Strategic rationale for the acquisitions
Transaction summary - acquisitions and equity raise'
Acquisitions strengthen and diversify Food and Hardware pillars and accelerate Metcash's strategic growth plans
Transaction
overview
Metcash has entered into binding agreements for three strategic acquisitions (together, the "Acquisitions")
Food: 100% interest in SFG Group Holdings Pty Ltd ("Superior Food"), a leading Australian foodservice distribution business
Total potential enterprise value (EV) of up to $412.3m (purchase price further detailed in Appendix A)
Comprises an upfront EV of $390m plus a contingent earn-out payment of up to $22.3m based on Superior Food's actual Underlying EBITDA for year ending 30 June 20242
Total potential EV implies 9.0x FY24 EBITDA 23 before expected annualised synergies and 6.9x including expected annualised synergies of $14m
Implied acquisition multiple is below recent transaction precedents in the sector
2. Hardware: 100% interest in Bianco Construction Supplies Pty Ltd ("Bianco"), a construction and industrial supplies business servicing the South Australian and Northern Territory trade market
EV of $82.2m (purchase price further detailed in Appendix A)
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Implies 5.9x Oct-23 LTM Underlying EBITDA³ before expected annualised synergies, or 5.0x including expected annualised synergies of $2.4m
Funding
Financial
impacts
Timing
3. Hardware: Assets of Alpine Truss Pty Ltd ("Alpine Truss"), one of the largest Frame & Truss operators in Australia
EV of $64.0m (purchase price further detailed in Appendix A)
Implies 6.0x Oct-23 LTM Underlying EBITDA³ before expected annualised synergies, or 4.8x including expected annualised synergies of $2.7m
The Acquisitions and associated transaction costs will be fully funded via:
1. An equity raise comprising: a $300m fully underwritten institutional placement ("Placement")
2. Up to $278m from existing cash and available debt facilities
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In aggregate mid-single digit accretive on a pro forma LTM basis including $19m of annualised synergies 4,5
Superior is EPS accretive including $14m of synergies
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Bianco and Alpine are accretive including $5m of synergies
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Pro forma DLR of 1.16-1.19x, post the competition of the acquisitions and equity raise, is within Metcash's target DLR range of 1.0x to 1.75x
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Bianco and Alpine Truss expected to complete 4Q FY24 (Bianco subject to ACCC clearance)
Superior Food expected to complete 1Q FY25 (subject to ACCC clearance)
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The financial information presented on this page has been calculated as further detailed in the remainder of this investor presentation. In particular, refer to the Pro-Forma financial information detailed on slides 40 and 41 and also Appendix A.
Further details of the earn-out mechanism are included in Appendix A. The implied acquisition multiple before synergies of 9.0x is calculated based on the total potential EV of $412.3m (includes the maximum earn-out) divided by Underlying EBITDA (pre-AASB16) of $46.0m for
the year ending 30 June 2024 (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 Underlying EBITDA (pre-AASB16) of $60.0m.
Underlying EBITDA represents the normalised results of each business, excluding the potential impact of acquisition accounting that will be applied by Metcash at the completion of each acquisition and is calculated on a pre-AASB16 basis.
EPS accretion is based on normalised results, excluding the potential impact of acquisition accounting that will be applied by Metcash at the completion of each acquisition, using Oct-23 LTM earnings as further detailed on slides 40.
See Appendix B for accretion details.
Debt Leverage Ratio ('DLR', calculated as Net Debt/ Underlying EBITDA (post-AASB16) less depreciation of Right-Of-Use (ROU) assets) as further detailed on slide 41.
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Metcash
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