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Fairness Opinion Detail

SWY FOOpen source

Safeway Inc. to Albertsons

Grocery Retail/Mar 2014/Goldman Sachs, Greenhill

Deal Information

Target
Safeway Inc.
Acquiror
Albertsons
Sector
Grocery Retail
Target Type
Public
Acquiror Type
Strategic
Advisors
Goldman Sachs, Greenhill

Transaction Metrics

Enterprise Value
$9.0B
EV / LTM Sales
EV / LTM EBITDA
5.5x
EV / Fwd EBITDA

Advisor Transaction Comparables

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

Advisor: Goldman Sachs

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

16 comps
Dec 2013Gelson’s Markets (Arden Group, Inc.)TPG Capital, L.P.--10.8x-
Sep 2013United Supermarkets, LLCAlbertson’s LLC----
Jul 2013Harris Teeter Supermarkets, Inc.The Kroger Co.--6.7x-
Jan 2013SUPERVALU Inc. (21.2% stake)Cerberus led consortium--5.2x-
Jan 2013SUPERVALU retail (New Albertson’s, Inc.)Ultimate Parent--3.9x-
Dec 2011Winn-Dixie Stores, Inc.BI-LO, LLC--5.1x-
Jun 2011BJ’s Wholesale Club, Inc.CVC Capital Partners Limited and Leonard Green & Partners, L.P.--6.4x-
Mar 2007Pathmark Stores, Inc.The Great Atlantic & Pacific Tea Company--9.9x-
Feb 2007Wild Oats Market, Inc.Whole Foods Market, Inc.--14.0x-
Feb 2007Smart & Final Inc.Apollo Global Management, LLC--10.3x-
Apr 2006Marsh Supermarkets, Inc.Sun Capital Partners, Inc.--8.7x-
Jan 2006Albertsons, Inc. (core food retailing)SUPERVALU Inc.--7.0x-
Jan 2006Albertsons, Inc. (non-core food retailing)Cerberus led consortium--4.0x-
Dec 2004BI-LO, LLC/Bruno’sLone Star Fund V (U.S.), L.P.----
Mar 2004Shaw’s Supermarkets, Inc.Albertsons, Inc.----
Apr 2002Roundy’s Supermarkets, Inc.Willis Stein & Partners L.P.--4.6x-
Mean-7.4x-
Median-6.7x-

Advisor: Greenhill

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

5 comps
Dec 2013Arden Group Inc.TPG Capital, L.P.$390M-9.9x-
Jul 2013Nash Finch Co.Spartan Stores, Inc.$776M-6.9x-
Jul 2013Harris Teeter Supermarkets, Inc.Kroger Co.$2.7B-6.7x-
Jun 2013Canada Safeway Ltd.Sobeys Inc.$5.7B-10.7x-
Dec 2011Winn-Dixie Stores, Inc.BI-LO LLC$642M-4.3x-
Mean-7.7x-
Median-6.9x-

DCF Assumptions

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

Goldman Sachs

Open
WACC
7.5% – 8.5%
Terminal method
Perpetuity growth
Terminal assumption
-1.0% – 1.0%
Forecast basis
-
Forecast period
2014-2018; present value as of 2013-12-31

Greenhill

Open
WACC
7.0% – 9.0%
Terminal method
Exit multiple
Terminal assumption
5.0x – 6.0x (2018 EBITDA)
Forecast basis
-
Forecast period
2014-03-05 to 2018; present value as of 2014-03-05
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