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US & Grocery Stores Industry Report July 2018

Supermarkets & Grocery Stores ,Industry Report D.C. 2018  SourcesMexico: City  Monterrey US Grocery Stores & Supermarkets Industry Overview

• The supermarkets and grocery stores industry represents the largest channel in the . Establishments in this industry offer a wide array of food products, including fresh and prepared , poultry and , canned and frozen , fresh fruits and vegetables and various product

• Stores are ranked according to size (e.g. megamarkets, , supermarkets, clubs, warehouses, convenience stores, and other)

• In 2017, total sales of the industry reached US$1,116 billion, with a CAGR (2012-2017) of 2.7%

• Number of outlets (as of 2017) of 385,100 units, showing a CAGR (2012-2017) of 1.4%

• Selling space (as of 2017) of 228.5 million m², showing a CAGR (2012-2017) of 1.2%

• By 2022, total sales of the industry are expected to reach US$1,142 billion with a CAGR (2017-2022) of 0.5%

• Number of outlets will increase to 403,500 units, a total growth (2017 / 2022) of 4.8%

• From 2017 to 2022, grocery discounters are expected to grow the most in sales and outlets, with 9.1% and 7.5% respectively

• Key players in the industry include, Wal-Mart Inc with a market share (retail value) of 25.6%, Co with a 9%, Cos Inc with a 5% and Delhaize with a 3.7%. Other competitors include, Super Markets Inc, HE Butt Grocery Co, Inc, Wakefern Food Corp, among others

• By number of outlets in 2017, 7-Eleven led with 9,242 units, (Couche-Tard) with 5,758 and Supercenter with 3,560

• By selling space in 2017, Walmart Supercenter led with 58,735 million m², Kroger with 5,397 million m² and Publix with 5,117 million m²

• Industry is experimenting intensifying retail competition from alternative options, as consumer migration online has grocers racing to increase their online presence and moving toward blended models (e.g. click and collect); meanwhile online giants are, venturing to traditional physical stores (e.g. buying Whole Foods)

• Discount stores (e.g. and ) account for 27% of the grocery stores recently built or in progress, being the main threat to traditional grocers forcing them to drop prices

Industry Sales Sales by Category

US$ Billion

1,142 Independent Small Others Grocers 5% 1,135 3% Food/Drink/ 1,129 Specialists 7% 1,124 1,120 Forecourt 1,116 Retailers 10% Supermarkets 47%

Hypermarkets 28%

2017 2018 2019 2020 2021 2022

Historical Forecast

Supermarkets & Grocery Stores Industry Report 2018 Sources: IBISWorld, Euromonitor, DB Hoovers Top 3 US Players by Market Share

Company Share: 25.6%

• 4,672 Units in the US • 2017 Annual sales in the US of US$308 billion, • Sales growth CAGR of 3.28% (2014-2017)

Company Share: 9%

• 2,782 Units in the US • 2017 Annual sales in the US of US$123 billion • Sales growth CAGR of 4.19% (2014-2017) • Company banners: Kroger, , Fry’s Food Stores, King Scoopers, , Smith’s, among others

Company Share: 5%

• 2,318 Units in the US • 2017 Annual sales in the US of US$60 billion • Sales growth CAGR of 1.33% (2014-2017) • Company banners: Albertsons, , , Amigos, Osco, Acme, United, Tom Thumb, among others.

Other Representative US Companies by Market Share

3.1% 3.7% 1.9% 1.5%

1.4% 1.4% 1.3% 1.3%

0.9% 1.2% 1% 0.9%

Supermarkets & Grocery Stores Industry Report 2018 Sources: Companies’ reports, Euromonitor Supermarkets & Grocery Stores Industry – Current Market Situation

The following section presents financial information of publicly traded companies in the food retail industry in the world and in the US

Comparable Public Companies – Global

Average EV / EBITDA 2018-07-20 Price Revenue EBITDA Market Cap. Enterprise Company Country US$M Margin US$M Value EV / EV / 2018-07-20 2014 2015 2016 2017 EBITDA Revenue

Walmart Inc. USA $88.06 $505,491 6.5% $259,851 $301,347 8.5x 7.8x 7.8x (Invalid8.6x End Date)9.2x 0.6x

Costco Wholesale Corporation USA $218.69 $139,465 4.3% $95,905 $95,657 12.5x 13.9x 14.0x 14.0x 16.1x 0.7x

