Pershing Square Activist Presentation Deck
III. Pershing's Proposal to McDonald's:
McOpCo IPO
The valuation of PF McDonald's suggests a valuation range of $45-$50 per share. Based on the midpoint of the
valuation analysis, PF McDonald's could be worth $47.50 per share, a 44% premium over where it trades today.
PF McDonald's Valuation
PF McDonald's Summary Financials
$ in millions
Financial Summary
Franchise Revenue
Real Estate Revenue
Total Revenue
Pro Forma McDonald's: Valuation Summary
Franchise EBITDA, Pre G&A
Real Estate EBITDA, Pre G&A
Less: Allocated G&A
Assumed G&A as a Percentage of Total G&A
Total EBITDA
EBITDA Margins
Net Income
EPS
FY 2006E
$2,275
5,118
$7,393
$2,275
3,869
1,680
75.0%
$4,464
60.4%
2,141
$2.27
(1) Assumes $1.35 billion of net debt allocated to McOpCo and $5.0 billion of net debt allocated to PF
McDonald's. In addition, assumes $9.7 billion of incremental leverage placed on PF McDonald's.
(2) Represents 35% of the market equity value of McOpCo.
(3) Assumes incremental leverage and the after-tax proceeds from McOpCo IPO (net of fees and
expenses) are used to buy back approximately shares 316 million shares at an average price of $40.
(4) Assumes a recent stock price of $33.
(5) P/FY '06E FCF multiple adjusted for Pro Forma McDonald's 35% stake in McOpCo.
(6) Fees and expenses associated with the IPO and financing transactions.
34
$ in millions
EV/06E EBITDA Multiple Range
Enterprise Value
Less: Net Debt (12/31/05E)
Plus: Remaining Stake in McOpCo
Equity Value
Ending Shares Outstanding (12/31/05E)
Price Per Share
Premium to recent price (4)
(1)
(2)
Implied P/FY 2006 EPS Multiple
Implied P/FY 2006 FCF Multiple (5)
# of shares repurchased (mm)
Average price of stock purchased
(3)
Implied FCF / Dividend Yield
Memo:Share Buyback:
Incremental Debt Issued
Less Transaction Fees and Expenses (6)
Approximate Cash Received From IPO, after Tax
Total Funds Available for Repurchase
Low
12.5x
$55,799
14,650
2,097
$43,247
957.3
$45
36.9%
19.9x
19.8x
5.1%
High
13.5x
$60,263
14,650
2,493
$48,106
957.3
$50
52.3%
22.2x
21.9x
4.6%
$9,685
($300)
$3,270
$12,654
316
$40View entire presentation