M&A Announcement

Jul 28, 2015

Good afternoon, ladies and gentlemen, and welcome to the Gerasimov's conference call regarding the acquisition of Centra. At the moment, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Now I hand over to Benjamin Strohmeyer, Manager Investor Relations and Credit Relations at Garesheimer AG. Thank you. Ladies and gentlemen, thank you for joining the conference call. Earlier today, we announced the acquisition of Centa. We are pleased to provide you with more information about this acquisition on this conference call and the remarks are accompanied by a set of slides. The press release is posted on the IR page of our website at garethheimer.com/investorrelations. Our agenda for today starts with the presentations by our CEO, Uwe Rohlf and our CFO, Rainer Bozhon. At this time, all participants are in a listen only mode. And after the presentation by our CEO and CFO, we will enter into a Q and A session. Before we start, I would like to remind you that the presentations and discussions are conducted subject to the disclaimer. We will not read it, but propose we take it as read into the records for the purpose of this conference call. It is now my pleasure to turn the call over to Gerasheimer's CEO, Uwe Rohlf. Yes. Thank you, Benjamin. Ladies and gentlemen, good afternoon and welcome to our call. I think this is an exciting day for Gerasheimer. As announced this morning, we reached an agreement with Nimera Development S. A. To acquire Center, the number one supplier of plastic vials for oral prescription drugs in the United States. This acquisition represents a very important step in extending Garexheimer's footprint in the primary pharmaceutical packaging market in America. In the U. S, we are already very strong in pharmaceutical primary packaging made of glass and we are growing with drug delivery devices and now extend our business with vials and closures for oral drugs for the pharmaceutical retail market. This page outlines the key terms of The total consideration of $725,000,000 represents an EBITDA multiple of 9.8 times based on last 12 months pro form a figures as of June 2015. The acquisition will be fully debt financed and driven by the high cash generation of Center, we expect significant deleveraging within a short timeframe. We expect that the acquisition, which is only conditional to antitrust approval and therefore should be closed in Q4 of our financial year 2015, will be very beneficial for our shareholders. And that means that we expect this transaction to be directly adjusted EPS accretive by a low single by low double digit sorry, by a low double digit percentage already in 2016. On slide 4, you can see that's not only the deal financials that are compelling, but also the strategic rationale behind the acquisition makes perfect sense. We are pleased to highlight that with Centa, we will acquire a business which meets all of our acquisition criteria. Centaur is the market leading supplier of plastic vials, an iconic must have product in the U. S. Prescription drug dispensing infrastructure. By the way a market with significant market entry barriers. In this market, Center is a clear number one player. Center has a focused business model characterized by a secured customer base, long term relationships and an industry leading manufacturing capabilities. We see a perfect fit with Santor because the primary plastic packaging business is one of our core competencies in our group. We are very familiar with the production process and the material use at center, which is plastics. And so the only difference is the new sales channel, but there Center has a very experienced and strong sales team already in place. Plus, the business has very high barriers to entry, such as quick regulatory requirements, compatibility with existing infrastructure in the pharmacies, relatively low cost for the vials relative to the revenues in the pharmacy, and a clear customer preference for Zentos product. We expect moderate growth going forward in line with a very stable market development expected by IMS Health and this combined with the proven capability of center to pass on inflation to customers. And for the Gerasimer Financials, that will actually mean that the group's adjusted EBITDA margin will go up directly in full year 2016 by about 2 percentage points as a result of the Center acquisition. And as already mentioned, the transaction should be adjusted EPS accretive by a low double digit percentage starting directly to be accretive in the financial year 2016. So Centa will directly increase the financial threat of Gerhard Seimer. The next few slides will give you a little bit more details about Santor's business. So on page 5, you see a very brief business natural center. Center provides plastic vials and closures for the U. S. Prescription industry, which is structured around the so called poor headcount system, whereby the exact number of prescription typically built is delivered to patients in vials. Poor headcount is an established feature of the American Health System with vials constituting the standard for oral rug packaging. With vials enclosures, center supplies the complete system. I would like to highlight the following key facts around