Acquisition makes Canadian Tire Corporation Canada's #1 party supply and
celebration destination

TORONTO, Aug. 8, 2019 /CNW/ - Canadian Tire Corporation, Limited (TSX:CTC, TSX:CTC.A) (CTC) announced today that it has entered into an agreement to purchase Party City's Canadian business for $174.4 million (including ~$40 million in inventory). Party City is a leading, one-stop shopping destination for party supplies and an expert in seasonal and micro-seasonal celebrations, with 65 Canadian retail stores in seven provinces.

Strategic Rationale for Acquisition:

Strengthens CTC's Marketplace

• CTC will immediately become the #1 party supply destination – a one-stop-shop for all consumers' party and celebration needs; cementing Canadian Tire as "Canada's Fun Store"
• Party City's exclusive and unique product assortments will be made available nationally across 500 Canadian Tire Retail (CTR) stores and online at Canadiantire.ca
• Adds the leading party supply brand to Triangle Rewards, further expanding and strengthening the program
• CTC will expand Party City's standalone store network in Canada, and build store-in-store, pop-ups and "in-line" aisles across CTR

Creates a New Platform for Growth

• Acquiring the leading brand in an underserved, high margin category for CTC
• With expertise in seasonal and micro-seasonal celebrations, Party City complements CTC's existing family fun categories and its role in preparing Canadians for the Joys of Life in Canada
• Provides access to Party City's extensive catalogue, including exclusive and proprietary designs and licensed products, such as Disney
• CTC's unparalleled retail capabilities and extensive store network positions it to double Party City's Canadian retail sales to $280 million by 2021

Strengthens Connection with Millennials and Canadian Families

• Gains a powerful customer segment with millennials and Canadian families, expanding the appeal of Triangle Rewards
• Adds a trip-driving category, with the average household hosting four parties or celebrations per year
• Significant opportunity to grow Triangle Rewards engagement and membership through Party City's appeal to these high lifetime value customer segments

Strong Financial Fundamentals

• Immediately accretive to EBITDA, ROIC and diluted EPS
• Combination will accelerate Party City's growth in Canada and unlock operational synergies
• CTC expects its estimated EBITDA attributable to Canadian Tire's acquisition of Party City's business in Canada to more than double, yielding an implied EBITDA multiple in the mid to low single digits by 2021

"Strengthening our marketplace is at the heart of our growth strategy and we are excited to welcome Party City into the Canadian Tire family of companies. We believe the Party City-Canadian Tire partnership will drive more trips, improve our offers in micro seasons, strengthen our connection with millennials and Canadian families and expand the appeal of Triangle Rewards," said Allan MacDonald, EVP, Retail, Canadian Tire Corporation. "With our extensive CTR store network, unparalleled retail capabilities and Party City's unique assortment, we are well-positioned to more than double Party City Canada's business by 2021."

"CTR has an unbeatable store network, retailing capabilities and customer loyalty. These assets, combined with our wholesale supply agreement, positions them well to grow the Party City brand in Canada," said Jim Harrison, Chief Executive Officer, Party City Holdco Inc.

Transaction Details
CTC has agreed to purchase Party City's brand, store network and employee base, leaseholds and fixed assets in Canada for $174.4 million (including ~$40 million in inventory). The acquisition is expected to close in Q3 2019 and is subject to the usual closing conditions. CTC has ample financial flexibility to fund the acquisition.

