THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES (OTHER THAN TO ELIGIBLE US FUND MANAGERS) WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF RELEVANT LAWS OF SUCH JURISDICTION. SUPER RETAIL GROUP TO ACQUIRE REBEL GROUP LIMITED FOR $610 MILLION SUPER RETAIL GROUP LAUNCHES A $334 MILLION PRO-RATA ACCELERATED RENOUNCEABLE ENTITLEMENT OFFER Super Retail Group Limited (the Group or Super Retail ) has agreed to acquire Rebel Group Limited ( Rebel ) from Archer Capital for total consideration of $610 million 1 Rebel is the clear market leader in the Australian sporting goods retail sector with 128 stores nationwide and an estimated 24% market share in a highly fragmented sporting goods retailing market Overview The strong fit between Super Retail s and Rebel s operating models presents the opportunity to apply Super Retail s retail capabilities to grow the Rebel business The acquisition will be partly funded through a fully underwritten 9 for 19 pro-rata accelerated renounceable entitlement offer at $5.34 per share to raise approximately $334 million of new equity The acquisition is expected to deliver mid single digit EPS accretion in FY12 (presynergies) 2 Super Retail today announced that it has reached agreement with Archer Capital to acquire Rebel for a total consideration of $610 million. 3 The acquisition is consistent with the Group s stated strategy of expanding into adjacent leisure retail businesses. The acquisition will be partly funded through a fully underwritten 9 for 19 pro rata renounceable entitlement offer of new Super Retail ordinary shares ( New Shares ) at an offer price of $5.34 per New Share ( Offer Price ) to raise approximately $334 million (the Entitlement Offer ). The retail component of the Entitlement Offer will contain an entitlements trading element where eligible retail shareholders will be able to trade their entitlements under the Entitlement Offer on the ASX. Rebel is Australia s number one sporting goods and apparel retailer with a market leading brand. The acquisition comprises 90 Rebel Sport stores, 36 Amart stores and 2 Performance Sports stores and accelerates the Group s strategic objective of establishing itself as the leading retailer of automotive and leisure products in the Australian market. Note: 1 The purchase price is before acquisition costs and is subject to a post completion adjustment based on Rebel s working capital balance as at 29 October 2011. 2 EPS accretion calculated on a pro-forma basis. The funding costs relating to integration costs and transaction costs has been included, but the expensing of these costs has been excluded. In accordance with AASB 133, EPS calculations for all prior periods will be restated based on an adjustment factor to take into account the bonus element in the Entitlement Offer. 3 Completion of the acquisition is conditional on the Group receiving the proceeds of the underwritten institutional component of the Entitlement Offer on or before completion. In the event that this condition is not met, a break-fee of 1% of the acquisition price is payable to the vendors.
The Group will finance the acquisition through: the underwritten $334 million Entitlement Offer; and an increase in the Group s existing debt facilities. The acquisition is expected to deliver mid single digit EPS accretion in FY12 (pre-synergies) 1 and is currently expected to complete on 31 October 2011. 2 Strategic Rationale Mr Peter Birtles, Chief Executive Officer of the Group, said, The acquisition represents a fantastic opportunity for the Group to leverage its retail and supply expertise in a highly complementary business and to build Rebel s position as the national leader in sporting goods retailing. There is a natural strategic fit between the Super Retail and Rebel businesses. Rebel will strengthen the Group s existing leisure and apparel retail offering, while the Group can provide the required expertise to accelerate Rebel s growth and store roll-out profile and to optimise Rebel s existing operations. There is a significant potential opportunity to grow Rebel from 128 stores today to a total of 185 stores over the medium term, across both the Rebel and Amart banners. In addition, the Group anticipates synergistic benefits will be realised through optimisation of the procurement, logistics, supply chain, marketing, IT and administrative functions. Both Super Retail and Rebel are focused on providing customers with a comprehensive product offering and excellent customer service, delivered by passionate team members. Mr Peter Birtles said. Financial Profile and Rationale In 2011 Financial Year, Rebel delivered: 3 ~$603 million in revenue; and ~$77 million in EBITDA. The acquisition has the capacity to create significant shareholder value through the delivery of pre-tax synergies that are estimated by Super Retail management to be in the order of $10 million on an annualised basis, of which approximately 50% are anticipated to be achieved in FY12. Super Retail expects the acquisition to meet its return on capital hurdle of 20% within five years. 