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

  1. Slide 1: Acquisition of Canada Safeway by Sobeys

    Acquisition of Canada Safeway by Sobeys June 12, 2013

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

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