UPL - Advanta Merger Scheme - Investor Presentation
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February 25, 2016 UPL – Advanta Merger Scheme Investor Presentation
Merger
2
Merger Overview
Appointed
• The appointed date for merger is April 1, 2015
Date
• 1 UPL equity share for 1 equity share of Advanta
• 3 Optionally Convertible Preference Shares (of par value Rs. 10 each) of
UPL for 1 equity share of resident shareholders of Advanta
Swap Ratio • 3 Compulsorily Convertible Preference Shares (of par value Rs. 10 each)
of UPL for 1 equity share of non-resident shareholders of Advanta
• Advanta GDR holders holding 1 GDR will be issued 1.06 GDR of UPL
• Face Value: Rs. 10
• Tenure: 18 months
Terms of • Rate of Dividend: 5% payable annually
Preference • Convertibility Option: Shareholders have the option of converting
Shares Preference Shares any time after issue date
• Redemption: Optionally Redeemable Convertible Preference Shares
to be redeemed at par at the end of 18 months
• The key approvals required for the proposed Scheme are:
• Shareholders / Creditors / Lenders of UPL and Advanta
Regulatory • SEBI and Stock Exchanges
Approvals • Competition Commission of India / RBI
• Jurisdictional High Court of Gujarat
• Such other approvals as may be required
3
Terms of Share Swap
• For e.g. Shareholder A (Resident) holds 157 Equity Shares (face value of Rs. 2 per
share) of Advanta
• As per the merger scheme, he will get:
• 157 Equity Shares (face value of Rs. 2 per share) of UPL
• 471 Optionally Convertible Preference Shares (face value of Rs. 10 per share) of
UPL
• Conversion Ratio - Optionally Convertible Preference Shares is 471 Preference
Shares : 10 Equity Shares
• For e.g. Shareholder B (Non-Resident) holds 157 Equity Shares (face value of Rs. 2 per
share) of Advanta
• As per the merger scheme, he will get:
• 157 Equity Shares (face value of Rs. 2 per share) of UPL
• 471 Compulsorily Convertible Preference Shares (face value of Rs. 10 per share)
of UPL
• Conversion Ratio - Compulsorily Convertible Preference Shares is 471
Preference Shares : 10 Equity Shares
4UPL Shareholding Pattern
As of November 20, 2015 Fully Diluted Ownership Post Merger
Promoter Promoter Promoter
Public Public Public
Group Group Group
29.8% 70.2% 29.8% 70.2% 27.8% 72.2%
48.4% 38.9%
13.0% 38.6% 10.5% 50.6%
If Nov. 20, 2015 share holding structure is used as the basis,
77.45 mn new UPL equity shares would have to be issued
Assumptions:
• Advanta outstanding FCCB’s will be fully converted
• Advanta outstanding ESOP’s will be fully exercised
5Background
6UPL and Advanta – A Snapshot
Global Agrochemical Company Transnational Plant Genetics Company
Global crop protection solutions Leading international field crops and
Overview provider vegetable seed company
Seeds: Sorghum, Sunflower, Corn,
Fungicides, Herbicides, Insecticides,
Products Canola, Mustard, Rice, Wheat,
Rodenticides, Specialty Chemicals
Nutrifeeds
Vegetable crops
11th largest agrochemical company 11th largest seed company globally
Market
globally World leader in Sorghum
Leadership Large South Asian vegetable seeds co.
28 manufacturing locations in 9 2 biotech and 15 R&D stations
Operations
countries across 3 continents Processing facilities in 5 countries
120 patents, 4,600+ registrations Strong technology collaborations
Direct presence: 40 countries Direct presence: 6 countries
Marketing and
Distribution Key Brands: Ulala, Starthene, Unizeb Key Brands: Advanta, Pacific Seeds,
Gold, Devrinol, Lifeline Alta Seeds, Vereda & Golden Seeds
7UPL – Transformational Growth
FY 2005 FY 2015
• Primarily Domestic • Amongst Global Top 11
Geographical • Organic Growth through
Player
R&D and Product
• Technical Sales Innovation • Branded Formulations
Focus
• Acquisition of Advanta
• Mainly Generics (2006), Cerexagri (2006), • Patented, Proprietary and
Products Generics
RiceCo (2010), DVA Agro
(2011) • Crop Solutions and Adjacent
• Crop Protection
Businesses Technologies
Revenue PAT Market Cap
(INR mn) (INR mn) (INR mn)
189,529
120,905
11,440
14,163 1,560 24,187
FY05 FY15 FY05 FY15 FY05 FY15
Source: Company filings. Market capitalization as of March 31 for respective fiscal years.
