Empire Co Ltd Class A · TSX:EMP.A
Empire Co Ltd Class A — Merger or Acquisition (June 2013)
15 slides from Empire Co Ltd Class A's merger presentation, Jun 12, 2013
Slide 1: Acquisition of Canada Safeway by Sobeys
Acquisition of Canada Safeway by Sobeys June 12, 2013
Slide 2: "Safe Harbour" Disclosure
“Safe Harbour” Disclosure FORWARD-LOOKING INFORMATION Certain statements made in this presentation that are not current or historical factual statements may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information in this
Slide 3: Transaction Overview
Transaction Overview On June 12, 2013, Sobeys entered into an agreement with Safeway Inc. to purchase substantially all of Canada Safeway’s assets for C$5.8 billion(1) in cash (the “Acquisition”) Canada Safeway is a leading Western Canadian food retailer with exceptional store locations • 213 full s
Slide 4: Transaction Rationale
Transaction Rationale Creation of a new platform for growth Positions Sobeys as a leading grocer in Western Canada and the #1 grocer in the fast-growing Alberta market Solidifies Sobeys’ #2 position nationally with pro forma revenue of approximately $24 billion Canada Safeway has an exceptional stor
Slide 5: Much Stronger National Platform
Much Stronger National Platform Sobeys’ pro forma LTM(1) revenue of approximately $24 billion Store Count: British Columbia Alberta Saskatchewan Manitoba Ontario Québec Atlantic Canada 32 141 15 32 334 407(3) 354(4) 75 93(5) 16 33 6 Loblaw 232(2) Loblaw 121(2) Pro Forma 107 Pro Forma 234 Pro Forma 3
Slide 6: Exceptional Store Portfolio in Sought After Locations with Significant Real Estate Ownership
Exceptional Store Portfolio in Sought After Locations with Significant Real Estate Ownership 213 full-service retail grocery stores under the Safeway banner • Approximately 9 million square feet of exceptional store real estate in highly desirable markets • Approximately 60% of store square footage
Slide 7: Sobeys and Canada Safeway: A Great Fit
Sobeys and Canada Safeway: A Great Fit Sobeys Canada Safeway • Focus on fresh food • Focus on offering high-quality perishables • Investment in private label – Sensations, • Growth of private label – SELECT, O Organics, Compliments, Balance Organic Open Nature • Customer loyalty • Loyalty building a
Slide 8: Significant Cost Synergies
Significant Cost Synergies Approximately $200 million run-rate cost synergies annually, realized over a three year period Type Comments Integrate and modernize distribution networks while leveraging Sobeys’ Distribution expertise Reorganize business processes to fully leverage Sobeys’ national IT IT
Slide 9: Strong Private Label Offering and Customer Loyalty Programs
Strong Private Label Offering and Customer Loyalty Programs Private Label Offering Customer Loyalty Programs Helps promote customer loyalty and Elimination of separate loyalty programs also provides price competitive products Integration of the loyalty program will Integration of private label offer
Slide 10: Modern Distribution Network, POS and Information Technology Infrastructure
Modern Distribution Network, POS and Information Technology Infrastructure Distribution Network POS/IT Infrastructure Sobeys has invested significantly in the Sobeys has “leading edge”, proprietary construction of automated DCs customer insight capability as well as a • Enables automated picking/ass
Slide 11: Significantly Accretive Transaction
Significantly Accretive Transaction Management expects the Acquisition to be immediately accretive to adjusted net earnings per share and in excess of 25% accretive once synergies are fully realized Effective acquisition multiple of 7.4x after adding assumed capital leases, adjusting for the Sale-Le
Slide 12: Financing Overview
Financing Overview Total transaction value of $6.0 billion(1), 56% to Sources of Funds at Closing (estimate) be funded with equity, asset sales and cash (C$ millions) Empire and Sobeys have obtained commitments from Scotiabank providing for an aggregate of $6.44 billion Bond • $1.825 billion term lo
Slide 13: Continue Focus on Food Retail and Related Real Estate
Continue Focus on Food Retail and Related Real Estate In 2007, with the privatization of Sobeys, Empire embarked on a major refocusing of its business on retail food operations Sobeys invested more than $2.3 billion to expand its stores and distribution network, while generating over $2.9 billion in
Slide 14: Continue Empire's Track-Record of Long-Term Growth
Continue Empire’s Track-Record of Long-Term Growth (C$ millions) Empire Total 600% May 2007 - Shareholder Privatization of Sobeys Return CAGR(1): March 2006 - 12.8% 500% Formation and investment in Crombie REIT 400% July 2000 - Sale of Hannaford Adjusted Net Brothers Earnings per $5.23 Total Return
Slide 15: Transaction Highlights
Transaction Highlights $5.8 billion(1) all-cash transaction Conservative acquisition financing with the majority of funds expected to be from an Empire equity issue and asset sales Effective acquisition multiple of 7.4x after giving effect to synergies, assumed capital leases and the Sale-Leaseback