Pershing Square Activist Presentation Deck
Valuation - Long-Term Model
Assuming Valeant de-levers and maintains 3.5 turns of leverage, allocates free
cash flow to acquisitions, and grows at a rate reflective of the strength of its
franchises, the stock is tremendously undervalued
▸ Assumptions:
$7.25bn of 2016 EBITDA (assumes ~50% of Philidor profit contribution is lost)
■ 7.5% organic EBITDA CAGR 2016-2020
■ De-levers to 3.5x LTM EBITDA and 6% cost of debt
■ 10% 2020 tax rate
■ Use of excess cash flow to make acquisitions at 7x Pro-Forma EBITDA
• Maximum $10bn of acquisitions per year
Remaining free cash flow, if any, used to buyback stock at 15x LTM EPS
High return potential :
2020 EPS
Forward Multiple
2019 Value (Year End)
Discounted Present Value (@10%)
Return From Current Share Price ($111.50)
$
$
32 $
12.0x
$384
262 Ś
135%
32 $
14.0x
$448
306 $
174%
32
16.0x
$512
350
214%
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