Strategic rationale for the acquisitions
Superior Food
•
Business overview
A leading Australian foodservice
distribution business
Servicing ~20,000 customers
With ~600 suppliers
Offering ~15,000 SKUs
3rd largest player (~6%5 market
share)
Diversified customer base across
five operating segments
National footprint of 23 branches
(except NT)
Ability to service >95% of the
states and territories it operates in
Scaled operational capabilities with
a fleet of ~290 vehicles and
national facility network with ~80k
sqm of warehouse space
Strategic rationale
Natural extension of Metcash's
Food strategy
Strengthens and diversifies
Metcash's existing Food business
Immediate scale in Foodservice -
an attractive growth market for
Metcash Food
Further M&A opportunity in a
fragmented ~$21bn market
Highly complementary businesses
with ~$14m+ of expected
annualised synergies
High-quality management team
with proven track record of
organic & inorganic growth and
enduring customer relationships
•
Transaction highlights
Total consideration of up to
$412.3m, comprises an upfront EV
of $390m plus a contingent earn-
out payment of up to $22.3m²
Total potential EV implies:
9.0x FY24E¹ Underlying EBITDA
before expected annualised
synergies³
6.9x FY24E¹ Underlying EBITDA
including expected annualised
synergies³
Implied acquisition multiple
(before synergies) of 9.0x
compares favourably to recent
transaction precedents in the
sector
Financially compelling - accretive
to EPS (inclusive of synergies) and
margins4
Sales
Key financials (FY24E)1
$1.3bn
Underlying EBITDA (pre-AASB16)
$46.0m (3.5% margin)
FY24E, pre synergies
Underlying EBIT (post-AASB16)
$39.9m (3.0% margin)
FY24E, pre synergies
Expected annualised synergies (at end of year 2)
$14.0m
Superior
food services
1.
2.
FY24E represents Superior Food's underlying actual results for the six months ended December 2023 plus Superior Food's underlying budget for the six months ending June 2024.
Further details of the purchase price and contingent earn-out mechanism are included in Appendix A.
3.
4.
The implied acquisition multiple before synergies of 9.0x is calculated based on the total potential EV of $412.3m (which includes the maximum potential earn-out of $22.3m) divided by the FY24E Underlying EBITDA (pre-AASB16 basis) of $46.0m (which corresponds to the
EBITDA that must be achieved for the maximum earn-out of $22.3m to be payable to the vendor). The implied multiple inclusive of synergies of 6.9x is based on EBITDA (pre-AASB16 basis) of $60.0m (comprising the FY24E Underlying EBITDA of $46.0m plus $14.0m of
annualised synergies).
Margin accretive prior to synergies in respect of the Food business (including Superior Foods). Margin represents EBIT (excluding synergies) divided by sales (including charge through sales) and is based on the Oct-23 LTM results per slide 40.
5.
Source: Superior Food management estimates.
Metcash
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