M&A in US Retail_Q4 2012 by Sutherland Global Services

US Retail M&A Review – Q1 2013 April 2013

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M&A deal numbers in the US Retail declined in Q1 2013 Announced US Retail M&A Activity (Q1 2012-Q1 2013) 70

$45

66 62

$40

$40.8

$35

Deal Volume

$30

$25

$20 $15

$10.7 $6.2

$2.1

Deal Value (USD Bn)

$10 $5

$1.8 0

$0 Q1 2012

Q2 2012

Q3 2012

Deal Volume

Q4 2012

Q1 2013

Disclosed Deal Value

Comments • In the US Retail industry, mergers and acquisitions (M&A) activity in terms of deal volume recorded a new low in Q1 2013 as compared to the past four quarters of 2012 • At an overall level, announced deals decreased 27.4% to 45 in Q1 2013 from 62 in Q4 2012, but the disclosed deal value increased to USD 6.2 Bn in Q1 2013 from USD 2.1 Bn in Q4 2012 • M&A activity in the US Retail space was majorly focused on the food and beverage retailing. Moreover, Private Equity (PE) firms continued to show strong interest, accounting for 40% of the total deal volume in Q1 2013 Source: Secondary Research

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Private Equity continues to find investment opportunities in the US Retail Announced US Retail M&A Activity by Type (Q1 2012- Q1 2013) 70

$35

60 37

Deal Volume

$25 $20

$15

9.5

$10

9.9

20 0.4 20

Q1 2012

Q2 2012

Q3 2012

4.2 2.0

1.1

1.4 10

$30

1.0

Q4 2012

Q1 2013

Deal Value (USD Bn)

30.9

$0 -$5

PE Deal

Corporate Deal

Total PE Deal Value

Total Corporate Deal Value

Comments • PE firms have continued to play a central role in the US Retail M&A market and have been active deal participants in Q1 2013. In Q1 2013, PE activity in the retail sector comprised 40% of the total deal volume and 67.3% of the total deal value • In Q1 2013, PE-backed deal volume decreased 35.7% quarter-on-quarter (q-o-q) to 18, whereas disclosed deal value hosted more than threefold growth (336.7%) to reach USD 4.2 Bn • Similarly, corporate deal volume in Q1 2013 decreased 20.6% q-o-q to 27 and disclosed value increased 76.9% to USD 2 Bn • PE-backed deals were more inclined toward food & beverage retailing, other retailing and apparel retailing in Q1 2013 Source: Secondary Research

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Food and beverage retailing continues to drive the US Retail M&A activity US Retail M&A Activity by Sub-sector (Q1 2013) Discount and Department Store Retailing Other Retailing

US Retail M&A Activity by Sub-sector (Q4 2012) Discount and Department Store Retailing

0 $0.0 12

Other Retailing

$1.8

Internet and Catalog Retailing

2 $0.0

Internet and Catalog Retailing

Home Improvement Retailing

1 $0.0

Home Improvement Retailing 19

Food & Beverage Retailing Computers & Electronics Retailing Apparel Retailing Deal Volume

Food & Beverage Retailing

$3.7 2 $0.0

Computers & Electronics Retailing

Apparel Retailing

$0.7

Deal Volume

Disclosed Deal Value (USD Bn)

1 $0 16 $0.2 8 $0.8 2 $0 31 $1.1 3

$0 1 $0 Disclosed Deal Value (in USD Bn)

Comments • The US Retail sector continues to be driven largely by food and beverage retailing transactions, both in terms of deal volume and deal value in Q1 2013 • While the number of food and beverage deals decreased to 19 in Q1 2013 from 31 in Q4 2012, the total transaction value increased close to 2.5 times q-o-q to USD 3.7 Bn in Q1 2013 • Apparel retailing saw an increase in the M&A activity after a quiet Q4 2012, whereas Internet and catalog retailing recorded a significant drop in the activity, from 8 deals in Q4 2012 to 2 deals in Q1 2013 Source: Secondary Research

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Key deals of Q1 2013 (1/2) Key Deals of Q1 2013 Date

Acquirer

Target

Deal Value (USD Mn)

10-Jan-13

AB Acquisition LLC

New Albertsons, Inc.

20-Feb-13

Office Depot, Inc.

