Exhibit (c)(1)
PRELIMINARY DRAFT—CONFIDENTIAL
Materials Prepared for Discussion
November 23, 2002
Table of Contents
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1
Introduction
The Board of Directors’ response to the proposal presented on November 11 (the “Proposal”) will be shaped by various considerations:
• Value offered in Proposal presented
• $21.00 cash per share
• Intrinsic value of CoorsTek as a standalone entity
• Market conditions
• Business conditions
• Process and circumstance surrounding the Proposal
• Timing of Proposal
• Identity of proposed acquiror
• Certainty of Proposal
• Ability of Board to conclude an alternative transaction or remain independent
• Ability of Affiliate to preclude alternatives
• Potential interest of alternative partners
Banc of America Securities (“BAS”) has prepared this material toassist the Board in its deliberations
2
3
Situation Update
STOCK PRICE PERFORMANCE VS. LAST CLOSE AND SOX
Terms of Offer | ||
| ||
Presented: |
| November 11, 2002 |
Proposal: |
| $21 per share in cash |
Acquiror: |
| Keystone Holdings LLC |
Aggregate Ownership(b): |
| Approximately 29% |
Deadline: |
| November 26, 2002 |
Financing: |
| $200 mm commitment from Wells Fargo |
PRICE VOLUME GRAPH (a)
BAS Review to Date
• BAS retained to represent Board
• Initial due diligence undertaken
• Preliminary views presented November 16
• Preliminary valuation and analysis completed, subject to revision
Source: FactSet Research Systems, Inc. as of November 19, 2002.
(a) Market adjusted price reflects percent change in SOX index.
(b) 13D filed November 11, 2002 indicates 31.5% ownership.
4
II. Market and Industry Overview
5
Semiconductor End Market Overview
The semiconductor industry is looking for an end to the protracted downturn
• A significant decline in end market demand has created a scenario where demand is lower following an inventory correction, the first time in the 40 year history of the industry
• End markets remain weak for device manufacturers and expectations call for a slow, protracted recovery
• The Semiconductor Industry Association recently lowered the expected growth rate for 2003 to 19.8% from 23%
• BAS and IDC both predict that the growth rate for 2003 will be approximately 9%
• Consumer and corporate demand will ultimately be the drivers for both the end markets and the semiconductor industry
Longer Term Issues:
• While analysts are expecting a cyclical recovery over the next two years, they have begun to question if the sector is transitioning to a cyclical industry rather than cyclical growth
• “We believe that compound annual growth rates in the range of 8-10% will be the norm going forward over the longer term.”
Jerry Sanders, Chairman of AMD, 11/6/02
WORLDWIDE SEMICONDUCTOR UNIT SHIPMENTS
WORLDWIDE SEMICONDUCTOR INDUSTRY GROWTH RATES
6
Semiconductor End Market Overview
Decelerating growth rates
• Over the last 26 years, the semiconductor device industry has exhibited a compound annual growth rate (CAGR) of 15%
• The 1995-2000 peak-to-peak comparison demonstrates evidence of slowing with a 5-year CAGR of 7%
• As long-term growth rates slow, the semiconductor industry will likely experience P/E multiple compression
|
| Revenue |
|
Peak - Peak |
| CAGR |
|
1959 - 2000 (41 Years) |
| 17 | % |
1974 - 2000 (26 Years) |
| 15 | % |
1984 - 2000 (16 Years) |
| 14 | % |
1995 - 2000 (5 Years) |
| 7 | % |
1996 - 2001(a) (5 Years) |
| 1 | % |
2000 - 2005 (5 Years) |
| 1 | % |
($ in billions)
GROWTH RATES OF MAJOR SEMI PRODUCT GROUPS
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Major Product Groups |
| 1995 |
| 2000 |
| 2005E |
| 5 Year CAGR 1995 - 2000 |
| 5 Year CAGR 2000 - 2005E |
| 10 Year CAGR 1995 - 2005E |
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Discrete and Optoelectronics |
| $ | 18.3 |
| $ | 27.4 |
| $ | 29.1 |
| 8.4 | % | 1.2 | % | 4.7 | % |
Analog |
| 16.6 |
| 30.5 |
| 38.5 |
| 12.9 | % | 4.8 | % | 8.8 | % | |||
MPU |
| 14.3 |
| 31.8 |
| 33.9 |
| 17.3 | % | 1.3 | % | 9.0 | % | |||
MCU |
| 10.7 |
| 12.2 |
| 13.9 |
| 2.7 | % | 2.6 | % | 2.7 | % | |||
DSP |
| NA |
| 6.1 |
| 9.1 |
| NA |
| NA |
| NA |
| |||
Standard Cell / Gate Array |
| 8.5 |
| 12.1 |
| 11.0 |
| 7.3 | % | (1.9 | )% | 2.6 | % | |||
FPLD |
| 1.6 |
| 5.5 |
| 4.6 |
| 28.0 | % | (3.5 | )% | 11.1 | % | |||
DRAM |
| 40.8 |
| 28.9 |
| 21.9 |
| (6.7 | )% | (5.4 | )% | (6.0 | )% | |||
SRAM |
| 6.1 |
| 6.5 |
| 4.7 |
| 1.3 | % | (6.3 | )% | (2.6 | )% | |||
Flash EEPROM |
| 1.9 |
| 10.6 |
| 12.2 |
| 41.0 | % | 2.9 | % | 20.4 | % | |||
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Total Semiconductor |
| $ | 118.8 |
| $ | 171.6 |
| $ | 178.9 |
| 12.5 | % | (0.5 | )% | 5.6 | % |
Source: BAS estimates and SIA information.
(a) Trough - Trough.
7
Semiconductor Capital Spending
Capital spending will remain under pressure until the semiconductor sector rebounds
• The explosive growth of profitability in the chip business during the 1990s enabled accelerated investment in next generation manufacturing technology, peaking in 2000
• Recent capital spending cuts by semiconductor companies may be indicative of an expected decrease in their growth rates going forward
($ in billions)
RATIO OF CAPITAL SPENDING TO SEMICONDUCTOR REVENUES
• Several research analysts have pointed to overly aggressive capital spending levels as a cause for a “depreciation overhang” for semiconductor companies that has eroded their gross margins
• If semiconductor companies choose to “rightsize” this overhang, semiconductor capital equipment companies may face a pushout in the spending recovery
SEMICONDUCTOR DEPRECIATION AS A PERCENTAGE OF REVENUES(a)
(a) Companies included: ADI, AMD, ATML, CY, IDTI, Hynix, IFX, INTC, LSI, MCHP, MU, NSM, PHG, Samsung, STM, TSM, TXN, UMC.
Source: BAS estimates, Wall Street research.
8
Semiconductor Capital Equipment Overview
Duration and severity of current downturn still unclear
• Though it is clear that spending in the semiconductor capital equipment sector is cyclically down, the duration and severity of the downturn is still unclear
• Manufacturing overcapacity combined with a lack of demand have caused an extended downturn
• Capital equipment spending cycles have become more volatile in recent years
• There are still no clear signs as to when the semiconductor capital equipment space will begin to recover from this most recent cyclical downturn
SEMI CAPITAL EQUIPMENT SPENDING PERCENTAGE CHANGE
($ in billions)
SEMI-CAP EQUIPMENT SPENDING GROWTH - ROLLING 5 YEAR CAGR
Source: BAS estimates, SIA.
9
Contract Manufacturing Overview
Semiconductor equipment outsourcing may mimic EMS growth trends
• The EMS industry has evolved from a small group of niche suppliers into a market with over $120 billion in revenues
• The semiconductor capital equipment market is in a position similar to that of electronics manufacturers in the early 1990s, where capital-intensive operations are being targeted for outsourcing
• These trends are favorable for CoorsTek as a number of the largest players in the semiconductor capital equipment sector have moved towards outsourcing more of their component manufacturing and assembly processes
• Constrained capital markets and cost-cutting initiatives at capital equipment companies may accelerate these outsourcing initiatives and drive growth rates similar to those of the EMS sector in the early to mid 1990s
• Despite slowing end market growth, EMS companies have increased their share of OEM COGS, a trend that could provide growth for CoorsTek in the semiconductor equipment sector
($ in billions)
CONTRACT MANUFACTURING INDUSTRY REVENUES
($ in billions)
CONTRACT MANUFACTURERS SHARE OF WORLDWIDE ELECTRONICS MARKET
Source: BAS estimates, Technology Forecasters.
10
III. Preliminary Valuation Considerations
11
12
CoorsTek Positioning
Scale and increased market share position CoorsTek well for the next ramp
Advanced Materials
• Largest U.S. supplier to the technical ceramics market
• Diverse applications for ceramics and plastics provides entrée into new business opportunities for other business segments
• Strong cash flow characteristics and diverse customer base act as a damper to the volatile cyclicality of the semiconductor businesses, but overall market growth tends to track GDP
Semiconductor Components & Assembly
• The outsourcing trend by semiconductor equipment companies represents a significant growth opportunity
• The current market environment should accelerate the trend
• Companies have reduced their manufacturing capabilities and will increasingly be using outsourced manufacturing for the next business ramp
• Provides OEM’s with a lean manufacturing model and faster time to market
• CoorsTek’s vertically integrated manufacturing approach encompasses all phases of product development and manufacturing.
• Provide customers reduced time to market and additional manufacturing efficiencies
• Strong worldwide manufacturing network to support diverse customer base.
• CoorsTek possesses key qualities that OEM’s look for in a manufacturing partner
• Critical mass, breadth of materials and breadth of services
• Emerging as the partner of choice for leading suppliers; proven traction with key customers
• Fragmented market which is expected to consolidate and become more competitive
13
B. Market Performance and Trading
14
CoorsTek Stock Price Performance
Since spin-off from ACX Technologies (as of 11/11/02)
Source: FactSet Research Systems, Inc. as of November 11, 2002.
15
Analysis of CoorsTek Shares Traded
Between 11/1/01 and 11/11/02
Volume Traded at Various Prices
Cumulative Volume Traded
Source: Factset Research Systems, Inc. as of November 11, 2002.
The Histogram report is based on the average high and low prices for current day, not the closing price.
16
Relative Stock Performance
CoorsTek stock has performed in line with the SOX and its peers
Source: Factset Research Systems, Inc. as of November 11, 2002.
(a) Advanced Material Peers include CRDN, Kyocera, MG Technologies, Morgan Crucible, Saint Gobain.
(b) Semi-Cap Equipment Peers include AEIS, ASYT, BRKS, ENTG, HELX, MKSI, MYK.
(c) EMS Peers include BHE, CLS, FLEX, JBL, MERX, MSV, PMTR, SANM, SLR, TTMI.
17
Analyst Commentary Prior to Proposal
($ in millions except per share values)
Last Update |
| Price @ Date of Report |
| Firm |
| Rating |
| Target Price |
| Revenue |
| EPS |
| ||||
| CY 02P |
| CY 03P |
| CY 02P |
| CY 03P |
| |||||||||
10/30/02 |
| $14.40 |
| CIBC World Markets |
| Sector Performer |
| $30.00 |
| $351.5 |
| $364.4 |
| $(0.69 | ) | $(0.11 | ) |
10/30/02 |
| 14.40 |
| Friedman, Billings, Ramsey |
| Market Perform |
| NA |
| 353.9 |
| 381.0 |
| (0.73 | ) | (0.30 | ) |
10/30/02 |
| 14.40 |
| Investec |
| Buy |
| NA |
| 352.0 |
| 420.0 |
| (0.72 | ) | 0.55 |
|
10/30/02 |
| 14.40 |
| Needham |
| Hold |
| NA |
| 350.3 |
| 355.0 |
| (0.76 | ) | (0.46 | ) |
10/30/02 |
| 14.40 |
| Wells Fargo |
| Sell |
| NA |
| 351.5 |
| 460.0 |
| (0.75 | ) | 0.91 |
|
10/29/02 |
| 14.46 |
| Banc of America Securities |
| Buy |
| 25.00 |
| 352.0 |
| 359.0 |
| (0.81 | ) | (0.15 | ) |
10/29/02 |
| 14.46 |
| Bear Stearns |
| Peer Perform |
| NA |
| 351.5 |
| 400.6 |
| (0.74 | ) | 1.05 |
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| First Call Consensus |
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| $351.8 |
| $391.4 |
| $(0.74 | ) | $0.21 |
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Report Date |
| Firm |
| Recent Research Commentary |
10/30/02 |
| CIBC World Markets |
| CoorsTek’s sequential revenue growth of 10% and return to profitability, clearly outperformed its peer component vendors during 3Q, demonstrating the superior growth and leverage in its semiconductor sub-assembly and component business, and further strength from its advanced materials business—in which its contract with InVision Systems (airport bomb detection equipment) has provided a nice buffer to overhead absorption. Generally speaking we believe that while CoorsTek’s outsourcer business model is lower margin franchise than most others in our universe, it also benefits from superior long-term growth fundamentals which together with diversification of end-markets (advanced materials sales) have allowed the company to exhibit lesser top-line volatility and outperform broader semiconductor cap-ex. |
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10/30/02 |
| Needham |
| We are maintaining our Hold rating on CoorsTek. The company expects the semiconductor business to trend down in the fourth quarter by 20% to 25%. This is in the range that we have seen for major subsystems suppliers. While CoorsTek is not primarily a subsystems supplier it has, in our view, a similar exposure in terms of customers and revenue mechanism. While we believe that CoorsTek may not have some of the inventory issues as the subsystems suppliers its should have some of the same SAB 101 related revenue effects. CoorsTek is seeing that the semiconductor components business is holding up a bit better than the semiconductor assembly business because of spares pull through at the end user level. |
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10/29/02 |
| Banc of America Securities Mark Fitzgerald |
| We maintain our Buy recommendation. We have a 12-month target price of $25 assuming roughly 2x tangible book value, now $13.47. We remain optimistic about the potential of the assembly business. It is clearly getting more competitive. Solectron won the Asyst Technology outsourcing contract this quarter. But, CoorsTek is chasing 39 programs, an increase from the 36 in the last quarter. Our strategy is to only model these as the company wins the contracts. |
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10/29/02 |
| Bear Stearns |
| We believe that the company is well positioned to leverage the upcycle as the industry returns to growth. CoorsTek also plays into the telecommunications, electronics, automotive, medical and other markets which help diminish the industry’s typical cyclical patterns. The semiconductor equipment industry also provides a large potential for growth as the industry recovers from the downturn and we think that the trend towards outsourcing will be stronger than that of the overall equipment recovery. The fast lead-times necessary during an upturn will likely work to CoorsTek’s advantage as the company has the infrastructure in place to potentially double its run rates. |
As of November 11, 2002.
