Diversified Royalty (DIV) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of Mr. Lube + Tires' franchisor business for CAD 235 million expands exposure to a high-performing partner with strong same-store sales (7.25% CAGR) and adjusted EBITDA growth (14.7% CAGR) over the past decade.

• The business is a market leader in Canada's Quick Lube segment, supporting a strategy of acquiring predictable, growing royalty streams.

• The transaction accelerates growth, leveraging a proven franchise model and high brand recognition.

• Succession planning and shareholder transition at Mr. Lube + Tires made this the right time for the acquisition.

• Management's continued equity stake signals confidence in future performance and alignment of interests.

Financial terms and conditions

• Purchase price is CAD 235 million, funded by CAD 212.5 million in new senior debt, CAD 20.6 million rolled management equity, CAD 13.7 million in DIV shares, $34 million cash on hand, and $41.1 million from an acquisition facility.

• Management retains a 4% interest via rolled equity; non-management holders receive approximately 3.4 million DIV shares at CAD 3.98 per share.

• Estimated adjusted EBITDA for the combined business is CAD 58.7 million in the 12 months post-closing.

• Pro-forma distributable cash per share expected to rise 11.2%, from CAD 0.3128 to CAD 0.3478; annual dividend remains at CAD 0.285 per share.

• Estimated transaction costs are $2 million; Mr. Lube + Tires will provide an $11.6 million non-interest-bearing loan to fund GST.

Synergies and expected cost savings

• Transaction is accretive, increasing distributable cash per share and lowering payout ratio.

• Enhanced operational leverage from new store growth and expanded service offerings.

• Continued same-store sales growth and operating leverage expected.