Trian Partners Activist Presentation Deck slide image

Trian Partners Activist Presentation Deck

Attractive Valuation Despite (a) health focus, (b) structurally attractive categories and (c) top-tier emerging markets exposure, Danone trades in-line with slower-growing US peers like Campbell and General Mills 2013E P/E ■ Historically Danone traded at a premium to Nestle; now trades at approximately 1.5x discount on 2013 P/E and much wider discount on free cash flow yield (1) 19.0x 18.0x 17.0x 16.0x 15.0x 14.0x 13.0x 2.0% Relationship Between Long-Term Organic Sales Growth Targets and 2013E P/E Correlation (ex-Danone): 88% g General Mills Kellogg's Heinz ConAgra Campbells 3.0% DANONE 10-Yr Avg.(2) 4.0% Nestle HERSHEY'S 5.0% Mondelez, 6.0% Management Long-Term Organic Sales Growth Target DANONE Today Meadjohnson 7.0% 8.0% Despite near-term headwinds, we would expect Danone to trade back to historic levels and believe it should trade at a premium given its portfolio mix and emerging market exposure Source: Company filings and presentations. Note: Graph reflects mid-point of target organic sales growth where applicable. Mead Johnson uses 2012 estimated growth rate per CAGNY presentation in Feb 2012. Danone's medium term organic sales growth is 5+%, which we have assumed to be 5.5% for this analysis. Danone's average organic growth for the years 2009-2011 was 6.0%. General Mills long-term growth of "low single digits," which we have assumed to be as 2.5% for this analysis. Heinz uses outlook for next three to five years per May 2012 Analyst Meeting. Excludes Kraft Foods Group and Unilever due to limited growth rate disclosure. (1) There is no assurance that Danone and Nestle were or are of comparable value. (2) Average of weekly NTM P/E ratios over the period from January 3, 2003 through November 2, 2012. - 11 -
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