Material Fact regarding the 3 acquisitions
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Material Fact regarding the 3 acquisitions

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Material Fact regarding the 3 acquisitions Material Fact regarding the 3 acquisitions Presentation Transcript

  • JBS S.A. PRESENTATION TO THE MARKET MARCH, 2008
  • Disclaimer The forward-looking statements presented herein are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future operating results, financial condition, strategies, market share and values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Forward-looking statements also include information concerning our possible or assumed future operating results, as well as statements preceded by, followed by, or including the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. 1
  • AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 2
  • OUR MISSION - PART OF THE DAY-TO-DAY OF OUR EMPLOYEES To be the best at what we set out to do, totally focused on our business, ensuring the best products and services for our customers, solidity for our suppliers, satisfactory profitability for our shareholders and the certainty of a better future for all our employees. 3
  • OUR VALUES - THE FOUNDATION OF OUR CULTURE Planning Determination Discipline Availability Openness Simplicity 4
  • AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 5
  • JBS’ HISTORY HAS BEEN BUILT THROUGH MORE THAN 30 ACQUISITIONS IN 15 YEARS Inalca National Beef Net Revenue (in R$ million) Swift Foods Co. Maringá (Amambay) Smithfield Beef Companies and plants acquired Berazategui Tasman (Rio Platense) Colonia Caroya SB Holdings JV Beef Jerky Goiânia Barretos (Anglo) Rio Branco Venado (Anglo) Pres. Epitácio (Bordon) Cacoal 1 Tuerto 39630 Campo Grande (Bordon) Cacoal 2 Pontevedra Porto Velho (CEPA) Vilhena (Frigovira) Barra do Cáceres Pedra Preta (Frigo Marca) Garças (Frigosol) Rosário (Sadia) Iturama (Swift ARG) 24076 (Frigosol) San Jose Anápolis Andradina Araputanga (Swift ARG) (Bordon) (Sadia) (Frigoara) 3158 3577 3968 1212 1292 1914 650 890 1993 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007* 2008** Source: JBS * Pro-Forma JBS S.A. LTM Sept/07 and JBS USA LTM Sept/07 ** Pro-Forma JBS S.A. LTM Sept/07 and JBS USA LTM Sept/07; Inalca LTM Sept/07; National FY Aug/07; Smithfield Beef LTM Oct/07; Tasman FY Jun/07 6
  • ACQUISITIONS SUMMARY The Companies The Companies Conditions for the + + acquisitions: 100% 100% 100% Governmental authorities’ approval (1) Enterprise Enterprise Enterprise Value: Value: Value: Value: Value: Value: Ratification by JBS’ general ~US$970mm ~US$565mm ~US$150mm assembly 7 (1) JBS intends to capitalize US200MM in Five Rivers
  • JBS WILL BE A LEADING COMPANY IN THE GLOBAL BEEF INDUSTRY IN SALES AND SLAUGHTERING CAPACITY Total Beef Net Revenue (US$ billion) 19.4 10.6 5.6 Leading beef company in the 2.8 world in terms of sales 0.5 JBS Total Beef JBS Beef National Beef Smithfield Tasman 1º Total daily slaughter capacity (thousand cattle heads) 79.2 54.9 JBS global leadership in terms 14.0 of slaughtering capacity 7.6 2.7 JBS Total Beef JBS Beef National Beef Smithfield Tasman 1º Source: JBS S.A. LTM Sept/07, Swift FY May/07; Inalca LTM Sept/07; National - 10K - FY Aug/07; Smithfield Beef - 10K, 10Q, company – LTM Oct/07; Tasman – company - FY Jun/07 8
  • JBS HAS A GLOBAL PRODUCTION AND DISTRIBUTION PLATFORM JBS’ main units and markets JBS’ main units and markets x = Legend Slaughterhouse (Beef) Slaughterhouse and Industry Distribution Center Vegetable Canning Plant Beef Canning Plant Beef Jerky Plant (Beef Snack’s) Slaughterhouse (Pork) Slaughterhouse (Lamb) x Beef and Pork Processing Plant = Wet Blue Processing Plant Headquarters Office Feed Lot Package Industry Inland Container Terminal Commercial Office 9
