L - Loblaw Companies Limited - Loblaw Companies Limited to Acquire Shoppers Drug Mart Corporation Transcript

    Company Name:Loblaw Companies Limited
    Event Title:Loblaw Companies Limited to Acquire Shoppers Drug Mart Corporation Transcript
    Event Date:15-Jul-2013
    Event Time:08:00 AM ET



    Good morning. My name is Melissa and I will be your conference operator today. At this time, I would like to welcome everyone to the Loblaw Companies Limited and Shoppers Drug Mart Transaction Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. And I'll now turn the call over to your host, Ms. Janet Craig, you may begin your conference.

    Janet Craig

    Senior Vice President, Investor Relations
    Thanks Melissa. And thank you everyone for joining us his morning. I mean here today with Loblaw Executive Chairman, Galen Weston; Shoppers Drug Mart Chair, Holger Kluge, sorry Holger Loblaw's President, Vicente Trius, Shoppers Drug Mart President and Chief Executive Officer, Domenic Pillaa and Loblaw's Chief Financial Officer Sarah Davis.

    Before we begin I would like to remind you that this discussion will contain forward-looking statements about the -- transactions. These forward-looking statements reflect current estimates, pro forma information, beliefs and assumptions which are based on Loblaw's and Shoppers Drug Mart's perception of factors and management beliefs are appropriate in the circumstances. We can give no assurance that such estimates, proforma information, beliefs and assumptions will prove to be correct. Investors are cautioned that there are number of risks and uncertainties that could also cause actual results or events to differ materially from those expressed in these forward-looking statements.

    For additional information regarding the forward-looking statements, please refer to the full text of the press release issued by Loblaw earlier today and so the slide contains today's presentation material. In addition, I wish to point out that throughout the presentation this morning, management may refer to non-GAAP measures such as EBITDA and free cash flow . Management of Loblaw and Shoppers Drug Mart believe that these non-GAAP measures provide useful information to both management, investors and discussing the proposed transaction. These measures do not have a standard meaning prescribed by GAAP and therefore they may not be comparable for similarly titled measures presented by other publicly traded companies.

    Now, let me turn the call over to Galen.

    Galen G. Weston

    Executive Chairman
    Thank you, Janet and thank you all for joining us today. As we start our presentation, I'd like to introduce the Chair of the Board of Shoppers Drug Mart, Holger Kluge. Making transformational transactions like this one happen takes vision, patients and stamina. Holger has demonstrated just such leadership. Today's announcement would not have take place without him. Holger, can I ask you to make a few remarks.

    Holger Kluge

    Chair, Shoppers Drug Mart Corporation
    Thank you, Galen. I appreciate your kind words. This is a wonderful combination that paves the way by terrific future of our two companies as well as for our investors, associate owners, and team and our customers. Transactions are about numbers for sure, but their success really depends on people and culture both Loblaw and Shoppers Drug Mart share for our customers and together, we will be able to serve them better than we ever could do alone. I am excited about this transaction and look forward to a very bright future ahead of us. With that, let me turn it back to Galen.

    Galen G. Weston

    Executive Chairman
    When Loblaw first opened it's stores in 1919, we changed our Canadian shops for groceries. When we launched our President's Choice and no name house brand, we changed our Canadian private label. President's Choice Financial changed our Canadian bank and Joe Fresh changed affordable apparel for Canadian. I have long believed that the next chapter for growth at Loblaw should be based in a vision that combined health, wellness and nutrition. Loblaw combining with shoppers drug mart is the ultimate expression of that vision. Not only does this transaction make compelling financial sense, it establishes a truly innovative platform for the future.

    With today's transformational partnership between Loblaw and Shoppers Drug Mart, we're changing the retail landscape in Canada, combining two iconic companies and creating an innovative new retailer. We will put both companies trusted brands and services within closer reach of even more Canadians and do so in a way that creates immediate value for the shareholders of both companies.

    Together Shoppers Drug Mart and Loblaw will touch millions of Canadians everyday. With 1 billion customer transactions per year over 2,300 stores nearly 1,800 pharmacies and 65 million square feet of selling space. Had we been one company in 2012 we would have generated $42 billion in annual revenue $3 billion in EBITDA and $1 billion in annual free cash flow . But as big as this deal is, it's about an even bigger idea.

    This transaction enables us to harness the complementary strengths of Canada's number one food retailers and Canada's number one pharmacy retailer to serve customers better, closer to where they live and worked and with an even greater combination of value assortment and service then either company could provide alone.

    The profile and preferences of the Canadian consumer continue to change as they have so many times in the more than nine decades since we opened our first grocery store, and in the five decades in Shoppers Drug Mart opened its first pharmacy. And we are confident that we will remain Canadian's first choice for health, wellness and nutrition. This transaction will enable us to offer Loblaw's portfolio of market leading brands and convenient food and groceries products through Shoppers Drug Mart store network. Likewise, we will begin to offer Shoppers Drug Mart respected wellness brands and pharmacy services in Loblaw stores.

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