18
NTM Revenue and EBITDA Multiples from Selected Research
STOCK PRICE
NTM EBITDA MUTLIPLE (a)
NTM REVENUE MULTIPLE (a)
AVERAGE MULTIPLES (a)
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| Aggregate Value / |
| Aggregate Value / |
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| Revenue |
| EBITDA |
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3 Months |
| 0.60 | x | 7.6 | x |
6 Months |
| 0.77 |
| 9.2 |
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9 Months |
| 0.93 |
| 11.0 |
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12 Months |
| 1.03 |
| 12.1 |
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18 Months |
| 1.07 |
| 13.3 |
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(a) NTM Revenue and EBITDA based on average of estimates from BAS, CIBC and Robertson Stephens (through July 2002).
19
Multiples Analysis
NTM REVENUE MULTIPLE
PRICE TO BOOK MULTIPLE
LTM REVENUE MULTIPLE
LTM EBITDA MULTIPLE
(a) CoorsTek average multiples excludes data after 11/11/02—date of proposal.
20
Stock Price Correlation Analysis
• Given the high correlation in stock price performance for a number of semi-capital equipment companies and CoorsTek, the average 12 month target price targets for these companies are a useful proxy for CoorsTek’s target price
Correlation to Semi-Cap Companies
Mykrolis |
| 0.905 |
|
Advanced Energy Industries |
| 0.831 |
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Applied Materials |
| 0.764 |
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Helix Technology |
| 0.755 |
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MKS Instruments |
| 0.748 |
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Brooks-PRI Automation |
| 0.691 |
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Asyst Technologies |
| 0.628 |
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Entegris |
| 0.527 |
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AEIS
Research |
| Date |
| Price |
| Target |
| ||
Lehman Bros. |
| 10/30/02 |
| $ | 11.90 |
| $ | 23.00 |
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Barrington |
| 10/21/02 |
| 9.03 |
| NA |
| ||
CIBC |
| 10/18/02 |
| 8.73 |
| 20.00 |
| ||
Needham |
| 10/18/02 |
| 8.73 |
| NA |
| ||
AH&H |
| 10/18/02 |
| 8.73 |
| 22.00 |
| ||
MSDW |
| 10/18/02 |
| 8.73 |
| NA |
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Merrill Lynch |
| 10/18/02 |
| 8.73 |
| NA |
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BAS |
| 10/17/02 |
| 7.70 |
| NA |
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Bear Stearns |
| 10/17/02 |
| 7.70 |
| NA |
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Average: |
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| $ | 21.67 |
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Price (as of 11/11/02): |
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| 11.82 |
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Implied Growth: |
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| 83.3 | % | ||
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CoorsTek Price (as of 11/11/02) |
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| $ | 15.42 |
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Implied CoorsTek Price: |
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| $ | 28.27 |
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HELX
Research |
| Date |
| Price |
| Target |
| ||
CIBC |
| 10/22/02 |
| $ | 10.16 |
| NA |
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MSDW |
| 10/21/02 |
| 10.59 |
| $ | 11.00 |
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Needham |
| 10/21/02 |
| 10.59 |
| 16.00 |
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AH&H |
| 10/18/02 |
| 9.94 |
| 20.00 |
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Average: |
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| $ | 15.67 |
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Price (as of 11/11/02): |
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| 9.28 |
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Implied Growth: |
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| 68.8 | % | ||
CoorsTek Price (as of 11/11/02) |
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| $ | 15.42 |
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Implied CoorsTek Price: |
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| $ | 26.03 |
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AMAT
Research |
| Date |
| Price |
| Target |
| ||
AH&H |
| 11/14/02 |
| $ | 15.76 |
| $ | 18.00 |
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CIBC |
| 11/14/02 |
| 15.76 |
| 20.00 |
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JP Morgan |
| 11/14/02 |
| 15.76 |
| 11.00 |
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Needham |
| 11/14/02 |
| 15.76 |
| 16.00 |
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Prudential |
| 11/14/02 |
| 15.76 |
| 21.00 |
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Soundview |
| 11/14/02 |
| 15.76 |
| 20.00 |
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UBS Warburg |
| 11/14/02 |
| 15.76 |
| 15.00 |
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USBPJ |
| 11/14/02 |
| 15.76 |
| 16.00 |
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BAS |
| 11/13/02 |
| 14.70 |
| 19.00 |
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Average: |
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| $ | 17.33 |
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Price (as of 11/11/02): |
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| 14.57 |
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Implied Growth: |
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| 19.0 | % | ||
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CoorsTek Price (as of 11/11/02) |
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| $ | 15.42 |
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Implied CoorsTek Price: |
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| $ | 18.34 |
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MKSI
Research |
| Date |
| Price |
| Target |
| ||
BAS |
| 11/14/02 |
| $ | 14.06 |
| NA |
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AH&H |
| 10/17/02 |
| 8.98 |
| $ | 21.00 |
| |
CIBC |
| 10/17/02 |
| 8.98 |
| 25.00 |
| ||
Lehman Bros. |
| 10/17/02 |
| 8.98 |
| 20.00 |
| ||
Merrill Lynch |
| 10/17/02 |
| 8.98 |
| NA |
| ||
Needham |
| 10/17/02 |
| 8.98 |
| NA |
| ||
TWP |
| 10/17/02 |
| 8.98 |
| 12.00 |
| ||
Wells Fargo |
| 10/17/02 |
| 8.98 |
| 3.00 |
| ||
Bear Stearns |
| 10/16/02 |
| 9.42 |
| NA |
| ||
Average: |
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| $ | 16.20 |
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Price (as of 11/11/02): |
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| 13.00 |
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Implied Growth: |
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| 24.6 | % | ||
CoorsTek Price (as of 11/11/02) |
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| $ | 15.42 |
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Implied CoorsTek Price: |
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| $ | 19.22 |
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Note: Correlation calculated after first quarter since CoorsTek’s spin-off from ACX Technologies through 11/11/02.
21
Trading Statistics
($ in millions, except per share data)
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| CoorsTek |
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| CoorsTek |
| CoorsTek |
| Keystone |
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| 11/11/02 |
| Adjusted (a) |
| Offer |
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Stock Price |
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| $ | 15.42 |
| $ | 17.01 |
| $ | 21.00 |
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Premium / (Discount) to: |
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Stock Price (11/11/02) ($15.42) |
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| 0.0 | % | 10.3 | % | 36.2 | % | |||||
Adjusted Stock Price ($17.01) |
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| (9.3 | )% | 0.0 | % | 23.5 | % | |||||
52-Week High ($42.09) |
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| (63.4 | )% | (59.6 | )% | (50.1 | )% | |||||
52-Week Low ($12.69) |
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| 21.5 | % | 34.0 | % | 65.5 | % | |||||
1 Month Average ($15.42) |
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| (0.0 | )% | 10.3 | % | 36.2 | % | |||||
3 Months Average ($17.74) |
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| (13.1 | )% | (4.1 | )% | 18.4 | % | |||||
6 Months Average ($23.55) |
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| (34.5 | )% | (27.8 | )% | (10.8 | )% | |||||
Diluted Shares Outstanding (b) |
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| 11.737 | 11.737 | 11.737 | ||||||||
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Total Equity Value |
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| $ | 181.0 |
| $ | 199.6 |
| $ | 246.5 |
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Plus: |
| Total Debt (c) |
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| 104.3 |
| 104.3 |
| 104.3 |
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Less: |
| Cash & Equivalents (c) |
|
|
| 53.7 |
| 53.7 |
| 53.7 |
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Total Enterprise Value |
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| $ | 231.6 |
| $ | 250.3 |
| $ | 297.1 |
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| CoorsTek Multiple Over |
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| Last Twelve Months |
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| High |
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Total Enterprise Value as a Multiple of: |
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| Statistic(d) |
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Revenue |
| LTM |
| $ | 334.4 |
| 0.69 | x | 0.75 | x | 0.89 | x | 0.60 | x | 1.65 | x |
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| CY02 |
| 352.1 |
| 0.66 |
| 0.71 | x | 0.84 | x | 0.60 | x | 1.65 | x | |
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| CY03 |
| 366.0 |
| 0.63 | x | 0.68 | x | 0.81 | x | 0.42 | x | 1.42 | x | |
|
| CY03 Street Consensus |
| 391.4 |
| 0.59 | x | 0.64 | x | 0.76 | x | 0.42 | x | 1.42 | x | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
EBITDA |
| LTM |
| $ | (6.6 | ) | NM |
| NM |
| NM |
| 8.9 | x | NM |
|
|
| CY02 |
| 17.0 |
| 13.6 | x | 14.7 | x | 17.5 | x | 8.9 | x | NM |
| |
|
| CY03 |
| 30.4 |
| 7.6 | x | 8.2 | x | 9.8 | x | 5.5 | x | NM |
| |
|
| CY03 Street Consensus |
| 38.2 |
| 6.1 | x | 6.6 | x | 7.8 | x | 5.5 | x | NM |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Stock Price as a Multiple of: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash EPS |
| LTM |
| $ | (2.31 | ) | NM |
| NM |
| NM |
|
|
|
|
|
|
| CY02 |
| (0.79 | ) | NM |
| NM |
| NM |
|
|
|
|
| |
|
| CY03 |
| (0.18 | ) | NM |
| NM |
| NM |
|
|
|
|
| |
|
| CY03 Street Consensus |
| 0.21 |
| 72.4 | x | 79.9 | x | 98.7 | x |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Book Value Mutiple |
| $ | 178.1 |
| 1.02 | x | 1.12 | x | 1.38 | x | 0.84 | x | 2.81 | x |
(a) Based on change in SOX from 11/11/02 to 11/19/02 of 10.3%.
(b) Based on 11.7 million shares and 1.0 million options outstanding with weighted average exercise prices ranging from $21.96 to $39.99.
(c) Based on CoorsTek’s Form 10-Q dated 9/30/02.
(d) Historical data based on CoorsTek’s Form 10-Q dated 9/30/02 and Form 10-K dated 12/31/02. Estimates based on management projections.