the company. Center is a carve out of Naimera Group, which is fully owned by Montague Private Equity. Nimera is a former business of Rex and Healthcare divested in 2014. Today's center operates largely standalone with very limited services provided by Nimera. The entire production is concentrated in 1 highly automated manufacturing plant, which is located in Berlin, Ohio. This plant is in excellent condition regarding all aspects of production and technology. Sensa has a focused product portfolio with about 85% of sales derived from the 2 leading product families in the U. S. Valve market, the Screw Lock and the One Click, which are the gold standard product in the market. Every American basically has used these products already and does so regularly. Accordingly, ZENTA is a clear number one player because the end customers, which are the patients, have a clear preference for its product. Moreover, the performance in the current financial year further underlines the strong financial track record over recent years. And from full year 2016 on, Center will contribute to our consolidated group figures. To give you an impression, in the last financial year 2014, Centa had pro form a revenues of US167 $1,000,000 On page 6, I would like to explain why Centre such an interesting business operating in a very attractive niche market. The business has strong characteristics. About €4,000,000,000 retail prescriptions are dispensed per year in the U. S, which is a massive amount. About 80% of those are filled with generics. About 62,000 pharmacies use plastic files and closures for the retail market. And about 70% of retail prescriptions are dispensed in plastic vials. The U. S. Prescription retail market is expected to grow by a bit more of 2% per year until 2019. This market in which center is a clear number 1 has high barriers to entry. Regulatory requirements are in place. The compatibility with the existing infrastructure means that robots in pharmacies need to be able to handle the retail vials. Here, a very high share of installed robots are calibrated exclusively to center vials. Low costs and that means that typically the cost of these plastic retail vials in the pharmacy amount to less than 0.1% of the revenues generated. While they represent a significant value added for the user. That means that customers have a clear preference for scent of products, which are absolutely iconic because really every American knows intuitively how to use them. It's a standard product of the market. Zenta has very long standing customer relationships with prime direct customers such at the big pharmacy chains like Walgreens or Rite Aid or supermarkets like Kroger. It also has long relationships with prime wholesalers like McKesson or AmerisourceBergen. Additionally, the business profits from the fundamental growth drivers that strongly underpin continued growth. These are the growing and aging of the population, increased medical coverage and the need for affordable drug therapies. So these trends are definitely here to stay. That is why it is expected that this niche market continues to grow in the midterm, thanks to the clear preference of the end customer for convenience. Now I hand it over to Reinhard, who will go with you through the financials. Thanks, Uwe. Good afternoon, ladies and gentlemen. Also from my side, a warm welcome. On Page 7, you see a very high level overview of selected pro form a financials. Please note that these pro form a financials are based on 2014 actuals and do not incorporate the effects from the disposal of our tubing operations announced earlier this year. The only exception is the illustration on the pro form a adjusted EBITDA and margin, which excludes the Tubing business. You can see why we are very excited about the financial contribution of Center to our group financials. First, it significantly strengthened our presence in the Americas region, underpinned by the fact that the plastic packaging business now also has a major production footprint in the U. S. The relative EBITDA and operating cash flow contribution reflects the strong margin and cash profile of Center. And with this acquisition, we will for sure also significantly increase our overall profitability as well as our cash conversion rate in the whole Gerasimer Group. The pro form a profitability will increase markedly by about 2 percentage points from 18.6 percent to 20.8 percent adjusted EBITDA March. And the strong cash conversion rate, the ratio of operating cash flow to adjusted EBITDA actually increases from 41% to about 48%, so for sure a lot higher than before. Let's spend a few words on the planned financing of the transaction. Please note that no capital increase is needed to finance this acquisition. The transition will be fully financed through our existing revolving credit facility and a new bridge loan provided by our relationship banks. Due to a competitive process, we were able to achieve highly attractive terms for the bridge loan, which will be replaced by long term debt instruments after the closing of the transaction. Pro form a for the acquisition, net leverage will increase temporarily above 3 times EBITDA. However, proceeds from the sale of the Tubing division will soon reduce the