  • NATIONAL BEEF PACKING COMPANY, LLC Company Summary Company Summary In fiscal year 2007, National Beef generated sales of US$ 5.6 billion and processed 3.9 million head of cattle National Beef has a slaughtering capacity of 14,000 cattle heads/day in 3 bovine slaughterhouse facilities National has also 2 case-ready beef processing plants, specialized in products for retailers and one plant specialized in products for commercial establishments The company has 1 carrier with approximately 1,200 vehicles among refrigerated and livestock transportation Brands Brands Facilities Facilities North Dakota Washington Montana Minnesota South Dakota Wisconsin Oregon Idaho New England Wyoming New York Iowa Michigan Nebraska Indiana Ohio x Pennsylvania Illinois Nevada Utah Colorado Kansas 6.400 x Missouri West Virginia Maryland Kentucky Virginia California Oklahoma Tennessee North Caroline Arkansas Arizona New Mexico South Caroline Mississippi Georgia Alabama Texas x Louisiana Florida National Beef Plants x National Beef plants of packed and customized meat “case ready” 10
  • SMITHFIELD BEEF GROUP (beef division of Smithfield Foods, Inc. - USA) and FIVE RIVERS CF, LLC Smithfield Beef Summary Smithfield Beef Summary Five Rivers Summary Five Rivers Summary In fiscal year 2007, generated sales The world Leader company in the of approximately US$ 2.8 billion and cattle feeding; processed 1.9 million head of cattle Five Rivers owns ten cattle feedlot Smithfield Beef has 4 bovine facilities and has a combined feeding slaughterhouse facilities; 1 rendering capacity of 811,000 head of cattle plant; one cattle feedlot; and one with locations in Colorado, Idaho, carrier, with approximately 120 Kansas, Oklahoma and Texas refrigerated trucks. Brands Brands Facilities Facilities North Dakota Washington Montana Minnesota South Dakota Wisconsin Oregon Idaho New England Wyoming New York Iowa Michigan Nebraska Indiana Ohio Pennsylvania Illinois Nevada Utah Colorado Kansas Maryland 6.400 Missouri West Virginia Kentucky Virginia California Oklahoma Tennessee North Caroline Arkansas Arizona New Mexico South Mississippi Caroline Georgia Alabama Texas Louisiana Florida Five Rivers Feedlot Smithfield Beef Plants 11
  • TASMAN Company Summary Company Summary In fiscal year 2007, Tasman generated sales of approximately AUS$ 498 million (approximately US$ 465 million), and processed 2.7 million head of cattle and smallstocks Tasman owns six processing facilities; one cattle feedlot unit with a feedling capacity of 25,000 head of cattle and 45,000 head of lambs The export markets represents 67% of its sales (31% North America; 35% Japan and 8% South Korea) Brands Brands Facilities Facilities Yambinya Cobram Yarrawonga Brooklyn Tasman Group Services Slaughterhouse King Island Longford Tasman Group Services Feedlot Devonport 12
  • USA MARKET: CONSTANT CONSUMPTION AND EXPORTS RECOVERY EVOLUTION OF AMERICAN BEEF CONSUMPTION EVOLUÇÃO DO CONSUMO DE CARNE BOVINA AMERICANO Despite crisis, beef consumption levels in 12,502 12,351 12,737 12,340 12,667 12,663 12,834 12,815 12.502 12.351 12.737 12.340 12.667 12.663 12.834 12.815 12,051 12,325 12.051 12.325 the USA has been constant 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: USDA Internet September,11 BSE Bubble WTC “Mad Cow” The USA exports are recovering after USA Exports 1142 (1,000 tons – Weight Equivalent Carcass) the slowdown since the BSE “Mad 776 Cow” disease, in December, 2003 650 519 317 209 2003 2004 2005 2006 2007E 2008E Source: USDA 13
  • AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 14
  • POTENTIAL SYNERGIES IMPACT Financing Rational – Synergy Financing Rational – Synergy CONSOLIDATED USA and AUSTRALIA (US$ MM) ENTERPRISE VALUE 1,459.0 970.0 565.0 150.0 3,144.0 Costs Synergies 35 70 25 2 132 US$ MM / year Present Value (1) 284 558 199 18 1.059 Synergies US$MM EV - synergies 1,174.6 412.4 365.9 132.2 2,085.1 Historical EBITDA* 152.9 122.0 85.4 26.8 387.0 EV / Historical Ebitda* 7.7 3.4 4.3 4.9 5.4 Quotation: €$ / US$= 1.43 AU$ / US$ = 0.94 EV - synergies / EBITDA*: 5.4 x Source: Swift – company –FY07 Smithfield Beef - 10K, 10Q, company - Pro-forma LTM Oct07, include Five Rivers 100% LTM Dec07 National - 10K, 10Q - LTM Nov07 Tasman – company – FY07 July (1) Present value of synergies after taxes for 5 years, discounted by a rate of 8% * Historical average EBITDA margin from the last 5 years and current net revenues 15
  • TOTAL ESTIMATED ACQUISITIONS SYNERGIES Estimated cost reduction of US$132 MM Estimated cost reduction of US$132 MM 20 7 132 26 79 Selling, General and Purchases, Production and Assets Rational Saves with Marketing Total Estimated Synergies Administrative Expenses Supply Chain Note: Include annual synergies from Swift of US$35MM 16