22
Summary of Street Commentary
• Wall Street analysts comments suggest that the current offer price may not adequately reflect the inherent value of the business
Date |
| Firm / Analyst |
| Recent Research Commentary |
11/12/02 |
| Bear Stearns |
| “In our view, $21 is a low valuation based on typical trough valuations in a highly cyclical industry. The 52 week range is $12.40 to $43.89. CoorsTek has the potential to get back to $3.00 in earnings at some time in the future. The list of other potential rival buyers of the company is relatively short and complicated by the fact of the conglomerate nature of CoorsTek’s business… CoorsTek also did a follow on offering of stock back in May at $33 per share so investors may question a management led buyout at roughly two thirds of that price six months later.” |
|
|
|
|
|
11/12/02 |
| CIBC World Markets Ali Irani |
| “We view the offer as inadequate and a disservice to other shareholders, including those who participated in the follow-on offering in 5/02, 1M shares at $33. The $21 offer prices buyout at 1.4x BV, in line with peer group & 0.7 TTM sales, no premium & significantly below past M&A valuations. The offer is particularly weak considering the improving outlook for CRTK, whose semi sub-assembly revs should benefit from outsourcing trends at OEMs & evidence in 3Q of cost restructuring for return to B/E provides foundation for above avg. earnings leverage into 2H03 & 04.” |
|
|
|
|
|
11/12/02 |
| Friedman Billings Ramsey Chris Versace |
| “We believe the Coors family is attempting to take advantage of the neutral attitude issued by the Street and to buy the company back on the cheap in the hopes of benefiting from the high degree of operating leverage when the semi-cap market eventually rebounds. The $21 offer, which offers 36% upside from recent share price, still equates to 1.6x CRTK’s tangible book per share, roughly a 20% discount to the blended peer group... The inherent discount in the offer bakes in the lack of liquidity and net debt on the balance sheet; however, with the company effectively being put into play, the possibility exists for other bids and we think there is room for the current bid to move slightly higher. Given the company’s business mix, we believe the possibility for competing bids is low... We think a better offer for the company is $23-$24.” |
|
|
|
|
|
11/13/02 |
| Investec |
| We estimate fair value for CRTK under our current industry scenario, which assumes a traditional industry recovery beginning in 2003, to be in about the $25-$30 range by 4Q03. This assumes the stock is fairly valued in the price/sales multiple range of 0.70x to 1.00x and a price to book value range of 2.0x. Based on this analysis, the current bid appears a bit low. We think it unlikely that the potential acquirers put their best deal on the table immediately and may wait to see what decision the board of directors makes to shareholders before possibly revising the term. We have heard that select EMS companies would like to buy their way into the semiconductor equipment assembly market and this announcement could spur a bid for CRTK by one of them. |
|
|
|
|
|
11/13/02 |
| Wells Fargo Securities Susan Crossley |
| We recommend that holders tender CoorsTek shares at a price equal to or higher than the proposed $21 per share because this represents a capitalization exceeding what the public equity market should, in our opinion, assign the company. We view the buyout offer as credible, and so we are raising our rating from Sell to Hold, as we do not recommend selling the shares short. We believe that CoorsTek is the type of industrial company that is better suited to being privately owned. The cyclicality of its business, particularly in the semiconductor equipment and telecommunications areas, prevent the steady predictable earnings growth that the public equity market rewards. What is attractive about the business are its cash flow levels. We speculate that the Coors family perhaps did not intend for CoorsTek to remain publicly owned long-term. Its public spinout nearly three years ago and subsequent secondary offerings capitalized on the comparatively high valuations then assigned to technology-related companies. Its return to private ownership would lock in a profit. |
23
C. Financial Performance—Historical and Projected
24
CoorsTek Financial Summary—Annual
($ in millions, except per share data)
|
| Fiscal Year Ending December 31, |
|
|
| CAGR |
|
|
|
|
| FY 2004E |
| ||||||||||||||
|
| 1999 |
| 2000 |
| 2001 |
| LTM |
| 1999-2001 |
| FY 2002E |
| FY 2003E |
| A |
| B |
| ||||||||
Semiconductor Revenue (a) |
| NA |
| $ | 188.3 |
| $ | 128.9 |
| NA |
|
|
| $ | 108.6 |
| $ | 109.2 |
| $ | 105.8 |
| $ | 134.7 |
| ||
% Growth |
| NA |
| NA |
| (31.5 | )% | NA |
|
|
| (15.8 | )% | 0.6 | % | (3.1 | )% | 23.3 | % | ||||||||
Ceramics Revenue (a) |
| NA |
| 351.3 |
| 271.5 |
| NA |
|
|
| 243.5 |
| 256.8 |
| 272.3 |
| 292.2 |
| ||||||||
% Growth |
| NA |
| NA |
| (22.7 | )% | NA |
|
|
| (10.3 | )% | 5.5 | % | 6.0 | % | 13.8 | % | ||||||||
Total Revenue |
| 365.1 |
| 539.7 |
| 400.4 |
| 334.4 |
| 4.7 | % | 352.1 |
| 366.0 |
| 378.1 |
| 426.9 |
| ||||||||
% Growth |
| 23.1 | % | 47.8 | % | (25.8 | )% |
|
|
|
| (12.1 | )% | 4.0 | % | 3.3 | % | 16.6 | % | ||||||||
Semiconductor Gross Profit |
| NA |
| 40.2 |
| (3.6 | ) | NA |
|
|
| (0.3 | ) | 2.3 |
| (1.9 | ) | 12.0 |
| ||||||||
% of Revenue |
| NA |
| 21.4 | % | NM |
| NA |
|
|
| NM |
| 2.1 | % | NM |
| 8.9 | % | ||||||||
Ceramics Gross Profit |
| NA |
| 84.2 |
| 48.5 |
| NA |
|
|
| 50.4 |
| 58.1 |
| 63.8 |
| 68.6 |
| ||||||||
% of Revenue |
| NA |
| 24.0 | % | 17.8 | % | NA |
|
|
| 20.7 | % | 22.6 | % | 23.4 | % | 23.5 | % | ||||||||
Total Gross Profit |
| $ | 90.7 |
| $ | 124.4 |
| $ | 44.9 |
| $ | 24.7 |
| (29.6 | )% | $ | 50.1 |
| $ | 60.4 |
| $ | 61.8 |
| $ | 80.7 |
|
% of Revenue |
| 24.8 | % | 23.1 | % | 11.2 | % | 7.4 | % |
|
| 14.2 | % | 16.5 | % | 16.3 | % | 18.9 | % | ||||||||
R&D |
| — |
| — |
| 4.9 |
| 9.7 |
| NA |
| 10.1 |
| 9.2 |
| 9.2 |
| 12.5 |
| ||||||||
% of Revenue |
| NA |
| NA |
| 1.2 | % | 2.9 | % |
|
| 2.9 | % | 2.5 | % | 2.4 | % | 2.9 | % | ||||||||
SG&A |
| 53.2 |
| 66.4 |
| 59.7 |
| 45.2 |
| 5.9 | % | 45.9 |
| 46.8 |
| 46.0 |
| 49.0 |
| ||||||||
% of Revenue |
| 14.6 | % | 12.3 | % | 14.9 | % | 13.5 | % |
|
| 13.0 | % | 12.8 | % | 12.2 | % | 11.5 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total Operating Expenses |
| $ | 53.2 |
| $ | 66.4 |
| $ | 64.6 |
| $ | 54.9 |
| 10.2 | % | $ | 56.0 |
| $ | 56.0 |
| $ | 55.2 |
| $ | 61.5 |
|
% of Revenue |
| 14.6 | % | 12.3 | % | 16.1 | % | 16.4 | % |
|
| 15.9 | % | 15.3 | % | 14.6 | % | 14.4 | % | ||||||||
Operating Income |
| $ | 37.5 |
| 58.0 |
| (19.7 | ) | $ | (30.2 | ) | NA |
| (5.9 | ) | 4.4 |
| $ | 6.6 |
| $ | 19.2 |
| ||||
% of Revenue |
| 10.3 | % | 10.7 | % | NM |
| NM |
|
|
| NM |
| 1.2 | % | 1.7 | % | 4.5 | % | ||||||||
Net Income (a) |
| $ | 20.1 |
| $ | 27.2 |
| $ | (18.7 | ) | $ | (24.7 | ) | NA |
| $ | (8.9 | ) | $ | (2.1 | ) | $ | (0.7 | ) | $ | 7.3 |
|
% of Revenue |
| 5.5 | % | 5.0 | % | NM |
| NM |
|
|
| NM |
| NM |
| NM |
| 1.7 | % | ||||||||
EPS (a) |
| $ | 2.77 |
| $ | 3.06 |
| $ | (1.76 | ) | $ | (2.31 | ) | NA |
| $ | (0.79 | ) | $ | (0.18 | ) | $ | (0.06 | ) | $ | 0.60 |
|
% Growth |
| 52.9 | % | 10.7 | % | NM |
| NM |
|
|
| NM |
| NM |
| NM |
| NM |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
D&A |
| $ | 22.7 |
| $ | 24.2 |
| $ | 25.0 |
| $ | 23.6 |
| 4.9 | % | $ | 22.9 |
| $ | 26.0 |
| $ | 26.0 |
| $ | 26.0 |
|
% of Revenue |
| 6.2 | % | 4.5 | % | 6.2 | % | 7.1 | % |
|
| 6.5 | % | 7.1 | % | 6.9 | % | 6.1 | % | ||||||||
EBITDA |
| $ | 60.2 |
| $ | 82.2 |
| $ | 5.3 |
| $ | (6.6 | ) | (70.3 | )% | $ | 17.0 |
| $ | 30.4 |
| $ | 32.6 |
| $ | 45.2 |
|
% of Revenue |
| 16.5 | % | 15.2 | % | 1.3 | % | NM |
|
|
| 4.8 | % | 8.3 | % | 8.6 | % | 10.6 | % |
Balance Sheet Data |
| 9/30/02 |
| |
Cash & Cash Equivalents |
| $ | 53.7 |
|
|
|
|
| |
Total Debt |
| 104.3 |
| |
|
|
|
| |
Common Shareholders’ Equity |
| 178.1 |
| |
Leverage Statistics |
| LTM |
|
Debt / Total Capitalization |
| 36.9 | % |
|
|
|
|
Debt / Mkt. Cap. |
| 57.6 | % |
Debt / EBITDA |
| NM |
|
EBITDA / Net. Interest Expense |
| NM |
|
Source: Public company filings and company forecasts.
(a) Semiconductor revenue differs from reported segments—includes InVision revenue, includes Metal and Assembly, excludes semiconductor-related ceramics.
25
CoorsTek Financial Summary—Quarterly
($ in millions, except per share data)
|
| 2002E |
| |||||||||||||
|
| Q1A |
| Q2A |
| Q3A |
| Q4E |
| FY |
| |||||
Revenue |
| $ | 74.5 |
| $ | 90.2 |
| $ | 99.6 |
| $ | 87.8 |
| $ | 352.1 |
|
% Growth |
| 6.3 | % | 21.1 | % | 10.4 | % | (11.9 | )% | (12.1 | )% | |||||
Gross Profit |
| $ | 7.3 |
| $ | 13.7 |
| $ | 16.7 |
| $ | 12.4 |
| $ | 50.1 |
|
% of Revenue |
| 9.7 | % | 15.1 | % | 16.8 | % | 14.2 | % | 14.2 | % | |||||
R&D |
| 2.3 |
| 2.7 |
| 2.8 |
| 2.2 |
| 10.1 |
| |||||
% of Revenue |
| 3.2 | % | 3.0 | % | 2.8 | % | 2.6 | % | 2.9 | % | |||||
SG&A |
| 10.4 |
| 12.1 |
| 11.3 |
| 12.0 |
| 45.9 |
| |||||
% of Revenue |
| 14.0 | % | 13.4 | % | 11.3 | % | 13.7 | % | 13.0 | % | |||||
Total Operating Expenses |
| $ | 12.8 |
| $ | 14.9 |
| $ | 14.0 |
| $ | 14.3 |
| $ | 56.0 |
|
% of Revenue |
| 17.1 | % | 16.5 | % | 14.1 | % | 16.3 | % | 15.9 | % | |||||
Operating Income |
| $ | (5.5 | ) | $ | (1.2 | ) | $ | 2.7 |
| $ | (1.8 | ) | $ | (5.9 | ) |
% of Revenue |
| NM |
| NM |
| 2.7 | % | NM |
| NM |
| |||||
Net Income |
| $ | (4.8 | ) | $ | (2.3 | ) | $ | 0.4 |
| $ | (2.3 | ) | $ | (8.9 | ) |
% of Revenue |
| NM |
| NM |
| 0.4 | % | NM |
| NM |
| |||||
EPS |
| $ | (0.45 | ) | $ | (0.20 | ) | $ | 0.04 |
| $ | (0.18 | ) | $ | (0.79 | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Depreciation & Amortization |
| $ | 5.4 |
| $ | 5.3 |
| $ | 6.2 |
| $ | 6.0 |
| $ | 22.9 |
|
% of Revenue |
| 7.2 | % | 5.8 | % | 6.2 | % | 6.8 | % | 6.5 | % | |||||
EBITDA |
| $ | (0.1 | ) | $ | 4.1 |
| $ | 8.9 |
| $ | 4.2 |
| $ | 17.0 |
|
% of Revenue |
| NM |
| 4.5 | % | 8.9 | % | 4.7 | % | 4.8 | % |
Source: Public company filings and management forecasts.
