M&A Presentation Cisco Version FINAL
- 1. Cisco Systems, Inc. 29th March 2015 Nada Aderrab Tamerlan Aliev Rauf Gulamaliyev Ka Yun Kei Martin Levesques Xuejiao Lin Renxuan Long Group 3
- 2. 1. Fortrust Global Advisory 2. Industry Landscape 3. Cisco Present and Future 4. Corporate Strategy and M&A 5. Targets 6. Valuation Outline 2Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 3. Sell-side advice 2015 £93M US Technology M&A Deals (2014) Rank Adviser Deals 1 Fortrust Global 25 2 Goldman Sachs 22 3 Credit Suisse 18 4 AGC Partners 17 5 Houlihan Lokey 15 6 Evercore Partners Inc 13 6= William Blair & Company 13 8 Deutsche Bank AG 12 9 JP Morgan 9 10 Bank of America Merill Lynch 9 Selected technology transactions advised in the last 12 months Number 1 in US technology M&A Emphasis on selling to strategic buyers Purchasers of Businesses Sold Highlights A leader in the technology landscape of deals with European buyers 72% of deals with US buyers of deals in US virtualization and cloud 65% 23% Buy-side advice 2014 £766M 80% 20% Trade buyers Private equity Buy-side advice 2014 £2,543M Sell-side advice 2014 £1,286M Buy-side advice 2014 £2,080M Buy-side advice 2015 £1,600M 1. Fortrust Global Advisory Leaders in technology M&A 3Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 4. Internet of Things Cloud Computing Software-Defined Applications Infrastructure Mobile Enterprise Solutions Cloud Storage Network Security 2015: $75bn Expected Cloud Market Growth 2017: $250bn Market Trend – Going Forward Current Data Networking Equipment Industry Revenue Breakdown 2. Technology industry landscape Transitioning to cloud computing and the internet of things Switching 37% Routing 20% Wireless LAN 14% IP Telephony 9% Data Center 18% Application Delivery 2% Sources: Bloomberg 4Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 5. Current Main Competitors Future Drivers Virtualization Security Cloud Current Drivers Switching Routing Wireless and other Future Competitors – Intensified Environment 3. Cisco present and future Leading the way Current Business Drivers Future Business Drivers 5Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 6. Successful acquisitions in the past – What’s next? 4. Corporate strategy and M&A Cisco - Building on success Mobility Security Collaboration Datacenter & Virtualization 6Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 7. Buy Acquire companies with innovative technologies Partner Partner with companies to jointly develop and resell innovative products Build Internally develop innovative solutions Three Approaches to strive innovation Technological complexity and rapid changes within markets make it difficult for Cisco to develop all resources and capabilities internally Acquisition of target companies will fil in the technological gap and broaden the range of products and services that Cisco delivers to customers in target markets Potential targets Nutanix •Virtualization, US, Private •Synergic effects: : strengthening market in virtualization, diversifying products and reducing market risk Simplivity •Virtualization, US, Private •Synergic effects: strengthening market in virtualization, diversifying products and reducing market risk Scale Computing •Virtualization, , UK, Private •Synergic effects: : strengthening market in virtualization, diversifying products and reducing market risk Informatica •Cloud, US, Public •Synergic effects: strengthening market cloud services, diversifying products and reducing market risk Nexum •IT Security, US, Private •Synergic effects: Reducing IT security risk 4. Corporate strategy and M&A Cisco – Adapting to Industry Trends 7Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 8. Sohaib Abbasi Chairman/ president/ CEO Michael J Berry Exec VP/CFO Margaret A Breya Exec VP/ Chief marketing Officer Management team Ownership structure Public company Ameriprise Fin Group 8.66% Blackrock 7.50% Vanguard Group 6.11% Scopia Capital