This document summarizes Nestle's acquisition of Pfizer Nutrition. It outlines that the acquisition will enhance Nestle's leading position in infant nutrition by expanding its geographic reach, portfolio breadth, and R&D capabilities. The acquisition is a strategic, cultural, and financial fit that is expected to be accretive and create shareholder value by positioning Nestle for growth in dynamic emerging markets. Key details include the $11.85 billion price, expected cost synergies, and that financing will maintain Nestle's strong balance sheet.
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Pfizer nutrition investor call
1. Wan Ling Martello Paul Bulcke Kurt Schmidt
Chief Financial Officer Chief Executive Head of Nestlé Nutrition
Roddy Child-Villiers
0 Head of Investor Relations
23rd April, 2012 Pfizer Nutrition Acquisition
2. Disclaimer
This presentation contains forward looking
statements which reflect Management’s current
views and estimates. The forward looking
statements involve certain risks and uncertainties
that could cause actual results to differ materially
from those contained in the forward looking
statements. Potential risks and uncertainties
include such factors as general economic
conditions, foreign exchange fluctuations,
competitive product and pricing pressures and
regulatory developments.
1 23rd April, 2012 Pfizer Nutrition Acquisition
3. Paul Bulcke
Chief Executive
2
2 23rd April, 2012 Pfizer Nutrition Acquisition
4. Building on...
Our 145 year commitment
Our Nutrition, Health & Wellness strategy
Our special commitment to the first 1000 days
3 23rd April, 2012 Pfizer Nutrition Acquisition
5. Building on our 145 year commitment...
Henri Nestlé
4 23rd April, 2012 Pfizer Nutrition Acquisition
6. On our Nutrition, Health & Wellness strategy...
5 23rd April, 2012 Pfizer Nutrition Acquisition
7. Aligned with the Nestlé Roadmap
Competitive
Advantages
Operational Growth
Pillars Drivers
6 23rd April, 2012 Pfizer Nutrition Acquisition
8. Aligned with the Nestlé Roadmap
60/40+
Nestlé R&D
Nestlé Nutrition
Nestlé Health Science,
Nestlé Institute of
Health Sciences
Venture Funds
M&A: Strategic
Cultural
Financial
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9. Building on our special commitment to the
first 1000 days ...
8 23rd April, 2012 Pfizer Nutrition Acquisition
10. Kurt Schmidt
Global Head
Nestlé Nutrition
9
9 23rd April, 2012 Pfizer Nutrition Acquisition
11. The first 1000 days
Critical nutritional milestones from conception through infancy
Science-based education & services for the right nutritional choices
Breastfeeding
The best form of nutrition in the first 6 months of life
The right start of a consumer journey with Nestlé
Start Healthy Stay Healthy
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12. Pfizer Nutrition...
Strong fit with Nestlé
Strategic
Cultural
Financial
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13. Infant Nutrition
Our roots & the core of Nutrition, Health & Wellness
Start of a new journey
Nestlé & Pfizer Nutrition nurturing a healthier generation
Building a strong future on our core passion & roots
Nutrition, Health & Wellness
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14. Nestlé & Pfizer Nutrition
Strong fit in attractive category
Infant Nutrition: High value & high growth
Nestlé Nutrition: Category pioneer & global leader
Pfizer Nutrition: Dynamic & valuable business with
exposure in growth markets
Strengthened position & a winning combination
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15. Infant Nutrition is an attractive category
Large market: ~USD 30 bn
High growth: ~10% p.a. globally
Emerging markets: 73% of market, 13% growth p.a.