26
CoorsTek Financial Summary—Street Consensus
Q4 2002E
($ in millions)
|
| BAS |
| Bear Stearns |
| CIBC |
| FBR |
| Investec |
| Needham |
| Wells Fargo |
| Street |
| Management |
| |||||||||
|
| 10/29/02 |
| 10/29/02 |
| 10/30/02 |
| 10/30/02 |
| 10/30/02 |
| 10/30/02 |
| 10/30/02 |
| Consensus |
| Projections |
| |||||||||
Revenues |
| $ | 87.7 |
| $ | 87.1 |
| $ | 87.2 |
| $ | 89.6 |
| $ | 87.7 |
| $ | 86.0 |
| $ | 87.1 |
| $ | 87.5 |
| $ | 87.8 |
|
Gross Profit |
| 12.5 |
| 13.1 |
| 14.8 |
| 13.7 |
| NA |
| NA |
| NA |
| 13.5 |
| 12.4 |
| |||||||||
Operating Income |
| (1.3 | ) | (0.7 | ) | 0.9 |
| (0.2 | ) | NA |
| NA |
| NA |
| (0.3 | ) | (1.8 | ) | |||||||||
Net Income |
| $ | (2.3 | ) | (1.7 | ) | $ | (0.8 | ) | (1.4 | ) | NA |
| NA |
| NA |
| $ | (1.6 | ) | $ | (2.3 | ) | |||||
EPS |
| $ | (0.19 | ) | $ | (0.14 | ) | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.13 | ) | $ | (0.18 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
EBITDA |
| $ | 4.9 |
| NA |
| $ | 7.4 |
| $ | 6.0 |
| NA |
| NA |
| NA |
| $ | 6.1 |
| $ | 4.2 |
|
FY 2003E
($ in millions)
|
| BAS |
| Bear Stearns |
| CIBC |
| FBR |
| Investec |
| Needham |
| Wells Fargo |
| Street |
| Management |
| |||||||||
|
| 10/29/02 |
| 10/29/02 |
| 10/30/02 |
| 10/30/02 |
| 10/30/02 |
| 10/30/02 |
| 10/30/02 |
| Consensus |
| Projections |
| |||||||||
Revenues |
| $ | 359.0 |
| $ | 400.6 |
| $ | 364.4 |
| $ | 381.0 |
| $ | 420.0 |
| $ | 355.0 |
| $ | 460.0 |
| $ | 391.4 |
| $ | 366.0 |
|
Gross Profit |
| 59.6 |
| 84.7 |
| 62.1 |
| NA |
| NA |
| NA |
| 84.8 |
| 72.8 |
| 60.4 |
| |||||||||
Operating Income |
| 5.1 |
| 28.2 |
| 5.9 |
| NA |
| NA |
| NA |
| 27.8 |
| 16.8 |
| 4.4 |
| |||||||||
Net Income (a) |
| $(1.9 | ) | 12.8 |
| $(1.4 | ) | NA |
| NA |
| NA |
| $ | 11.4 |
| $ | 5.2 |
| $ | (2.1 | ) | ||||||
EPS |
| $(0.15 | ) | $ | 1.05 |
| $(0.11 | ) | $(0.30 | ) | $ | 0.55 |
| $(0.46 | ) | $ | 0.91 |
| $ | 0.21 |
| $ | (0.18 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
EBITDA |
| $ | 30.0 |
| NA |
| $ | 31.9 |
| NA |
| NA |
| NA |
| $ | 52.7 |
| $ | 38.2 |
| $ | 30.4 |
| ||||
Gross Margin |
| 16.6 | % | 21.1 | % | 17.0 | % | NA |
| NA |
| NA |
| 18.4 | % | 18.6 | % | 16.5 | % | |||||||||
Operating Margin |
| 1.4 | % | 7.0 | % | 1.6 | % | NA |
| NA |
| NA |
| 6.1 | % | 4.3 | % | 1.2 | % | |||||||||
Source: Wall Street research.
(a) Excludes extraordinary and one-time charges.
27
Evolution of Analyst Estimates
($ in millions except per share data)
|
| Post Q1 Earnings (1/25/02) |
| Pre Follow-on (5/23/02) |
| 11/11/02 |
| ||||||||||||||||||
|
| Revenue |
| EPS |
| Revenue |
| EPS |
| Revenue |
| EPS |
| ||||||||||||
|
| CY 2002 |
| CY2003 |
| CY 2002 |
| CY2003 |
| CY 2002 |
| CY2003 |
| CY 2002 |
| CY2003 |
| CY 2002 |
| CY2003 |
| CY 2002 |
| CY2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banc of America Securities (a) |
| NA |
| NA |
| NA |
| NA |
| $361.4 |
| $564.0 |
| $(1.06 | ) | $2.16 |
| $352.0 |
| $359.0 |
| $(0.81 | ) | $(0.15 | ) |
Bear Stearns (b) |
| NA |
| NA |
| NA |
| NA |
| NA |
| NA |
| NA |
| NA |
| 351.5 |
| 400.6 |
| (0.74 | ) | 1.05 |
|
CIBC |
| 358.7 |
| NA |
| (1.25 | ) | NA |
| 373.9 |
| 675.0 |
| (0.52 | ) | 2.00 |
| 351.5 |
| 364.4 |
| (0.69 | ) | (0.11 | ) |
Friedman Billings Ramsey |
| 358.0 |
| NA |
| (0.40 | ) | NA |
| 380.9 |
| 502.0 |
| (0.33 | ) | 1.95 |
| 353.9 |
| 381.0 |
| (0.73 | ) | (0.30 | ) |
Wells Fargo |
| 348.0 |
| 559.0 |
| (0.26 | ) | 2.94 |
| 376.5 |
| 604.0 |
| (0.20 | ) | 2.84 |
| 351.5 |
| 460.0 |
| (0.75 | ) | 0.91 |
|
Robertson Stephens |
| 362.0 |
| 470.0 |
| (0.46 | ) | 0.74 |
| 370.4 |
| 509.8 |
| (0.11 | ) | 2.36 |
| NA |
| NA |
| NA |
| NA |
|
Average |
| $356.7 |
| $514.5 |
| $(0.59 | ) | $1.84 |
| $372.6 |
| $571.0 |
| $(0.44 | ) | $2.26 |
| $351.8 |
| $391.4 |
| $(0.74 | ) | $0.21 |
|
Actual / Current Consensus Estimate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Initiated coverage February 2002.
(b) Initiated coverage June 2002.
(c) Initiated coverage August 2002.
28
Actual Performance Versus Analyst Estimates At Time of Offering
|
| Pre Follow-On Offering (5/23/02) |
| |||||||||||||||||||||||
|
| Revenue |
| EPS |
| |||||||||||||||||||||
|
| Q2 02 |
| Q3 02 |
| Q4 02 |
| CY2003 |
| Q2 02 |
| Q3 02 |
| Q4 02 |
| CY2003 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Banc of America Securities (a) |
| $ | 79.0 |
| $ | 94.2 |
| $ | 113.7 |
| $ | 564.0 |
| $ | (0.39 | ) | $ | (0.23 | ) | $ | 0.01 |
| $ | 2.16 |
| |
Bear Stearns (b) |
| NA |
| NA |
| NA |
| NA |
| NA |
| NA |
| NA |
| NA |
| |||||||||
CIBC |
| 83.0 |
| 96.7 |
| 119.7 |
| $ | 675.0 |
| (0.12 | ) | (0.03 | ) | 0.08 |
| $ | 2.00 |
| |||||||
Friedman Billings Ramsey |
| NA |
| NA |
| NA |
| $ | 502.0 |
| (0.33 | ) | 0.05 |
| 0.40 |
| $ | 1.95 |
| |||||||
Wells Fargo |
| 82.0 |
| 100.0 |
| 120.0 |
| $ | 604.0 |
| (0.27 | ) | 0.14 |
| 0.37 |
| $ | 2.84 |
| |||||||
Robertson Stephens |
| 83.5 |
| 96.6 |
| 115.8 |
| $ | 509.8 |
| (0.19 | ) | 0.10 |
| 0.41 |
| $ | 2.36 |
| |||||||
Average |
| $ | 81.9 |
| $ | 96.9 |
| $ | 117.3 |
| $ | 571.0 |
| $ | (0.26 | ) | $ | 0.01 |
| $ | 0.25 |
| $ | 2.26 |
| |
Actual / Current Consensus Estimate |
| 90.2 |
| 99.6 |
| 87.5 |
| 391.4 |
| (0.20 | ) | 0.04 |
| (0.13 | ) | $ | 0.21 |
| ||||||||
(a) Initiated coverage February 2002.
(b) Initiated coverage June 2002.
29
D. Preliminary Valuation Summary
30
Illustrative Reference Range Summary
(a) As of 11/11/02.
31
Selected Reference Range Valuation Parameters
($ in millions, except per share data)
|
| CoorsTek |
| Relevant Multiple Range |
| Aggregate |
|
|
|
|
|
| ||||||||||
|
| Statistics (a) |
| Low |
|
| High |
| Value Range |
| Implied Share Price (b) |
|
| |||||||||
Analysis of Selected Publicly Traded Companies |
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
| |||||
LTM Revenues |
| $ | 334.4 |
| 0.55 | x | - | 1.10 | x | $ | 183.9 | - | $ | 367.8 |
| $ | 11.36 | - | $ | 27.03 |
|
|
CY02 Revenues |
| 352.1 |
| 0.55 | x | - | 1.10 | x | 193.6 | - | 387.3 |
| 12.19 | - | 28.68 |
|
| |||||
CY03 Revenues |
| 366.0 |
| 0.50 | x | - | 1.00 | x | 183.0 | - | 366.0 |
| 11.28 | - | 26.87 |
|
| |||||
CY03 Revenues @ 15.0% Growth over CY02 |
| 420.9 |
| 0.50 | x | - | 1.00 | x | 210.5 | - | 420.9 |
| 13.62 | - | 31.55 |
|
| |||||
CY02 EBITDA |
| $ | 17.0 |
| 8.00 | x | - | 13.00 | x | $ | 135.7 | - | $ | 220.6 |
| $ | 7.25 | - | $ | 14.48 |
|
|
CY03 EBITDA |
| 30.4 |
| 7.00 | x | - | 12.00 | x | 213.0 | - | 365.1 |
| 13.83 | - | 26.79 |
|
| |||||
CY03 EBITDA @ 15.0% Revenue Growth over CY02 (c) |
| 35.0 |
| 7.00 | x | - | 12.00 | x | 244.9 | - | 419.9 |
| 16.55 | - | 31.46 |
|
| |||||
Book Value |
| 178.1 |
| 1.00 | x | - | 1.70 | x | $ | 178.1 | - | $ | 302.7 |
| $ | 10.86 | - | $ | 21.48 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preliminary Reference Range |
|
|
|
|
|
|
|
|
|
|
|
| $ | 14.00 | - | $ | 28.00 |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Analysis of Selected Precedent Transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
LTM Revenues |
| $ | 334.4 |
| 0.90 | x | - | 1.00 | x | $ | 301.0 | - | $ | 334.4 |
| $ | 21.33 | - | $ | 24.18 |
|
|
CY02 Revenues |
| 352.1 |
| 0.90 | x | - | 1.00 | x | 316.9 | - | 352.1 |
| 22.69 | - | 25.68 |
|
| |||||
CY03 Revenues |
| 366.0 |
| 0.60 | x | - | 1.05 | x | 219.6 | - | 384.3 |
| 14.40 | - | 28.43 |
|
| |||||
CY03 Revenues @ 15.0% Growth over CY02 (c) |
| 420.9 |
| 0.60 | x | - | 1.05 | x | 252.5 | - | 441.9 |
| 17.20 | - | 33.34 |
|
| |||||
|
|
|
|
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|
|
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|
|
|
|
|
|
|
| |||||
Preliminary Reference Range |
|
|
|
|
|
|
|
|
|
|
|
| $ | 17.00 | - | $ | 30.00 |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Premium Paid Analysis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
CoorsTek Adjusted Stock Price (d) |
| $ | 17.01 |
| 30.0 | % | - | 60.0 | % |
|
|
|
| $ | 22.11 | - | $ | 27.22 |
|
| ||
Last 1 Month (e) |
| 15.42 |
| 30.0 | % | - | 60.0 | % |
|
|
|
| 20.05 | - | 24.67 |
|
| |||||
Last 3 Months (e) |
| 17.74 |
| 30.0 | % | - | 60.0 | % |
|
|
|
| 23.06 | - | 28.38 |
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preliminary Reference Range |
|
|
|
|
|
|
|
|
|
|
|
| $ | 21.00 | - | $ | 27.00 |
|
| |||
|
|
|
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|
|
|
|
|
|
| |||||
Discounted Equity Value Analysis |
|
|
|
|
|
|
|
|
|
|
|
| $ | 25.00 | - | $ | 35.00 |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Discounted Cash Flow Analysis |
|
|
|
|
|
|
|
|
|
|
|
| $ | 20.00 | - | $ | 30.00 |
|
| |||
|
|
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|
|
|
|
|
| |||||
Sum of Parts Analysis |
|
|
|
|
|
|
|
|
|
|
|
| $ | 17.00 | - | $ | 27.00 |
|
|
(a) As per CoorsTek management estimates.
(b) Adjusted for $50.6 million of net cash per Form 10-Q dated 9/30/02.
(c) Based on EBITDA margin projected by management for CY03.
(d) Adjusted for 10.3% increase in SOX from 11/11/02 to current.
(e) As of 11/11/02.
