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3M Acquisition of Aearo Company
 

3M Acquisition of Aearo Company

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    3M Acquisition of Aearo Company 3M Acquisition of Aearo Company Presentation Transcript

    • 3M Company Acquisition Of Aearo Company November 15, 2007 Growing 3M’s Personal Protection Franchise
    • Forward-Looking Statements This presentation contains forward-looking information (within the meaning of the Private Securities Litigation Reform Act of 1995) about 3M’s financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic conditions; (2) competitive conditions and customer preferences; (3) foreign currency exchange rates and fluctuations in those rates; (4) the timing and acceptance of new product offerings; (5) the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (6) the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (7) generating less productivity improvements than estimated; and (8) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2006 and its subsequent Quarterly Reports on Form 10-Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under “Risk Factors” in Part I, Item 1A (Annual Report) and in Part II, Item 1A (Quarterly Report). The information contained in this presentation is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. The information contained in this presentation is as of the date indicated. Neither 3M nor Aearo assumes any obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. 2
    • 3M Safety, Security And Protection Services Strategic Roadmap Our Dream: Achieve $10B in sales from $3B today ILLUSTRATIVE Core growth Governments Security Systems Occup. Health & Bldg & Adjacencies/M&A CPP Environmental Com. Svcs Businesses Customers Safety - Pomp (2006) - Aerion (2006) - SPSL (2006) - E. Wood (2007) T&T EBO T&T EBO Trace Track & - Rochford Thompson (2007) IMPD Global focus Mining Consumers EBO & Special initiatives Safety - People Security - Processes Protection - Assets 3
    • Our Dream In Safety: Multi-Category Leadership Personal Protective Equipment markets Current leadership $Billions Minimal sales today Visibility & Hand, Foot & Respiratory Hearing Head, Eye & Face Fall Protective Body Clothing $3.5 - $4.0 $1.9 – $2.2 $0.9 -$1.2 $2.0 – $2.2 $1.0 - $1.2 $7.0 - $8.5 #1 share today #1 share today Building toward leadership in multiple Personal Protective Equipment categories 4
    • Aearo Adds Market Strength In Three Important Personal Protective Equipment Categories Personal Protective Equipment markets Current leadership $Billions Minimal sales today Visibility & Hand, Foot & Respiratory Hearing Head, Eye & Face Fall Protective Body Clothing $3.5 - $4.0 $1.9 – $2.2 $0.9 -$1.2 $2.0 – $2.2 $1.0 - $1.2 $7.0 - $8.5 #1 share today #1 share today #1 #2 Developing 5
    • Aearo Is A Leading Supplier Of Personal Protective Equipment & Specialty Composites Passive hearing • #1 position in North America and Europe protection • Disposable and reusable plugs and muffs • Strong positions in industrial and construction markets Active hearing • #1 position in North America and Europe protection • Investments in wireless, ANR, bone conduction technology • Strong presence in industrial, military and aerospace markets Eye protection • #2 position in North America and Europe • Industrial and consumer safety eyewear • Strong presence in consumer, sportsman and industrial markets Respiratory • Maintenance free and elastomeric face piece respirators protection • Strong presence in consumer markets Fall protection • #3 position in North America • Harness and anchor systems for fall protection • Focused on construction and consumer markets in U.S. Specialty • Specialty materials for managing noise, vibration, shock and thermal composites • Designed into customer products pre-launch • Strongest in electronics, trucking and aerospace industries 6
    • 3M’s Global Presence Provides a Strong Foundation for Aearo’s Growth Aearo Sales 3M OH&ES Sales APAC Europe APAC LAC LAC Europe U.S. U.S. 7
    • Aearo’s Strength Is Primarily In The U.S. & Western Europe – Hearing – Hearing – Communications – Communications – Eyewear – Eyewear – Fall protection – Fall protection – Hearing – Other safety – Other safety – Communications – Specialty Composites – Specialty Composites – Eyewear – Fall protection – Other safety – Specialty Composites – Hearing – Communications – Eyewear – Fall protection – Other safety – Specialty Composites Aearo today: limited international coverage and infrastructure 8
    • 3M’s Global Infrastructure Will Significantly Expand Aearo’s Business – Hearing – Hearing – Communications – Communications – Eyewear – Eyewear – Fall protection – Fall protection – Hearing – Other safety – Other safety – Communications – Specialty Composites – Specialty Composites – Eyewear – Fall protection – Other safety – Specialty Composites – Hearing – Communications – Eyewear – Fall protection – Other safety – Specialty Composites Aearo + 3M: broad global coverage across multiple product lines 9
    • 3M + Aearo = Global Leader In Personal Protective Equipment 2006: 3M 2012: 3M + Aearo Hearing Head, Eye, Protection Visibility Head, Eye, Face Protection Face Protection Protection Hearing Protection Respiratory Protection Other Visibility Protection Other Respiratory Specialty Protection Fall Protection Composite 10
    • Aearo Has A History Of Delivering Strong Results Sales 818 $Millions Adj. EBITDA Total Growth 12.6% CAGR 10.0% CAGR 508 Local Currency 462 10% CAGR 423 363 316 213 17.6% CAGR 14.8% CAGR 107 91 83 65 56 2003 2004 2005 2006 2007 2012 Adj. EBITDA 17.6% 17.8% 19.5% 19.8% 21.1% 26.0% to sales* 11 *Excludes management fees and other acquisition costs.
    • Multiple Sources Of Synergies • Sales growth synergies • Leveraging 3M global infrastructure – Asia Pacific, Latin America, Central East Europe, Russia • Market synergies – military, commercial construction, oil and gas and mining • Cost synergies • ~1% reduction of combined Aearo/3M cost base, or approximately $20 million per year • Redundant structure and corporate functions • Sourcing and Lean Six Sigma • Technology synergies • Integrating respiratory, hearing and communications technologies into full-face and head protection gear • Thermal and acoustic/vibration absorption • Regulatory leadership in respiratory and hearing protection 12
    • Summary Of Acquisition Terms Financial summary $Millions Transaction Summary Purchase Price Multiples Deal Structure Cash for Stock Sales 2.1 Purchase Price $1,200 EBITDA 9.8 Expected Closing Date Q1 2008 (based on 08 fiscal year forecast) Financing Closing Conditions Combination of existing cash and debt Regulatory approvals Other customary conditions Earnings Impact EPS neutral in 2008 including one-time costs $0.03 of one-time costs in 1H 2008 13
    • Summary • 3M’s Occupational Health & Environmental Safety Division is a global leader in respiratory protection and a cornerstone of our Safety, Security and Protection Services Business • Aearo is a leader in hearing protection and vision protection, and has a growing capability in fall protection; 3M does not have strong positions in these product groups • Acquisition of Aearo: – Creates a clear global leader in personal protective equipment products, playing across multiple industries – Provides access to higher growth product categories – Expands and deepens 3M capabilities in multiple technologies, and offerings in multiple important product areas – Represents significant opportunities in sales and cost synergies A perfect opportunity to expand 3M’s personal safety business 14