Wal-Mart de México, S.A.B. de C.V. MEX $2.92 $32,207 9.8% $51,074 $50,046 13.8x 14.7x 15.2x 14.0x 16.7x 1.6x

The Kroger Co. USA $28.14 $123,907 4.3% $22,418 $35,999 7.6x 8.9x 7.8x 6.6x 6.7x 0.3x

Aeon Co., Ltd. JPN $19.93 $77,482 5.6% $16,736 $35,457 6.6x 8.2x 7.8x 7.8x 8.4x 0.5x

Koninklijke N.V. NLD $25.18 $76,325 6.5% $29,647 $32,531 5.4x 7.4x 8.7x 7.6x 6.8x 0.4x

Woolworths Group Limited AUS $22.91 $44,339 6.3% $30,013 $31,108 10.1x 8.1x 8.8x 10.5x 11.8x 0.7x

Carrefour SA FRA $15.82 $96,651 4.5% $12,299 $25,584 7.6x 8.6x 7.6x 7.4x 6.0x 0.3x

Dairy Farm Int. Holdings Limited HKG $9.28 $11,289 5.1% $12,552 $13,220 16.6x 13.7x 13.0x 15.2x NR 1.2x

J Sainsbury plc GBR $4.27 $39,472 4.1% $9,394 $11,893 5.0x 5.1x 5.4x 6.6x 7.7x 0.3x

Sun Art Retail Group Limited HKG $1.28 $15,725 7.1% $12,178 $10,761 10.8x 7.3x 6.2x 7.9x 9.7x 0.7x

Wm Morrison Supermarkets PLC GBR $3.35 $24,372 4.7% $7,877 $9,193 6.5x 10.7x 11.7x 9.2x 8.7x 0.4x

Shoprite Holdings Limited RSA $15.42 $11,761 7.2% $8,552 $8,659 11.3x 10.7x 10.4x 11.3x 11.0x 0.8x

Public Joint Stock Company Magnit RUS $67.74 $19,593 7.4% $6,903 $8,600 14.3x 10.6x 9.5x 10.2x 6.6x 0.5x

Companhia Brasileira de Distribuição BRA $20.51 $13,745 6.3% $5,464 $7,250 7.6x 5.5x 7.1x 10.5x 9.9x 0.6x

NR: Not Relevant Mean 9.7x 0.6x

Median 8.9x 0.6x

Comparable Public Companies – USA

Average EV / EBITDA 2018-07-20 Price Revenue EBITDA Market Cap. Enterprise Company State US$M Margin US$M Value EV / EV / 2018-07-20 2014 2015 2016 2017 EBITDA Revenue

Walmart Inc. AR $88.06 $505,491 6.5% $259,851 $301,347 8.5x 7.8x 7.8x 8.6x 9.2x 0.6x

Costco Wholesale Corporation WA $218.69 $139,465 4.3% $95,905 $95,657 12.5x 13.9x 14.0x 14.0x 16.1x 0.7x

The Kroger Co. OH $28.14 $123,907 4.3% $22,418 $35,999 7.6x 8.9x 7.8x 6.6x 6.7x 0.3x

BJ's Wholesale Club Holdings, Inc. MA $25.91 $12,869 3.8% $3,418 $6,075 0.0x 0.0x 0.0x 0.0x 12.4x 0.5x

Casey's General Stores, Inc. IA $109.67 $7,472 6.5% $4,013 $5,306 9.3x 10.1x 9.7x 9.9x 10.9x 0.7x

Sprouts Farmers Market, Inc. AZ $22.15 $4,821 7.0% $2,920 $3,402 24.2x 17.2x 12.1x 11.2x 10.1x 0.7x

SUPERVALU INC. MN $20.61 $14,157 3.1% $796 $2,664 6.5x 6.3x 4.9x 4.6x 5.9x 0.2x

PriceSmart, Inc. CA $80.40 $3,122 5.9% $2,444(Invalid Identifier)$2,411 17.1x 14.5x 13.6x 13.9x 13.0x 0.8x

Ingles Markets, Incorporated NC $29.55 $4,072 5.9% $599 $1,481 7.0x 8.0x 7.1x 6.8x 6.1x 0.4x

Weis Markets, Inc. PA $52.63 $3,491 4.8% $1,416 $1,322 6.8x 7.1x 7.3x 7.8x 8.0x 0.4x

