Agreement designed to grow retail and financial services businesses, provide significant benefits to customers and facilitate closer collaboration to enhance customer affinity for both brands
TORONTO, May 8, 2014 /CNW/ - Canadian Tire Corporation, Limited (TSX:CTC,TSX:CTC.a) and Scotiabank (TSX: BNS, NYSE: BNS) today announced a far-reaching strategic partnership that creates unprecedented opportunities for joint marketing to drive new business growth. The agreement will see Scotiabank acquire a 20% equity interest in Canadian Tire's financial services business for $500 million in cash. Scotiabank will also provide a funding commitment to Canadian Tire's financial services business with credit card receivable financing of up to $2.25 billion.
"The real strength of our partnership with Scotiabank lies in the opportunity it creates to benefit our retail customers and grow our business," said Stephen Wetmore, Chief Executive Officer, Canadian Tire Corporation. "By working together and innovating, we will better serve our customers, earn new business, and strengthen our community initiatives."
Canadian Tire's financial services division is the eighth largest credit card issuer in Canada with $4.4 billion in receivables, 1.8 million active customer accounts and $12 billion in annual spend volume. The agreement also provides an option for Canadian Tire to sell up to an additional 29% of its financial services business to Scotiabank within the next 10 years at the then fair market value.
"We are excited about the possibilities that come with this partnership. Canadian Tire is an iconic company with an incredibly strong brand and great customer focus," said Brian Porter, President and Chief Executive Officer, Scotiabank. "This is a strategic investment in a high performing business and a partnership with the Canadian Tire family of companies will provide opportunities for us to grow our customer base and provide unique and relevant solutions to our customers."
The investment in the financial services business will be funded from Scotiabank's cash resources and is expected to be modestly accretive to Scotiabank's earnings. The deal is subject to customary closing conditions and regulatory approvals and the transaction is expected to close by September 30, 2014.
Scotiabank will become the exclusive partner for new financial products to the Canadian Tire portfolio of customers. The agreement allows for joint marketing efforts to introduce the companies' respective customers to each other's brands with exclusive offers. Available only to customers of the Canadian Tire family of companies and Scotiabank, the offers are expected to attract new customers and provide more value to loyal consumers.
Today, the companies announced two inaugural offers available from May 9 to August 31, 2014 to celebrate the new partnership:
- New customers who join the Scotiabank Start Right Program, which provides new Canadians with a bank account, credit card and other financial services, will receive $50 at Canadian Tire and $50 at Mark's to help them buy every day essentials for life in Canada.
- Through Canadian Tire, Scotiabank will offer $500 in Canadian Tire Money to any Canadian Tire Options MasterCard holders who switch or take a new five-year mortgage from Scotiabank.
Canadian Tire and Scotiabank share a strong understanding of customer needs and what drives consumer decisions. With a rapidly changing consumer and digital landscape, there are significant benefits to working together to develop new online and mobile payment technologies that will benefit both retail and banking customers.
Both brands are committed to giving back to communities, investing in grassroots hockey and helping families in need. The companies share the belief that local investments help build strong communities and will work together on opportunities to celebrate sport and maximize sponsorship activity from coast-to-coast.
CANADIAN TIRE CORPORATION FORWARD-LOOKING STATEMENTS
This document contains forward-looking information that reflects management's current expectations related to the business partnership with Scotiabank. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements regarding the expected benefits of the partnership between the Company and Scotiabank, such as the growth of the retail and financial services businesses, significant benefits to customers, the enhancement of brand affinity among customers, the integration of marketing, sponsorships, and community contributions, the collaboration on technological solutions and other statements concerning management's expectations relating to possible or assumed future prospects and results, our strategic goals and priorities, our actions and the results of those actions and the economic and business outlook for us. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking information is 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 information is provided.
By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's assumptions, estimates, analyses, beliefs and opinions may not be correct and that the Company's expectations and plans will not be achieved. Although the Company believes that the forward-looking information in this document is based on information, assumptions and beliefs which 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 the factors - many of which are beyond our control and the effects of which can be difficult to predict - include, but are not limited to, changes in economic and market conditions, the possibility that the anticipated benefits and synergies from the partnership cannot be realized or may take longer to realize than expected and other risks and uncertainties discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including the "Risk Factors" section of our Annual Information Form for fiscal 2013 and our 2013 Management's Discussion and Analysis, as well as the Company's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.
Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such forward-looking information. The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward-looking information, 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, unless required by applicable securities laws.
