Woolworths Holdings Limited · JSE:WHL
Woolworths — Merger or Acquisition (April 2014)
31 slides from Woolworths's merger presentation, Apr 9, 2014
Slide 1: Agreement to Acquire David Jones
AGREEMENT TO ACQUIRE David Jones Presentation to Investors, Analysts and Media 9 April 2014 1
Slide 2: Table of contents
Table of contents 1 Presenters 2 Creating a leading southern hemisphere retailer 3 David Jones, an iconic Australian department store 4 Compelling strategic rationale 5 The combined group 6 Salient features of the offer 7 Indicative timetable Q&A 2
Slide 3: Presenters
1 PRESENTERS 3
Slide 4: Presenters
PRESENTERS Ian Moir Group CEO Woolworths Holdings (“WHL”) Joined WHL in 2010 Reeza Isaacs Group Finance Director WHL Joined WHL in 2013 as Group Finance Director Ralph Buddle Head Corporate Finance WHL Joined WHL in 2001 4
Slide 5: Creating a leading southern hemisphere retailer
2 Creating a leading southern hemisphere retailer 5
Slide 6: Changing dynamics in southern hemisphere retail
CHANGING DYNAMICS IN SOUTHERN HEMISPHERE RETAIL n WHL continues to pursue aggressive growth plans across Africa (including South Africa) to benefit from forecast sub-Saharan WHL HISTORIC REVENUE AND NPAT (R'M) GDP growth of ~5% § Opening new stores 45 000 3 000 § Expanding existing stores § Launchin
Slide 7: Australian expansion the optimal next step
AUSTRALIAn EXPANSION THE OPTIMAL NEXT STEP n WHL has conducted an extensive analysis of all relevant southern hemisphere markets Household spend § Being a leading fashion retailer in the southern hemisphere is one and population growth 1 of WHL’s strategic objectives § Southern hemisphere expansion
Slide 8: Transformational transaction with compelling rationale
Transformational transaction with compelling rationale n WHL has agreed to acquire 100% of David Jones Limited ("David Jones") via a cash settled Scheme of Arrangement ("Scheme") § The Board of Directors of David Jones recommends its shareholders vote in favour of the Scheme in the absence of a supe
Slide 9: David Jones, an iconic Australian department store
3 David Jones an iconic Australian department store overview 9
Slide 10: David Jones, an iconic Australian brand
David Jones footPRINT an iconic Australian BRAND QLD: 8 stores n Founded in Sydney, Australia in 1838 and first listed in 1920 WA: 4 stores sA: n Department store retailer focused on aspirational and premium customer 3 stores segments NSW: 14 stores ACT: 2 stores § Strong player in the premium segme
Slide 11: David Jones, an iconic Australian brand
David Jones an iconic Australian BRAND 11
Slide 12: Attractive owned property portfolio
Attractive owned property portfolio n David Jones owns the four properties that house its flagship stores in each of Sydney and Melbourne n They have been independently valued at ~A$612m (R6.1bn1 , as at late 2012) Sydney § Elizabeth Street (~39,000m2) § Market Street (~32,000m2) Melbourne § 310 Bou
Slide 13: The perfect platform for Australian expansion
the perfect platform FOR AUSTRALIAN EXPANSION higher income AUSTRALIAN CUSTOMER SEGMENT DEPARTMENT STORE LANDSCAPE ILLUSTRATIVE ONLY LOWER income BUDGET PRODUCT OFFERING PREMIUM 1 meaningful in size 2 a mirror image of whl 3 aligned values 4 aligned customer >R55bn market capitalisation1 Iconic Sout
Slide 14: Compelling strategic rationale
5 Compelling strategic rationale 14
Slide 15: Acquisition supports our strategy
Acquisition supports our strategy n Be a leading southern hemisphere fashion retailer David Jones is a paradigm-changing acquisition that n Drive synergies and efficiencies across the group delivers on 3 of our 6 strategic initiatives n Build stronger, more profitable customer relationships n Become
Slide 16: Compelling commercial rationale for the transaction
Compelling commercial rationale for the transaction 1 Expected to provide attractive IRR and strong earnings growth from a materially higher base Ensures strong defensive position against northern hemisphere entrants in both South Africa and Australia through 2 scale and global sourcing opportunitie