Smart & Final Stores, Inc. CA $5.55 $4,620 3.4% $413 $1,045 10.4x 10.8x 10.4x 9.9x 6.6x 0.2x

Village Super Market, Inc. NJ $29.69 $1,609 3.8% $427 $396 5.8x 6.1x 5.7x 5.0x 6.5x 0.2x

Natural Grocers by Vitamin Cottage, CO $14.65 $812 5.2% $328 $377 16.9x 12.7x 7.5x 5.6x 8.9x 0.5x Inc.

iFresh Inc. NY $4.17 $137 0.2% $60 $76 0.0x 0.0x 0.0x 57.9x NR 0.6x

NR: Not Relevant Mean 9.3x 0.5x

Median 8.9x 0.5x

Supermarkets & Grocery Stores Industry Report 2018 Sources: Capital IQ Supermarkets & Grocery Stores Industry – US Transactions

Size EV/ EV/ Date Target State Description Buyer (US$M) EBITDA Revenue

May-18 BJ's Wholesale Club in Fort Myers, FL A wholesale club in Florida Cole Credit Property Trust V, Inc. $26 - -

Mar-18 , L.L.C. TX Hispanic supermarkets Bodega Latina Corporation $265 - -

The Kroger Co.; , Inc.; Food Mar-18 21 Farm Fresh Stores of SUPERVALU Inc. USA Grocery stores $43 - - Lion, LLC

Oct-17 Honey Farms, Inc. MA Convenience stores LP $36 - -

Oct-17 Liquor Stores USA South Inc. KY Liquor stores Blue Equity, LLC $29 - -

Jun-17 , Inc. TX Natural and organic foods Amazon.com, Inc. $14,621 10.3x 0.9x

Aug-16 Delek US' Retail Assets USA Food retail fleets Copec Inc. $529 - -

May-16 Joe Caputo & Sons, Inc. IL Grocery stores Midwest, LLC $32 - -

Stevenson Ranch Plaza in Los Angeles, Apr-16 CA A InvenTrust Properties Corp. $73 - - California

Apollo Global Management, LLC; Apollo Mar-16 , Inc. NC Specialty grocery retailer $1,391 7.0x 0.7x Management VIII, L.P.

Nov-15 Roundy's, Inc. WI Retail grocery stores The Kroger Co. $835 7.0x 0.2x

Oct-15 , Inc., Eight California Stores CA Food retail stores Gelson's Markets, Inc. $36 - -

The Great Atlantic & Pacific Tea Company, Inc., Sep-15 CA Supermarkets Wakefern Food Corp. $40 - - 12 A&P and Stores

The Stop & Shop Supermarket Company Jul-15 25 Stores in New York NY Supermarkets $146 - - LLC

Jul-15 Susser Holdings Corporation TX Convenience stores Sunoco LP $1,924 - -

Jun-15 One Stop Inc. WV Chain of convenience stores Domino's Pizza Group plc $45 - -

77 Convenience Stores & Retail Motor Fuel Jun-15 USA Convenience stores GTY-Pacific Leasing, LLC $215 - - Stations

Feb-15 VPS Group, LLC NC Chain of convenience stores GPM Petroleum LP $60 - -

LGT Capital Partners AG; Crown Co- Dec-14 , Inc. NC Convenience stores $1,808 7.8x 0.3x investment Opportunities plc; entre otros

Dec-14 Convenience stores and other assets USA Convenience stores GPM Petroleum LP $43 - -

Lehigh Gas Partners LP Aug-14 Nice N Easy Grocery Shoppes, Inc. NY A chain of grocery stores (nka:CrossAmerica Partners LP); CST $65 - - Brands, Inc.

Mar-14 Safeway Inc. CA Food and drug retailer AB Acquisition LLC $12,391 4.8x 0.2x

Apr-14 Susser Holdings Corporation TX Convenience stores Energy Transfer Partners, L.P. $2,534 16.0x 0.4x

Victory Park Capital Advisors, LLC; Cha Feb-14 Mi Pueblo San Jose, Inc. (nka:Mi Pueblo LLC) CA Network of supermarkets $46 - - Cha Enterprises, LLC

Pro's Ranch Markets, Inc. (nka:CNG Ranch, Cardenas Markets, Inc.; Northgate Jan-14 AZ Network of supermarkets $55 - - LLC) González Markets, Inc.