32
E. Preliminary Valuation Detail
33
Discounted Equity Value Analysis
($ in millions, except per share data) |
|
|
| |
|
|
|
| |
Target CoorsTek Revenues |
| $ | 600.0 |
|
|
|
|
| |
Normalized CoorsTek LTM Revenue Multiple (a) |
| 1.09 | x | |
|
|
|
| |
Implied Target Enterprise Value |
| $ | 654.0 |
|
|
|
|
| |
Plus: Cash (c) |
| $ | 53.7 |
|
Less: Debt (c) |
| $ | (104.3 | ) |
|
|
|
| |
Implied Equity Value |
| $ | 603.4 |
|
|
|
|
| |
Current Fully Diluted Shares Outstanding (c) |
| 11.737 |
| |
|
|
|
| |
Implied Value per Share |
| $ | 51.41 |
|
CoorsTek Historical |
| ||||
And Projected Revenues (b) |
| ||||
|
|
|
| ||
CY00 |
| $ | 539.7 |
| |
CY01 |
| 400.4 |
| ||
CY02 |
| 352.1 |
| ||
CY03 |
| 366.0 |
| ||
CY04 (A) |
| 378.1 |
| ||
CY04 (B) |
| 426.9 |
| ||
Illustrative Discount Rate |
| 14.5 % |
| ||||||||||
|
|
|
|
|
|
|
|
|
| ||||
Years to Achieve Target Revenues |
| 2 Years |
| 3 Years |
| 4 Years |
| 5 Years |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Implied CAGR (from 2002) |
| 30.5 | % | 19.4 | % | 14.3 | % | 11.3 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Implied Current Share Price |
| $ | 39.21 |
| $ | 34.25 |
| $ | 29.91 |
| $ | 26.12 |
|
|
|
|
|
|
|
|
|
|
| ||||
Assumed Probability |
| [5.0 | ]% | [35.0 | ]% | [40.0 | ]% | [20.0 | ]% | ||||
|
|
|
|
|
|
|
|
|
| ||||
Probability Adjusted Current Share Price |
|
|
|
| [$31.14 | ] |
|
|
|
| |||
|
| Probability Adjusted |
| |
Discount |
| Current CoorsTek |
| |
Rate |
| Share Price |
| |
|
|
|
| |
13.5% |
|
| [$32.15] |
|
14.5% |
|
| [$31.14] |
|
15.5% |
|
| [$30.16] |
|
(a) Based on last one year average LTM revenue multiple for CoorsTek.
(b) Historical revenues per CoorsTek’s SEC filings. Projections based on management estimates.
(c) Per Form 10-Q dated 9/30/02.
34
Discounted Equity Value Analysis
Based on out year revenue target of $600 million
| |||||||||||||
Time to Achieve Revenue Target of $600 Million | |||||||||||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years |
| 1 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
|
Implied CAGR |
| 70.4 | % | 30.5 | % | 19.4 | % | 14.3 | % | 11.3 | % | 9.3 | % |
Against CY02 Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
35
Discounted Equity Value Analysis
Value at various revenue targets and timing expectations
REVENUE TARGET: $600 MILLION
| |||||||||||||
Time to Achieve Revenue Target of $600 Million | |||||||||||||
| |||||||||||||
Years |
| 1 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
|
Implied CAGR |
| 70.4 | % | 30.5 | % | 19.4 | % | 14.3 | % | 11.3 | % | 9.3 | % |
Against CY02 Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE TARGET: $500 MILLION
| |||||||||||||
Time to Achieve Revenue Target of $500 Million | |||||||||||||
| |||||||||||||
Years |
| 1 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
|
Implied CAGR |
| 42.0 | % | 19.2 | % | 12.4 | % | 9.2 | % | 7.3 | % | 6.0 | % |
Against CY02 Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE TARGET: $550 MILLION
| |||||||||||||
Time to Achieve Revenue Target of $550 Million | |||||||||||||
| |||||||||||||
Years |
| 1 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
|
Implied CAGR |
| 56.2 | % | 25.0 | % | 16.0 | % | 11.8 | % | 9.3 | % | 7.7 | % |
Against CY02 Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE TARGET: $650 MILLION
| |||||||||||||
Time to Achieve Revenue Target of $650 Million | |||||||||||||
| |||||||||||||
Years |
| 1 |
| 2 |
| 3 |
| 4 |
| 5 |
| 6 |
|
Implied CAGR |
| 84.6 | % | 35.9 | % | 22.7 | % | 16.6 | % | 13.0 | % | 10.8 | % |
Against CY02 Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Analysis performed at a 13.5% and 15.5% discount rate in each scenario.
36
Discounted Equity Value Analysis
Equity value depends on probability-weighted timing of achieving $600 million revenue target
Note: Assumes discount rate of 14.5%, target revenue of $600 million and LTM revenue multiple of 1.09x.
37
Multiple Selection—Revenue
|
| Analysis of Selected |
| Analysis of Selected |
| ||||||
|
| LTM |
| CY02 |
| CY03 |
| LTM |
| NTM |
|
Revenue Multiples |
|
|
|
|
|
|
|
|
|
|
|
Advanced Materials Companies (a) |
| 0.57x |
| 0.57x |
| 0.57x |
| 0.91x |
| 0.61x |
|
Semiconductor Capital Equipment Companies (b) |
| 1.79x |
| 1.89x |
| 1.83x |
| 2.20x |
| 2.59x |
|
Normalized—Estimated 60% Discount |
| 0.71x |
| 0.75x |
| 0.73x |
| 0.88x |
| 1.04x |
|
EMS Companies (c) |
| 0.41x |
| 0.41x |
| 0.38x |
| 0.95x |
| 0.73x |
|
Normalized—Estimated 35% Premium |
| 0.55x |
| 0.55x |
| 0.51x |
| 1.28x |
| 0.99x |
|
|
| LTM |
|
|
| NTM |
|
CoorsTek Average Multiple |
|
|
|
|
|
|
|
3 Months |
| 0.79x |
|
|
| 0.58x |
|
9 Months |
| 1.12x |
|
|
| 0.91x |
|
18 Months |
| 1.00x |
|
|
| 1.04x |
|
Selected Range—LTM |
|
|
| 0.55x | - | 1.10x |
| 0.90x | - | 1.00x |
|
Selected Range—CY02 |
|
|
| 0.55x | - | 1.10x |
| 0.90x | - | 1.00x |
|
Selected Range—CY03 |
|
|
| 0.50x | - | 1.00x |
| 0.60x | - | 1.05x |
|
(a) Based on median for comparable advanced material companies.
(b) Based on median for comparable semiconductor capital equipment companies.
(c) Based on the average of the medians for comparable large-cap and mid-cap EMS companies (excludes Sanmina-SCI).
38
Multiple Selection—EBITDA
|
| Analysis of Selected |
| ||||
|
| LTM |
| CY02 |
| CY03 |
|
EBITDA Multiples |
|
|
|
|
|
|
|
Advanced Materials Companies (a) |
| 4.0x |
| 4.2x |
| 4.1x |
|
Semiconductor Capital Equipment Companies (b) |
| 23.5x |
| 38.2x |
| 33.1x |
|
Estimated 60% Discount |
| 9.4x |
| 15.3x |
| 13.2x |
|
EMS Companies (c) |
| 8.1x |
| 8.1x |
| 6.7x |
|
|
|
|
|
|
|
|
|
CoorsTek Average Multiple |
| LTM |
|
|
| NTM |
|
3 Months |
| NM |
|
|
| 7.6x |
|
9 Months |
| 9.3x |
|
|
| 11.0x |
|
18 Months |
| 8.5x |
|
|
| 13.3x |
|
|
|
|
|
|
|
|
|
BAS Selected Range—CY02 |
|
|
| 8.0x | - | 13.0x |
|
BAS Selected Range—CY03 |
|
|
| 7.0x | - | 12.0x |
|
(a) Based on median for comparable advanced material companies.
(b) Based on median for comparable semiconductor capital equipment companies.
(c) Based on the average of the medians for comparable large-cap and mid-cap EMS companies (excludes Sanmina-SCI).
39
Multiple Selection—Book Value
Book Value Multiples |
|
|
|
|
|
|
|
Advanced Materials Companies (a) |
|
|
|
|
| 0.80x |
|
Semiconductor Capital Equipment Companies (b) |
|
|
|
|
| 1.79x |
|
Estimated 20.0% Discount |
|
|
|
|
| 1.43x |
|
EMS Companies (c) |
|
|
|
|
| 1.03x |
|
Estimated 20.0% Premium |
|
|
|
|
| 1.23x |
|
CoorsTek Average Multiple |
|
|
|
|
|
|
|
3 Months |
|
|
|
|
| 1.14x |
|
9 Months |
|
|
|
|
| 1.82x |
|
18 Months |
|
|
|
|
| 1.73x |
|
|
|
|
|
|
|
|
|
BAS Selected Range |
| 1.00x |
| - |
| 1.70x |
|
(a) Based on median for comparable advanced material companies.
(b) Based on median for comparable semiconductor capital equipment companies.
(c) Based on the average of the medians for comparable large-cap and mid-cap EMS companies (excludes Sanmina-SCI).
40
Summary Publicly Traded Company Comparables
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
| Agg. Value / Rev. |
| Agg. Value / EBITDA |
| P/E |
|
|
| ||||||||||||
Company |
| LTM |
| CY’02E |
| CY’03E |
| LTM |
| CY’02E |
| CY’03E |
| LTM |
| CY’02E |
| CY’03E |
| Price / |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Materials Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 1.10 | x | 1.10 | x | 1.07 | x | 8.9 | x | 21.4 | x | 21.4 | x | 37.2 | x | 29.4 | x | 24.8 | x | 1.35 | x |
Average |
| 0.59 |
| 0.58 |
| 0.54 |
| 4.8 |
| 7.3 |
| 7.1 |
| 22.0 |
| 12.7 |
| 11.8 |
| 0.89 |
|
Median |
| 0.57 |
| 0.57 |
| 0.57 |
| 4.0 |
| 4.2 |
| 4.1 |
| 23.0 |
| 7.3 |
| 10.3 |
| 0.80 |
|
Low |
| 0.11 |
| 0.11 |
| 0.11 |
| 1.2 |
| 1.1 |
| 0.9 |
| 1.8 |
| 3.4 |
| 5.7 |
| 0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Semi-Cap Equipment Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 2.59 | x | 2.53 | x | 2.54 | x | 23.5 | x | 53.4 | x | 83.4 | x | NM |
| 71.5 | x | 67.1 | x | 2.09 | x |
Average |
| 1.62 |
| 1.68 |
| 1.69 |
| 23.5 |
| 38.2 |
| 37.7 |
| NM |
| 71.5 |
| 67.1 |
| 1.53 |
|
Median |
| 1.79 |
| 1.89 |
| 1.83 |
| 23.5 |
| 38.2 |
| 33.1 |
| NM |
| 71.5 |
| 67.1 |
| 1.79 |
|
Low |
| 0.76 |
| 0.97 |
| 0.99 |
| 23.5 |
| 23.0 |
| 9.3 |
| NM |
| 71.5 |
| 67.1 |
| 0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Cap EMS Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 0.87 | x | 0.84 | x | 0.68 | x | 15.1 | x | 15.9 | x | 7.8 | x | 37.4 | x | 42.7 | x | 76.3 | x | 2.21 | x |
Average |
| 0.43 |
| 0.43 |
| 0.40 |
| 9.0 |
| 9.3 |
| 6.8 |
| 26.2 |
| 29.0 |
| 31.1 |
| 1.02 |
|
Median |
| 0.35 |
| 0.36 |
| 0.34 |
| 8.1 |
| 8.1 |
| 6.6 |
| 27.1 |
| 28.5 |
| 20.3 |
| 0.89 |
|
Low |
| 0.26 |
| 0.27 |
| 0.26 |
| 4.7 |
| 5.7 |
| 5.8 |
| 13.3 |
| 16.4 |
| 16.4 |
| 0.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid Cap EMS Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 1.27 | x | 1.18 | x | 1.04 | x | 126.2 | x | 51.8x |
| 18.4 | x | 87.0 | x | 70.3 | x | 48.9 | x | 1.70 | x |
Average |
| 0.65 |
| 0.63 |
| 0.53 |
| 7.4 |
| 7.1 |
| 7.8 |
| 46.5 |
| 34.6 |
| 25.6 |
| 1.07 |
|
Median |
| 0.44 |
| 0.44 |
| 0.41 |
| 7.0 |
| 7.0 |
| 6.2 |
| 44.6 |
| 19.2 |
| 19.3 |
| 1.10 |
|
Low |
| 0.12 |
| 0.13 |
| 0.12 |
| 1.7 |
| 2.6 |
| 2.4 |
| 9.8 |
| 14.4 |
| 4.8 |
| 0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CoorsTek ($15.42 as of 11/11/02) |
| 0.69x |
| 0.66x |
| 0.63x |
| NM |
| 13.6x |
| 7.6x |
| NM |
| NM |
| NM |
| 1.02x |
|
CoorsTek Adjusted ($17.01) |
| 0.75x |
| 0.71x |
| 0.68x |
| NM |
| 14.7x |
| 8.2x |
| NM |
| NM |
| NM |
| 1.12x |
|
CoorsTek ($21.00 Offer Price) |
| 0.89x |
| 0.84x |
| 0.81x |
| NM |
| 17.5x |
| 9.8x |
| NM |
| NM |
| NM |
| 1.38x |
|
Source: Projections are from Wall Street research. Historicals are from company SEC filings.