1 EPS accretion calculated on a pro-forma basis. The funding costs relating to integration costs and transaction costs has been included, but the expensing of these costs has been excluded. In accordance with AASB 133, EPS calculations for all prior periods will be restated based on an adjustment factor to take into account the bonus element in the Entitlement Offer. 2 Payment of part of the consideration payable to Archer will be deferred until post completion of the retail component of the Entitlement Offer. 3 Adjusted to exclude contribution from the Glue business which is not being acquired. Page 2 of 8
The acquisition is expected to deliver mid single digit EPS accretion in FY12 (pre-synergies). 1 Integration Approach The Group intends to maintain Rebel as a separate division known as Sports Retailing based in Sydney. Over time, and after a thorough integration planning process, the Group will seek to derive supply chain efficiencies through leveraging the expertise and capabilities of the combined businesses. About the Entitlement Offer The Entitlement Offer comprises a fully underwritten accelerated renounceable institutional entitlement offer and a fully underwritten renounceable retail entitlement offer that includes the ability for eligible retail shareholders to trade their Entitlements on the ASX. The Offer Price of $5.34 represents a discount of 17.8% to the closing price of Super Retail shares on 14 October 2011, a discount of 14.6% to the one month volume weighted average share price of Super Retail shares and a 12.8% discount to the theoretical ex-entitlements price ( TERP ). Eligible shareholders will be able to purchase 9 New Shares for every 19 existing Super Retail shares held on the Record Date of 7.00pm (AEST) on 20 October 2011. Eligible shareholders are those holders of Super Retail shares who: are registered as the holder of shares as at 7.00pm AEST on the Record Date; are not in the United States (other than Eligible US Fund Managers); and are eligible under all applicable securities laws to receive an offer under the Entitlement Offer. Please refer to Appendix 3 of the investor presentation for further details on international selling restrictions. Super Retail Group s largest shareholder, SCA FT Pty Limited (ACN 010 721 614)(2) ( SCA FT ) holding 40.98% of Super Retail Group s shares prior to the Entitlement Offer, will participate in the Institutional Entitlement Offer and has committed to take up 11.0% of its entitlements and renounce the balance. New Shares in respect of those renounced entitlements will be sold as part of the institutional shortfall bookbuild. The Group s shares have been placed in trading halt whilst the institutional component of the Entitlement Offer is undertaken. New Shares issued under the Entitlement Offer will rank equally with existing Super Retail ordinary shares on issue. Commenting on the equity raising, the Group Chairman, Mr Robert Wright said, We are very pleased to present such an exciting opportunity for shareholders to participate in the future growth of Super Retail through the Entitlement Offer. The acquisition of Rebel continues to build on the Group s acquisition successes and will position the Group as one of Australia s leading retailers, with strong growth prospects in attractive markets. The Board is pleased to be implementing a structure that provides flexibility for all of our shareholders. Page 3 of 8
Eligible retail shareholders are able to trade their entitlements on the ASX for 14 days commencing on the trading day immediately after the completion of the bookbuild for the institutional entitlement offer, allowing eligible retail shareholders to receive upfront liquidity for their entitlement. Those eligible retail shareholders who do not sell or take up their entitlement may still receive value for their entitlement through the retail shortfall bookbuild to be conducted after the retail entitlement offer closes. Further details on the institutional and retail components of the Entitlement Offer, including key dates, are provided in the appendix to this announcement. Under the terms of the Bank facilities which will be utilized to partially fund the proposed acquisition of Rebel and its subsidiaries, Super Retail is required to ensure that Rebel and the