  • ESTIMATED EBITDA MARGIN OF 3% Financing Rational – Potential Margin Financing Rational – Potential Margin CONSOLIDATED USA and AUSTRALIA (US$ MM) ENTERPRISE VALUE 1,459.0 970.0 435.0 130.0 150.0 3,144.0 Net Revenue (1) 9,504.8 5,578.5 2,795.3 1,520.4 464.7 19,863.7 (US$ MM) EBITDA (3%) 285.1 167.4 83.9 45.6 13.9 595.9 EV / Ebitda (3%) 5.1 x 5.8 x 5.2 x 2.9 x 10.8 x 5.3 x Quotation: EV - synergies / EBITDA*: 5.3 x €$ / US$= 1.43 AU$ / US$ = 0.93 Source: Swift – company – FY May/07 National - 10K – FY Aug/07 Smithfield Beef - 10K, 10Q, company - Pro-forma LTM Oct/07 Five Rivers – company – LTM Dec/07 Tasman – company – FY Jul/07 (1) Considering the hypothesis of addition of Five Rivers’ revenue *Estimated EBITDA Margin in the middle term 17
  • JBS: A BRAZILIAN GLOBAL COMPANY WITH SALES OF US$21.5 BILLION Combined Companies Pro-forma Combined Companies Pro-forma CONSOLIDADO Net Revenue (US$ MM) 12,712.7 5,578.5 2,795.3 464.7 21,551.2 EBITDA (US$ MM) 425.9 93.1 69.6 26.8 615.3 EBITDA Margin 3.4% 1.7% 2.5% 5.8% 2.9% Slaughter Capacity 54.9 14.0 7.6 2.7 79.2 Units 91 6 16 7 120 Employees 46,840 8,800 6,370 1,887 63,897 Quotations: R$ / US$ = 0.54 – 28/09/2007 €$ / US$= 1.42 – 28/09/2007 AU$ / US$ = 0.86 - 30/06/2007 Source: JBS – DFP, ITR - Pro-forma LTM Sep07, include JBS SA, JBS USA, Inalca Smithfield Beef - 10K, 10Q, company - Pro-forma LTM Oct07, include Five Rivers 100% LTM Dec07 National - 10K, 10Q - LTM Nov07 Tasman – company – FY07 July 18
  • ACQUISITION’S FINANCIAL STRUCTURE Acquisitions Financial Structure Acquisitions Financial Structure From ~US$821 From ~US$148 MM From ~US$197 MM MM up to FIP J&F Up to ~US$303 MM Market up to ~US$531 MM US$1,000 MM US$1,500 MM 1 Cash US$95 MM Use US$1,500 MM 2 Cash US$290 MM 3 ~US$95 MM in Shares Use USA ~US$1,790 MM 9 4 ~US$50 MM ~US$100 MM 8 US$565 MM 6 7 ~US$200 MM 5 ~US$410 MM ~US$ 465 MM Five Rivers Creditors Shareholders Shareholders increase Capital Creditors Shareholders EV: US$565MM EV: ~US$150 MM Debt: US$0,00 Smithfield: ~US$435MM EV:~US$970MM Net Debt: ~US$50 MM Five Rivers: ~US$130MM Net Debt: ~US$410MM Equity: ~US$100 MM Five Rivers: US$200MM (K increase) Equity: US$560MM EBITDA: US$ 21.4 MM EBITDA: US$44.2MM + US$25.4MM EBITDA: US$93.5MM All these values are estimated and can be changed at closing of the transactions 19
  • ACQUISITION’S FINANCIAL STRUCTURE Description of the Acquisitions`Main Points Description of the Acquisitions`Main Points 1. Capital Increase in JBS S.A. of US$1,500 million; 2. Capital Increase of JBS S.A. (JBS USA) of US$1,500 million; 3. Payment of approximately US$95 million in JBS S.A. shares to the National Beef current shareholders ; 4. Payment of approximately US$465 million in cash to the National Beef current shareholders; 5. Net debt repayment from National Beef of approximately US$410 million; 6. Payment of US$565 million in cash to the Smithfield Beef and the Five Rivers current shareholders; 7. Capital Increase of US$200 million in Five Rivers; 8. Payment of approximately US$100 million in cash to the Tasman current shareholders; 9. Net debt repayment from Tasman of approximately US$50 million. All these values are estimated and can be changed in the closing of the transactions 20
  • AGENDA ACQUISITIONS SUMMARY FINANCIAL METRICS FINAL CONSIDERATIONS QUESTIONS AND ANSWERS 21
  • JBS IS A GLOBAL LEADER IN THE MEAT SECTOR WITH COMBINED REVENUES OF US$21.5 BILLION, 63 THOUSAND EMPLOYEES AND PRESENCE IN 6 CONTINENTS The acquisitions represent the conclusion of the investment plan in the USA and Australia, initiated in July 2007 through the Swift & Co acquisition In the coming years JBS will be focused in improving efficiency, capturing synergies and growing organically Acquisitions were made in a 5x – 6x EBITDA multiple range or 60% of the replacement cost generating value to JBS’ shareholders A US$1.5 billion equity issuance will support an adequate capital structure for the acquisitions The combination of the acquired companies management with the JBS team guarantees the integration of the business 22
  • RECOGNIZED BRANDS IN ALL THE WORLD 23
  • QUESTIONS & ANSWERS 24