived from waste activities (1) Implementation Costs 1- year of cost synergies over Full benefit of costs & revenue synergies realized by year 5 c. 80% of cost synergies to be generated over the next 3 years 22 I Note: 1) Not factored in synergy figures

23 2 Compelling Valuation Supported by Solid Cash Conversion and Synergies Attractive Financial Profile (1) 3.2bn Consideration (1) 12.5x ~13% ~3-4% ~16-17% Synergies 10.0x EBITDA Margin Cost Synergies Synergized EBITDA Margin (2) 2016 EBITDA 2016 EBITDA + Cost Synergies (2) WATER 17.4x ~72% ~6% ~78% Synergies 12.8x (3) Cash Conversion Cost Synergies Synergized Cash Conversion (2) 2016 Op CF 2016 Op CF + Cost Synergies (2) WATER Strong and predictable cash flow generation 23 I Notes: 1) Based on 2016 estimated recurring EBITDA and capex excluding one-off implementation costs 2) Run-Rate Cost Synergies of 65m 3) (EBITDA recurring capex) / EBITDA

24 3 Strong Value Creation for SUEZ Shareholders Topline Growth Positioned in the fast-growing industrial water market Expected mid-single digit revenue growth in the industrial water market EPS Cash Conversion Double-digit accretion based on runrate cost synergies EPS accretion as soon as 2017 without synergies Attractive cash conversion profile (> 70%) Respect financial discipline Maintain flexibility Accelerated EPS growth FCF Positive FCF from 2017 onwards Value enhancing transaction fully consistent with SUEZ strict investment criteria 24 I

25 4 Secured Financing and Solid Proforma Balance Sheet Envisaged Transaction Structure Key Financing Terms & Timing Bridge financing fully underwritten Contemplated refinancing strategy designed to preserve SUEZ strong investment grade rating profile Parent 70% Company 30% c. 0.7bn equity provided by CDPQ c. 0.75bn capital increase c. 0.6bn hybrid debt c. 1.1bn senior debt WATER Industrial Solutions Unanimous board approval and confirmed intention from main shareholders to participate in the capital increase Closing expected by mid-2017 and subject to customary regulatory approvals 25 I

26 A Strategic Acquisition Jean-Louis CHAUSSADE Chief Executive Officer

27 A Strategic Acquisition Transaction in line with group s strategy, expanding offer for industrial clients, reinforcing international footprint and boosting digital and innovation platform. All cash transaction, for an enterprise value of 3.2bn, with strategic partner CDPQ A compelling value proposition for SUEZ shareholders: EPS accretive on year 1, with strong revenue and cost synergies ; double-digit accretion based on run-rate cost synergies Unanimous support from the Board of Directors of SUEZ Bridge financing fully secured, to be refinanced through a capital increase, straight and hybrid debt SUEZ main shareholders, Engie, Criteria CaixaHolding and Caltagirone, confirmed intention to participate in the capital increase 27 I