initial debt financing volume. Moreover, the outstanding financial performance and cash generation of Center enables a quick deleveraging and in general leads to a more stable business due to even more regional and product diversification. With this, let me hand it back over to Ulf. Thanks, Rainer. So I move on to Slide 9 now. Assuming that the acquisition of Scenta will be closed during the Q4 of the financial year 2015, Gerasimer expectations for 2015 remained exactly the same. So we fully confirm our guidance for the full year 2,050. Gartnerzheimer anticipates organic revenue growth between 1% 3%. This corresponds to a revenue corridor of approximately €1,300,000,000 to €1,330,000,000 Regarding adjusted EBITDA, Gerasheimer expects an increase in a target corridor of €255,000,000 to 2 €65,000,000 at constant exchange rates. Capital expenditure in financial year 20 15 is forecasted to represent around 9% to 10% of revenues, again at constant exchange rate. So here, you see there's absolutely no change and we remain fully on track to meet this guidance. But any contribution from center in Q4 2015 would increase the reported figures. So that is for sure important to remember. Please move on with me to Slide 10 that shows the first indication on our midterm outlook with Centa as part of Gerasthan. Assuming completion of the Center acquisition during the Q4 and completion of the sale of the glass tubing business by the end of the calendar year 2015, we update our outlook for the coming years in order to reflect also also the financial impact of the Center acquisition. So our expectations for the financial years 2016 to 2018 are included in our first indication, including center now as follows. Annual organic revenue growth is expected to average 4% to 5% and that on an increased base in full year 2016 if the center deal goes through in Q4 2015 as expected. And the reported base revenues for full year 2016 would be higher due to the initial revenue contribution from Centa, which generated US167 $1,000,000 in full year 2014 on a pro form a basis. The adjusted EBITDA margin will be approximately 22% by 2018, so 2 percentage points higher than before in our old midterm outlook. So overall, that means that Centa will directly improve our strong financial profile even more. To clarify, this means that the adjusted EBITDA margin will be about 2 percentage points higher in every year from 2016 driven by centers. And this first indication should help you to understand the implications on our group assuming again that the Sensa acquisition will be closed by latest by the end of the financial year 2015. Finally, let me wrap up the key points for the presentation. We are very excited to inform you about this value generating acquisition. The acquisition expands our primary packaging offering in the U. S. As the company focuses on stable niche markets for prescription packaging. We do not foresee any issues with regards to the integration of the business, driven by the fact that Santos operations are to a large extent independent from the current owner and that Centaur will continue to operate within the Gerasheimer Group. Center shows an excellent financial performance with superior profitability and high cash conversion, which will now benefit the whole Gerasimer Group. And this means that we expect that the acquisition will be very beneficial for our shareholders. With that, I hand it back to Benjamin. Thank you both for your presentations. We will now open the call to questions. The lines are now open for any questions you may have. Okay. The first question comes from David Hedlington from JPMorgan. Afternoon, guys. Thanks for the questions. Some housekeeping ones first, please. Just maybe if you could give us an idea of the depreciation we should be assuming on Centaur and the interest rate on the debt? And then secondly, you're not assuming I don't think any synergies as part of the transaction. Do you see any scope particularly around some cost synergies? It looked like you should have some cost synergies at least on the bottles business. And then finally just a slightly bigger picture question. Obviously, this asset came up or this was part of an asset that came up for sale a couple of years ago, but you walked away from it then. I suppose it's not quite the same asset. What's changed since you originally looked at it to make you relook at this asset this time around? Thanks. Yes. Thank you, David. Luv, I'm going to ask the last part of your question. Yes, it is we certainly took a look at the Rx and Healthcare business, which consisted at this time all the 3 components. Center was one part of it. And at that time already looked very attractive, but the overall package for us at that time was not attractive. So since we were now able to look at a separated highly focused business, this presented itself as an attractive opportunity for us to pursue this acquisition. The synergy potential, I'd say is given the bottom line contribution by SENSA rather immaterial. We certainly integrated into our overall larger footprint in the U. S. With synergies on the HR side, on the IT side, on the financial side. But in the line of the overall numbers that is really not such important effect here to