subsidiaries being acquired give security to the Super Retail's Banks within 90 days of Financial Close of the Bank facilities. This funding requirement means that the shareholders of Super Retail will need to approve the giving of the securities by Rebel and its subsidiaries by special resolution passed at a General Meeting of Super Retail shareholders. It is intended to seek this approval at a General Meeting to be held on or before 31 January 2012.Further information in relation to the acquisition is contained in an Investor Presentation dated 17 October 2011 which is available on the Super Retail website at www.superretailgroup.com The Group s financial adviser is Greenhill Caliburn and its legal adviser is Mallesons Stephen Jacques. Macquarie Capital (Australia) Limited and RBS Equity Capital Markets (Australia) Limited are joint lead managers and underwriters to the Entitlement Offer (the Underwriters ). Further Enquiries: Peter Birtles Gary Carroll Ron Malek Roger Feletto Chief Executive Officer Chief Financial Officer Co-Chief Executive Managing Director Super Retail Group Super Retail Group Greenhill Caliburn Greenhill Caliburn 751 Gympie Road 751 Gympie Road Level 34 The Chifley Level 34 The Chifley Tower, 2 Chifley Square Tower, 2 Chifley Square LAWNTON QLD 4501 LAWNTON QLD 4501 SYDNEY NSW 2000 SYDNEY NSW 2000 Phone: +61 7 3482 7500 Phone: +61 7 3482 7500 Phone: +61 2 9229 1409 Phone: +61 2 9229 1420 Email: peterb@superretailgroup.com Email: garyc@superretailgroup.com Email: rmalek@greenhillcaliburn.com Email: rfeletto@greenhillcaliburn.com Page 4 of 8
APPENDIX About Rebel Rebel is Australia s largest sports retailer with 128 stores across Australia under the Rebel (90 stores), Amart (36 stores) and Performance Sport (2 stores) banners. Rebel was created through the combination of three iconic Australian sports stores chains, Amart All Sports (acquired in 2004), Rowe & Jarman (acquired in 2005) and Rebel Sport (acquired in 2007). In FY11, Rebel generated ~$603 million of revenue and ~$77 million of EBITDA. 1 Institutional Entitlement Offer Eligible institutional shareholders will be invited to participate in the institutional entitlement offer which will take place from 17 October 2011 to 18 October 2011 ( Institutional Entitlement Offer ). The Institutional Entitlement Offer will be made to those Super Retail Group institutional shareholders with a registered address in Australia and New Zealand, and any other jurisdiction which Super Retail Group deems appropriate for the purpose of the institutional entitlement offer in accordance with ASX Listing Rule 7.7.1. Super Retail Group currently anticipates that this will include institutional shareholders in Australia; New Zealand; Hong Kong; Singapore; Eligible US fund managers; UK; Ireland; France; Belgium; Netherlands; Germany; Austria; Norway; Sweden; Denmark; Canada and Japan. Please refer to Appendix 3 of the investor presentation for further details on international selling restrictions. Eligible institutional shareholders can choose to take up all, part or none of their entitlement. New Shares in respect of entitlements not taken up and New Shares that would have represented entitlements of ineligible institutional shareholders will be sold through the institutional bookbuild on 19 October 2011, with any proceeds in excess of the Offer Price remitted proportionally to those shareholders (net of any applicable withholding tax). Entitlements to participate in the institutional entitlement offer cannot be traded on the ASX. Retail Entitlement Offer Eligible retail shareholders will be invited to participate in the retail entitlement offer at the same Offer Price and offer ratio as the Institutional Entitlement Offer ( Retail Entitlement Offer ). The Retail Entitlement Offer is not being extended to any shareholder with a registered address outside Australia and New Zealand. The Retail Entitlement Offer will open on 21 October 2011 and close at 5.00pm (Sydney time) on 16 November 2011. Eligible retail shareholders will be able to trade their Entitlements on the ASX on a deferred settlement basis from 20 October 2011 to 26 October 2011 (when those Entitlements are expected to be allotted) and on a normal settlement basis from 27 October 2011 to 9 November 2011. This means that eligible retail shareholders who do not wish to take up all or part or their Entitlement can seek to sell all or part of their Entitlement on the ASX in order to realise value for that entitlement ahead of the retail shortfall bookbuild. 1 Adjusted to exclude contribution from the Glue business which is not being acquired. Page 5 of 8
