Parkland expands food offer and accelerates convenience growth with acquisition of M&M Food Market

CALGARY, AB, Jan. 18, 2022 /CNW/ - Parkland Corporation ("Parkland", "we", the "Company", or "our") (TSX: PKI), a leading operator and consolidator of convenience retail and fuel marketing businesses, announced today it has entered into an agreement to acquire M&M Food Market ("M&M") ("the Acquisition"). M&M is a premium, restaurant-quality frozen food retailer who brings high-quality, convenient food choices to Canadians. This acquisition represents one of many steps we are taking in our retail diversification strategy to expand our proprietary food offer, customer reach and innovation pipeline.

"This acquisition provides a platform to grow our food offer, expand our proprietary brands, and advance our digital and loyalty strategy," said Ian White, SVP Strategic Marketing & Innovation. "Consistent with our commitment to create convenience destinations, M&M's national store network, and innovative approach to food preparation and menu development positions us to offer high-quality food that complements our growing quick-serve restaurant offerings. We will grow these capabilities in all our operating regions and bolster our digital connection to customers by combining M&M and JOURNIE™ rewards programs. We look forward to bringing ON the RUN and M&M together to help customers make the most of every stop."

The acquisition includes over 300 well-located standalone franchise and corporate owned stores, over 2,000 M&M Express locations, and a well-established rewards program with approximately two million active members. Led by an experienced management team who have a proven track record of growth and a food-first culture, M&M will create quality food options that our customers can consume fresh-from-frozen, both on site and on the go, and prepared from frozen at home. We will leverage these capabilities throughout our existing network and soon to be launched standalone ON the RUN convenience locations.

"Parkland's ON the RUN brand is a convenience retail leader and we are excited to combine our two offerings," said Andy O'Brien, CEO of M&M. "M&M and its franchise partners share Parkland's customer focus and passion for quality food. The combination of our innovative food capabilities and Parkland's more than 3,000 retail locations in 25 countries creates an immediate runway of growth and expansion opportunities."

This Acquisition enables key elements of our strategy:

• Advances our enterprise food strategy: Adds a proprietary brand, experienced team, franchisee network, and a scalable fresh and fresh-from-frozen food growth platform across all our markets. We will leverage M&M's expertise and track record of developing successful menus in its innovation kitchen to evaluate and develop additional fresh and quick-serve food choices across our network.
• Advances our digital strategy and creates a premier Canadian loyalty program: By combining JOURNIE™ and M&M's reward programs which has two million active members, we will create extensive cross-promotional opportunities and form one of Canada's premier loyalty programs.
• Enhances our ON the RUN customer value proposition: M&M will be integral to our growing On the Run network, bolstering our in-store, e-commerce and home delivery offers, and supporting our standalone convenience concept.
• Capital-light: M&M leverages a well-established, highly efficient food preparation and distribution network, requiring limited capital investment to efficiently serve its retail locations.
• Ratable cash flow with significant growth potential: M&M's royalty fee-based operating model creates a ratable stream of cash flow. We aim to grow M&M's Canadian annual run rate Adjusted EBITDA to approximately $55 million in three years.

The total consideration for this transaction is approximately $322 million, which will be funded out of existing credit facility capacity. This Acquisition represents a valuation metric of less than 8.5x estimated 2021 Adjusted EBITDA. Subject to approval under the Competition Act (Canada) and other customary closing conditions, the Acquisition is expected to close in the first quarter of 2022.

Acquisition Conference Call and Webcast Details
Parkland will host a webcast and conference call on Thursday, January 18, at 4:00pm MDT (6:00pm EDT) to discuss the acquisition. To listen to the live webcast and watch the presentation, please use the following link: https://produceredition.webcasts.com/starthere.jsp?ei=1524874&tp_key=388fcb2af7

Analysts and institutional investors interested in participating in the question-and-answer session of the conference call may do so by calling 1-888-390-0546 (toll-free) (Conference ID: 68511332). International participants can call 1-800-389-0704 (toll) (Conference ID: 68511332).