look at overall. So from that perspective, we expect some synergies, but there are clearly no synergies on the sales side since this is a new channel for us and particularly Center has a very, very strong and experienced sales team completely dedicated to that channel. And of course, expect us a little bit to do on the technology side. But as I mentioned before, this is a highly automated plant. So there is a limited need to start activities here right after the acquisition. So synergies again are not playing a major role in this acquisition subject. So let's talk a little bit about interest rates. You've seen that we are doing a bridge financing of €550,000,000 and bridge financings, you normally have the situation that the margin during the 1st 3 months is lower than the margin in the last 2 months. Also bridge financing, we have a bridge financing for 12 months and we also can go further another 6 months. So when you make when you would do an assumption and you would say, okay, we take 6 months and after 6 months, we hopefully have done the takeout. For the 1st 6 months, you can assume that the margin is pretty close to the revolving credit facility, the interest rate. So overall, so that means roughly around 1.1%, but then you have on top of that a one time cost, which normally can come up to €3,000,000 So this together would be an assumption for the 1st year. And if we can make them the takeout after 6 months, we don't know. If you would assume it's going longer and long term, I would it's difficult to forecast, but with around 3%, 3.5%, you're not totally wrong long term, because then we have to think how we refinance it long term and that's I would say 3% to 3.5% is that what perhaps is not totally wrong. 3rd question was about depreciation. Depreciation is well below the normal depreciation, which we have, which you normally should assume based on low CapEx. This is not a very CapEx driven business overall. Okay. Great. And actually just one follow-up question as well. Does this have will this have any impact on the group tax rate given the U. S. Exposure? We believe when you look at our tax rate right now, which you normally should assume between 30% 32% that this won't change dramatically because there's always it's a tax group, which we will have in the U. S. So therefore, we also can handle a couple of tax based on the things which we are doing there. Great. Thanks very much guys. Next up is Daniel Wendler from Commerzbank. Thanks for taking my questions. I have 2 remaining actually. 1 is considering the entry barriers for the business. Maybe you can talk a little bit more about them also in particular with regards to regulatory requirements. So what are these actually? So do the does the plastic containers have to be approved for this purpose, for example? I don't know, so that's why I'm asking. And second question would be regarding the market share of Centro in the U. S. You mentioned it's by far the number 1. Can you potentially attach a figure to that? That would be helpful. Thank you. The market share is over 50% is what I want to say in as I said in a small niche market, so that's significant. And rebarriers are various. Of course, primary packaging is somewhat regulated. It is, however, not as regulated as, for example, injectable packaging by the FDA. So from an FDA perspective, that is certainly less. So regulation comes more through some typical USB. 2nd, you have the obviously the convenience aspect since I've lived in the U. S. For quite a while. So you basically you go in particularly elderly people and try to buy their prescription always at the same pharmacy to basically obtain the same type of packaging because then they know exactly how to do this and how to open it. And here Centro has actually a patented product family that's particularly attractive for the use because it can be used with a child protection feature. And if you reverse the gap without a child protection feature, which is particularly attractive to elderly people because it is much easier to open. If you use it the other way and you have no smaller children in. Then the Screw Lock product is basically the standard of the American market. So you can basically everybody I think knows how to open it other than you are an immigrant and you buy it the first time like it happened to me once. But that is from a convenience aspect. And second is almost 40% of the pharmacies use robots. Those robots are extremely expensive. And the robots are generally calibrated for the product of a certain manufacturer and most of the robots in the U. S. Due to the high market share of center are calibrated for center. And then second, due to the channel, you basically need particularly to service smaller regional pharmacy chains, you need the access with larger contracts to large wholesalers that basically like McKesson that basically service the pharmacies with all also their pharmaceutical products. And if you have that excess, then you basically can automatically they automatically dispense the vials through that. And if you do that in a different way that is much, much obviously much, much more expensive than servicing the pharmacies. And Centaur actually has most of the large wholesalers in contract and