41
Summary Precedent Transaction Analysis
|
| Agg. Value / Rev. |
| Agg. Value / EBITDA |
| P/E |
| ||||||
Company |
| LTM |
| NTM |
| LTM |
| NTM |
| LTM |
| NTM |
|
Advanced Materials |
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 2.59 | x | 0.71 | x | 11.4 | x | 7.4 | x | NA |
| NA |
|
Average |
| 1.05 |
| 0.53 |
| 7.8 |
| 7.4 |
| NA |
| NA |
|
Median |
| 0.91 |
| 0.61 |
| 7.1 |
| 7.4 |
| NA |
| NA |
|
Low |
| 0.46 |
| 0.27 |
| 5.3 |
| 7.4 |
| NA |
| NA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Semiconductor Capital Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 11.00 | x | 10.91 | x | 11.9 | x | 13.6 | x | 26.0 | x | 35.9 | x |
Average |
| 3.34 |
| 4.04 |
| 9.7 |
| 13.6 |
| 20.8 |
| 34.1 |
|
Median |
| 2.20 |
| 2.59 |
| 8.6 |
| 13.6 |
| 20.1 |
| 34.1 |
|
Low |
| 0.72 |
| 1.73 |
| 8.1 |
| 13.6 |
| 16.4 |
| 32.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMS |
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
| 1.89 | x | 1.41 | x | 19.9 | x | 24.0 | x | 35.7 | x | 27.1 | x |
Average |
| 0.99 |
| 0.75 |
| 12.2 |
| 16.9 |
| 22.3 |
| 19.6 |
|
Median |
| 0.95 |
| 0.73 |
| 11.4 |
| 15.2 |
| 20.0 |
| 19.9 |
|
Low |
| 0.25 |
| 0.33 |
| 7.4 |
| 11.5 |
| 8.4 |
| 11.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CoorsTek ($15.42 as of 11/11/02) |
| 0.69 | x | 0.63 | x | NM |
| 7.6 | x | NM |
| NM |
|
CoorsTek Adjusted ($17.01) |
| 0.75 |
| 0.68 |
| NM |
| 8.2x |
| NM |
| NM |
|
CoorsTek ($21.00 Offer Price) |
| 0.89 |
| 0.81 |
| NM |
| 9.8x |
| NM |
| NM |
|
Source: CoorsTek NTM multiples are based on CY03 multiples.
42
Summary Premiums Paid Analysis
ALL TRANSACTIONS |
| Premium to Average Stock Price |
| ||||||
|
| 1 Day |
| 1 Week |
| 1 Month |
| 3 Months |
|
|
| Average |
| ||||||
Technology Deals—$50MM - $1,000MM |
|
|
|
|
|
|
|
|
|
2002 to Current (25 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 47.2 | % | 48.7 | % | 50.9 | % | 58.5 | % |
Median |
| 31.9 | % | 38.4 | % | 37.7 | % | 40.1 | % |
2001 to Current (60 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 45.2 | % | 47.9 | % | 52.8 | % | 55.5 | % |
Median |
| 38.6 | % | 39.2 | % | 50.6 | % | 46.7 | % |
Technology Deals—$200MM - $500MM |
|
|
|
|
|
|
|
|
|
2002 to Current (8 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 31.6 | % | 34.8 | % | 36.3 | % | 35.5 | % |
Median |
| 16.6 | % | 21.6 | % | 27.4 | % | 26.6 | % |
2001 to Current (13 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 37.9 | % | 41.3 | % | 46.0 | % | 45.1 | % |
Median |
| 37.3 | % | 35.1 | % | 50.5 | % | 38.7 | % |
|
|
|
|
|
|
|
|
|
|
100% CASH TRANSACTIONS |
| Premium to Average Stock Price |
| ||||||
|
| 1 Day |
| 1 Week |
| 1 Month |
| 3 Months |
|
|
| Average |
| ||||||
Technology Deals—$50MM - $1,000MM |
|
|
|
|
|
|
|
|
|
2002 to Current (9 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 78.7 | % | 81.5 | % | 80.1 | % | 86.2 | % |
Median |
| 61.2 | % | 67.0 | % | 66.5 | % | 62.0 | % |
2001 to Current (12 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 52.8 | % | 57.1 | % | 65.2 | % | 65.9 | % |
Median |
| 38.6 | % | 42.5 | % | 58.7 | % | 62.0 | % |
Technology Deals—$200MM - $500MM |
|
|
|
|
|
|
|
|
|
2002 to Current (1 Deal) |
|
|
|
|
|
|
|
|
|
Mean |
| 75.1 | % | 86.0 | % | 81.9 | % | 81.5 | % |
Median |
| 75.1 | % | 86.0 | % | 81.9 | % | 81.5 | % |
2001 to Current (6 Deals) |
|
|
|
|
|
|
|
|
|
Mean |
| 43.1 | % | 47.3 | % | 59.7 | % | 55.5 | % |
Median |
| 41.8 | % | 46.9 | % | 58.3 | % | 58.1 | % |
43
Discounted Cash Flow Sensitivity Analysis
IMPLIED PRICE PER SHARE (a) |
|
|
|
|
|
|
| |||
|
| Discount Rates |
| |||||||
|
| 10.5% |
| 11.5% |
| 12.5% |
| |||
|
|
|
|
|
|
|
| |||
Scenario A |
| $ | 18.00 |
| $ | 14.17 |
| $ | 11.43 |
|
|
|
|
|
|
|
|
| |||
Scenario B |
| 28.87 |
| 23.36 |
| 19.35 |
| |||
|
|
|
|
|
|
|
| |||
Scenario C |
| 35.61 |
| 28.81 |
| 23.85 |
| |||
Note: Projections Based on sum of Ceramics and Semiconductor businesses.
For Ceramics, assumes EBITDA margin of 16% from 2004 onwards. Depreciation kept constant. Capital expenditures based on a constant percentage of capital expenditures / sales. Change in net working investment calculated as 18% of change in revenue.
For Semiconductor business, EBITDA margin as provided by CoorsTek management. Depreciation kept constant. Capital expenditures based on a constant percentage of capital expenditures / sales. Change in net working investment calculated as 15% of change in revenue. Scenario A assumes liquidation of semiconductor business in 2007.
(a) Assumes a normalized level of unlevered free cash flows taking into account equalized depreciation and capital expenditures. Terminal value based on perpetuity growth of 5%.
44
Sum of Parts Valuation Summary
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
| Multiple Range |
| Implied Aggregate Value |
| |||||||||||||
|
| Statistics (a) |
| Low |
|
|
| High |
| Low |
|
|
| High |
| |||||
SEMICONDUCTORS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Analysis of Selected Publicly Traded Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
CY02 Revenues |
| $ | 108.6 |
| 0.80x |
| - |
| 1.20x |
| $ | 86.8 |
| - |
| $ | 130.3 |
| ||
CY03 Revenues |
| 109.2 |
| 0.80x |
| - |
| 1.20x |
| 87.4 |
| - |
| 131.0 |
| |||||
CY03 Revenues @ 25.0% Annual Growth |
| 135.7 |
| 0.80x |
| - |
| 1.20x |
| 108.6 |
| - |
| 162.8 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Analysis of Selected Precedent Transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
CY02 Revenues |
| $ | 108.6 |
| 0.90x |
| - |
| 1.10x |
| $ | 97.7 |
| - |
| $ | 119.4 |
| ||
CY03 Revenues |
| 109.2 |
| 0.90x |
| - |
| 1.10x |
| 98.3 |
| - |
| 120.1 |
| |||||
CY03 Revenues @ 25.0% Annual Growth |
| 135.7 |
| 0.90x |
| - |
| 1.10x |
| 122.1 |
| - |
| 149.3 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Discounted Cash Flow Analysis |
|
|
|
|
|
|
|
|
| $ | 50.0 |
| - |
| $ | 100.0 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average |
|
|
|
|
|
|
|
|
| $ | 93.0 |
| - |
| $ | 130.4 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
CERAMICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Analysis of Selected Publicly Traded Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
CY02 Revenues |
| $ | 243.5 |
| 0.60x |
| - |
| 1.00x |
| $ | 146.1 |
| - |
| $ | 243.5 |
| ||
CY03 Revenues |
| 256.8 |
| 0.55x |
| - |
| 1.00x |
| 141.2 |
| - |
| 256.8 |
| |||||
CY02 EBITDA |
| 27.6 |
| 4.00x |
| - |
| 6.00x |
| 110.6 |
| - |
| 165.8 |
| |||||
CY03 EBITDA |
| 37.7 |
| 4.00x |
| - |
| 6.00x |
| 150.7 |
| - |
| 226.0 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Analysis of Selected Precedent Transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
CY02 Revenues |
| $ | 243.5 |
| 0.80x |
| - |
| 1.00x |
| $ | 194.8 |
| - |
| $ | 243.5 |
| ||
CY03 Revenues |
| 256.8 |
| 0.50x |
| - |
| 0.70x |
| $ | 128.4 |
| - |
| $ | 179.8 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Discounted Cash Flow Analysis |
|
|
|
|
|
|
|
|
| $ | 250.0 |
| - |
| $ | 350.0 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average |
|
|
|
|
|
|
|
|
| $ | 160.3 |
| - |
| $ | 237.9 |
| |||
Total (Based on Sum of Parts) |
| $ | 253.2 |
| - |
| $ | 368.3 |
|
Add: Cash |
| 53.7 |
| - |
| 53.7 |
| ||
Less: Debt |
| (104.3 | ) | - |
| (104.3 | ) | ||
Implied Equity Value |
| $ | 202.6 |
| - |
| $ | 317.7 |
|
|
|
|
|
|
|
|
| ||
Fully Diluted Shares |
| 11.737 |
| - |
| 11.737 |
| ||
|
|
|
|
|
|
|
| ||
Implied Value Per Share |
| $ | 17.27 |
| - |
| $ | 27.07 |
|
(a) Based on management projections.
45
After Tax Proceeds on Sale
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Semiconductor |
| Ceramics |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Low |
|
|
| High |
| Low |
|
|
| High |
| ||||
Taxes on Sales |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Estimated Sale Price |
| $ | 93.0 |
| - |
| $ | 130.4 |
| $ | 160.3 |
| - |
| $ | 237.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Less: Transaction Costs (a) |
| (0.9 | ) | - |
| (1.3 | ) | (1.6 | ) | - |
| (2.4 | ) | ||||
Less: Tax Basis (b) |
| (15.7 | ) | - |
| (15.7 | ) | (74.3 | ) | - |
| (74.3 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Taxable Amount |
| $ | 76.3 |
| - |
| $ | 113.4 |
| $ | 84.3 |
| - |
| $ | 161.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Taxes @ 40.0% |
| $ | 30.5 |
| - |
| $ | 45.4 |
| $ | 33.7 |
| - |
| $ | 64.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
After-Tax Proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Estimated Sale Price |
| $ | 93.0 |
| - |
| $ | 130.4 |
| $ | 160.3 |
| - |
| $ | 237.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Less: Transaction Costs (a) |
| (0.9 | ) | - |
| (1.3 | ) | (1.6 | ) | - |
| (2.4 | ) | ||||
Less: Taxes |
| (30.5 | ) | - |
| (45.4 | ) | (33.7 | ) | - |
| (64.5 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
After-Tax Proceeds |
| $ | 61.5 |
| - |
| $ | 83.8 |
| $ | 124.9 |
| - |
| $ | 171.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Value of Residual Entity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assumed Value |
| $ | 160.3 |
| - |
| $ | 237.9 |
| $ | 93.0 |
| - |
| $ | 130.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Value to Shareholders |
| $ | 221.8 |
| - |
| $ | 321.7 |
| $ | 217.9 |
| - |
| $ | 301.5 |
|
Add: Cash |
| 53.7 |
| - |
| 53.7 |
| 53.7 |
| - |
| 53.7 |
| ||||
Less: Debt |
| (104.3 | ) | - |
| (104.3 | ) | (104.3 | ) | - |
| (104.3 | ) | ||||
Implied Equity Value |
| $ | 171.2 |
| - |
| $ | 271.1 |
| $ | 167.3 |
| - |
| $ | 250.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fully Diluted Shares |
| 11.737 |
| - |
| 11.737 |
| 11.737 |
| - |
| 11.737 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Implied Value per Share |
| $ | 14.59 |
| - |
| $ | 23.10 |
| $ | 14.25 |
| - |
| $ | 21.37 |
|
(a) Assumed to be 1% of estimated sale price.
(b) As per CoorsTek management.