Dec-13 Arden Group, Inc. CA Operates supermarkets TPG Capital, L.P.; TPG Partners VI, L.P. $390 - -

Dec-13 Safeway, Inc., 11 Dominick's Stores IL Grocery stores Roundy's, Inc. $36 3.0x 0.1x

Nov-13 Girkin Development, LLC KY Convenience stores TravelCenters of America LLC $68 - -

Portfolio of 7-Eleven Properties in Northeastern Nov-13 OH Convenience stores Inland Private Capital Corporation $29 - -

Piggly Wiggly Carolina Company, Inc., 22 Sep-13 SC Food retail stores Bi-Lo Holdings, LLC $35 - - Piggly Wiggly Stores

NR: Not relevant Mean 8.0x 0.4x

Median 7.0x 0.3x

Supermarkets & Grocery Stores Industry Report 2018 Sources: Capital IQ Regional Representative Transactions – Supermarkets & Grocery Stores Industry Target Deal Summary Buyer

On June 16, 2017, Amazon.com, Inc., a company focused on e-commerce and cloud computing services based in Washington, announced the acquisition of Whole Foods Market, Inc., a Texan supermarket chain, for US$14,620 million, representing implied multiples of 10.3x (EBITDA) and 0.9x (revenue)

On March 06, 2014, AB Acquisition LLC, subsidiary of Albertsons Companies LLC based in Idaho, announced the acquisition of Safeway Inc, a Californian food retail company, for US$2,181 million, representing implied multiples of 4.8x (EBITDA) and 0.2x (revenue)

On April 28, 2014, Energy Transfer Partners, L.P., a Texan oil and gas transportation company, announced the acquisition of Susser Holdings Corporation, operates convenience stores in , for US$2,533 million, representing implied multiples of 16.0x(EBITDA) and 0.4x Revenue

On July 15, 2015, Sunoco LP, a Texan retailer of motor fuels, announced the acquisition of Susser Holdings Corporation, operates convenience stores in Texas, for US$1,923 million to Energy Transfer Partners

On December 20, 2013, TPG Capital L.P., a Texan venture capital firm, announced the acquisition of Arden Group, Inc, a Californian food retailer doing business as “Gelson's”, for US$389 million

On April 29, 2018, “El Super”, Texan supermarkerts and subsidiary of Grupo Comercial Chedraui, a Mexican supermarket chain, announced the acquisition of Fiesta Mart, L.L.C., a Texan food retailer, for US$265 million to ACON Investments, L.L.C., representing implied multiples of 6.6x (EBITDA) and 0.2x (revenue)

On April 20, 2016, InvenTrust Properties Corp., a estate company based in Stevenson Illinois, announced the acquisition of Stevenson Ranch Plaza., a Californian grocery Ranch Plaza store, for US$72 million

On January 31, 2014, Cardenas Markets, Inc., a chain of supermarkets in California and Arizona, announced the acquisition of Pro's Ranch Markets, Inc., a network of supermarkets in Arizona, for US$55 million

On February 20, 2014, Cha Cha Enterprises, LLC, a real estate company based in California, announced the acquisition of Mi Pueblo San Jose, LLC, a network of supermarkets in California, for US$46 million

Supermarkets & Grocery Stores Industry Report 2018 Sources: Capital IQ, Mergermarket #1 Representative Transaction – Supermarkets & Grocery Stores Industry

Amazon.com, Inc. announced the acquisition of Whole Buyer: Foods Market, Inc. for US$14,620 million

• On June 16, 2017, Amazon.com, Inc., a company focused on e-commerce and cloud computing services, announced the acquisition of Whole Foods Market, Inc., an organic supermarket chain based in Texas, for US$14,620 million, representing implied multiples of 10.3x (EBITDA) and 0.9x (revenue) Target: • It is the largest acquisition to date made by Amazon and the most important merger in food retail • Whole Foods generates annual revenues of US$16,000 million and has establishments in the United States, Canada and the • The Whole Foods shares appreciated by 29% while Amazon shares appreciated by 3% on the day of the announcement of the acquisition Company Value: US$14,620 M Multiple Multiple EV/Revenue: EV/EBITDA: US Industry size equals to Amazon paid US$42 per share 0.9x 10.3x US$800 billion in cash to Whole Foods

