Orora acquires IntegraColor

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1 March 2016

Transaction summary

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Orora acquired US-based IntegraColor
Consideration of US$77M (approximately A$107M)
EBITDA multiple of 6.9 times
RoAFE expected to be in excess of 15% by third full year and 20%
by year five
Approximately US$100M sales revenue
Acquisition enhances Orora’s packaging solutions capability and geographic footprint
IntegraColor to be managed as a separate division within Orora
Synergies relating to purchasing and administrative shared services in excess of US$2M (approximately A$2.7M) are expected to be realised over 2-3 years.

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Acquisition effective 1 March 2016
Funded from existing bank debt facilities
Transaction costs of approximately US$1.0m (approximately A$1.4m) will be expensed in FY16

Orora Ltd 2016

IntegraColor overview

IntegraColor is a well regarded US provider of point of purchase (POP) retail display solutions and other visual communications services
Serves blue-chip corporate customers across the consumer (including food and beverage), horticulture and healthcare/education sectors
Established 1956
Located in Dallas, Texas
Large long-term leased facility
Vertically integrated manufacturing operations
Approximately 300 employees
Plus 135 casuals – demand driven

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Orora Ltd 2016

IntegraColor overview

Offers a broad set of value-added services and complete supply chain solutions including:
Design
Campaign development
Data management & proprietary analytics
Digital media
Logistics
Fulfilment
High class modern manufacturing operations
Eight different printing processes, multi substrate capability on over 40 presses
Long-term customer relationships
Well-established position in both defensive and growth markets

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Orora Ltd 2016

Alignment with Orora’s growth strategy

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Orora North America

Objective: Drive regional growth/expand capability

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Organic growth

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Continue to target large corporate accounts and increase share of wallet with current customers

Focused on large corporate customers

Adjacent M&A

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Investments in parallel packaging substrates/markets

Well regarded provider of point of purchase retail display solutions and other visual communications services

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Targets servicing preferred markets of food, pharma/health, IT & automotive

Established position servicing consumer, healthcare/education & horticulture markets

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Enhance geographic footprint and/or extend product offering/value proposition

Enhances Orora’s packaging solutions capability and geographic footprint

Integrated fibre offering

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Sell the improved performance characteristics of B9 paper

B9 paper expected to complement customer offering

Orora Ltd 2016

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IntegraColor - Enhances Orora’s customer value proposition

Landsberg Orora offers custom packaging solutions from concept to consumer
IntegraColor enhances Orora’s customervalue proposition, particularly in high value-added areas such as:
Design
Fulfilment
Logistics
POP - retail ready displays
Orora North America target markets:

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Food & Beverage

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Healthcare/Pharmaceutical
Information Technology

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Automotive
IntegraColor sales by segment:
Consumer – approx 60%
Horticulture – approx 30%
Healthcare/Education – approx 10%

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Orora Ltd 2016

Integration

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Landsberg and IntegraColor will be managed as separate divisions within Orora
Landsberg will continue as a solutions provider for customised packaging requirements
IntegraColor’s primary focus will be on POP solutions to its existing customers and, in time, Landsberg customers
IntegraColor will report directly to the Orora MD&CEO
A detailed 100 day plan has been prepared with clear responsibilities and accountabilities
Steering group includes Orora MD&CEO/CFO
As soon as practical, both divisions will utilise a centrally managed service model, encompassing design, supply chain and logistics
Procurement and administrative functions will also be integrated and optimised across the group in time

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The integration of IntegraColor onto SAP (likely FY17) will be scheduled but will not disrupt the existing Landsberg SAP roll out program
Cross-sell opportunities will be coordinated centrally
Several key senior IntegraColor executives have been provided earn out incentives on the achievement of minimum RoAFE requirements over the first three years

Orora Ltd 2016

Key Financial Metrics

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The purchase price has two components:
Up-front price of US$70M (approximately A$97.0M) paid on completion
A reps and warranties holdback of US$7M (approximately A$10.0M), to be paid in equal instalments after 12 months and 18 months from the date of acquisition
Orora expects the acquisition to achieve a return on investment in excess of 15% by the third full year of ownership and 20% by year five
Cost synergies of approximately US$2M (approximately A$2.7M) are expected to be realised over two to three years primarily through improved procurement and integration of shared administrative services
Approximately US$100M sales revenue
The acquisition will be funded utilising Orora’s existing debt facilities
Transaction has been structured to enable tax deductibility (over time) of the full purchase price
Transaction costs of approximately US$1.0M (approximately A$1.4M) will be expensed in FY16

Orora Ltd 2016

Total Investment

~$80M

~$35M

~$107M

Orora has invested approx. $220M in growth since ASX Listing in December 2013

2H14 1H15 2H15

1H16

2H16

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Organic
Growth
Capital
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Opened new Landsberg DC in Nashville, USA – customer backed

New customer backed Dairy Sack Line ($20M) Launched $45M Orora Global Innovation Initiative

Established 2 new East Coast US DCs (Charlotte & Orlando) – both customer backed

$16M spend committed from Orora Global Innovation Initiative to date

Investing $42M to increase glass bottle manufacturing capacity – import replacement, underpinned by existing customer demand

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Bolt-on
M&A
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Acquired World Wide Acquired small South Plastics Australian fibre (Rigid plastic packaging distributor containers) – “Go Direct” model

Acquired Jakait ($23M) (Greenhouse produce & labels) Acquired small Californian based supplier of flexible packaging

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Adjacent
M&A
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Acquired IntegraColor (Point of purchase solutions)

Orora Ltd 2016

Summary

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Acquisition is in line with stated growth strategy
Provides a platform in POP - an adjacent customised value added proposition
Provides another platform, in addition to Landsberg, to support future bolt-on M&A growth for Orora
Enhances Orora’s North American geographic footprint through bolstering position in Texas
Strengthens Orora North America’s corporate account revenue growth strategy
Services two of our four identified target markets – food/beverage and healthcare
Opportunities for cross sell between Landsberg and IntegraColor

Orora Ltd 2016

Orora acquires IntegraColor

Appendix

1 March 2016

Appendix 1 : Orora North America Geographic footprint

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Landsberg Orora has 11 manufacturing plants and 50 distribution sites across 5 countries – opportunity to leverage IntegraColor offering
IntegraColor is based in Dallas, Texas
Serves over 3,200 customer locations across North America
Central location, ideally located to facilitate southern and national distribution

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Expands Orora’s presence in Texas
Enhances Orora’s geographic footprint and reach

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Manufacturing Plants Distribution Sites

Orora Ltd 2016