Pershing Square Activist Presentation Deck
A. Pershing's Proposal: Assumptions
Step 1: McOpCo dividends a $4.2bn
Note to McDonald's (parent)
$4.2bn
Note
M
McDonald's
McOpCo
► McOpCo declares and pays a dividend to
McDonald's (parent) in the form of a Note in an
amount equal to the anticipated proceeds from
an initial public offering of McOpCo
► For illustrative purposes, we assume the Note is
for $4.2bn, or 65% of the equity market value
of McOpCo (assumed to be $6.5bn)
McOpCo IPO: Structural And Tax Observations
Step 2: IPO of McOpCo and
Tax Costs
IPO of
McOpCo
Shares
McDonald's
retains
35% stake
Equity
Markets
McOpCo
McDonald's
■
$4.2 bn cash received
McOpCo repays $4.2 bn
Note to McDonald's
McOpCo undertakes the IPO and uses the
proceeds to repay the dividend note.
The tax cost for the IPO would be the amount by
which the IPO distribution exceeded McDonald's
basis in the McOpCo stock multiplied by
McDonald's corporate and state/local tax rate
Assuming a $4.2bn of IPO distribution, the tax
cost would be approximately $1bn
■ Tax cost equals $4.2 billion of distribution
less $1.65 billion of basis multiplied by the
tax rate of 38%
62
As such, after tax proceeds of the McOpCo IPO
will be approximately $3.2 billion
Step 3: Leveraged Self-Tender at
Pro Forma McDonald's
PropCo
Issues CMBS
financing, or
$9.7bn of
incremental debt
Pro Forma
M
McDonald's
PF McDonald's
performs a
leveraged self-tender
FranCo
No debt at FranCo
► PF McDonald's is organized as a real estate
business ("PropCo") and a franchise business
("Franco")
PropCo issues secured financing with
proceeds used for
■ Repaying existing debt at PF
McDonald's
■ Buying back shares
► PF McDonald's performs a self tender using
proceeds from:
New CMBS financings
■ After tax proceeds of IPOView entire presentation