Metro Inc. · TSX:MRU
Metro — Merger or Acquisition (October 2017)
15 slides from Metro's merger presentation, Oct 2, 2017
Slide 1: Creating a New Retail Leader in Food, Pharmacy, Health and Beauty
Creating a New Retail Leader in Food, Pharmacy, Health and Beauty October 2, 2017
Slide 2: Forward Looking Statement
Forward Looking Statement Today's presentation contains different statements that could be construed as being forward-looking information. In general, any statement which does not constitute a historical fact, may be deemed a forward-looking statement. Expressions such as “expect”, “potential”, “est
Slide 3: Strategic Context
Strategic Context Grocery Pharmacy Enhanced scale and scope in an evolving competitive landscape Better positioned to capitalize on demographic and consumer trends impacting food, pharmacy, health and beauty Expanded selection and convenience through an improved retail footprint Strong cultura
Slide 4: A Great Business with an Iconic Brand
A Great Business with an Iconic Brand • Franchise model with low capital intensity and high free cash flow conversion • Highly productive network: $12+ million sales per store; 250,000+ scripts per store; $1,300+ sales per sq. ft. (1) • Irreplaceable real estate footprint with 419 stores Ranked firs
Slide 5: Combined Platform: A New Retail Leader
Combined Platform: A New Retail Leader A Leader in Food in Québec and Ontario #1 in Pharmacy in Québec 1,307 stores: 677 pharmacies and 630 food stores $15.9bn revenue(1), $1.3bn EBITDA(1) and $0.5bn free cash flow(1, 2) 86,800 employees 1. Presented on a LTM basis as of most recent quarterly
Slide 6: Compelling Strategic Rationale
Compelling Strategic Rationale 630 Food Stores 677 Pharmacies(1) • Combined platform well-positioned to capitalize on Increased scale future expansion and growth opportunities improving › Combined network of 630 food stores and 677 pharmacies competitive 367 positioning • Enhanced scale, reach and o
Slide 7: Compelling Strategic Rationale
Compelling Strategic Rationale • Combination of leading banners will enhance Positioned to product assortment and increase customer convenience serve our customers in › Best-in-class private label and exclusive brands food, pharmacy, › Excellent real estate and leading urban footprint health and • B
Slide 8: A Track Record of Growth and Shareholder Returns
A Track Record of Growth and Shareholder Returns Première Founded IPO McMahon Super C Steinberg Loeb A&P Adonis MissFresh PJC Moisson 1947 1986 1986 1987 1992 1999 2005 2011 2014 2017 2017 Share Price Performance Total return since A&P acquisition: 479%(1) May-90 May-95 May-00 May-05 May-10 May-15 M
Slide 9: Financial Highlights
Financial Highlights metro & JeanCoutu)
Slide 10: Financially Attractive Combination
Financially Attractive Combination $75 million annual run-rate cost synergies(1) Accretive to adjusted EPS(2) Highly accretive to free cash flow per share Prudent balance sheet and financing plan 1. Expected within 36 months. 2. Adjusted to exclude amortization of transaction-related intangi
Slide 11: Transaction Overview
Transaction Overview • Acquisition of 100% of PJC’s outstanding Class A and Class B shares for equity consideration of $4.5 billion › EV / LTM EBITDA of 14.0x and 11.3x adjusted for synergies • PJC shareholders to receive, at their election: Transaction / i. $24.50 in cash, or Consideration ii. 0.61
Slide 12: Financing Structure
Financing Structure Sources • Financing structured to maintain current BBB Committed Debt Financing $3.44 bn investment grade credit rating Equity Issued to PJC Shareholders 1.13 bn • $3.4 billion of committed bank facilities fully Total Sources $4.57 bn underwritten • Flexibility to sell some or al
Slide 13: Significant Synergy Potential
Significant Synergy Potential Multiple Synergy Opportunities Procurement Costs Operating and Warehouse Procurement administrative rationalization expenses $75 million of Annual Revenue (Not included in synergy estimate) Run-Rate Cost • Food Synergies • HABA Cross-selling Operating • Seasonal Merchan
Slide 14: Pro Forma Financial Summary
Pro Forma Financial Summary Pro Forma Financial Profile (C$ millions)(1) Metro PJC Adjustments Pro Forma Revenue $12,876 $3,005 - $15,881 (2) EBITDA $952 $306 $75 $1,333 (3) (4) Free Cash Flow $356 $179 ($5) ~$530 Free Cash Flow Per $1.54 $2.04 Share Highly accretive to free cash flow per share 1.
Slide 15: Conclusion
Conclusion Combination of two iconic brands to create a new retail leader Positioned to better serve our customers and benefit from evolving trends in food, pharmacy, health and beauty Strong platform for continued growth Thank You. Q&A. 15