Rite Aid — Merger or Acquisition (February 2018)
25 slides from Rite Aid's merger presentation, Feb 20, 2018
Slide 1: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements contained herein are “forward-looking statements” within the meaning of applicable securities laws and regulations. These forward-looking statements can generally be identified by the use of words such as “anticipate,” “expect,” “believe,” “could,” “esti
Slide 2: Forward Looking Statements (Cont'd)
FORWARD LOOKING STATEMENTS (CONT ’D) Important Additional Information In connection with the proposed strategic combination involving Rite Aid and Albertsons Companies, Rite Aid and Albertsons Companies intend to file relevant materials with the SEC, including that Albertsons Companies will file a r
Slide 3: Participants
PARTICIPANTS Robert Miller Chairman & CEO Albertsons Companies John Standley Chairman & CEO Rite Aid Kermit Crawford Darren Karst Bob Dimond President & COO Rite Aid SEVP, CFO & CAO Rite Aid EVP & CFO Albertsons Companies Robert Miller will be Chairman and John Standley will be CEO of the combined C
Slide 4: Our Companies Today
OUR COMPANIES TODAY (1) 2,569 stores in 19 states 221 million scripts per year(2) Full service PBM (EnvisionRxOptions) with ~22 million lives covered across all business $16bn in Retail Pharmacy and $6bn in EnvisionRx sales, respectively Wellness+ loyalty program (12 million members) 7 million custo
Slide 5: Albertsons Track Record of Successful Growth
ALBERTSONS TRACK RECORD OF SUCCESSFUL GROWTH Safeway Acquisition January 2015 Select A&P, Haggen & Independent Sites 2H 2015 / 2016 Acquisition from Supervalu (NAI) March 2013 United Acquisition December 2013 Plated & El Rancho (45% ownership) 2017 SVU: 414 stores 51 stores 1,325 stores 159 stores 1
Slide 6: The Transaction Transforms Rite Aid
THE TRANSACTION TRANSFORMS RITE AID Increased Geographic Presence… …Solidifies Financial Strength …New Levers for Growth… Convenience and format choice for customers Leverage strength and capabilities of both companies New customer lives Transforms front end Access new markets Strong cash flow for f
Slide 7: Key Transaction Terms
KEY TRANSACTION TERMS For every 10 Rite Aid shares, Rite Aid shareholders will have the right to elect to receive either 1 share of Albertsons plus $1.832 in cash or 1.079 shares of Albertsons If all Rite Aid shareholders elect to receive shares plus cash, former Rite Aid shareholders will own appx.
Slide 8: Combination Highlights
COMBINATION HIGHLIGHTS „ $83bn revenue(1) „ 4,892 stores and 4,345 pharmacies „ 40+ million customers per week and 323 million prescriptions filled per year Powerful Combination „ Leading positions in 66% of the top MSAs(2) „ 70% of pharmacy locations in the West are #1 or #2(3) Increased Local Pres
Slide 9: Creating Local Networks in Attractive Geographies
CREATING LOCAL NETWORKS IN ATTRACTIVE GEOGRAPHIES #1 integrated food and drug retailer on the West Coast(1) Strong position in the Northeast „ „ #2 Shaw’s #1 Seattle #1 #1 #1 #1 Portland #3 #1 #1 #1 Intermountain #3 #2 Acme #3 #2 Eastern #1 #1 Nor Cal #2 #2 #1 Jewel Osco #3 #2 Denver #3 #2 #2 #1 So
Slide 10: Building on Each Format's Complementary Strengths
BUILDING ON EACH FORMAT ’S COMPLEMENTARY STRENGTHS “With Us It’s Personal” “Full, Fresh, Friendly, Fast, Clean” Health and Beauty & General Merchandise Own Brands Award Winning Loyalty Program Premium Fresh Prepared Foods Vitamins and Mineral Supplements (GNC) Innovative Wellness Store Format NOSHE(
Slide 11: Unmatched Manufacturing and Distribution Network with Own Brands Innovation
UNMATCHED MANUFACTURING AND DISTRIBUTION NETWORK WITH COMPREHENSIVE OWN BRANDS INNOVATION Best-in-Class Own Brands Portfolio National Vertically Integrated Network Growing Own Brands – $12bn combined business driving customer loyalty Albertsons manufactures $1bn in Own Brands Albertsons Distribution
Slide 12: Own Brands Category Expertise Will Drive Combined Penetration
OWN BRANDS CATEGORY EXPERTISE ACROSS FORMATS WILL DRIVE COMBINED PENETRATION Own Brands Strategy Driving Combined Penetration (Own Brands % revenue mix) 30% Use Albertsons Own Brands in food and consumables to transform Rite Aid Front End 23% Use Rite Aid Own Brands and expertise to grow Albertsons
