M&A Through the Treasury Lens

Transcription

1 M&A Through the Treasury Lens Elaine Lou Assistant Vice President, Global Cash Management AT&T Tamara Saront-Eisner Vice President and Treasurer, US and Americas Air Liquide Kelvin Ang, CFA, CPA Director, Americas Head Treasury Advisory Group Citi Treasury & Trade Solutions

2 Introductions Elaine Lou has been with AT&T for over 15 years. Currently, Elaine is responsible for Global Cash Management covering cash management, intercompany funding, banking relationships, and foreign exchange risk management and execution. Before Elaine joined the treasury team in 2008, she held positions in Financial Planning and other finance groups within AT&T. Elaine holds an M.B.A. from Washington University in St. Louis and a B.S. from Shanghai University of Finance and Economics. She has been a CFA charter holder since Photo Tamara Saront-Eisner is VP and Treasurer for the US and the Americas Hub at Air Liquide. Tamara joined Air Liquide in 2015 as VP and Treasurer to lead the treasury functions in all the Americas. Prior to Air Liquide, Tamara developed her career in the Oil and Gas industry, always in Corporate Finance or Treasury roles. She was Regional Treasurer for US and Canada at Repsol where she worked 16 years. She has recently been recognized as one of Houston s 50 Most Influential Women of 2016 by Houston Women Magazine. She is the current President of the Houston chapter of Women s Energy Network, a non-profit organization. She received her B.A. in Economics from University of San Andres, Argentina and her MSc in Economics from the London School of Economics (LSE), UK. Kelvin Ang is responsible for leading the delivery of advisory to Americas clients in the areas of treasury operations, working capital management, risk mitigation, and treasury technology. He joined Citi in April 2015 with extensive corporate experience, having been based in Asia, the US, and the Middle East in positions managing regional treasury centers, in-house banking, investments, financing, and cash management bank selection, FX and interest rate risk management, supply chain financing, and financial control. Prior to joining Citi he was most recently at Caterpillar. Kelvin holds an accounting degree from the Nanyang Technological University of Singapore, and is a Singapore Chartered Accountant as well as a Chartered Financial Analyst.

3 M&A by the Numbers

4 M&A Deals in recent years 2016 worldwide M&A activity totaled USD 3.8 trillion from 46,000+ transactions expected to be USD 3.3 trillion, 13% lower than 2016 and 26% lower than Top motivating factors for M&A: limited organic growth options the need to address the business model transformation that is occurring across industries.most interested in acquiring relevant technologies and responding to transformation in their industries, as well as a desire to expand their products. Source: Dealogic, Citi, KPMG M&A Pulse

5 Audience Poll 1 Has your Treasury team been involved in (in the last 12 months) or are they going to be involved in an M&A integration (in the next 12 months)? A. Yes B. No

6 Poll Results

7 Trivia Question What is the largest ever M&A deal in history? - Buyer - Target - Deal $ Amount - Year

8 AT&T Company Overview * Iconic brand in American business for 140 years $160 billion+ in revenue; world s largest communications company by revenue Premier global network spanning 6 continents 147 million wireless customers in the U.S. & Mexico #1 pay TV provider in the U.S. 265,000 employees in 60+ countries worldwide *Numbers as of 2Q AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners.

9 AT&T M&A History 1997: Pacific Telesis/Pacific Bell 1998: Southern New England Telephone 1999: Ameritech 2005: AT&T 2006: BellSouth/Cingular 2014: Cricket 2015: Iusacell and Nextel 2015: DirecTV 2017: Time Warner (pending) Many acquisitions in between: Interwise, Wayport, Sterling Commerce, Superclick, Quickplay, etc.

10 Air Liquide: World Leader in Gases, Technology and Services *Figures as of Dec. 2016

11 Air Liquide M&A History

12 M&A Deal Lifecycle

13 Lifecycle of the Deal Pre-Deal Preparation and Evaluation of Transactional Assumptions Pre-Close Planning Day 1 Post-Close Execution Post- Integration Optimization Timeline Due Diligence Post-Close Planning Big Bang vs. Phased approach Integration

14 What are your priorities as Treasurers during different stages of the M&A deal cycle?

15 M&A Treasury Involvement Pre Announcement: Closing Funding considerations, Rating Agencies Post Announcement: Post close refinancing: capital markets consideration, FX matters Cash Management team Day of Close planning; Staging cash, managing counterparty limit Short term funding of acquired target Stock exchange considerations Credit lines Parlor room discussions & alignment on treasury organization, bank account info, daily positioning, centralization, funding policies, pooling strategy Post Close: Cash visibility and control, cash positioning Integration: bank signer change; system integration

16 AT&T M&A Case Study US: DirecTV Parlor Room/Clean Room Process Allows sharing of information prior to close Everything shared under a Non-Disclosure Agreement Conference calls to cover questions and data requests Your Treasury Team Your Integration Team Your Legal Team Their Legal Team Their Integration Team Their Treasury Team International: Iusacell and Nextel

17 Air Liquide Airgas Acquisition Air Liquide: focus on upstream Airgas: focus on downstream Highly complementary businesses Implied synergies Improved customer reach U.S. operations merged October 1 st, 2016

18 Audience Poll 2 What is your priority during the Post-close phase in an M&A transaction? A. Cash / Funding B. FX C. Control of Bank Accounts D. Systems E. Treasury Organization F. All are equally important

19 Poll Results

20 Key Takeaways

21 Keys to a successful Treasury integration Obtain senior sponsorship Seek legal, tax and technical resources early in the game Define volumes, transaction flows, credit requirements and legal entity information early Identify dedicated project managers on both sides; centralize coordination and tracking of issues Communicate intensively with key internal stakeholders Leverage support from banking partners Execute documents, open accounts, address technical issues within key milestone dates Centralize signature authorizations

22 Questions & Answers Thank you!

23 Appendix

24 M&A Pre-Close Considerations General Treasury Department: Impact of Acquisition on business needs, geographic spread of operations Impact on Treasury Organization (Corporate Finance and Cash Management) / Organizational Structure (org chart with titles and primary job responsibilities) Alignment on structure and responsibilities (centralized vs non centralized) Corporate Finance: List of temporary cash or short term investments Overview of foreign exchange, interest rate and other derivatives Derivatives: overview of ISDAs and positions. Credit lines including leasing (covenants) Intercompany funding (for subsidiaries and US group). Significant contingent liabilities or off-balance-sheet obligations

25 M&A Pre-Close Considerations (Cont d) Cash Management: Treasury system and visibility of cash Process for daily cash positioning Cash Pooling / Concentration bank Alignment on banking partners Intercompany funding structure Bank account structures and services / banking platform Bank fee analysis Treasury execute what wires Letters of Credit Processes and Policies Overview of Sarbanes-Oxley key processes

26 M&A Post-Close Considerations Cash Management: Full transformation of cash management: banking partners, bank structure and disbursements and collection. Allows to improve in cost efficiencies Help increase security Homogenize processes and file formats Daily funding Cash sweeps Control of Bank Accounts Process and Procedures Working capital efficiencies Elect new Treasury officers for each legal entity owning bank accounts Adopt standard banking resolutions for each legal entity owning bank accounts Corporate Finance: Cash forecasting / debt variance analysis FX exposure Long term funding Optimization of financial expenses