Please connect and log in approximately 10 minutes before the beginning of the call. The webcast will be available for replay two hours after the conference call ends at the link above. It will remain available for one year and will also be posted to www.parkland.ca.

About Parkland Corporation
Parkland's purpose is to Power Journeys and Energize Communities. We are a leading operator and consolidator of convenience retail and fuel marketing businesses. Through our portfolio of trusted and locally relevant convenience, retail, commercial and wholesale brands, we serve over one million customers per day across Canada, the United States, the Caribbean region and Central and South America. In addition to leveraging our supply and storage capabilities to provide the essential fuels that our diverse customers rely on, we are a leader in manufacturing low carbon fuels and are rapidly building a charging network to serve growing demand for convenient charging from electric vehicle drivers in select markets.

Parkland's proven strategy is centered around growing organically, realizing a supply advantage, acquiring prudently, and integrating successfully. We are positioned to win through the energy transition and are focused on developing our existing business in resilient markets, further diversifying our retail business into convenience, food, and EV charging, and helping our commercial customers decarbonize their operations. Our strategy is enabled and underpinned by our people, as well as our values of safety, integrity, community, and respect, which are deeply embedded across our organization.

About M&M Food Market:
Founded in 1980, M&M Food Market is Canada's leading retailer of frozen foods and has helped Canadians put delicious meals on the table by offering consumers products that were prepared with care using authentic recipes and high-quality ingredients along with personalized customer service, all within a uniquely convenient shopping environment. Following the beginning of a significant rebranding effort in 2016 – including the name change from M&M Meat Shops, a new store design, new products and packaging, a new website, and newly trained Meal Advisors – M&M Food Market has been focused on innovation across virtually every aspect of the business. It is headquartered in Mississauga, Ontario, with locations in all ten provinces, Yukon, and the Northwest Territories. M&M has been recognized as one of Canada's Best Managed Companies for 11 years in a row. M&M products include delicious and convenient options across virtually every food category including appetizers, prepared meals, seafood, meats and poultry, vegetables, sides, bakery, and desserts and come in formats ranging from individual portions to family-sized options.

Forward Looking Statement
Certain statements contained in this news release constitute forward-looking information and statements (collectively, "forward-looking statements"). When used in this news release the words "expect", "will", "could", "would", "believe", "continue", "pursue" and similar expressions are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, the successful completion of the Acquisition and the timing thereof; expected benefits of the acquisition, including: potential organic growth, creating convenience destinations; expanding Parkland's food offerings throughout its existing network; creating a loyalty coalition between the M&M and JOURNIE™ rewards programs; expected future increase to the run rate Adjusted EBITDA of the M&M business and the timing thereof; and the launch of standalone ON the RUN convenience locations.

These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These forward-looking statements speak only as of the date of this news release. Parkland does not undertake any obligations to publicly update or revise any forward-looking statements except as may be required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, failure to complete the Acquisition; failure to satisfy the conditions to closing of the Acquisition; failure to realize all or any of the anticipated benefits of the Acquisition; general economic, market and business conditions; competitive action by other companies; the ability of suppliers to meet commitments; actions by governmental authorities and other regulators including but not limited to increases in taxes or restricted access to markets; changes and developments in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. See also the risks and uncertainties described in "Forward-Looking Information" and "Risk Factors" included in Parkland's Annual Information Form dated March 5, 2021, and "Forward-Looking Information" and "Risk Factors" included in the Q3 2021 MD&A dated November 2, 2021 and the Q4 2020 MD&A dated March 4, 2021, each filed on SEDAR and available on the Parkland website at www.parkland.ca.

SOURCE Parkland Corporation

For further information: Investor and Media Inquiries: Investor Inquiries: Valerie Roberts, Director, Investor Relations, 403-956-9282; Valerie.Roberts@parkland.ca; Media Inquiries: Simon Scott, Director, Corporate Communications, 403-956-9272, Simon.Scott@parkland.ca