SCOTIABANK FORWARD-LOOKING STATEMENTS
Our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the United States Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements made in this document, the Management's Discussion and Analysis in the Bank's 2013 Annual Report under the headings "Overview - Outlook", for Group Financial Performance "Outlook", for each business segment "Outlook" and in other statements regarding the Bank's objectives, strategies to achieve those objectives, expected financial results (including those in the area of risk management), and the outlook for the Bank's businesses and for the Canadian, United States and global economies. Such statements are typically identified by words or phrases such as "believe", "expect", "anticipate", "intent", "estimate", "plan", "may increase", "may fluctuate", and similar expressions of future or conditional verbs, such as "will", "should", "would" and "could".
By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. Do not unduly rely on forward-looking statements, as a number of important factors, many of which are beyond our control, could cause actual results to differ materially from the estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: the economic and financial conditions in Canada and globally; fluctuations in interest rates and currency values; liquidity; significant market volatility and interruptions; the failure of third parties to comply with their obligations to us and our affiliates; the effect of changes in monetary policy; legislative and regulatory developments in Canada and elsewhere, including changes in tax laws; the effect of changes to our credit ratings; amendments to, and interpretations of, risk-based capital guidelines and reporting instructions and liquidity regulatory guidance; operational and reputational risks; the risk that the Bank's risk management models may not take into account all relevant factors; the accuracy and completeness of information the Bank receives on customers and counterparties; the timely development and introduction of new products and services in receptive markets; the Bank's ability to expand existing distribution channels and to develop and realize revenues from new distribution channels; the Bank's ability to complete and integrate acquisitions and its other growth strategies; changes in accounting policies and methods the Bank uses to report its financial condition and financial performance, including uncertainties associated with critical accounting assumptions and estimates (see "Controls and Accounting Policies - Critical accounting estimates" in the Bank's 2013 Annual Report, as updated in this document); the effect of applying future accounting changes (see "Controls and Accounting Policies - Future accounting developments" in the Bank's 2013 Annual Report, as updated in this document); global capital markets activity; the Bank's ability to attract and retain key executives; reliance on third parties to provide components of the Bank's business infrastructure; unexpected changes in consumer spending and saving habits; technological developments; fraud by internal or external parties, including the use of new technologies in unprecedented ways to defraud the Bank or its customers; consolidation in the Canadian financial services sector; competition, both from new entrants and established competitors; judicial and regulatory proceedings; acts of God, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments, including terrorist acts and war on terrorism; the effects of disease or illness on local, national or international economies; disruptions to public infrastructure, including transportation, communication, power and water; and the Bank's anticipation of and success in managing the risks implied by the foregoing. A substantial amount of the Bank's business involves making loans or otherwise committing resources to specific companies, industries or countries. Unforeseen events affecting such borrowers, industries or countries could have a material adverse effect on the Bank's financial results, businesses, financial condition or liquidity. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements. For more information, see the "Risk Management" section starting on page 60 of the Bank's 2013 Annual Report.
Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2013 Annual Report under the headings "Overview - Outlook", as updated in this document; and for each business segment "Outlook". These "Outlook" sections are based on the Bank's views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing these sections.
The preceding list of important factors is not exhaustive. When relying on forward-looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding factors, other uncertainties and potential events. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf.
Additional information relating to the Bank, including the Bank's Annual Information Form, can be located on the SEDAR website at www.sedar.com and on the EDGAR section of the SEC's website at www.sec.gov.
ABOUT CANADIAN TIRE
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, CT REIT and Canadian Tire Jumpstart, a nationally registered charity dedicated to removing financial barriers so kids across Canada can participate in sports and physical activities. 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 categories. 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, and FGL Sports (Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport, Pro Hockey Life and Atmosphere), which offers the best active wear brands. The nearly 1,700 retail and gasoline outlets are supported and strengthened by our Financial Services division and the tens of thousands of people employed across the Company. For more information, visit Corp.CanadianTire.ca.
Scotiabank is a leading financial services provider in over 55 countries and Canada's most international bank. Through our team of more than 83,000 employees, Scotiabank and its affiliates offer a broad range of products and services, including personal and commercial banking, wealth management, corporate and investment banking to over 21 million customers. With assets of $783 billion (as at January 31, 2014), Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS). Scotiabank distributes the Bank's media releases using Marketwired. For more information please visit www.scotiabank.com.
SOURCE: CANADIAN TIRE CORPORATION, LIMITED