#2 Representative Transaction – Supermarkets & Grocery Stores Industry

AB Acquisition LLC, announced the acquisition of Safeway Buyer: Inc., for US$12,391 million • On March 06, 2014, AB Acquisition LLC, subsidiary of Albertsons Companies LLC, announced the acquisition of Safeway Inc, a Californian food retail company, for US$2,181 million, representing implied multiples of 4.8x (EBITDA) and 0.2x (revenue) • The merger will create a diversified network that includes 2,230 stores, 27 distribution facilities and 19 manufacturing plants with over 250,000 employees across 34 states and Target: the District of Columbia • Safeway Inc., by the time of the transaction, operated 1,335 stores in 20 states and the D.C., 13 distribution centers and 20 manufacturing plants, and employs approximately 138,000 employees.

Company Value: US$12,391 M Multiple Multiple EV/Revenue: EV/EBITDA: As result of the transaction, the The new company is common stock of Safeway is no comprised in 3 regions and 14 0.2x 4.8x longer listed for trading retail division

Supermarkets & Grocery Stores Industry Report 2018 Sources: Capital IQ, Safeway, NY Times REPRESENTATIVE GLOBAL ENGAGEMENTS

has sold a subsidiary of has sold the North has sold American guarding business of has sold has acquired GE Industrial Systems to

A division of Carrier Commercial Refrigeration, Inc. to to to Acquisition and Advisory Services GE Power Systems

has sold a wholly owned has sold has acquired subsidiary of Triumph Air Repair & Shell Oil Products U.S. and Triumph Engines has acquired businesses Divestiture & to to Brand Valuation Acquisition Advisory Advisory Services Services

has sold has sold the has sold its has sold Films Business of GRACE Membranes Business has acquired to has acquired to Daives Baird Pty Ltd to a sister company of to a subsidiary of Code Flower Inc.

sold has acquired sold Rockville Asphalt Plant has been acquired by has been acquired by has acquired from to to Private Investment KPAC Holdings, Inc. A private investment group Fund

has been acquired by

Strategic Acquisition Acquisition Consulting Advice on Project Acquisition Advisory Services Advisory Services Services Financing Advisory Services

Washington, D.C.  Mexico City  Monterrey REPRESENTATIVE MEXICAN ENGAGEMENTS

intelectiva® has acquired has merged with merged its merged its has acquired has acquired beverage division beverage division with with KFC Costa Rica a business of from

has partnered with has partnered with has acquired Corporate Acquisition Acquisition Finance Advisory a subsidiary of Advisory Advisory Services Services Services

has formed a partnership in has formed a has carved out and sold the casting tools business sold partnership to market sold between its concrete pumping and develop oil storage assets in Mexico and distribution in Corporate to Mexico with Finance to and to Advisory Services

has sold has acquired Holding company of Cosmocel Química to has been acquired by Corporate Corporate Finance Finance dealers of acquired a 61% stake on

a business unit of Advisory Advisory Services Services

has sold has acquired its sanitaryware business Grupo Galaz, S.A de C.V. has acquired has been acquired by workshop and store in Mexico City from and has been acquired by Acquisition Advisory to Services

Washington, D.C.  Mexico City  Monterrey Mexico Contact Information Since 1999, Seale & Associates has been the trusted advisor to highly James A. Seale respected public and private companies from around the world, with a President track record of success in a diverse range of industries. Seale is an elite [email protected] boutique global investment banking firm with extensive experience in mergers and acquisitions (M&A), corporate finance advisory, and Brett M. Carmel enterprise level strategy consulting. Our experienced team of Senior Managing Director professionals are committed to serving clients with excellence and [email protected] integrity, while offering innovative ideas and solutions to address Felipe Bueno Viesca complex dealings. All securities related transactions are cleared through Managing Director Seale Capital, Inc., a registered broker dealer and member of FINRA [email protected] and SIPC.

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Miguel Leal 950 N. Glebe Road 37, Moliere Junior Analyst Suite 950 Granada [email protected] Arlington, 22203 Mexico City, 11520 Phone: +1 (703) 294 6770 Phone: +52 (55) 8000 7463 Diego Hernandez Junior Analyst [email protected] Please contact us if you would like further information about M&A trends and/or specific transaction multiples for your industry.

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Supermarkets & Grocery Stores Washington,Industry Report D.C. 2018  SourcesMexico: City  Monterrey