7-Mar-13

Comments

Status

3,300.0

• An investor group – led by Cerberus Capital Management LP and including Kimco Realty Corp, Klaff Realty LP, Lubert-Adler Partners Real Estate Funds and Schottenstein Real Estate Group LLC – acquired the entire share capital of New Albertsons, Inc. (New) from SuperValu, Inc. for USD 3.3 Bn, in a leveraged buyout transaction

Completed

OfficeMax, Inc.

1,181.0

• Office Depot, Inc. agreed to acquire the entire share capital of OfficeMax, Inc. in a stock swap transaction valued at USD 1.181 Bn. The acquisition was initiated to revive the Office Depot, who has been losing sales to online rivals and Staples, Inc., the largest US office-supplies chain

Pending

Sycamore Partners LLC

Hot Topic, Inc.

625.0

• Sycamore Partners LLC agreed to acquire the entire share capital of Hot Topic, Inc., a City of Industry-based owner and operator of clothing and accessories stores. The acquisition is aimed to expand the retail portfolio of Sycamore Partners

Pending

4-Jan-13

Cerberus Capital Management LP

Admiral Taverns Ltd

323.0

• Cerberus Capital Management LP acquired Admiral Taverns Ltd., a Chesterbased owner & operator of pubs, from Lloyds Banking Group PLC. The acquisition provides an ideal platform to Cerberus for the acquisition of additional tenanted pubs in the UK

Completed

6-Feb-13

CVS Caremark Corp

Drogaria Onofre Ltda

313.4

• CVS Caremark Corp acquired the entire share capital of Drogaria Onofre Ltda (Onofre), a Sao Paulo-based owner and operator of pharmacies. The acquisition was done to expand CVS's international footprints in Brazil

Completed

10-Jan-13

Cerberus Capital Management LP

SuperValu, Inc.

256.2

• Cerberus Capital Management LP (Cerberus) launched a tender offer to acquire a 30% stake in SuperValu, Inc. for a total value of USD 256.2 Mn

Part Comp

1-Jan-13

Gap, Inc.

Intermix, Inc.

130.0

• Gap, Inc. acquired Intermix, Inc., a New York-based owner and operator of apparel stores, to add luxury women’s clothes and accessories to its brands

Completed

7-Feb-13

Landry's, Inc.

Ark Restaurants Corp

71.4

• Landry's, Inc. planned to acquire the entire share capital of Ark Restaurants Corp, a New York-based owner and operator of restaurants and bars, to expand its restaurant business

Pending

Source: Secondary Research

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Key deals of Q1 2013 (2/2) Key Deals of Q1 2013 Date

Acquirer

Target

Deal Value (USD Mn)

8-Mar-13

Investor Group

Oticas Carol

55.5

• An investor group consisting of 3i Group PLC, Neuberger Berman Group LLC and Siguler Guff & Co LLC acquired Oticas Carol, a retailer of optical goods, from Marcos Amaro, to expand their investment portfolio in Brazil

Completed

6-Feb-13

Ignite Restaurant Group, Inc.

Romano's Macaroni Grill

55.0

• Ignite Restaurant Group, Inc. acquired Romano's Macaroni Grill, a Dallasbased owner and operator of restaurants, from Golden Gate Capital. The acquisition was done by Ignite to capture the market potential of Romano's Macaroni Grill for expansion and growth

Completed

28-Jan-13

Le Duff America, Inc.

Mimis Cafe

50.0

• Le Duff America, Inc. acquired Mimi's Cafe, an Irvine-based owner and operator of restaurants, to expand its portfolio of restaurants business

Completed

10-Mar-13

Tiger Global Management LLC

Cobone.com Fz LLC

40.0

• Tiger Global Management LLC acquired Cobone.com Fz LLC, a Dubai-based provider of ecommerce retail services, from Jabbar Internet Group for an estimated value of USD 40 Mn

Completed

1-Mar-13

Party City Holdings, Inc.

iParty Corp

11.0

• Party City Holdings, Inc. definitively agreed to acquire the entire share capital of iParty Corp, a Dedham-based retailer of party goods and accessories. The acquisition will provide Party City a foothold in New England, the US

Pending

4-Jan-13

Global Baristas LLC

TC Global, Inc.

9.2

• Global Baristas LLC agreed to acquire TC Global, Inc., a Seattle-based owner and operator of coffee shops. The acquisition will help it expand Baristas’ portfolio of restaurants business into new locations, which will also allow further distribution of other Baristas products

Pending

Comments

Status

Source: Secondary Research

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