Tesco Plc · LSE:TSCO
Tesco — Merger or Acquisition (January 2017)
22 slides from Tesco's merger presentation, Jan 27, 2017
Slide 1: Creating the UK's leading food business
& Creating the UK’s leading food business
Slide 2: This merger is about unlocking new growth. Tesco, the UK’s leading retailer, and Booker,
This merger is about unlocking new growth. Tesco, the UK’s leading retailer, and Booker, the UK’s leading food wholesaler, are merging to form what can become the UK’s leading food business. Together we can bring benefits for consumers, independent retailers, caterers, small businesses, suppliers, c
Slide 3: Together, we can:
Together, we can: • delight consumers with better availability of quality food at attractive prices across retail and eating out locations • serve better the faster growing ‘out of home’ food market • help independent retailers, caterers and small businesses by further improving choice, price and se
Slide 4: The merger terms
The merger terms • Each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash per Booker share • Based on the closing price of 189.0 pence per Tesco share on 26 January 2017, this represents: – a value of approximately 205.3 pence per Booker share; – a value of approximately £3.7 bill
Slide 5: Together, we can serve a larger and growing market opportunity
Together, we can serve a larger and growing market opportunity Retail Wholesale Large stores Small stores Online Cash & carry Delivered No.1 No.1 No.1 No.1 No.4 UK food market £195bn sales In home: £110bn Out of home: £85bn Growth: +1.5% (‘12-‘15) Growth: +2.5% (‘12-‘15) +2.4% (‘15-‘18) +3.8% (‘15-‘
Slide 6: A compelling combination of capabilities
A compelling combination of capabilities • Market leading product development (own label), and procurement expertise • Extensive market reach across stores, Cash & Carry, home/business delivery and Click & Collect • A service enhancing digital infrastructure • The opportunity to leverage financial s
Slide 7: Significant benefits expected for all key stakeholders
Significant benefits expected for all key stakeholders Consumers Independent retailers, Suppliers Colleagues Shareholders caterers and small businesses 6
Slide 8: Consumers
Consumers • Choice and convenience – the widest range of food available, from professional catering to core grocery – greater value via increased access to quality fresh foods at attractive prices across independent retailers and out of home caterers • A network of up to c.8,000 neighbourhood Click
Slide 9: Independent retailers, caterers and small businesses
Independent retailers, caterers and small businesses • Further enhances choice, price and service, enabling business customers to offer better value and quality to their consumers • An improvement in value equation via enhanced efficiency • A significant improvement in delivery service via utilisati
Slide 10: Suppliers
Suppliers • A broader market opportunity • Full crop procurement and utilisation – lower costs and reduced food waste • An integrated multi-channel supply chain driving further efficiencies • Greater carbon effectiveness from the UK’s most efficient buying, storage and transportation network 9
Slide 11: Colleagues
Colleagues • Potential new career opportunities as part of the UK’s leading food business • A richer learning experience base from a true multi-channel business • A further opportunity to contribute to local communities 10
Slide 12: Shareholders
Shareholders • Growth – access to a larger, faster-growing market opportunity for the combined group – innovation and improved asset utilisation driving significant potential for revenue synergies • Returns – total quantifiable synergies of at least £200m within 3 years – ROIC in excess of cost of c
Slide 13: Synergies
Synergies • Expect synergies to reach a run-rate of at least £200m per annum by end Yr 3 • Opportunity for meaningful revenue synergies – at least £25m per annum incremental operating profit has been identified by end Yr 3; – further opportunities have not been quantified for reporting under the Cod
Slide 14: The global food market is changing. Core ‘in home’ consumption is significant and stable.
The global food market is changing. Core ‘in home’ consumption is significant and stable. Eating out will continue to increase; delivery and convenience will be key customer requirements. The combination of Tesco and Booker allows us to meet this market opportunity. Wherever food is prepared and con
Slide 15: The UK’s leading food business
The UK’s leading food business PRODUCT CHANNEL CUSTOMER HYPERS / SUPERMARKETS In CONVENIENCE home OWNED / INDEPENDENT SYMBOLS Improved choice / range ONLINE Enhanced volume for efficiency e.g. full crop utilisation CASH & CARRY Out DELIVERED of home FOOD SERVICE 14
Slide 16: Creating the UK’s leading food business for
Creating the UK’s leading food business for Consumers Independent retailers, Suppliers Colleagues Shareholders caterers and small businesses 15
Slide 17: Appendices
Appendices
Slide 18: Tesco is the UK’s leading food retailer
Tesco is the UK’s leading food retailer • 50 million customer transactions per week PLC • 16 million active Clubcard customers 2016 sales = £48.4bn • Leading fresh, own-brand & branded ranges UK International • Proven leadership in grocery home shopping £37.2bn £10.2bn service • Deep, long-standing
Slide 19: Booker is the UK’s leading food wholesaler
Booker is the UK’s leading food wholesaler • Sales: Group PLC – £3.2bn cash & carry via 200 sites 2016 sales = £5.0bn – £1.8bn delivered via c.1,200 vehicle fleet Cash & Carry Delivered £3.2bn sales £1.8bn sales – includes £1bn sales digitally • Proudly serving 450k caterers / out of home 172 branch
Slide 20: Indicative combined financials – based on 2015/16 published results (1)
Indicative combined financials – based on 2015/16 published results(1) Booker Tesco(2) Combined Sales £5.0bn £54.4bn £59.4bn EBITDA(3) £180m £2.2bn £2.4bn % margin 3.6% 4.0% 4.0% Operating profit(3) £155m £944m £1.1bn % margin 3.1% 1.7% 1.8% Capex £(26)m £(956)m £(982)m % sales (0.5)% (1.8)% (1.7)%
Slide 21: Key transaction highlights
Key transaction highlights Key terms • Each Booker shareholder will receive 0.861 Tesco shares and 42.6p in cash per Booker share • Based on the closing price of 189.0 pence per Tesco Share on 26 January 2017, this represents: - a value of approximately 205.3 pence per Booker Share; - a value of app
Slide 22: Disclaimer
Disclaimer THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL. This presentation has been prepared solely for information and for use in connection w