8Advanta – Transformational Growth
CY 2006 CY 2014
• Asia-Pac (incl. • 11th largest seed company,
Geographical India), Argentina globally
• Organic growth- added
presence in EU, NAFTA,
• Proprietary Indonesia, Brazil • Superior seeds –
Focus germplasm on field germplasm, molecular
crops • Added vegetables crops, marker, disease resistant
genetically modified seeds technology
• Sorghum, tropical - Corn and Canola, wheat
Products in Australia
corn, sunflower • Significantly enhanced
seeds offering
Businesses • Regional producer
and seller
Revenue EBITDA Market Cap
(INR mn) (INR mn) (INR mn)
18,636
2,502
30,104
14,310
2,865 509
CY06 CY14 CY06 CY14 On IPO CY14
Source: Company filings. Market capitalization as of IPO date (April 19, 2007) and December
9 31, 2014.
9Key Financials: UPL and Advanta
UPL Advanta
Mar. 31, 2015 Dec. 31, 2014
(Proforma) (Proforma)
Revenues (Rs. in million)¹ 117,395 18,636
EBIDTA % 19.5% 16.1%
Shareholder Funds (Rs. in million)² 58,603 10,635
Net Debt (Rs. in million)² 23,628 5,364
Net Debt Equity Ratio 0.40 0.50
¹ India seed revenue included in Advanta
² Outstanding FCCB's fully converted
10Merger Rationale
11Merger – Why now?
Wider geographical
presence EXPONENTIAL GROWTH Proprietary product
access
• Germplasm
• in line with global
• Molecular marker and
trend Disease resistance
Greater financial technology
bandwidth • newer geographies +
cross selling
opportunities
• proprietary access to Strong R&D
Talent and international distributors and early
experience
engagement with
farmers Higher customer intimacy
• competitive cost
Low-cost entry to markets structure
Seeds - future of
agriculture value
12Strategy In-Line with Global Business Models
FY 2014
Agchem Seeds
89% 11%
FMC 100%
Most crop
Nufarm 94% 6%
protection
Adama 94% 6%
players have a
Dupont 33% 67%
sizeable
Monsanto 32% 68%
presence in
Dow 77% 21%
seeds
Bayer 87% 13%
Syngenta 78% 22%
* UPL figures are for FY ended March 31, 2015
13Merger strengthens UPL – Portfolio, R&D,
Farmer Engagement
Collaborative
Research &
Development
• Both teams to
develop seeds
and formulations
that complement
each other
Value Drivers
14……… access to Advanta’s crop portfolio
(Figures in brackets indicate market size of crop protection chemicals in the respective region / country)
• Sunflower • Sorghum
(USD 418 mn) • Corn (USD 826 mn)
• Sorghum • Vegetables (USD 3,229 mn)
• Forages • Canola
• Sorghum • Vegetables
• Corn (USD 300 mn) (USD 269 mn)
• Sunflower (USD 64 mn) • Forages
• Canola
• Forages • Sorghum
• Canola • Sorghum
• Vegetables (USD 262 mn) • Corn (USD 2 mn)
• Canola
• Soybeans (USD 6,000 mn) • Wheat
• Corn (USD 1,095 mn)
15Synergies from Merger
Margin • Higher gross margins of seeds business to support UPL’s
Accretive margin growth
Cost Savings • Integration of administrative and back-office functions
Economical
Terms of • Better working capital management and improved terms of
credit
Finance
• Effective April 2016, move to IFRS (Ind-AS) mandates
Accounting and Consolidation of Advanta with UPL due to ‘De facto control’
Taxation • Merger prior to April 2016 will result in Goodwill recognition
and thereby optimize tax on its amortization
16Value Accretion
2
1 Increased
Presence Across
Geographical
Entire Agri-inputs
Reach
Value Chain
Sustainable
Growth
4 Greater 3
Improved Customer
Focus Access
Growth Accretive
171 Presence Across Entire Value Chain
Seeds + Crop Protection Chemicals Post Harvest
• End-to-end presence across entire agri-inputs value chain: seeds to post-
harvest chemicals
182 Increased Geographical Reach
• Combined entity brings greater balance to geographic mix
• Leverage distribution, brand, penetration
Balanced geographical mix
• 40 countries • 6 countries
North America Europe
19% 15% • Strong presence in
• Strong presence in
India Asia Pacific
Europe and America 20%
• Increased access to
• Enhanced portfolio/ RoW
Latam
19% important countries
presence (e.g: 28%
(e.g: Brazil,
Australia, Thailand)
Americas)
Note: Regional ratios (%) represent combined revenue mix of UPL Limited (Fiscal year 2015) and
Advanta Limited (CY 2014)
193 Improved Access – Value Convergence
Convergence leading to
sustainable growth
Seeds
Superior technology
differentiation
• Low capital
• Higher R&D spend
• Long gestation
• Proprietary products
Technology +
Differentiation Crop Protection
• High capital
• Lower R&D spend
• Short gestation Better customer
access
• Generic products
Customer Intimacy
204 Greater Focus
Poised for Exponential Growth
• Continue investment in
• Increased share of innovative
breeding and technology
and differentiated products
• Geographic expansion and
• Sustainable technologies
collaborations
• Enhanced farmer engagement
• Product range enhancement
• Focus on Brazil, India, Africa,
• Gain access to varied
China
germplasm
21Value Acceleration
Geographical Presence Greater Focus
