Delhaize Group SA — Merger or Acquisition (February 2016)
30 slides from Delhaize Group SA's merger presentation, Feb 1, 2016
Slide 1: EGM Presentation Document
EGM Presentation DocumentFebruary 1, 2016
Slide 2: No Offer or Solicitation
No Offer or SolicitationThis presentation is being made in connection with the proposed business combination transaction between Koninklijke Ahold N.V. also known as Royal Ahold (“Ahold”) and Delhaize Group SA/NV (“Delhaize”). This presentation is not intended to and does not constitute an offer to
Slide 3: Forward-Looking Statements
Forward-Looking StatementsThis presentation contains forward-looking statements, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or
Slide 4: Items for shareholders vote at March EGM
Items for shareholders vote at 14 March EGM 4 (1) See more details on slide 30 Record date : 29 February 2016Confirmation of participation date: 8 March 2016 ItemCross-border merger by acquisition of Delhaize by Ahold effective as from and conditional upon the Effective Time, and hence the dissoluti
Slide 5: Ahold Delhaize merger – a strong investment case
Merger to form a large, more innovative company with market-leading retail offerings and strong, trusted local brandsCombination of two companies with complementary cultures, similar values and neighboring geographies, as well as a shared focus on the customerWill create a superior customer offering
Slide 6: Bringing together two complementary businesses: Delhaize
Note: 2014 figures exclude Super Indo; based on exchange rate of 1.33 USD/EUR Bringing together two complementary businesses: Delhaize… Belgium Luxembourg Greece Serbia Romania WVVANC SCGA KY TN MA ME VTNH NY DE MD PA DC 14.4% 23.0% 62.5% 17.0% 14.8% 68.2% Unique brands Present in 6 countries(2) Key
Slide 7: ... and Ahold
US NL CEENote: 2014 figures exclude JMR in Portugal; based on exchange rate of 1.33USD/EUR … and Ahold Belgium Netherlands Czech Republic MA NY PA DCWV VA DE MD 4.6% 35.7% 59.7% 55.4% 43.1% 1.4% Unique brands 7 (1) Market cap as of 26 January 2016(2) Excluding Portugal Key Figures - 2014 Present in
Slide 8: To form Ahold Delhaize – present in eight countries
(1) Excludes JMR in Portugal and Super Indo in Indonesia To form Ahold Delhaize – a retailer with unique brands present in eight countries… Netherlands Belgium Czech Republic Luxembourg Greece Serbia Romania MA CT RI GA KY TN ME NC SC NHNY DC VA VT WV NJ DE MD PA Ahold Presence Delhaize Presence Aho
Slide 9: ...With a strong combined profile
USBenelux CSENote: 2014 figures exclude JMR for Ahold in Portugal and Super Indo for Delhaize in Indonesia …With a strong combined profile 8.5% 30.7% 60.8% 32.5% 60.2% 7.2% Key Figures - 2014 Key Facts#1 European retailer by market cap #2 US grocery retailer by market capLeading (#1 or #2) grocery r
Slide 10: Transaction expected to be earnings accretive for 2016 to 2018
Transaction expected to be earnings accretive for calendar years 2016 to 2018(4)Source: Ahold and Delhaize 2014 annual reports, based on their respective accounting definitionsRepresents net income, excluding losses from discontinued operations.Represents net profit from continued operations.Represe
Slide 11: Strong transaction rationale
Similar Profile Creation of shareholder value Strong transaction rationale Critical scale in core markets - Would become leading retailer in US East Coast markets and #1 in Benelux - Better equipped to compete with scale players and able to play a role in further consolidation Significant synergies
Slide 12: Key terms of the transaction
Key terms of the transaction Pre-closing capital return of €1 billion to Ahold shareholders Reverse stock split - Ahold ordinary shares to decrease by the equivalent of €1 billion Execution of the cross-border merger with Ahold as the ongoing listed entity Delhaize shareholders will receive 4.75 Aho
Slide 13: Structure and composition of Supervisory Board
Jacques de VaucleroyVice Chairman Jan HommenVice Chairman Remuneration Committee Chair Audit/Finance/Risk Committee Chair Governance/Nomination Committee Chair Sustainability/Innovation Committee Chair Mats JanssonChairman Structure of Supervisory Board Composition of Supervisory Board Jan HommenVic
Slide 14: Management Board and Executive Committee
Management Board and Executive Committee Frans MullerDeputy CEO and Chief Integration Officer Dick BoerCEO Pierre BouchutCOO Europe(1) Jeff CarrCFO James McCannCOO USA Kevin HoltCOO USA Hanneke FaberChief E-Commerce& Innovation Officer Jan Ernst de GrootChief Legal Officer Marc CroonenChief Sustaina
Slide 15: Cost synergies: realistic and achievable
15 25-30% 15-20% 25%-30% Europe US 70%-75% General & Administrative and Other Indirect sourcing €500 million of run-rate synergies(1) to be achieved at the end of Year 3 after completion 40% at end of year 180% at end of year 2100% at end of year 3 Eliminate duplication, achieve ‘best-of-both’ effic
Slide 16: The proposed exchange ratio of 4.75x has been confirmed through several steps