Slide 13: Combining to Offer a World-Class Omni-Channel Platform
COMBINING TO OFFER A WORLD-CLASS OMNI-CHANNEL PLATFORM BranBdrsa/Ondffserings MMaarrkkeetplaccee FFulfillllmeenntt People DDiigittaall Rettaaiill “Meeting our customers where and how they want to shop” PPBM 14
Slide 14: Update on Recent eCommerce Initiatives
UPDATE ON RECENT ECOMMERCE INITIATIVES Providing customers what they want, when they want it Commitment to same-day convenience across Food, Health and Wellness Albertsons’ home grown eCommerce offerings Rite Aid Drive Thru pharmacies and home delivery Grocery delivery business with loyal customer b
Slide 15: Targeted Offerings Through Loyalty & Data Analytics
TARGETED OFFERINGS THROUGH LOYALTY & DATA ANALYTICS Integrated Loyalty Programs (1) 12m households Leverage a combined base of 25m loyalty customers „ Ability to drive traffic across companies „ Personalized offers and content in email and direct mail Personalizing connections with customers through
Slide 16: Deepens Relationships with Most Valuable Customers
DEEPENS RELATIONSHIPS WITH MOST VALUABLE CUSTOMERS National Pharmacy Brand With More Options And Convenience For Customers Albertsons Rx Customers Spend Significantly More Than Non-Rx Customers(2) (Spend per week) ~$92 4,345 Pharmacies Higher total $16bn Annual Combined Pharmacy Sales(1) 319 Health
Slide 17: Increase Lives Through Broader Geographic Coverage and Local Pharmacy Networks
INCREASE LIVES THROUGH BROADER GEOGRAPHIC COVERAGE AND STRONG LOCAL PHARMACY NETWORKS Integrated Healthcare Network Significant Opportunity to Convert Lives Combined pharmacy network increases choice, convenience and access to the ~50 million lives in West Coast markets Total lives: ~50 million Inve
Slide 18: Leveraging EnvisionRx Will Drive More Lives to Our Stores
LEVERAGING ENVISIONRx WILL DRIVE MORE LIVES TO OUR STORES EnvisionRx Offerings EnvisionRxOptions Comprehensive suite of services offered as a bundle or à la carte EnvisionRx Transparent Pass-through PBM Patented Point-of-Service (POS) rebate capabilities EnvisionPharmacies Mail Order/ Specialty Phar
Slide 19: Combination Creates Opportunities to Drive Traffic and Growth
COMBINATION CREATES OPPORTUNITIES TO DRIVE AND GROWTH TRAFFIC Incremental Revenue Opportunities of $3.6 Billion Rebrand existing Albertsons pharmacies as Rite Aid(1) and integrate loyalty programs to drive traffic Leverage Front End capabilities and pharmacy expertise to enhance customer offering Ph
Slide 20: Opportunity to Deliver Significant Cost Synergies
OPPORTUNITY TO DELIVER SIGNIFICANT COST SYNERGIES Expected Cost Synergies: $375 million EBITDA Contribution $90m Expanded geographic coverage to improve national brand vendor funding $90m Grow penetration of Own Brands and reduce COGS $75m Pharmacy purchasing, formulary optimization, and expansion o
Slide 21: Albertsons' Proven Integration Expertise
ALBERTSONS’ PROVEN INTEGRATION EXPERTISE Breakdown of Realized Safeway Synergies Additional Synergies Utilities Insurance Manufacturing Pharmacy FY’18E(2) Expected $823m Planned At Announcement $800m(1) Albertsons has exceeded the initial synergy target in the Safeway integration (1) Estimated four
Slide 22: Financial Strength Supported by Free Cash Flow and Real Estate Portfolio
FINANCIAL STRENGTH SUPPORTED BY LARGE, DIVERSIFIED FREE CASH FLOW AND A VALUABLE REAL ESTATE PORTFOLIO Strong and Diversified Cash Flow Valuable Real Estate Portfolio LTM Q3’17(1) Combined Revenue Split „ Highly valuable “first and main” locations PBM 7% „ High proportion of owned and ground-leased
Slide 23: Pro Forma Financial Snapshot
PRO FORMA FINANCIAL SNAPSHOT Revenues(1) $ 22.0 $ 61.0 $ 83.0 Revenue Target Note: Store counts are as of Q3 ending December 2017 for both Albertsons and Rite Aid. Albertsons’ and Rite Aid’s management estimates based on results year to date and are subject to risks and uncertainties. Prior to givin
Slide 24: Creating a Leader in Food, Health and Wellness
Creating a Leader in Food, Health and Wellness
Slide 25: Albertsons
Albertsons AID Jiey Creating a Leader in Food, Health and Wellness