• Leverage channel capabilities
• Top management focus and support
• Enhanced coverage in existing
• Balance sheet support
markets
• Lower cost to market
• Access to newer territories
Accelerated
Growth
Customer Access Product Portfolio
• Proprietary product portfolio
• Complete crop solutions
• Seed coating business
• Early and direct customer
engagement • End-to-end solutions encompassing
Seeds, Crop Protection and Post
• Specialized offerings by seed and crop
Harvest
protection teams
22Merger Value Equation
Integration of crop protection and
seed business will provide
Annual cost savings of ~ USD 14 m accelerated growth opportunities
for both the businesses
G&A
~ USD 6 mn
Finance Cost ¹
~ USD 4 mn
C Tax 2
~ USD 4 mn
¹ Finance Cost savings of Advanta debt are computed Integrated model¹ successfully tested in India
based on interest rates applicable to UPL debt.
with crop protection business growing 3.9x and
2 Savings in taxes are all outside of India. seed business 2.3x (2015 over 2008)
¹ Sales and marketing teams of crop protection and seed
business are independent
23Next Steps
24Expected Transaction Time Table
Event Timeline
Approval by Boards of both companies and announcement √
BSE and NSE approval sought √
BSE and NSE approval √
Competition Commission approval sought √
Application to Jurisdictional High Court √
Competition Commission approval √
Scheme documents posted to shareholders of both companies √
UPL – Shareholders and Creditors Meetings
Advanta – Shareholders and Creditors Meetings
High Court approval 5 to 6 months
Other required approvals
Transaction completion
25Advisors
• BSR & Associates LLP
Independent
Valuation
• Citigroup Global Markets India Private Limited
Fairness
Opinion to UPL
Fairness • Kotak Mahindra Capital Company Limited
Opinion to
Advanta
• J. Sagar Associates
Legal Advisor
26Disclaimer
This presentation has been prepared by UPL Limited (the “Company”) solely for information purposes without any regard to any specific
objectives, financial situations or informational needs of any particular person. This presentation may not be copied, distributed or
disseminated, directly or indirectly, in any manner. By reviewing this presentation, you agree to be bound by the trailing restrictions
regarding the information disclosed in these materials.
This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the
intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial
condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,”
“projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks
and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions
which the Company believes to be reasonable in light of its operating experience in recent years. The risks and uncertainties relating to these
statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition,
our ability to manage our international operations, government policies, regulations etc. The Company does not undertake any obligation to
revise or update any forward-looking statement that may be made from time to time by or on behalf of the Company. Given these risks,
uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements.
No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the
accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation.
Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this
presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Such
information and opinions are in all events not current after the date of this presentation. Further, past performance is not necessarily
indicative of future results. Any opinions expressed in this presentation or the contents of this presentation are subject to change without
notice. This presentation should not be construed as legal, tax, investment or other advice.
None of the Company, any placement agent, promoters or any other persons that may participate in the offering of any securities of the
Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or
otherwise arising in connection therewith.
This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or part, or disclosed by
recipients directly or indirectly to any other person.
This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or
inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company by any person in any
jurisdiction, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any investment
decision or any contract or commitment therefore. Securities of the Company may not be offered or sold in the United States absent
registration or an applicable exemption from registration under the United States Securities Act of 1933, as amended.
This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under
the Companies Act, 1956, as amended, replaced or reenacted by the Companies Act, 2013, the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India.
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