Investment Community Conference Call Details
Canadian Tire Corporation will conduct a conference call to discuss information included in this news release and related matters at 8:00 a.m. ET on August 8, 2019.  The dial-in number is 416-340-2216 or 1-800-273-9672. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://investors.canadiantire.ca, and will be available through replay at this website for 12 months. For more information related to this transaction, please visit https://corp.canadiantire.ca/English/investors/events-and-presentations/Presentations/default.aspx.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects management's current expectations regarding the proposed acquisition and future events. All statements other than statements of historical facts contained in this press release may constitute forward-looking information, including but not limited to: statements concerning the expected benefits of the proposed acquisition, including with respect to the impact of the acquisition of Party City's business in Canada on CTC's EBITDA, ROIC and diluted EPS accretion, CTC's estimated retail sales for the acquired business, CTC's estimated EBITDA attributable to the proposed acquisition, the implied future EBITDA multiple of the proposed acquisition, the expansion of the Party City brand in Canada and the realization of synergies; the expected timing of the proposed acquisition, if completed; CTC's financial flexibility to fund the transaction; and management's expectations relating to other possible or assumed future prospects and results, CTC's strategic goals and priorities, and the economic and business outlook for CTC. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "believe", "estimate", "plan", "can", "could", "should", "would", "outlook", "forecast", "anticipate", "aspire", "foresee", "continue", "ongoing" or the negative of these terms or variations of them or similar terminology. Forward-looking statements are based on the reasonable assumptions, estimates, analyses, beliefs and opinions of management, made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made. CTC has provided these forward-looking statements for the purpose of presenting information about management's current expectations and plans relating to the proposed acquisition and readers are cautioned that these statements may not be appropriate for other purposes.

By their very nature, forward-looking statements require management to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that CTC's assumptions, estimates, analyses, beliefs and opinions may not be correct and that CTC's expectations and plans will not be achieved. Although CTC believes that the forward-looking information in this press release is based on information and assumptions that are current, reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information for a variety of reasons. Some of these factors – many of which are beyond management's control and the effects of which can be difficult to predict – include: (a) the risk that Party City's Canadian business will not be integrated successfully; (b) the possibility that the anticipated benefits and synergies from the proposed acquisition cannot be realized or may take longer to realize than expected; (c) the ability of CTC and Party City to maintain relationships with customers, suppliers and other business partners, (d) risks associated with the supply arrangements; (e) the risk that regulatory approvals required for the proposed acquisition are not obtained, or are obtained on unfavorable terms; (f) the risk that regulatory approvals may delay the proposed acquisition; (g) the risk that a condition to the closing of the proposed acquisition may not be satisfied or the acquisition agreement may be terminated prior to closing; (h) the diversion of management time and attention on the proposed acquisition; (i) credit, market, currency, operational, liquidity and funding risks generally, including changes in economic conditions, interest rates or tax rates; and (j) risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, competition, seasonality, commodity price and business disruption. Management's expectations with respect to the impact of the acquisition of Party City's business in Canada on CTC's EBITDA, ROIC and diluted EPS accretion, CTC's estimated retail sales for the acquired business, CTC's estimated EBITDA attributable to the proposed acquisition and the implied future EBITDA multiple of the proposed acquisition are based on a number of assumptions, including the successful roll out of Party City products across at least two-thirds of CTR stores, the successful introduction of at least nine additional Party City stores in Canada and additional growth in sales at Party City's existing Canadian stores based on marketing and other initiatives. Management cautions that the foregoing lists of important factors and assumptions are not exhaustive and other factors could also adversely affect CTC's results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, refer to section 2.8 (Risk Factors) of our Annual Information Form for fiscal 2018 and to sections 7.2.4 (Retail Segment Business Risks), 7.3.2 (CT REIT segment business risks), 7.4.3 (Financial Services Segment Business Risks) and 12.0 (Risks and Risk Management) and all subsections thereunder of our  Management's Discussion and Analysis for the year ended December 29, 2018, as well as the Company's other public filings, available at www.sedar.com and at https://investors.canadiantire.ca.

The forward-looking information contained herein is based on certain factors and assumptions as of the date hereof and does not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on CTC's business. CTC does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as required by applicable securities laws.

ABOUT CANADIAN TIRE CORPORATION
Canadian Tire Corporation, Limited, (TSX: CTC.A) (TSX: CTC) or "CTC", is a family of businesses that includes a Retail segment, a Financial Services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal & Gardening divisions. PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark's, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts, National Sports, Intersport and Atmosphere, which offer the best active wear brands. The approximately 1,700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the tens of thousands of people employed across Canada and around the world by the Company and its local dealers, franchisees and petroleum retailers. In addition, Canadian Tire Corporation owns and operates Helly Hansen, a leading global brand in sportswear and workwear based in Oslo, Norway. For more information, visit Corp.CanadianTire.ca.

FOR MORE INFORMATION
Media: Jane Shaw, [email protected]
Investors: Lisa Greatrix, [email protected]

SOURCE CANADIAN TIRE CORPORATION, LIMITED

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