46
Discounted Cash Flow Sensitivity Analysis
CERAMICS
|
| Revenue Growth Rate |
| CAGR |
| ||||||||||||||
|
| 2003 |
| 2004 |
| 2005 |
| 2006 |
| 2007 |
| 2002-07 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Scenario A |
| 5.5 | % | 6.0 | % | 7.5 | % | 7.5 | % | 7.5 | % | 6.8 | % | ||||||
|
| $ | 256.8 |
| $ | 272.3 |
| $ | 292.7 |
| $ | 314.7 |
| $ | 338.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Scenario B |
| 5.5 | % | 13.8 | % | 15.0 | % | 10.0 | % | 10.0 | % | 10.8 | % | ||||||
|
| $ | 256.8 |
| $ | 292.2 |
| $ | 336.0 |
| $ | 369.6 |
| $ | 406.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Scenario C |
| 10.0 | % | 15.0 | % | 15.0 | % | 10.0 | % | 10.0 | % | 12.0 | % | ||||||
|
| $ | 267.9 |
| $ | 308.1 |
| $ | 354.3 |
| $ | 389.7 |
| $ | 428.7 |
|
|
|
|
IMPLIED ENTERPRISE VALUE (a)
|
| Discount Rates |
| |||||||
|
| 9.0% |
| 10.0% |
| 11.0% |
| |||
|
|
|
|
|
|
|
| |||
Scenario A |
| $ | 311.5 |
| $ | 262.4 |
| $ | 227.3 |
|
|
|
|
|
|
|
|
| |||
Scenario B |
| 368.7 |
| 307.2 |
| 263.3 |
| |||
|
|
|
|
|
|
|
| |||
Scenario C |
| 396.5 |
| 329.7 |
| 282.1 |
| |||
SEMICONDUCTORS
|
| Revenue Growth Rate |
| CAGR |
| |||||||||||||
|
| 2003 |
| 2004 |
| 2005 |
| 2006 |
| 2007 |
| 2002-07 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Scenario A |
| 0.6 | % | (3.1 | )% | 15.0 | % | 15.0 | % | 15.0 | % | 8.2 | % | |||||
|
| $ | 109.2 |
| $ | 105.8 |
| $ | 121.7 |
| $ | 139.9 |
| $ | 160.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Scenario B |
| 0.6 | % | 23.3 | % | 40.0 | % | 20.0 | % | 20.0 | % | 20.1 | % | |||||
|
| $ | 109.2 |
| $ | 134.7 |
| $ | 188.6 |
| $ | 226.3 |
| $ | 271.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Scenario C |
| 10.0 | % | 40.0 | % | 40.0 | % | 25.0 | % | 25.0 | % | 27.5 | % | |||||
|
| $ | 119.4 |
| $ | 167.2 |
| $ | 234.1 |
| $ | 292.6 |
| $ | 365.7 |
|
|
|
IMPLIED ENTERPRISE VALUE (b)
|
| Discount Rates |
| |||||||
|
| 11.0% |
| 12.0% |
| 13.0% |
| |||
|
|
|
|
|
|
|
| |||
Scenario A |
| $ | (48.4 | ) | $ | (47.2 | ) | $ | (46.1 | ) |
|
|
|
|
|
|
|
| |||
Scenario B |
| 70.6 |
| 53.4 |
| 41.3 |
| |||
|
|
|
|
|
|
|
| |||
Scenario C |
| 130.5 |
| 100.6 |
| 79.5 |
| |||
(a) Assumes EBITDA margin of 16% from 2004 onwards. Depreciation kept constant. Capital expenditures based on a constant percentage of capital expenditures/ sales. Change in net working investment calculated as 18% of change in revenue. Assumes a normalized level of unlevered free cash flows taking into account equalized depreciation and capital expenditures. Terminal value based on perpetuity growth of 4%.
(b) EBITDA margin as provided by CoorsTek management. Depreciation kept constant. Capital expenditures based on a constant percentage of capital expenditures / sales. Scenario A assumes liquidation of semiconductor business in 2007. Change in net working investment calculated as 15% of change in revenue. Assumes a normalized level of unlevered free cash flows taking into account equalized depreciation and capital expenditures. Terminal value based on perpetuity growth of 6%. Assumes liquidation in 2007 for Scenario A.
47
IV. Alternatives and Considerations
48
Alternative Courses of Action
49
Issues / Considerations Surrounding Alternatives
| • | Fiduciary responsibilities | |||
| • | Obligation to maximize value in cash transaction | |||
| • | Perception of conflict | |||
Negotiate with Affiliate | • | Recent stock price performance | |||
| • | Follow-on offering at $33.00 | |||
| • | Market reaction to failed negotiation | |||
|
|
|
| ||
| • | Affiliates’ ownership interest | |||
|
| • | Discourages other interest, does not preclude a transaction | ||
| • | Appetite of strategic buyers | |||
Sale to Third Party | • | Separability of businesses | |||
|
| • | Operational considerations, tax leakage | ||
| • | Financial buyers constrained by leverage limitations | |||
|
|
|
| ||
| • | Stand-alone business prospects in volatile environment | |||
| • | Access to capital for growth | |||
|
| • | Debt capital | ||
Remaining Independent | • | Ability to pursue acquisitions | |||
|
| • | Ownership dilution | ||
| • | Willingness of Affiliate to become hostile | |||
| • | Market reaction to decline in stock price | |||
50
Potential Responses
A number of responses are open to CoorsTek if it determines the proposal to be inadequate
Deem Inadequate
GOLDEN, Colo. — CoorsTek, Inc. (Nasdaq: CRTK) today announced that its Board of Directors has decided to reject the offer by certain members of the Coors family and related trusts to purchase all outstanding shares of common stock for $21.00 per share. After careful consideration, including consultation with its independent financial and legal advisors, the CoorsTek Board has concluded that the Coors family’s proposal is inadequate and not in the best interests of CoorsTek’s shareholders .. . .
The Board of Directors may also choose to announce further action:
Negotiate with Affiliate
. .. . The Board of Directors has commenced negotiations with the Coors family to determine if an increase in the offer price can be achieved . . .
Pursue Strategic Alternatives
. .. . The Board of Directors announced that together with its financial advisor, Banc of America Securities, it will investigate strategic alternatives available to CoorsTek for the purpose of enhancing shareholder value . . .
Negotiate and Pursue Strategic Alternatives
. .. . The Board of Directors has commenced negotiations with the Coors family to determine if an increase in the offer price can be achieved. The Board of Directors also announced that together with its financial advisor, Banc of America Securities, it will investigate strategic alternatives available to CoorsTek for the purpose of enhancing shareholder value . . .
51
Coors Family Ability to Pay
($ in millions, except per share data) |
|
|
| |
|
|
|
| |
CoorsTek Shares Outstanding (a) |
| 11.737 |
| |
|
|
|
| |
Shares Owned by “Reporting Persons” (a) |
| 3.370 |
| |
|
|
|
| |
Remaining Shares |
| 8.367 |
| |
|
|
|
| |
Financing Commitment |
| $ | 200.0 |
|
Less: Cash to Buyback Options |
| (0.4 | ) | |
Financing Commitment Remaining |
| $ | 199.6 |
|
|
|
|
| |
Implied Maximum Purchase Price per Share |
| $ | 23.85 |
|
Note: Excludes options held by Coors family.
(a) As per CoorsTek management.
52
53
CoorsTek Defense Profile
Summary Review of CoorsTek Structural Defenses
Defense Provision |
| Status |
| Deterrent |
| Shareholder Approval |
| Highlights |
Economic Deterrents |
|
|
|
|
|
|
|
|
Shareholder Rights Plan |
| In Place |
| High/Moderate |
| No |
| Exercise Price $38.00; Ownership Trigger 15%; Expiration 1/1/2010; Each holder of a right will have the right to receive, upon exercise, common stock having a value equal to two times the exercise price of the Right. |
Blank Check Preferred Stock |
| In Place |
| Moderate |
| Yes |
| 20,000 shares authorized |
Corporate Governance Defenses |
|
|
|
|
|
|
|
|
Disparate Share Voting Classes |
| No (a) |
| Moderate |
| Yes |
|
|
High Concentration of Insider Ownership |
| Yes (b) |
| Low |
| NA |
| Coors family owns 26% of total shares outstanding |
Prohibition Against Action by Written Consent |
| Not In Place (c) |
| Low |
| Yes |
| Any action required or permitted to be taken at a stockholder’s meeting may be taken without a meeting only by the unanimous written consent of all stockholders entitled to vote on such matter. |
|
|
|
|
|
|
|
|
|
Staggered Board |
| In Place (d) |
| Moderate |
| Yes |
| Total number of directors divided into three classes |
Number of Directors “Capped” |
| In Place (e) |
| Moderate |
| Yes |
| The number of directors constituting the whole Board shall not exceed 11. |
No Director Removal without Cause |
| In Place (f)
|
| Low |
| Yes |
| Any Director or the entire Board of Directors may be removed from office at any time, but only for cause, and only by the affirmative vote of the holders of at least two-thirds of the stockholders entitled to vote. |
|
|
|
|
|
|
|
|
|
Limitation on Ability to Call Special Meetings |
| In Place (g) |
| Moderate |
| Yes |
| Special meeting of the stockholders, for any purpose, unless otherwise prescribed by statute, may be called by the Board of Directors, the Chairperson or the President. |
|
|
|
|
|
|
|
|
|
No Cumulative Voting |
| In Place(h) |
| Low |
| Yes |
| Every stockholder shall be entitled to one vote in person or by proxy for each share of the capital stock having voting power. |
|
|
|
|
|
|
|
|
|
Advance Notice for Director Nominations |
| In Place(i) |
| Low |
| No |
| To be timely, a stockholder’s notice to the Secretary must be submitted in writing not less than 90 no more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. |
|
|
|
|
|
|
|
|
|
Supermajority Provision for Article/By-law Amendments |
| In Place(j) |
| High/Moderate |
| Yes |
| The by-laws of the corporation may be adopted, amended or repealed by an affirmative vote of two—third of the directors then in office or two-third of the stockholders entitled to vote. |
|
|
|
|
|
|
|
|
|
Limitations on Partial Offers/Mergers with Interested Parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supermajority Provision for Mergers |
| Not In Place |
| Moderate |
| Yes |
|
|
Fair Price Provision |
| Not In Place |
| Moderate |
| Yes |
|
|
State Anti-Takeover Statute |
| Yes (k) |
| High |
| NA |
| Delaware Section 203: An “interested stockholder” (defined as someone who owns at least 15% of the company’s stock) may not merge with or sell the assets of the company for 3 years after obtaining a 15% stake of the company unless a) the Board approves the transaction before the acquirer became an interested stockholder, b) the person has acquired at least 85% of the stock, or c) the Board and 66.66% of shareholders beside the interested stockholder approve the combination. |
(a) Certificate of Incorporation, Article 4.
(b) Proxy filed on 5/7/02.
(c) Certificate of Incorporation, Article 7.1.
(d) Certificate of Incorporation, Article 6.1.
(e) Certificate of Incorporation, Article 6.1.
(f) Certificate of Incorporation, Article 6.3.
(g) Certificate of Incorporation, Article 7.2.
(h) Bylaws, Article 2.9.
(i) Bylaws, Article 3.3.
(j) Certificate of Incorporation, Article 11.
(k) IRRC State Takeover Laws, Delaware.
54
Analysis of Flip-In Pill Provision
Ouch!
($ in millions) |
|
|
|
|
| ||
|
| Pre-Exercise |
| Post-Exercise |
| ||
Company Equity Value |
| $ | 261.8 |
| $ | 579.8 |
|
Affiliate Ownership Interest |
| 28.7 | % | 8.4 | % | ||
Affiliate Economic Value |
| $ | 75.2 |
| $ | 48.5 |
|
Implied Ownership Dilution |
| — |
| 70.8 | % | ||
Implied Economic Dilution |
| — |
| 35.4 | % |
Note: Based on $38.00 exercise price and flip-in provision of 50.0% discount to market price. Market price based on closing price of $22.30 as of November 19, 2002.
55
Analysis of Flip-In Pill Provision
($ in millions, except per right data)
Pre-Flip-In Shares Outstanding (a) |
| 11.740 |
| |
Affiliate Pre-Flip-In Ownership % |
| 28.7 | % | |
Affiliate Pre-Flip-In Share Ownership |
| 3.370 |
| |
Affiliate Pre-Flip-In Economic Interest |
| $ | 75.2 |
|
Pre-Flip-In Shares Outstanding Excluding Affiliate |
| 8.370 |
| |
|
|
|
| |
Assumed Exercise Price Per Right |
| $ | 38.00 |
|
New Shares Issued Per Right |
| 3.4 |
| |
Aggregate New Shares Issued (b) |
| 28.524 |
| |
|
|
|
| |
Pro Forma Shares Outstanding |
| 40.263 |
| |
|
|
|
| |
Affiliate Pro Forma Ownership % |
| 8.4 | % | |
Implied Ownership Dilution |
| 70.8 | % | |
Affiliate Pro Forma Economic Interest (c) |
| $ | 48.5 |
|
Implied Economic Dilution |
| 35.4 | % |
Note: Based on $38.00 exercise price and flip-in provision of 50.0% discount to market price. Market price based on closing price of $22.30 as of November 19, 2002.