Management 5.90% Business overview - Provider of data integration software and services. - Allows clients to access, integrate, and trust all their information assets - Market Cap: USD 4,810m Product offering Infrastructure software categories: - Data Integration, cloud computing, complex event processing, data quality, B2B data exchange, Identity resolution, cloud MDM ($M) 2011 2012 2013 2014 Revenue 783.8 811.6 948.2 1048 Growth (%) - 4% 17% 11% EBITDA 198.2 176.8 183.9 207.7 Margin 25.3% 21.8% 19.4% 19.8% Net profit 14.9 11.58 9.1 10.9 Financial highlights - NTT DATA & Informatica Collaborate on Delivering Information Federation Infrastructure for the Japanese Market - Highest score for current offering and strategy in evaluation of its agile data integration platform (Q1 2015 Report) - Rated on 18 March, 2015 highest in Master Data Management use- case category Recent news 5. Target opportunities Building-up industry leadership Sources: Bloomberg, Informatica annual report (2014) 8Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 9. Dheeraj Pandey CEO Duston Williams CFO Sunil Potti Sr. VP, Eng & PM Management team Ownership structure Private Equity backed: Morgan Stanley Expansion Capital, Riverwood Capital, SAP Ventures Business overview - Established in 2009 - IT infrastructure solution provider - Enterprise virtualization and storage - 850+ employees - 55 countries covered - 43 patents filed Product offering - Enterprise storage - Data protection - Infrastructure resilience - Management & analytics - Security Financial highlights Recent news - March 30th 2015: “Nutanix Goes Beyond Hardware To Fast Track Fitness First To The Cloud” - March 17th 2015: “Nutanix Launches Flagship Hyper- Converged Certification Program” - March 5th 2015: “Yahoo Japan Corporation Improves Security and Enhances Performance with Nutanix” - March 5th 2015: “St. Luke’s Healthcare System Chooses Nutanix and Citrix for Virtual Desktop Expansion and Acquisition Integration” - Nutanix raised USD$140m Series E funding to date at over USD$2bn valuation, funding totalled to USD$312m 5. Target opportunities Building-up industry leadership Sources: Mergermarket, Nutanix website 9Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 10. Doron Kempel CEO Mitch Breen Sr. VP Global Sales Karen Baker VP Finance & Operations Management team Ownership structure Private Equity backed DFJ Growth, KPCB Growth, Kleiner Perkins Caufield & Byers, Waypoint Capital, Business overview - Founded in 2009 - 400+ employees - Record growth, +270%y/y - Leader in hyperconverged infrastructure for the software- defined data center Product offering - OmniCube Hyperconverged Infrastructure - OmniStack Integrated Solution Key product features: - Data Virtualization Platform - Global Unified Management - VM-Centricity - Native Data Protection Financial highlights Recent news - March 23rd 2015: “SimpliVity Awarded 5-Star Rating in CRN’s 2015 Partner Program Guide for Third Consecutive Year” - Jan. 27th 2015: “SimpliVity Wins Cloud Tech Trailblazer Award” - Jan. 13th 2015: “SimpliVity Experiences Record Growth in 2014; Solidifies Leadership Position within Hyperconverged Infrastructure Market” - SimpliVity raised USD$175m at USD$1bn plus in Series D funding round, venture funding totalled in USD$276m 5. Target opportunities Building-up industry leadership Sources: Mergermarket, Simplivity website 10Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 11. Jeff Ready CEO Thomas Harvey CFO Clint McVey COO Management team Ownership structure Private Equity backed Benchmark Capital, Heron Capital Venture Fund, Northgate Capital, Scale Venture Partners Business overview - Hyperconverged infrastructure vendor - Provides HC3 ScaleService technical support services and virtual machine security solutions - Clients include small to medium- sized organisations Product offering “Scale Computing integrates storage, servers, and virtualization software