actually has about more than 1,000 contracts with end customers directly. So we believe that is a very, very out of this makeup a very well balanced system. Not to mention that this is a product in the United States completely different than in the U. S. Again, than in Europe than here, it's cost effective. I mean, you dispense mainly unbranded pharmaceutical prescription drugs, oral drugs in a packaging that also has basically no branding on it other than the name of the pharmacy. So that's extremely attractive for the channel to use and a system that is in place for more than I think for almost 100 years. So very stable business environment. Thank you very much. So the next question comes from Madeleine Matlock from Pioneer Investments. Yes. I just wanted to ask a little bit more about this poor and count system that's used in the U. S. That's different than other parts of the world. Why do you think that is? And do you see any long term risk or opportunity in that system as it stands now? Yes. I think that is the that for us was actually one of the key questions to assess the business model in the United States. Mexico and actually Canada are using that system. It has been very, very introduced for a very, very long time and basically set up to allow the exact dispensing and reduction of waste by medication to the patients. So the label tells you exactly how to use it, what's in it, the actual amount of bills per prescription is in and the cost obviously for the packaging is extremely low. We basically have not found using our using market know how and consultants that see the risk for that business model to change. And I think that is pretty much common understanding in the United States and in Canada. So we believe particularly with the trend to more unbranded generics making the majority of the dispensing of pills that this system is uniquely qualified to deliver what the design of the health system in the United States has planned with it basically to keep the cost low. Thank you. Okay. The next question comes from Oliver Reinberg from Kepler Hey, good afternoon. Can you hear me? Yes. Oliver Reinberg from Kepler Cheuvreux. Three areas of questions, if I may. Firstly, just to understand the business a bit better. The reboda, which obviously calibrated for you, is it actually just one manufacturer of this reboda? And also, what is actually the percentage of sales of center that is derived by the top 3 U. S. Pharmacy chains? Secondly, on the growth, you talked about the market growth is 2%. Shall we assume a similar growth rate for Centre given the fact that they're market leader? Can you also talk about the margin level? Is this sustainable? Is there a kind of downside pressure? Or can you actually further leverage that? And also on growth for the Gerasama Group, I think on one slide you indicated that the deal on a pro form a basis has about 220 basis points of margin accretion. I guess it's now even higher given the stronger U. S. Dollar. So if I do my math and baking that onto 2016 consensus estimates, I think the margin accretion post the consolidation of center is somewhat limited. So can you give us any kind of color what is the growth potential for EBITDA of the Gerassemble Group post the consolidation of this transaction? And then probably just finally in terms of housekeeping, can you just confirm I assume there's no minority charges that apply? And I assume that the fair value amortization are tax deductible and can you quantify them? Thank you. A lot of questions, so I think if Should I start? I'll start, okay. Okay. So start with the fair value amortization. First of all, we haven't done our purchase price allocation. That's something which we have to perform in that moment when we have closed the deal. Uwe will talk a little bit about customers in a second and how the situation looks like. So we hopefully can put a lot on customers. So therefore, then for sure, we also write off pretty fast specific parts of the difference because that's also important for the return on capital deployed because on that basis it has to increase then further on because the capital employed is then yes, it's pretty high because as you know, we take goodwill also as part of the capital employed and therefore we really calculate correctly. So therefore, it is important for us that we also write off and make a fair value amortization, which is pretty high in the 1st years. But we don't know right now because it all depends on the purchase price allocation, which we haven't performed up now. Margin level, yes, we believe that the margin level is pretty sustainable. We've already explained the market. So we don't see a decline there. So, we believe that the margin is good and but we're not telling you right now how this can increase, go down or whatever, because we believe stable and we have to finish our work and then we have to make, 1st of all, our initial consolidation and thereafter. And that's the reason why we also call it first indication, because we really would like to finish it because we have 2 transactions right now. First of all, the sale of the tubing business, which has to be finished up to the year end as well as the first consolidation or initial consolidation of