Slide 17: Value creation opportunities in excess of ~R1.4bn per annum within 5 years
Value creation opportunities in excess of ~ R1.4bn per annum WITHIN 5 years1 Introduction of WHL Private label TIMING OF BENEFITS n David Jones private label contribution only ~3.5% of sales (all sourced through 3rd parties so not ‘true’ private label ) n Opportunity to increase this to at least 20%
Slide 18: Offer will benefit all Australian stakeholders
Offer will benefit all australian stakeholders The n Creates a leading southern hemisphere retailer combination n Platform will allow David Jones to accelerate the delivery of its growth objectives n Compelling cash offer for David Jones shareholders SHAREHOLDERS n Unanimously recommended by the Dav
Slide 19: Further long term benefits to South Africa
Further long term benefits to South Africa n Transforming WHL into a leading southern hemisphere retailer is likely to result in increased employment Labour force opportunities for South Africans and skills n The acquisition will also result in a positive impact in terms of skills and knowledge bein
Slide 20: The combined group
5 THE COMBINED GROUP 20
Slide 21: Enhanced portfolio of owned brands
ENHANCED PORTFOLIO OF OWNED BRANDS FOOD C&GM COUNTRY ROAD GROUP1,2 DAVID JONES2 Revenue: R17.5bn Revenue: R10.8bn Revenue: R6.5bn Revenue: R16.8bn Stores: 372 Stores: 256 Stores: 485 Stores: 38 Source: Company announcements, WHL information, excludes Financial Services. 1. WHL owns ~88% of Country R
Slide 22: Combined entity key financials
Combined entity key financials PRO FORMA COMBINED GROUP CONTRIBUTION1 FOOD C&GM COUNTRY ROAD FINANCIAL SERVICES DAVID JONES FY13A REVENUE (R'BN) 17.5 10.8 6.5 16.8 51.6 FY13A OPERATING PROFIT (R'BN) 1.0 1.9 0.5 1.0% 0.2 1.4 5.0 CURRENT STORES (#) 372 256 485 38 1, 151 Source: Company announcements,
Slide 23: Transformational southern hemisphere footprint
Transformational southern hemisphere footprint Combined group presence OMAN:1 UNITED ARAB EMIRATES:2 GHANA: 2 UGANDA: 2 KENYA:8 EQUATOR TANZANIA:4 ZAMBIA:5 Namibia:11 MOZAMBIQUE:4 BOTSWANA:32 Australia WHL: 433 South Africa, David Jones:38 Swaziland and Lesotho:579 mauritius: 3 NEW ZEALAND: 27 Note:
Slide 24: Diversified earnings base across product and geography
(product) Diversified earnings base across product and geography FY13A sales FY13A sales FY13A operating profit (product) (geography) (product) Other 2% Financial Rest of Services 5% Clothing Africa 2% WHL & Home 49% Australia 16% Food 29% “status quo” Food 49% South Clothing Africa 82% & Home 66% H
Slide 25: Well positioned to compete against growing presence of international retailers
Well positioned to compete against growing presence of international retailers REVENUE (LAST REPORTED PERIOD, US$BN)1 21.7 NORTH AMERICA EUROPE 19.6 19.0 south AMERICA COMBINED ENTITY 15.2 AUSTRALASIA AFRICA 12.5 11.9 6.2 5.7 5.3 4.6 4.2 4.0 3.5 3.5 3.3 2.7 2.5 1.8 1.5 1.4 1.0 MARKS & SPENCERS indit
Slide 26: Salient features of the offer
6 Salient features of the offer 26
Slide 27: Key terms of the offer
Key terms of the offer n WHL has agreed to acquire 100% of David Jones via a Scheme § The Board of Directors of David Jones recommends its shareholders vote in favour of the Scheme in the absence of a superior proposal 1 § Parties have entered into a Scheme Implementation Deed which will govern the
Slide 28: Indicative timetable
7 Indicative timetable 28
Slide 29: Indicative transaction timetable
Indicative transaction timetable Indicative David Jones Scheme timetable 2014 First Australian court hearing mid - late May Distribution of Scheme Booklet to David Jones shareholders late May Scheme meeting late June Notice of second Australian court hearing late June Second Australian court hearing
Slide 30: Thank You & Questions
Thank You & Questions 30
Slide 31: Disclaimer
Disclaimer The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions. This
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