October 15, 2021

Market Presentation

Transaction Summary

Optimization of the entire Extra Hiper platform by means of a strategic transaction between GPA and Assai

Overview

Description & Perimeter

Transaction

Value and

Payment

  • On October 15, 2021, GPA and Assai entered into a binding agreement to implement a transformational move:
    • GPA will accelerate its expansion plan focusing on high profitability & performance banners + food E-com leadership
    • Assaí will accelerate its route towards the cash & carry absolute leadership in Brazil
  • Conversion of 71 Extra Hiper stores into C&C format by Assaí (approx. 70% of the total Extra Hiper platform):
    • 32 stores to remain with GPA: 28 stores converted into its higher performance banners Pão de Açúcar and Mercado Extra; (-) 4 stores divested
    • 71 stores transferred to Assaí
  • Total consideration of R$ 5.2 Bn(1) including stores and owned Real Estate:
    • R$ 4.0 Bn in consideration for the Stores - primary scope of the MoU with Assaí
    • R$ 1.2 Bn in consideration for the RE assets - scope of the MoU with the REIT, but subject to commitment by Assaí
    • Upfront payment in Dec.2021 and 5 installments from 2022 up to 2024, adjusted by CDI + 1.2% p.a.

Relevant proceeds to accelerate growth in the core and most profitable banners

New GPA Transformational shift to +60% of total Sales coming from Pão, Proximity & E-com

Improved EBITDA margin & Bottom Line with a positive deleveraging impact

(1) Base Value of R$ 5.2 Bn subject to potential adjustment; possibility of Assaí acquiring stores' equipment is also contemplated by the agreement.

2

Transaction Summary

Optimization of the entire Extra Hiper platform by means of a strategic transaction between GPA and Assai

Attractive

Valuation

Solid Financial Position

Governance

  • Total consideration represents 0.6x of comparable perimeter Gross Sales LTM of R$ 8.7 Bn
    • Above GPA consolidated 0.3x EV / Sales trading(1)
    • Rich multiple considering cash generation and operating profit profile
  • Robust sale proceeds flow to support investments for growth and make a positive deleveraging impact
    • R$ 1 Bn+ investments in the most attractive banners within the portfolio
    • Approx. R$4.0bn(2) available cash proceeds for growth initiatives and deleveraging
  • Approval based exclusively on the votes of the independent members of the BoD
    • Strict compliance with the RPT policies both by GPA and Assaí
    • Members indicated by the controlling shareholder refrained from voting
    • Independent financial, legal advisors and fairness opinions to support the negotiation and decision-making process

(1) Based on pre-IFRS EV figures and 90 days VWAP perspective as from October 15, 2021.

(2) Sale proceeds after est. cash taxes and cash one-off transaction impacts; does not include non-recurring dividends and working capital impacts.

3

Compelling Strategic Rationale for GPA Brazil

Unique opportunity to focus on the most promising and profitable banners for Premium & Proximity and Food E-com in Brazil

Pre-Deal Sep/21

182

146

239

28

(=) Cont.Op. 595

103

TOTAL 698

Pre-Deal

Proforma Post Deal(1)

• Net addition of +28 Pão and Mercado stores in the short term,

698 total stores

623 total stores

+8.5% Vs. current base

328 PdA + Mex

356 PdA + Mex

5

16

16

− 6 month remodeling and 6 month ramp up to reach Pão and

2

1

3

Mercado efficiency levels

47%

5

2

57%

5

1

1

16

0

16

− Only 4 stores to be divested, representing an almost optimal

2

platform optimization with further positive impacts from said

3

2

2

1

4 stores monetization

5 11

4

4

11

1

3

1

1

1

52

1

2

51

52

19

482

16

9

• Mitigated execution risk, in a single transaction allowing the quick

2

482

1

1

demobilization of the entire Extra Hiper platform

ExHiper

− Intra economic group transaction

ExHiper

− Expedite demobilization plan Vs. multiple sales' efforts, allows

Conversions

Others

Others

a faster achievement of a more efficient structure

Stores Remained

Overview Proforma Post Deal(1)

Post Deal

Sep/21

14

14

32 Stores

Current Stores

698

Stores

Stores

Extra Hiper

(103)

Conversions

28

4 Stores

TOTAL

623

Note: Number of stores does not consider Gas Stations and Drugstores.

  • Increased focus to deliver further growth in the most promising banners of GPA in Brazil

(1) Proforma overview based on current stores as of Sep/21, including conversions of Extra Hiper stores (without expansion plan).

4

Strengthening Core Competencies in the Most Attractive Segments

The New GPA Brazil will show a relevant shift to +60% of total Sales coming from Pão, Proximity & E-com

  • Fast track expansion for banners with Higher Margin & Profitability, adding and remodeling premium Pão and Minuto stores
  • Strengthening regional platform with Mercado Extra remodeling and Compre Bem maturity; becoming increasingly competitive vs. regional players

3.5%

6.5%

4.3%

17.0%

2020A

42.7%

R$ 31 Bn

26.0%

Proximity

Ecommerce

Gas Stations +

(DCs), Aliados

Drugstores

& Others

Organic Expansion of

Premium &

Consolidated Formats

R$ 8.1 Bn Net Sales 21LTM

Expansion 21-24:

+100 new PdA, including 14

conversions of E-Hiper

+100 new Minuto

Refurbishment of +135 stores

Growth and

Maturation of

Super Regional

R$ 4.9 Bn Net Sales 21LTM

+14 M-Extra conversions +50 stores refurbishment

Potential comeback to the M&A arena in

strategic opportunities

(1) Pre-IFRS excluding G&A, managerial figures.

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CBD - Companhia Brasileira de Distribuição published this content on 15 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 October 2021 09:51:02 UTC.