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Fairness Opinion Detail

HTSI FOOpen source

Harris Teeter Supermarkets, Inc. to The Kroger Co.

Grocery Retail/Jul 2013/JPMorgan

Deal Information

Target
Harris Teeter Supermarkets, Inc.
Acquiror
The Kroger Co.
Sector
Grocery Retail
Target Type
Public
Acquiror Type
Strategic
Advisors
JPMorgan

Transaction Metrics

Enterprise Value
$2.5B
EV / LTM Sales
EV / LTM EBITDA
7.4x
EV / Fwd EBITDA

Advisor Transaction Comparables

Comparable transactions cited by the advisor, excluding the subject transaction.

Advisor: JPMorgan

FV / LTM EBITDA selected range: 6.0x - 7.0x

19 comps
Jan 2013SuperValu (30% stake)Cerberus--4.9x-
Jan 2013SuperValu/New Albertsons Inc.Cerberus--3.9x-
Dec 2011Winn-DixieBI-LO--4.1x-
Jun 2011BJ’s WholesaleLeonard Green/CVC Capital--7.0x-
Jul 2009A&P Pathmark (37% stake)Yucaipa--5.7x-
Nov 2008Whole Foods (17% stake)Leonard Green--6.8x-
Mar 2007PathmarkA&P--11.3x-
Feb 2007Wild OatsWhole Foods--13.5x-
Feb 2007Smart & FinalApollo--9.6x-
Apr 2006Marsh SupermarketsSun Capital--8.5x-
Feb 2006FoodaramaManagement--6.1x-
Jan 2006Albertsons CoreSuperValu--7.0x-
Dec 2005Piggly Wiggly MidwestCertified Grocers Midwest--5.9x-
Mar 2005Pathmark (40% stake)Yucaipa--5.8x-
Dec 2004BI-LO/Bruno’sLone Star Funds--5.8x-
Mar 2004Shaw’s & Star MarketsAlbertsons--6.9x-
Apr 2002Roundy’sWillis Stein--6.1x-
May 2001CoppsRoundy’s--6.5x-
Apr 2001Dick’s SupermarketPiggly Wiggly Midwest--6.0x-
Mean-6.9x-
Median-6.1x-

DCF Assumptions

Discount rate and terminal value assumptions the advisor selected for its discounted cash flow analysis.

JPMorgan

Open
WACC
7.5% – 9.5%
Terminal method
Perpetuity growth
Terminal assumption
1.0% – 2.0%
Forecast basis
Harris Teeter forecasts for fiscal 2013-2017, extrapolated by J.P. Morgan for 2018-2022 (… more

Harris Teeter forecasts for fiscal 2013-2017, extrapolated by J.P. Morgan for 2018-2022 (reviewed and approved by management)

Forecast period
fiscal 2013 through 2022 (ten years)
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