center. And that's something which we have to do first before we can be more precise on that. Yes, I think some Minorities. Sorry? Minorities. Oh, minorities. There are no minorities coming with this transaction. So we buy this company 100%. So on the customer concentration center has a significant higher customer concentration than the GellerSheimer portfolio generally has. And that is due to the nature of the business in the United States with some larger wholesalers servicing a lot of end customers. On the other hand, it is worth mentioning that Centro owns contracts with the end customers that are serviced through wholesale of or a larger part of the end customers. So that this is there is a direct line always to the pharmacy or to the pharmacy chain. So from a concentration perspective, there is a significant amount of revenues going through the top 10 of the customers. On the risk for growth, we basically in our due diligence look on a number of things. I already touched on one, which is the risk for the poor end count system to stay in place in North America, which we saw extremely low. The second one is obviously a potential consolidation in the market even though that the last already the CVS or Walgreens are already quite large. We looked at that consolidation of the pharmacies has actually not happened in the past. There was always a slight increase. But just recently CVS bought the pharmacies of Target and there was a consolidation. So we basically have taken that into account in our due diligence and our assessment of the company that there is a potential for consolidation, probably not a top line risk. But the second one is we look at balances balances for opportunities and there are a number of areas in the market where center has larger opportunities where the share of center at certain customers or certain chains is very low. So we believe that the company has a very, very balanced risk and opportunity profile for the revenues. And I would say going forward, my advice to you would be in your models, let it grow with the market. That is probably a fair and safe assumption. And from currency, the rates are only translational. Can you just confirm the amortization charges are tax deductible, correct? Yes, we yes. At the end, you have to take a deferred tax calculation on that basis. And we will find and we have analyzed for sure also the tech situation so that we are pretty optimistic that we can as I already said before that normally if you would assume in the U. S. That the tax rate is around 38%, depends in which part of the U. S. You are, in some case could also be lower, that we can keep the overall tax rate for the group at around 30% to 32%. All right. Thanks. And the last follow-up, can you just give us a number, what percentage of your sales of center are the top 3 clients? And also what kind of EBITDA growth we should expect for the Gerassemble Group post the consolidation? Unfortunately, we cannot give you guidance on that today. We have to stick to the guidance we have provided on the midterm. And so sorry that we cannot help you further on that. And the client concentration? As I said, the top 10 customers make a significant amount of the overall revenues. Okay. Thanks very much indeed. Good. Let's hear the questions of Jan Kepeler from HSBC. Yeah. Thanks for taking my questions. Only 2 remaining. The first one and you already touched this is on ROCE. I was just wondering if you could quantify it a bit further what the impact on the ROCE will be from the acquisition. And secondly, I mean, you have now acquired another strong cash generating unit. I was just wondering if this somehow is impacting your view or your strategic view on the Life Science division, especially with the increased leverage? Life science, I can answer pretty easily. Nothing has changed here. So it is at the end a cash generator. We have a higher return on capital employed. But on the other side, long term, it is like in the past, not strategic. But as long as there is no good opportunity for us to divest, we're not doing it and we like it because it's generating cash and that's the reason why we think it fits our group and helps us to set the basis also for further acquisitions or other stuff. And return on capital employed, as I said, very important is the purchase price allocation, because it all depends also going on further, how much goodwill you will have, because goodwill is not written off. So and this is influencing. So at the end, you have all the numbers there. You've got the adjusted EBITDA. EBITDA multiple, you can make up your mind for the return on capital employed. For us most important here is that the group EPS is increasing very well as already said, and overall, it's a very, very good financial deal and makes me happy because from a financial point of view, it's a very, very good deal. All right. Thank you. Let me ask you, are there any more questions? If yes, please dial the 9 plus star. Okay. Another round. Let's start with Marco Zipprecht from MainFirst Bank. Yes. Good afternoon. Marco Zipprecht here. One question on the history. Maybe you could share with us a little bit the previous historic performance of Cento in terms of revenue growth and margin development. As