Loblaw Companies (L) investor relations material

Deal rationale and strategic fit

• EQB will acquire 100% of PC Financial, including PC Bank and affiliated entities, for CAD 800 million, aiming to become a leading digital challenger bank and exclusive financial partner for Loblaw and the PC Optimum loyalty program.

• The transaction creates one of Canada's largest loyalty-linked banking ecosystems, expanding benefits for millions of Canadians and uniting two innovative digital banking brands.

• The deal accelerates EQB’s strategic priorities: reigniting core franchises, expanding product offerings, and growing the customer base to nearly 3.5 million, with access to over 17 million PC Optimum members.

• PC Financial’s customer profile is highly complementary, with minimal overlap, strong digital engagement, and high credit quality.

• PC Financial customers gain access to EQ Bank's digital platform and broader products, while EQ Bank customers benefit from PC Financial's credit card offerings and retail presence.

Financial terms and conditions

• Total consideration is CAD 800 million (1.15x book value), with Loblaw receiving 7.2 million EQB shares (approx. 17% of EQB) and the remainder in cash; Loblaw can increase ownership to 25% over time.

• Loblaw will realize about CAD 1.3 billion in value, including equity, cash, and release of excess capital.

• EQB will finance the cash portion from its balance sheet; no financing contingency applies.

• The deal is expected to be mid-single digit accretive to adjusted EPS and accretive to ROE in the first full year post-closing.

• Estimated one-time pre-tax integration costs of CAD 105 million and annual pre-tax run rate cost synergies of over CAD 30 million, mostly within two years of closing.

Synergies and expected cost savings

• Cost synergy target is modest at 7% of the cost base, with most synergies and integration costs realized within two years post-closing.

• Annual run-rate cost synergies are expected to reach CAD 30 million (pre-tax).

• Revenue synergies from cross-selling are expected but not required for deal attractiveness; significant upside anticipated from cross-sell, capital, and funding opportunities.

• Funding synergies will be achieved by increasing securitization and growing core digital deposits, releasing RWA.