EQB (EQB) M&A Announcement summary

Deal rationale and strategic fit

• EQB will acquire PC Financial and related entities, forming a long-term exclusive partnership with Loblaw and gaining access to the PC Optimum loyalty program, aligning with EQB's challenger bank strategy and expanding its digital banking footprint.

• The acquisition creates one of Canada's largest loyalty-linked banking ecosystems, expanding benefits for millions of Canadians and integrating digital banking with a major loyalty program.

• PC Financial's customer base is digitally engaged, with minimal overlap with EQB's, providing significant cross-sell and growth opportunities.

• The deal accelerates EQB's core franchise growth, diversifies its product shelf, and brings complementary strengths in spend products, loyalty, and everyday banking.

• Provides end-to-end access to a broader suite of products and services for both EQ Bank and PC Financial customers.

Financial terms and conditions

• EQB will acquire 100% of PC Financial for CAD 800 million (1.15x book value), paid via 7.2 million EQB shares (approx. 17% of EQB post-closing) and cash, subject to customary adjustments.

• Loblaw to receive approximately $500 million in excess capital from PC Bank prior to closing, for a total estimated value of $1.3 billion.

• Loblaw will receive two EQB board seats and can increase its ownership to 25% over time, subject to a four-year lock-up and standstill.

• Transaction expected to be mid-single digit accretive to adjusted EPS in the first full year post-closing.

• The transaction is expected to close in the second half of 2026, pending regulatory approvals.

Synergies and expected cost savings

• Annual pre-tax run rate cost synergies are expected to exceed $30 million, with one-time pre-tax integration costs of $105 million, mostly within two years post-closing.

• Revenue synergies from cross-selling are expected but not required for deal attractiveness.

• Funding and capital synergies anticipated through increased securitization and digital deposit growth.

• Revenue opportunities expected from expanded customer base and product offerings.