Loblaw Companies Limited · TSX:L
Loblaw Companies — Debt Investor Presentation (September 2013)
27 slides from Loblaw Companies's debt investor presentation, September 2013
Slide 1: Fixed Income Investor Presentation
A final base shelf prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the final base shelf prospectus, any amendment to the final base shelf prospect
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation for Loblaw Companies Limited (“Loblaw” or “Company”) and Shoppers Drug Mart Corporation and retain key employees and pharmacists or effectively manage succession planning; risks associated with the (“Shoppers Drug Mart”) contains forward-looking statement
Slide 3: Agenda
Agenda 1. Introduction 2. Acquisition Overview 3. Financing Summary 4. Offering Summary Appendix – Non-GAAP Reconciliations 3
Slide 4: 1. Introduction
1. Introduction 4
Slide 5: Executive Summary
Executive Summary On July 15, 2013, Loblaw Companies Limited (“Loblaw” or the “Company”) and Shoppers Drug Mart Corporation (“Shoppers Drug Mart”) announced a definitive agreement under which Loblaw will acquire all of the outstanding Shoppers Drug Mart common shares (the “Acquisition”) Shoppers
Slide 6: Acquisition Highlights
Acquisition Highlights Increased Scale Enhanced Product Offering and Brands Broad Loyalty and Financial Services Platform Enhanced Profitability and Operating Leverage Pro Forma Investment Grade Profile Highly Accretive to Free Cash Flow 6
Slide 7: 2. Acquisition Overview
2. Acquisition Overview 7
Slide 8: Loblaw announced intent to acquire Shoppers Drug Mart for $12.4 billion
On July 15, 2013, Loblaw announced its intent to acquire Shoppers Drug Mart for an Equity Value of approximately $12.4 billion in cash and stock Offer Per Share Total (maximum)(1) $33.18 Cash $6.7 billion 54% 0.5965 Loblaw Shares $5.7 billion 46% $12.4 billion 100% Premium(2) Pro forma ownership 29%
Slide 9: Unique opportunity to combine Canada's leading food and pharmacy retailers
The Acquisition is a unique opportunity to combine Canada’s leading food and pharmacy retailers... Leading food brands Leading wellness brands PC Financial services Optimum loyalty program Expansive transport network and supply chain National pharmacy infrastructure supply chain network Canada’s lar
Slide 10: Complementary strategies and consistent corporate cultures
....and leverage complementary strategies and consistent corporate cultures Strong Customer Commitment to Loyalty Platforms Customer Service Dedicated and Belief in the Power Entrepreneurial of Health and Associate/Colleague Wellness Network Small Store Control Brand Convenience Food Focus Offering
Slide 11: Increased Scale
Increased Scale(1) ~1 billion Annual customer transactions ~2,350 Stores ~1,800 Pharmacies ~65 million square feet $42 billion+ Combined revenue $3 billion+ Combined EBITDA(2) ~$1 billion Combined free cash flow(2) Combined market capitalization – by far the largest of any retail or ~$20 billion con
Slide 12: Enhanced Product Offering and Brands
Enhanced Product Offering and Brands Enhanced food offering in Shoppers Drug Mart stores with increased product selection and introduction of food products Unique small store convenience food offering while preserving the core customer proposition Enhanced pharmacy offering at Loblaw Further
Slide 13: Broad Loyalty and Financial Services Platform
Broad Loyalty and Financial Services Platform Integrated loyalty program Loyalty with access to more than 10 million Shoppers Optimum cardholders Larger store and customer Financial Services base is expected to accelerate credit card, banking, mobility and insurance businesses We plan to drive s
Slide 14: Enhanced Profitability and Operating Leverage
Enhanced Profitability and Operating Leverage Run Rate Synergies in 3rd year $300 million Synergies phased in evenly over the first 3 years following closing Purchasing Marketing PC Financial Private Label Supply Chain Optimum and PC Penetration IT Plus Integration Shared Infrastructure We intend to