The proposed exchange ratio of 4.75x has been confirmed through several steps •1 The Board of Directors utilised a multi-criteria approach to assess the proposed exchange ratio of 4.75x •2 Following such assessment and negotiations with Ahold, the Board of Directors approved the terms of the merger,
Slide 17: Multi-criteria approach to recommend the proposed exchange ratio
The Board of Directors utilised a multi-criteria approach to recommend the proposed exchange ratio of 4.75x 1. P/E and EV/EBITDA multiples for selected public companies operating in thesame industry 2. Discounted cash flow analysis 3. Relative contribution analysis based on various P&L, cash flow an
Slide 18: Selected public company analysis based on P/E multiples
Source: Public filings, Factset as per 22 June 2015(1) 8 May 2015 was the last trading day prior to press reports that Ahold and Delhaize were engaged in preliminary discussions regarding a potential business combination transaction. Delhaize unaffected(1) Delhaize Selected public company analysis b
Slide 19: Selected public company analysis based on EV/EBITDA multiples
Source: Public filings, Factset as per 22 June 2015.Note: For purposes of this analysis, enterprise value was calculated as total equity value plus net debt and adjusted for local statutory tax rate-adjusted pension deficits, minorities and associates. In addition, enterprise value for Ahold was adj
Slide 20: Discounted cash flow analysis suggests exchange ratio of 3.48x-5.52x
Discounted cash flow analysis suggests an exchange ratio of 3.48x-5.52x vs. 4.75x in the merger The financial projections for Delhaize for 2015 to 2017 were reasonably prepared in December 2014 on bases reflecting the best available estimates and judgments of the management of Delhaize at that time
Slide 21: Proposed exchange ratio of 4.75x is well supported by valuation analysis
Proposed exchange ratio of 4.75x is well supported by valuation analysis Source: Public filings, FactSet, financial projections for Delhaize (see note on slide 20) and financial projections regarding Ahold (see note on slide 20) (1) For each method except the ‘52 week exchange ratio range’, the show
Slide 22: Relative contribution analysis implies exchange ratio of 3.82x-5.23x
Implied Exchange ratio (2) Relative equity contribution (post Ahold capital reduction) EBITDA Average 2014A - 2017E (3) 5.23x EBIT Average 2014A - 2017E (4) 5.10x EBITDA - capex Average 2014A - 2017E (5) 3.82x Equity value 8 May 2015 4.20x Net income Average 2014A - 2017E (6) 4.89x Low - High (2) Av
Slide 23: DCF implies 29-30% value creation for Delhaize shareholders
Discounted cash flow analysis implies 29-30% value creation from the merger for Delhaize shareholders as compared to standalone Source: Financial projections for Delhaize (see note on slide 20) and financial projections regarding Ahold (see note on slide 20)Discounted cash flow analysis of the combi
Slide 24: Exchange ratio of 4.75x represents c.13% premium
Exchange ratio of 4.75x represents a c.13% premium for Delhaize shareholders vs. unaffected share price (1) Source: Factset as per 8 May 2015, Delhaize Management8 May 2015 was the last trading day prior to press reports that Ahold and Delhaize were engaged in preliminary discussions regarding a pot
Slide 25: Appealing Ahold Delhaize Strategy
Appealing Ahold Delhaize Strategy Supermarkets as our main formatSeek growth in convenience formatsPursue leading position in e-commerce and omnichannel Clear format strategy #1 or #2 position in every marketOperate as multi-brand retailer with strong local brands- Delhaize to remain leading brand i
Slide 26: Solid capital structure and financial policy going forward
Solid capital structure and financial policy going forward Highly cash generative businesses, enabling Ahold Delhaize to invest in future growth and deliver attractive returns to shareholdersBalanced approach to investing in profitable growth and returning excess liquidityExpected dividend policy: 4
Slide 27: Update on closing process
Tax neutrality on merger and on hive-down obtained from Belgium tax authoritiesRegistration statement filed on Form F-4 by Ahold declared effective by the SECDutch prospectus approved by the AFM2020 institutional bondholders have consented to waive the potential event of default resulting from the m
Slide 28: Confident about our future together
Confident about our future together Compelling strategic rationale for the merger: The right combination at the right timeCombining strong heritage, similar values and a shared focus on the customerCreating a stronger, international food retailer and delivering value for all stakeholdersA superior c
Slide 29: Appendix
Appendix DELHAIZE #A GROUP
Slide 30: Compensation
Compensation 30 The Board considered the following prior to the announcement of the proposed mergerContinuity of leadership leading us to approval of the merger would be criticalContinuation of the steadily improving results at Delhaize pre-transaction was vitalRetention of Frans Muller in a senior
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