–Increasing births
–Increasing affluence
–Increasing awareness of benefits of good nutrition
–Premiumisation & broader range of product benefits
Source: Euromonitor (Milk Formula)
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16. Infant Nutrition is highly dynamic
2010 Market Size ($m) 2010 Market Size ($m) (%)
06-'10 Market Growth 06-'10 Market Growth (%)
10-'16 Market Growth %)
(%) 10-'16 Market Growth %)
hina China 7,306 7,306
28.3% 19.0%28.3% 19.0%
her Asia Other Asia 6,475 9.1% 6,475 9.1%
6.7% 6.7%
orth America 4,807
North America 0.6% 4,807 0.6%
1.9% 1.9%
Egypt
urope Europe 4,613 6.3% 4,613 6.3%
5.1% 5.1%
tin America 2,034
Latin America 2,034 10.9% 10.9%
11.7% 11.7%
ddle East & Middle East &
1,586 1,586 17.9% 13.3%
17.9% 13.3%
rica Africa
ustralia & Australia &
197 197 8.2% 4.9%
8.2% 4.9%
ew Zealand New Zealand
Source: Euromonitor (Milk Formula)
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17. Pfizer Nutrition
Dynamic player with strong geographic growth profile
85% of sales in emerging markets
– Key markets include: China, Philippines, Thailand, Indonesia, Middle East, Mexico
Strong reputation & equity with Health Care Professionals
High quality brand portfolio with strength in premium products
Strong leadership team with proven track record
Good and consistent financial performance
5,400 employees, 5 factories and 3 R&D centres
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18. Nestlé & Pfizer Nutrition
Building on Nestlé’s strong base
Nestlé Infant Nutrition today:
Global leadership with broad geographic reach
Leading global R&D network
Strong medical & scientific partnerships
Science-based innovation
Focused stand-alone organisation
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19. Nestlé Nutrition & Pfizer Nutrition
Enhanced presence in dynamic regions
Top 10 markets:
9 markets in the world’s top 10 of highest absolute population growth
45%+ of the next 5 years’ category growth will come from China/HK*
Nestlé IF & Nestlé IF & GUMs
GUMs & Pfizer Nutrition
Sales 2011 USD 5bn+ USD 7bn+
% in Emerging Markets 83% 85%
% in Asia, Oceania & Africa 45% 55%
% in Leading Positions 65% 75%
*Euromonitor (Milk Formula)
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20. Complementary benefits & platforms
Strength from entry level to super premium
Allergy Immune Brain Optimal growth
Gut Comfort Picky Eater
Prevention Protection Development & Development
Enlarged business has a pioneering presence in key benefit platforms
Strong presence in premium & super-premium products
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21. Nestlé Nutrition & Pfizer Nutrition
Strong cultural fit
Combined management teams with sustained, successful track record
Leadership teams focused on science-based innovation
Consistent focus on compliance, quality & safety; ‘non-negotiable’
Conviction that ‘breast-feeding is best’
Ethical approach to marketing
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22. Summary
A great fit with capabilities & presence to win
Enhances strong Nestlé business
Positions Nestlé to benefit from population growth
Expands our portfolio
Leverages R&D:
Nestlé’s into Pfizer Nutrition brands; Pfizer Nutrition’s into Nestlé brands
Combines strong management teams
Benefits from ‘Nestlé in the Market’ scale, capabilities, systems, etc.
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23. Wan Ling Martello
Chief Financial Officer
22
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24. Pfizer Nutrition
A high quality business
Accretive to Nestlé Model
Implementing Nestlé acquisition strategy
Creating shareholder value over time
by enhancing our positions & capabilities
to win in the world’s most dynamic markets
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25. Pfizer Nutrition – a high quality business
A track-record of dynamic growth
CAGR: +13%
Sales 2.4
2.2
1.6 1.9
2009-2012
(USD bn)
2009 2010 2011 2012E
2012E Sales: USD 2.4bn
85% of which in Emerging Markets
2012: Nestlé estimate
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26. Pfizer Nutrition – a high quality business
Healthy level of profitability
25% 25% 25%
23%
EBITDA &
EBITDA margin 0.6
0.5
0.4 0.4
2009-2012
(USD bn)
2009 2010 2011 2012E
A proven track-record of profitable growth
2012: Nestlé estimate
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27. Key transaction parameters
Acquisition price: USD 11.85 bn
Multiple (EV/EBITDA 2012E): 19.8x
15.6x post run rate synergies
Full year cost synergies: USD 160 mn
Financing: Cash & additional debt,
strong balance sheet maintained
Closing subject to regulatory approvals
2012: Nestlé estimate
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28. Pfizer Nutrition accretive to the Nestlé Model
Organic Growth: Above Group’s 5-6% OG guidance
Margin: Immediate
EPS: First full year
Capital Efficiencies: ROIC to exceed cost of capital in year 4 to 5
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29. Implementing Nestlé’s acquisition strategy
To be a category leader Leading positions globally
Focused approach on value-added
Strategic
growth categories Category growing at 10%
High quality brands, strong market
Strong brands in leadership positions positions
High degree of certainty of Operations complementary,
Cultural
successful integration good cultural fit
Generate value for shareholders Growth model & healthy returns
Financial Top & bottom line, & cash flow enhancing Accretive
Maintain strong credit ratings
& financial flexibility Strong credit ratings maintained
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30. ... captures the very essence
of Nestlé and the promise
we commit ourselves to
everyday, everywhere
as the leading Nutrition, Health
and Wellness Company
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