into an all-in-one appliance based system that is scalable, self- healing and as easy to manage as a single server” Financial highlights Recent news - Scale Computing Selected to Present at The Montgomery Summit - Scale Computing’s HC4000 Named Product of the Year in Storage Systems: Disk and Hybrid Systems Category by Storage Magazine/SearchStorage.com - 2014 SVC Awards – Virtualization Company of the Year - Midmarket CIO Forum Best Midmarket Strategy - Raised USD$ 12m in Series D Round, funding totalled to USD$43m 5. Target opportunities Building-up industry leadership Sources: Mergermarket, Scale Computing website 11Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 12. David Lesser President J.D. Butt VP Solutions Brian Haboush VP Sales & Marketing Mike Scher VP & General Counsel Management team Ownership structure Private held by: David Lessor 100% Business overview Product offering - Cybersecurity - Networking solutions Financial highlights Recent news - Oct. 17th 2014: “Nexum, Inc. Named to CRN Fast Growth 150 List” - Estimated 2014 revenue of USD 83m, expected to surpass USD 100m this year - Had its best year of EBITDA in 2014 with only “modest” increase in revenue - Cited lack of qualified engineering talent and staff turnover as the main reasons behind revenue slowdown - Cyber-security and networking service provider - Clients include small to medium- sized organisations and US federal institutions - Nexum plans to raise capital in 2015 via ESOP potentially selling up to 49%, says president 5. Target opportunities Building-up industry leadership Sources: Mergermarket, Nexus website 12Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 13. CA Inc 14.3 12.9 4.2 35.5% Checkpoint Software Tech 15.1 11.5 1.6 54.3% Citrix Systems 10.1 9.6 3.3 20.1% Red Hat Inc. 14 12.9 2 18.2% SolarWinds Inc. 3.9 3.6 0.5 32.4% Symantec Corporation 15.9 14.3 6.5 26.5% Trend Micro 4.7 3.6 1 35.8% Vmware inc. 35 29.5 6.7 22.7% 12.06x 9.92x 6.42x 14.29x 23.33x 10.19x 12.69x 8.07x 0x 5x 10x 15x 20x 25xSource: Bloomberg EV/EBITDA multiple Company Name Market cap ($B) EV ($B) Sales ($B) EBITDA margin InfrastructureSoftware Median EV/EBITDA 11.1x Average EV/EBITDA 12.1x 4.41x 3.47x 2.18x 6.9x 6.43x 2.89x 7.07x 3.06x 0x 2x 4x 6x 8x EV/Sales multiple Median EV/Sales 3.9x Average EV/Sales 4.9x 6. Valuation Market Comparables 13Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
- 14. Closing date Target Description Bidder EV ($B) 09/07/2014 Tail-f Systems AB Solutions for virtualised networks Cisco 103 10/12/2013 Insieme Networks, Inc. Development of software-defined networking systems Cisco 536 07/10/2013 Sourcefire, Inc. Cybersecurity solutions Cisco 1474 30/07/2013 Composite Software, Inc. Data visualisation solutions Cisco 103 25/02/2013 Cognitive Security s.r.o. Network security solutions Cisco 12 20/12/2012 Meraki, Inc. Cloud networking Cisco 756 10/03/2015 Blue Coat Systems, Inc. Security solutions Bain Capital LLC 1591 26/02/2015 Accela, Inc. Cloud-based technologies Equity Ltd 93 05/02/2015 Porticor Ltd. Cloud solutions Intuit Inc. 6 04/02/2015 F-Secure Corporation Personal Cloud Synchronoss Technology 39 EV/Sales multiple EV/EBITDA multiple Exit Multiple – Average North America/Europe (adjusted) 3.2x 20.9x Sample size 176 90 Exit Multiple – Median North America 2.7x 17.3x Sample size 99 46 Methodology – Data obtained from Mergermarket Summary of recent transactions in the computer software industry across North America and Europe over the last 12 months Exit Multiple - Average (adjusted); based on removing the top and bottom 2.5% of the original data results. 1 month before closing 1 day before closing 1 day after closing 1 month after closing Average premium 32.3% 28.3% 3.4% 4.3% Sample size 58 56 47 32 6. Valuation Transaction Multiples 14Aderrab, Aliev, Gulamaliyev, Kei, Levesques, Lin, Long Group 3
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Editor's Notes
- #2: Good afternoon