I understand, it's a pretty historic company with a route that dates back many decades ago. So how good is your visibility backwards? Well, I can actually without going into too much detail because we all have responsibilities for certain confidentiality. I can tell you, I do know the business for 25 years personally. It has been an old OI business Owens Illinois, you know, Gerasimer goes back to an old OI history as well. And most of the management has been there for many, many years. So it's extremely stable. And I can tell you that the management years and revenue growth that you would expect from the market leader. Okay. Any meaningful volatility on the margin side? Or has that also been fairly stable over the years? You can what you can expect is always the same what you generally see in the plastic business. You have 3 main drivers for margins on the short term, which is your resin prices, where the business here, Centro has passed through clauses. So that goes always with a small time delay that might impact margins short term favorably or unfavorably before it catches up. The second one is you have contract durations between 3 2 3 years. And here and there you might see growth opportunities, profit improvement, if you capture more volume or if you have a discount a small, but very, very stable. I'll tell you over the years a very, very stable unbelievably stable financial performance from my perspective. And that is the nature of the business because the spending on those type of product is not discretionary. You have a prescription, you go and fill it and the likelihood that it fills with the center product is larger than 50%. And I think that is a nice situation. Yes, indeed. Thanks very much. Very helpful. Okay. Next question comes from Gunnar Romer, Deutsche Bank. Good afternoon, everyone. Gunnar Romer, Deutsche Bank. Thanks for taking my question. The first one would be with regard to integration cost, whether you can quantify those and some timing behind. 2nd question, again, coming to the margins of the acquired business. When I do my calculations, I think it should be more like 240 basis points accretive to your margin, if not more. And therefore, I have to basically come back to Olli's question earlier, whether there's anything we should bear in mind with regard to the margin outlook of Centro for next year potentially? Or is it just conservative planning at your side? And then lastly, whether you can comment on EPS accretion on a reported basis and the timelines you would be considering in this regard? Thank you. So for the reported EPS, we never guided that by the way, because it's very difficult and it all depends on the purchase price allocation, because it depends how much fair value amortization I have and so on and so on. So therefore, we would never go this path before we haven't finished the purchase price allocation. So we have to wait up to this point. Integration costs, we believe this is not a very small number overall because it's a business. In the U. S, you already have businesses in the U. S. We manage our U. S. Business in a tax group and this tax group is also leading it. So therefore, and this is close to Vineland. And that's at the end, what we do there and there we will integrate it and at the end of it, we manage all of that from an operational point of view. For sure, we'll be part of plastics and devices. So the top managers in plastics and devices will take responsibility for that. But for finance and legal and personal and so on, it will be managed with the help of our people, which we have in the U. S. Yes. 3rd question, can it be more or less? So first of all, we give you a first indication. I think it's a good indication. It's not a full outlook, normal outlook we normally will do when we have finished our year. And again, I have to repeat it. We have to, 1st of all, finish our sale of the tubing business as well as we have to start with our initial consolidation. We know and we hope it will happen for Center in the last quarter of this year. And thereafter, we have a better feeling and then we will discuss further other indications or outlooks later on. Okay. Thank you. Maybe just one follow-up and sorry to insist here. Can you comment on the margin development on of Centaur next year? And or to put it differently, would you be in a position to rule out a margin decline at Centaur next year relative to the pro form a numbers you've provided? Number 1 is that we give you guidance for next year. When we give guidance for next year which is January. Generally in February, we have to see how the integration goes. We have a transition service agreement with business for a while and integrated. There could be obviously smaller impacts due to the integration and the separation, but we do not expect that to be of any significance for the business going forward. So unfortunately, I have to ask for your patience to get more detail up to the point that we generally do that. We foresee the margin to be stable. That's fair. Thank you very much. Okay. Last chance to ask questions. Okay. If that's not the case, we would like to thank you for joining us today. Please note that we are going to publish our Q3 results on October 8 in 2015. Goodbye.