Exhibit 9 DuPont Corporation: Sale of Performance Coatings Stand-Alone Valuation (dollars in millions) Metric PPG Indust
Posted: Sat Feb 26, 2022 9:05 am
- Exhibit 9 Dupont Corporation Sale Of Performance Coatings Stand Alone Valuation Dollars In Millions Metric Ppg Indust 1 (74.63 KiB) Viewed 51 times
- Exhibit 9 Dupont Corporation Sale Of Performance Coatings Stand Alone Valuation Dollars In Millions Metric Ppg Indust 2 (91.21 KiB) Viewed 51 times
DPC's value if a PE firm can implement the following policy
changes:
a. 5% revenue growth per annum (versus 4%
growth) in each of the next 5 years and improvement in operating
margins to 12% (versus 10%)
b. In addition to a., assume that the division
can be sold at 7.5x EBITDA in 5 years
c. In addition to a. and b., assume debt
financing equal to 6x forward EBITDA can be obtained. Assume all
cash available each year is used to pay down the LBO debt. In 5
years, the firm will become an all-equity firm.
Exhibit 9 DuPont Corporation: Sale of Performance Coatings Stand-Alone Valuation (dollars in millions) Metric PPG Industries Actual 2011 10.9% 11.2% 7.31 Projected 2012E 2013E 4.1% 4.3% 11.0% 12.0% Sales Growth (%) EBIT Margin (Pretax) EV/EBITDA 2012 (x) Metric Sales Growth (%) Depreciation and Amortization EBIT Margin (Pretax) Tax Rate! Capital Expenditures Net Working Capital (%) DuPont Performance Coatings Projected 2011A Closing 2012E 2013E 2014E 12.5% 4.0% 4.0% 4.0% $104 $115 $118 $122 6.3% 10.0% 10.0% 10.0% 25% 25% 25% 25% $80 $115 $122 $132 15.0% 15.0% 15.0% 2015E 4.0% $125 10.0% 25% $144 15.0% 2016E 4.0% $130 10.0% 25% $150 15.0% 7.0 N/A Terminal EBITDA Multiple (X) 2 Debt EBITDA 2012 (x) Debt Blended Interest Rate on Debt Unlevered Cost of Equity 3 6.75% 11.2%
Exhibit 9 (continued) Stand-Alone Valuation continued) 2011A $4.281 $372 2015E $5,008 $626 $104 $125 $268 APV Analysis Closing 2012E $4,452 $560 $115 $445 $0 $445 ($111) $334 ($26) ($115) Net Sales EBITDA Depreciation and Amortization Pretax Operating Income (EBIT) Interest Expense Earnings before Taxes Taxes Net Income Increase in Net Working Capital Capital Expenditures Residual (Levered) Cash Flow $501 SO 2013E $4,630 $581 $118 $463 $0 $463 ($116) $347 ($27) ($122) $317 2014E $4.816 $604 $122 $482 $0 $482 ($120) $361 ($28) ($132) $323 2016E $5,208 $651 $130 $521 $0 $521 ($130) $391 ($30) ($150) $341 $501 ($125) $376 ($29) ($144) $327 $308 $327 Unlevered Free Cash Flow (FCF) $308 $317 $323 $327 $341 Terminal Value $4.738 Unlevered FCF, including TV $308 $317 $323 $5,079 Enterprise Vahe (EV) $3,970 Interest Tax Shield PV Tax Shield EV with Tax Shield $3,970 Data sources: Historical information for DPC is from DuPont company Databooks. Projections are case writer estimates. PPG's enterprise value is based on prices at the end of January 2012. PPG's projections are based on Buckingham Research Group analyst report, PPG Industries: "Other" Industrial Coatings Review, May 21, 2012. Notes to stand-alone model: DPC's estimated average tax rate of 25% is lower than the U.S. marginal corporate tax rate as a result of interational operations taxed at lower rates. 2 Assumed forward exit multiple for Terminal Value is based on projected EBITDA growth in 2017 and is below PPG's multiple because of lower margins and slightly lower growth. 3 Unlevered Cost of Equity ( kis based on PPG's estimated unlevered beta of 1.2, a normalized 4% long-term U.S. Treasury rate, and a 6% market risk premium.