Dollarama (DOL) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition marks Dollarama's first international expansion outside the Americas, entering Australia with a platform of 390+ stores and 5,000 employees.

• The Reject Shop is Australia's largest pure-play discount retailer, with no national direct competitor and an underpenetrated market offering significant growth potential.

• The business model and corporate culture of both companies align, supporting a clear path for growth and value creation.

• Acquisition supports Dollarama's long-term international growth strategy, complementing operations in Canada and Latin America.

• Target to expand to approximately 700 stores in Australia by 2034, leveraging local management and Dollarama's expertise.

Financial terms and conditions

• All-cash offer of A$6.68 per share, a 108% premium to The Reject Shop's 20-day VWAP, valuing equity at ~A$259 million (C$233 million).

• Enterprise value of ~A$189 million (pre-AASB/IFRS 16) and ~A$421 million (post-AASB/IFRS 16), with multiples of 8.9x and 3.3x EBITDA, respectively.

• Funded through cash on hand and revolving credit facility; minimal immediate impact on EPS and leverage.

• Special dividend of up to A$0.77 per share may be paid to shareholders, deducted from the purchase price.

Synergies and expected cost savings

• Plans to unlock margin and growth potential by optimizing merchandise mix, price points, store layout, and shopping experience.

• Integration of IT, logistics, and operational best practices expected to drive efficiency.

• Sourcing synergies anticipated through import and domestic buying teams, leveraging existing vendor relationships.

• Opportunity to generate attractive risk-adjusted returns through disciplined capital deployment and network growth.