Canadian Tire Corporation, Limited · TSX:CTC
Canadian Tire — Merger or Acquisition (May 2011)
15 slides from Canadian Tire's merger presentation, May 9, 2011
Slide 1: Proposed Acquisition of FGL Will Create Canada's Ultimate Authority in Sporting Goods
Proposed Acquisition of FGL Will Create Canada’s Canada s Ultimate Authority in Sporting Goods Investor/Analyst Conference Call May 9, 2011 1
Slide 2: Agenda
Agenda Strategic Overview Stephen Wetmore Financial Marco Marrone y Summary Stephen p Wetmore 2
Slide 3: Forward-looking information
Forward-looking information This document contains forward-looking information that reflects management’s current expectations related to matters such as future financial performance and operating results of the Company. Forward-looking statements are provided for the purposes of providing informati
Slide 4: Transaction Highlights: Building Canada's Sporting Goods Leader
Transaction Highlights Building Canada’s Sporting Goods Leader Key deal terms Bidding for 100% of FGL for $26.50 per share in cash 45% premium based on FGL’s 10 day volume weighted average price ending May 6, 2011 Unanimously recommended by FGL’s Board of Directors Break fee to CTC of $15
Slide 5: FGL Overview: Canada's #1 Sporting Goods Retailer
FGL Overview Canada’s #1 Sporting Goods Retailer Largest retailer of sporting goods in Canada with approximately 20% market share Fiscal year 2011 sales of $1.4 billion and EBITDA of $110 million Business mix: softgoods (40%) (40%), footwear (31%) (31%), hardgoods (29%) Strong national prese
Slide 6: FGL Strengths & Capabilities
FGL Strengths & Capabilities Market leader in sporting goods goods, apparel and athletic footwear Well recognized brands Strong national presence with prime lease locations High performing franchise division Access to private label and licenses for global brands 6
Slide 7: Strategic Rationale
Strategic Rationale Organic growth remains a priority priority, however however, CTC is going on the offensive to establish its position as “Canada’s ultimate authority in sporting goods” • #1 Strengthens a core business category • #2 Platform for growth and diversification • #3 Opportunity to creat
Slide 8: Strategic Rationale #1: Strengthens core business category
Strategic Rationale #1 Strengthens St th core business b i category t Complementary business with minimal product overlap Strengthens presence in sporting goods through a broader product offering Broadens customer base and access through specialty sporting goods concepts Covers full sporting
Slide 9: Strategic Rationale #2: Platform for Growth and Diversification
Strategic Rationale #2 Platform for Growth Gro th and Diversification Di ersification Broader access to $7.7B sports apparel, footwear and equipment market Softgoods g in p particular offers future g growth avenue Logical diversification of CTC’s business New distribution channels and market
Slide 10: Strategic Rationale #3: Creating A Sporting Goods Super-Brand
Strategic Rationale #3 Creating A Sporting Goods Super-Brand S per Brand Focused national branding strategy Leveraging Canadian Tire’s Tire s capabilities Super-store concept in urban areas nationwide Extension to rural markets with smaller format stores Variety of leading brands and stron
Slide 11: Transaction Terms & Financing
Transaction Terms & Financing Purchase price of $26.50/share $26 50/share for aggregate purchase price of $771 million million, excluding FGL net debt and shares currently owned by Canadian Tire EV / LTM EBITDA multiple of 7.3x Currently own 1.3 million FGL shares or approximately 4% of total
Slide 12: Pro Forma Financial Metrics
Pro Forma Financial Metrics FGL’ss contribution is modest but expected to increase FGL Significant cash flow generation Pro Forma Revenue Pro Forma EBITDA Pro Forma FCF After Dividends 14% 10% 8% 86% 90% 92% Pro Forma LTM Revenues Pro Forma LTM EBITDA Pro Forma LTM FCF After Dividends C$10.4 bil
Slide 13: Financially Attractive
Financially Attractive Expected meaningful accretion to EPS Cost synergies beginning in 2011 and expected to achieve approximately $25 million in 2012 Full run-rate run rate of approximately $35 million in 2014 Key synergy opportunities Supply chain Procurement / purchasing SG&A Attr
Slide 14: Indicative Transaction Timeline
Indicative Transaction Timeline Minimum tender condition of 66 2/3% of outstanding FGL shares Competition Bureau Approval Closing expected Q3 2011 14
Slide 15: Summary
Summary Acquisition strengthens market position in Canadian sporting goods retail Integration of FGL provides runway for future growth and diversification Unique opportunity with other “great Canadian brands” Significant synergies and ability to leverage Canadian Tire strengths Attractive