Pershing Square Activist Presentation Deck
V. Developing a Response to the
Company
Scenario 1:
No Sharebuyback
No Incremental
Leverage
Scenario 2
Proposed
Sharebuyback
McDonald's Stock Price
McOpCo Stock Price
PF McDonald's Stock Price
Pre-Tax Yield
Which Would You Rather Own:
Pro Forma McDonald's or a Large Retail REIT?
(2)
After-Tax Investor Yield (3)
Estimated LT Dividend Growth
PF McDonald's Stock Price
Pre-Tax Yield (4)
After-Tax Investor Yield (4)
Estimated LT Dividend Growth
$33.15
$35.15 $40.15 $45.15 $50.15 $55.15 $60.15
5.15 5.15 5.15 5.15 5.15 5.15
5.15
$28.00 $30.00 $35.00 $40.00 $45.00 $50.00
$55.00
6.7% 5.9% 5.2% 4.7% 4.3%
5.7% 5.0% 4.4% 4.0% 3.6% 3.3%
7.2%
3% -4%
$28.00 $30.00 $35.00 $40.00 $45.00 $50.00
8.5% 7.9% 6.7% 5.8% 5.1% 4.6%
52
3.9%
6.7% 5.7% 4.9% 4.3% 3.9%
3% -4%
Note: Assumes a 7x EV/FY '06E EBITDA multiple on McOpCo.
(1) Retail / REIT dividend yield based on Simon Property Group. Illustrative LT Dividend growth based on Pershing's estimates.
Assumes full payout of free cash flows for PF McDonald's.
(2)
(3)
Assumes 15% tax rate on PF McDonald's dividend and a 35% tax rate on the REIT dividend.
(4)
Scenario 2 Pre-Tax and After-Tax Yields are adjusted for a 35% stake in McOpCo.
3.6%
3.1%
$55.00
4.1%
3.5%
Typical
Large Retail
REIT
(1)
4.0%
2.6%
3%- 6%View entire presentation