New Shares in respect of entitlements which are not exercised or sold by the close of the Retail Entitlement Offer, including the entitlements of all ineligible retail shareholders, will be sold through the retail shortfall bookbuild on 21 November 2011, with any proceeds in excess of the Offer Price remitted proportionally to those shareholders (net of any applicable withholding tax). Page 6 of 8
Key Dates of Entitlement Offer Institutional Entitlement Offer Institutional Entitlement Offer opens Institutional Entitlement Offer closes Institutional shortfall bookbuild Trading halt lifted Settlement of the Institutional Entitlement Offer Issue and quotation of New Shares under the Institutional Entitlement Offer 17 Oct 18 Oct 19 Oct 20 Oct 28 Oct 31 Oct Retail Entitlement Offer Record date for eligibility in the Retail Entitlement Offer Rights entitlements trading on ASX begins (on a deferred settlement basis) Retail Entitlement Offer opens Retail offer booklet despatched Retail entitlements allotted Entitlements trading on ASX begins (on a normal settlement basis) Retail entitlements trading on ASX ends New Shares under the Retail Entitlement Offer commence trading on ASX on a deferred settlement basis Retail Entitlement Offer closes Retail shortfall bookbuild (after market close) Settlement of the Retail Entitlement Offer Issue and quotation of New Shares under the Retail Entitlement Offer New Shares under the Retail Entitlement Offer commence trading on ASX on a normal settlement basis 7.00pm (Sydney time) 20 Oct 20 Oct 21 Oct 26 Oct 26 Oct 27 Oct 9 Nov 10 Nov 16 Nov 21 Nov 28 Nov 29 Nov 30 Nov Page 7 of 8
The above timetable is indicative only. Super Retail, in conjunction with the Joint Lead Managers, reserves the right to amend any or all of these dates and times, to accept late applications either generally or, in particular cases, to withdraw the offers without prior notice subject to the Corporations Act, the ASX Listing Rules and other applicable laws. The commencement of quotation of shares and trading in Retail Entitlements is subject to ASX confirmation. Further information in relation to the Entitlement Offer will be set out in an Investor Presentation released today to ASX by the Group. A printed copy of the retail offer booklet together with a personalised entitlement and acceptance form will be mailed to each eligible retail shareholder by 26 October 2011. Eligible retail shareholders considering applying for New Shares are encouraged to read the retail offer booklet in full. Any eligible retail shareholder who wishes to participate in the Retail Entitlement Offer will need to complete their personalised entitlement and acceptance form accompanying the retail offer booklet unless paying their application monies by BPAY, in which case an entitlement and acceptance form is not required (but the eligible retail shareholder will be taken to have made the statements on the entitlement and acceptance form). For further details on who is an eligible retail shareholder, please refer to section 7 of the retail offer booklet, scheduled to be despatched on Wednesday, 26 October 2011. If you do not receive a copy of the retail offer booklet or your personalised entitlement and acceptance form, you can call the Super Retail Information Line on 1800 170 502 (within Australia) or +61 2 8280 7323 (outside Australia) at any time from 8.30am to 5.30pm (Sydney time) until 9 December 2011. This announcement does not constitute an offer of shares for sale in the United States (other than to eligible US fund managers) or in any other jurisdiction in which such an offer would be illegal. The shares have not been registered under the Securities Act, and may not be offered or sold in the United States (other than to eligible US fund managers.) Please refer to Appendix 3 of the investor presentation for further details on international selling restrictions. This announcement includes forward-looking statements within the meaning of securities laws of applicable jurisdictions. Forward-looking statements can generally be identified by the use of forward-looking words such as may, will, expect, intend, plan, estimate, anticipate, believe, continue, objectives, outlook, guidance or other similar words, and include statements regarding certain plans, strategies and objectives of management and expected financial performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the company, and its officers, employees, agents or associates, including the risks described in this announcement. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. Readers are cautioned not to place undue reliance on forward-looking statements and Super Retail assumes no obligation to update such information. Page 8 of 8