From: Courtney Gaskins <CGaskins@mercuryinsurance
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Mead Johnson Nutrition |
MJN, B, 8 |
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pediatric nutrition products, worldwide |
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Post-IPO shrs144mm |
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Evansville, IN |
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2005 |
2006 |
2007 |
9-30-08* |
IPO Mkt |
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Rev ($mm) |
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$2,201 |
$2,345 |
$2,537 |
$2,141 |
Cap (mm) |
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Gross profit % |
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65% |
64% |
63% |
63% |
$4,500 |
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Net after-tax income |
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$348.0 |
$301.0 |
@$22.5 |
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Net income % |
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13.7% |
14.1% |
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2007 & 20008 proforma includes interest payments |
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*nine months ending Sept |
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from notes issued to parent |
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Sales estimate for the year ended Dec 31, 2008 is $2.882 bllion |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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MeadJohnsonNutri MJN |
$4,500 |
1.6 |
11.2 |
-4.8 |
-4.1 |
13% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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2 |
1 |
3 |
2 |
8 |
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Pre-IPO financial summary |
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. 11 P/E; expected dividend of 3.56%, $4.5bb market cap
. Market leader, strong Dec qtr sales, 63% gross margin
. $2.882 billion in sales for the year ended Dec 31, 2008
. Spin-off from Bristol-Myers Squib, $45bb market cap |
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Dividend policy |
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. Quarterly rate of $.20 per share
. Annual rate of 3.56% at $22.50, price range mid-point |
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Business |
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A global leader in infant formula, based on retail sales.
. A leader in infant formula in the United States, the world’s largest infant formula market, based
on U.S. market share.
. A leader in infant formula in Asia, the fastest growing region in the pediatric nutrition industry,
based on retail sales. |
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Spin-off |
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. Leveraged spinoff from Bristol-Myers Squibb (NYQ: BMY, $45bb market cap)
. Bristol-Myers Squibb has two segments – Pharmaceuticals & Mead Johnson Nutritionals. Mead
Johnson |
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Pre-IPO leveraging by the parent |
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$2.6 billion in notes |
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. On August 26, 2008, Mead Johnson issued a $2 billion note to a Bristol-Myers subsidiary.
. On January 31, 2009 the MJN subsidiary issued an additional $600mm notes to another Bristol
Myers subsidiary.
. Stockholder deficit: Bristol-Myers had been running an $1.3+ billion stockholder equity deficit in
the MJN sub, expected to be reduced post-IPO shareholder’s to $930mm
. However, with a $4.5bb market cap and a cash flow positive income statement MNJ appears
adequately capitalized
. Interest payments now 25% of after-tax income, 16% of operating earnings |
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Competition |
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Néstle S.A., Abbott Laboratories, Groupe Danone and Wyeth |
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Voting power in MJN, the IPO entity |
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. Outstanding shares: 1/3 Class A, 2/3 Class B
. Class B will have 95% voting control
. Parent company owns 64% of Class B |
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Use of $530mm in IPO proceeds |
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Repay part of $600mm in intercompany notes issued on January 31, 2009 in preparation for the
IPO |
© 2009 IPOdesktop
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