Pershing Square Activist Presentation Deck

Appendix Step 1: McOpCo dividends a $1.3bn Note to McDonald's (parent) $1.3bn 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 $1.3bn, or 20% of the equity market value of McOpCo (assumed to be $6.6bn) McOpCo IPO: Mechanics IPO of McOpCo Shares Step 2: IPO of McOpCo McDonald's retains 80% stake Equity Markets McOpCo McDonald's $1.3 bn cash received McOpCo repays $1.3 bn Note to McDonald's ► McOpCo undertakes the IPO and uses the proceeds to repay the dividend note. ► Any 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 51 Assuming a $1.3bn of IPO distribution, there would be no tax cost associated with the IPO ■ Assume a $1.65 billion of tax basis Step 3: Share Repurchases using Cash on Hand and IPO Proceeds Pays $3.0 billion Equity Markets Final Revised Proposal.ppt McDonald's Repurchases shares ■ Excess cash on hand ■ After tax proceeds of IPO McDonald's performs a self-tender post the IPO No incremental leverage issued ► PF McDonald's repurchases approximately 7% of the fully diluted share base using

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