(a) Based on 11.737 million shares outstanding and 0.975 million options outstanding with weighted average exercise prices ranging from $21.96 to $39.99, as per Form 10-Q dated September 30, 2002 and Form 10-K dated December 31, 2001.
(b) Calculation is ((Pre-Flip-In Shares Outstanding — Acquiring Person Pre-Flip-In Share Ownership) x New Shares Issued per Right).
(c) Calculation is [(Current Market Capitalization + (1 - Acquiring Person Pre-Flip-In Ownership %) x Pre-Flip-In Shares Outstanding x Exercise Price) / Pro Forma Shares Outstanding] x Acquiring Person Pre-Flip-In Share Ownership.
56
57
Overview of Potential Strategic Partners
Company |
| Market Cap.(a) |
| LTM Revenue |
| Agg. Val./ LTM Rev. |
| Price/ Book |
| Cash |
| Strategic Fit |
| Perceived Interest |
| Financial Capability |
| Form of Consideration |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Advanced Materials Competitors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Kyocera |
| $ | 10,574.4 |
| $ | 8,662.1 |
| 1.10x |
| 1.35x |
| $ | 2,641.4 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
MG Technologies AG |
| $ | 1,379.2 |
| $ | 8,865.8 |
| 0.11x |
| 0.68x |
| $ | 390.3 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Morgan Crucible |
| $ | 197.1 |
| $ | 1,484.4 |
| 0.13x |
| 0.29x |
| $ | 409.3 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Saint Gobain |
| $ | 9,142.3 |
| $ | 30,713.2 |
| 0.57x |
| 0.80x |
| $ | 1,333.2 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Semiconductor Capital Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Advanced Energy Industries |
| $ | 407.2 |
| $ | 254.2 |
| 1.79x |
| 2.02x |
| $ | 189.0 |
|
|
|
| Stock |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
MKS Instruments |
| $ | 717.1 |
| $ | 168.2 |
| 1.86x |
| 1.15x |
| $ | 80.2 |
|
|
|
| Stock |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Large Cap EMS Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Celestica |
| $ | 3,479.3 |
| $ | 8,807.8 |
| 0.28x |
| 0.89x |
| $ | 1,848.3 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Flextronics |
| $ | 4,609.6 |
| $ | 13,217.0 |
| 0.40x |
| 1.02x |
| $ | 499.2 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Jabil |
| $ | 3,369.1 |
| $ | 3,545.5 |
| 0.87x |
| 2.21x |
| $ | 640.7 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Sanmina — SCI |
| $ | 1,569.1 |
| $ | 10,039.4 |
| 0.26x |
| 0.46x |
| $ | 1,163.7 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Solectron |
| $ | 2,516.2 |
| $ | 12,451.8 |
| 0.30x |
| 0.53x |
| $ | 2,014.4 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mid Cap EMS Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Benchmark |
| $ | 648.5 |
| $ | 1,431.5 |
| 0.39x |
| 1.31x |
| $ | 237.6 |
|
|
|
| Stock / Cash |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Plexus Corp. |
| $ | 479.9 |
| $ | 883.6 |
| 0.44x |
| 1.10x |
| $ | 116.4 |
|
|
|
| Stock / Cash |
|
High |
| Medium/High |
| Medium |
| Low |
| None/NA |
(a) Stock prices as of November 19, 2002.
58
Ability to Pay Analysis for Potential Strategic Partners
A cash transaction is dependent on the acquiror’s scale and capitalization
($ in millions, except per share) |
|
|
| |
CoorsTek Price Before Offer (11/11/02) |
| $ | 15.42 |
|
CoorsTek CY03 Cash EPS Estimates |
| 0.21 |
| |
CoorsTek CY03 Cash P/E |
| 72.4 | x | |
CoorsTek CY03 Shares Outstanding |
| 12.0 |
| |
CoorsTek 2003 Operating Expenses |
| $ | 56.0 |
|
Companies |
| Current(a) Price |
| Current(a) Equity Val. |
| Debt |
| Cash |
| Debt / LTM EBITDA |
| Cost of Debt (b) |
| Break Even Price |
| Accretion / (Dilution) |
| Synergies to Break Even |
| Synergies to Break Even as % |
| |||||||||||||
| at $21.00 |
| at $25.00 |
| at $21.00 |
| at $25.00 |
| at $21.00 |
| at $25.00 |
| ||||||||||||||||||||||
|
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|
|
|
|
|
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|
|
|
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|
|
|
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|
|
|
| |||||||
Advanced Materials Competitors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
| |||||||
Kyocera |
| $ | 57.15 |
| $ | 10,574.4 |
| $ | 1,625.1 |
| $ | 2,641.4 |
| 1.4 | x | 2.0 | % | $ | 17.75 |
| (0.1 | )% | (0.2 | )% | $ | 0.8 |
| $ | 1.7 |
| 1.4 | % | 3.1 | % |
MG Technologies AG |
| 7.13 |
| 1,379.2 |
| 0.0 |
| 390.3 |
| 0.0 |
| 4.0 | % | 8.87 |
| (1.4 | )% | (1.9 | )% | 5.8 |
| 7.7 |
| 10.4 | % | 13.8 | % | |||||||
Morgan Crucible |
| 0.85 |
| 197.1 |
| 405.3 |
| 409.3 |
| 3.2 |
| 7.0 | % | 5.07 |
| (42.1 | )% | (52.7 | )% | 13.4 |
| 16.7 |
| 23.9 | % | 29.9 | % | |||||||
Saint Gobain |
| 26.43 |
| 9,142.3 |
| 9,751.2 |
| 1,333.2 |
| 2.2 |
| 2.0 | % | 17.75 |
| (0.0 | )% | (0.1 | )% | 0.8 |
| 1.7 |
| 1.4 | % | 3.1 | % | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
| |||||||
Semiconductor Capital Equipment |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Advanced Energy Industries |
| $ | 12.63 |
| $ | 407.2 |
| $ | 235.6 |
| $ | 189.0 |
| NM |
| 7.0 | % | $ | 5.07 |
| NM |
| NM |
| $ | 13.4 |
| $ | 16.7 |
| 23.9 | % | 29.9 | % |
MKS Instruments |
| 13.99 |
| 717.1 |
| 28.9 |
| 113.2 |
| NM |
| 7.0 | % | 5.07 |
| NM |
| NM |
| 13.4 |
| 16.7 |
| 23.9 | % | 29.9 | % | |||||||
|
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| |||||||
Large Cap EMS Companies |
|
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Celestica |
| $ | 14.91 |
| $ | 3,479.3 |
| $ | 861.6 |
| $ | 1,848.3 |
| 1.6 | x | 4.0 | % | $ | 8.87 |
| (1.7 | )% | (2.3 | )% | $ | 5.8 |
| $ | 7.7 |
| 10.4 | % | 13.8 | % |
Flextronics |
| 8.83 |
| 4,609.6 |
| 1,155.0 |
| 499.2 |
| 1.8 |
| 4.0 | % | 8.87 |
| (1.2 | )% | (1.6 | )% | 5.8 |
| 7.7 |
| 10.4 | % | 13.8 | % | |||||||
Jabil |
| 16.85 |
| 3,369.1 |
| 363.4 |
| 640.7 |
| 1.2 |
| 4.0 | % | 8.87 |
| (2.1 | )% | (2.8 | )% | 5.8 |
| 7.7 |
| 10.4 | % | 13.8 | % | |||||||
Sanmina — SCI |
| 2.99 |
| 1,569.1 |
| 2,241.2 |
| 1,163.7 |
| 5.8 |
| 4.0 | % | 8.87 |
| (5.5 | )% | (7.3 | )% | 5.8 |
| 7.7 |
| 10.4 | % | 13.8 | % | |||||||
Solectron |
| 3.05 |
| 2,516.2 |
| 3,826.9 |
| 2,014.4 |
| 13.3 |
| 4.0 | % | 8.87 |
| (10.4 | )% | (13.9 | )% | 5.8 |
| 7.7 |
| 10.4 | % | 13.8 | % | |||||||
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Mid Cap EMS Companies |
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Benchmark |
| $ | 26.10 |
| $ | 648.5 |
| $ | 148.7 |
| $ | 237.6 |
| 1.1 | x | 4.0 | % | $ | 8.87 |
| (8.9 | )% | (11.8 | )% | $ | 5.8 |
| $ | 7.7 |
| 10.4 | % | 13.8 | % |
Plexus Corp. |
| 11.25 |
| 479.9 |
| 27.0 |
| 116.4 |
| 0.7 |
| 4.0 | % | 8.87 |
| (35.1 | )% | (46.7 | )% | 5.8 |
| 7.7 |
| 10.4 | % | 13.8 | % |
Source: Public company filings and Wall Street research.
Note: Excludes impact of transaction costs. Assumes incremental tax rate of 40%.
(a) As of November 11, 2002.
(b) BAS estimate for illustrative purposes.
59
Ability to Pay Analysis for Potential Strategic Partners
Due to limited near term earnings, a stock transaction will generally be dilutive in the first year
($ in millions, except per share) |
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CoorsTek Price Before Offer (11/11/02) |
| $ | 15.42 |
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CoorsTek CY03 Cash EPS Estimates |
| 0.21 |
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CoorsTek CY03 Cash P/E |
| 72.4 | x | |
CoorsTek CY03 Shares Outstanding |
| 12.0 |
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CoorsTek 2003 Operating Expenses |
| $ | 56.0 |
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Companies |
| Current(a) Price |
| Current(a) Equity Val. |
| Cash EPS Estimates |
| Current P/E |
| Accretion / (Dilution) |
| Synergies to Break Even |
| Synergies to Break Even as % |
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at $21.00 |
| at $25.00 |
| at $21.00 |
| at $25.00 |
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Advanced Materials Competitors |
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Kyocera |
| $57.15 |
| $10,574.4 |
| $2.30 |
| 24.8 | x | (1.7 | )% | (2.1 | )% | $12.6 |
| $15.9 |
| 22.6 | % | 28.4 | % |
MG Technologies AG |
| 7.13 |
| 1,379.2 |
| 1.25 |
| 5.7 |
| (14.6 | )% | (17.0 | )% | 69.4 |
| 83.4 |
| 124.0 | % | 149.0 | % |
Morgan Crucible |
| 0.85 |
| 197.1 |
| 0.08 |
| 10.3 |
| (50.2 | )% | (55.0 | )% | 36.3 |
| 44.1 |
| 64.9 | % | 78.8 | % |
Saint Gobain |
| 26.43 |
| 9,142.3 |
| 3.76 |
| 7.0 |
| (2.5 | )% | (3.0 | )% | 55.4 |
| 66.8 |
| 99.0 | % | 119.3 | % |
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Semiconductor Capital Equipment |
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Advanced Energy Industries |
| $12.63 |
| $407.2 |
| $(0.50 | ) | NM |
| NM |
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MKS Instruments |
| 13.99 |
| 717.1 |
| (0.13 | ) | NM |
| NM |
| NM |
| NM |
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Large Cap EMS Companies |
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Celestica |
| $14.91 |
| $3,479.3 |
| $0.84 |
| 17.8 | x | (5.4 | )% | (6.6 | )% | $19.4 |
| $23.9 |
| 34.7 | % | 42.7 | % |
Flextronics |
| 8.83 |
| 4,609.6 |
| 0.54 |
| 16.4 |
| (4.2 | )% | (5.1 | )% | 21.4 |
| 26.3 |
| 38.3 | % | 47.0 | % |
Jabil |
| 16.85 |
| 3,369.1 |
| 0.83 |
| 20.3 |
| (5.5 | )% | (6.7 | )% | 16.4 |
| 20.4 |
| 29.4 | % | 36.4 | % |
Sanmina — SCI |
| 2.99 |
| 1,569.1 |
| 0.12 |
| 24.9 |
| (10.2 | )% | (12.5 | )% | 12.6 |
| 15.8 |
| 22.5 | % | 28.2 | % |
Solectron |
| 3.05 |
| 2,516.2 |
| 0.04 |
| 76.3 |
| (2.0 | )% | (3.7 | )% | 1.2 |
| 2.3 |
| 2.2 | % | 4.1 | % |
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Mid Cap EMS Companies |
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Benchmark |
| $26.10 |
| $648.5 |
| $1.54 |
| 16.9 | x | (22.7 | )% | (26.5 | )% | $20.5 |
| $25.2 |
| 36.7 | % | 45.1 | % |
Plexus Corp. |
| 11.25 |
| 479.9 |
| 0.23 |
| 48.9 |
| (17.2 | )% | (22.3 | )% | 4.3 |
| 6.0 |
| 7.7 | % | 10.7 | % |
Source: Public company filings and Wall Street research.
Note: Excludes impact of transaction costs. Assumes incremental tax rate of 40%.
(a) As of November 11, 2002.
60
Potential Financial Sponsor
Tier I Partners
Tier II Partners
61