Slide 15: 3. Financing Summary
3. Financing Summary 15
Slide 16: Financing Overview (C$ millions)
Financing Overview (C$ millions) Cash consideration backstopped with $5.1 Transaction Uses billion of committed credit facilities Cash to Shoppers Drug Mart Shareholders (1) $6,636 (1) $1.6 billion 364-Day Bridge Loan Equity to Shoppers Drug Mart Shareholders 5,732 Equity Offer Value $12,368 $
Slide 17: Investment Grade Profile
Investment Grade Profile As at June 15, 2013 after giving effect to the Acquisition and significant Loblaw changes in consolidated capitalization (in millions of Canadian dollars) as at June 15, 2013 subsequent to June 15, 2013 Cash and Cash Equivalents 771 1,074 Debt of the Company Short term debt
Slide 18: Pro Forma Long Term Debt Maturity Profile
Pro Forma Long Term Debt Maturity Profile $1.6 billion 364-Day Bridge Loan to be replaced with Offering and available cash(1) 5-Year Term Loan due in 2018 includes amortizing payments and is pre-payable without penalty $3,500 $3,000 To be replaced with $2,863 $2,650 proceeds from Notes Offering
Slide 19: Highly Accretive to Free Cash Flow
Highly Accretive to Free Cash Flow 2012 Combined Free Cash Flow (Before Synergies) (1) (C$M) The Acquisition results in approximately $1,250 $663 $1 billion of annual free cash flow $1,001 $1,000 ($130) Focus on debt repayment and return to a steady $750 state capital structure over the two year
Slide 20: 4. Offering Summary
4. Offering Summary 20
Slide 21: Pro Forma Corporate Structure
Pro Forma Corporate Structure Loblaw Companies Limited will be the issuer of the Notes Existing Shoppers Existing Loblaw George Weston Drug Mart Public Minority Limited Shareholders 25% 29% 46% 5.6% 12.7% Loblaw Companies New Limited Notes 100% 81.7% (1) Choice Properties 100% REIT Shoppers Drug M
Slide 22: Summary Terms
Summary Terms Issuer: Loblaw Companies Limited Securities Offered: 5.5 Year and 10 Year Senior Unsecured Notes Principal Amount: ■ of Series 2019 Notes ■ of Series 2023 Notes Expected Ratings: S&P: BBB (Stable) / DBRS: BBB (Stable) Use of Proceeds: The net proceeds from sale of the Notes will be app
Slide 23: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations 23
Slide 24: Non-GAAP Pro Forma Financial Information for the 52 weeks ended December 29, 2012
Non-GAAP Pro Forma Financial Information for the 52 weeks ended December 29, 2012(1) Pro Forma EBITDA Pro Form a EBITDA for the year ended Decem ber 29, 2012 (in m illions of Canadian dollars) Shoppers Pro Forma Pro Form a Loblaw Drug Mart Adjustm ents Com bined Net Earnings (2) 634 607 (410) 831 Ad
Slide 25: Non-GAAP Pro Forma Financial Information for 24 weeks ended June 2012 and 2013
Non-GAAP Pro Forma Financial Information for the 24 weeks ended June 16, 2012 and June 15, 2013(1) Pro Forma EBITDA Pro Form a EBITDA for the 24 w eeks ended June 16, 2012 (in m illions of Canadian dollars) Shoppers Pro Forma Pro Form a Loblaw Drug Mart Adjustm ents(3) Com bined Net Earnings (2) 278
Slide 26: Non-GAAP Pro Forma Financial Information for the 52 weeks ended June 15, 2013
Non-GAAP Pro Forma Financial Information for the 52 weeks ended June 15, 2013(1) Adjusted Pro Forma EBITDA Adjusted Pro Form a EBITDA for the 52 w eeks ended June 15, 2013 (in m illions of Canadian dollars) Shoppers Pro Forma Pro Form a Loblaw Drug Mart Adjustm ents Com bined (2) Net Earnings 705 60
Slide 27: Non-GAAP Pro Forma Financial Information as at June 15, 2013
Non-GAAP Pro Forma Financial Information as at June 15, 2013 Adjusted Pro Forma Debt Adjusted Pro Form a Debt as at June 15, 2013 (in m illions of Canadian dollars) Shoppers Pro Forma Pro Form a Loblaw Drug Mart Adjustm ents Com bined Short Term debt 905 491 - 1,396 Long term debt due w ithin one ye
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