STELLARTON, Nova Scotia – Empire Co. Ltd. agreed to acquire food retailer Farm Boy for C$800 million.
Under the agreement, Farm Boy will be established as a separate company within Empire’s business. Additionally, Jean-Louis Bellemare and Jeff York, co-CEOs of Farm Boy, agreed to reinvest for a 12 percent interest of the continuing Farm Boy business. Empire will finance the transaction through a combination of cash on hand and debt. Expected to close at the beginning of 2019, the deal is subject to customary closing conditions, including a review by the Canadian Competition Bureau.
“Farm Boy is a superb strategic and financial acquisition. It strengthens our reach in the key Ontario and GTA markets, it will be a growth vehicle in urban and suburban markets, and its very strong private label program will bolster our Ocado-driven e-commerce business,” said Michael Medline, president and CEO of Empire. “Farm Boy has a best-in-class brand with stellar customer loyalty. Its fresh, ready-to-eat and private label offerings are particularly appealing to urban and suburban consumers — it truly is ‘all about the food’ at Farm Boy. We believe we will be able to build on their historical industry leading same-store sales growth of 5.3 percent and five-year EBITDA CAGR of 21 percent to double the size of the business in the next five years.”
The first Farm Boy store opened in 1981 in Ottawa, Ontario. Since then, 26 locations operate across southeastern Ontario. Most recently, the first store in the Greater Toronto Area opened earlier this year. The 27th location will open in Oakville, Ontario this winter.
“This is a great addition to our portfolio at a time when we are moving from defense to offence.” Medline said. “We believe that with the leadership of our new colleagues, current CEOs Jean-Louis Bellemare and Jeff York, we can turbo-charge Farm Boy’s growth. We intend to enable the leadership team of Farm Boy to do what they do best — grow a highly successful retail format at double digit rates.”
Empire plans to prioritize rollout of the Farm Boy concept in the Toronto metro and will continue existing expansion plans — which include new site builds and conversions of some existing Sobeys location — in southwestern Ontario.
“What an extraordinary opportunity for Farm Boy. Together with Empire, an iconic Canadian brand with a national grocery presence, Farm Boy will significantly accelerate its growth agenda,” said Farm Boy co-CEO Jeff York. “We will strengthen the already strong Farm Boy brand, starting with urban and suburban markets in Ontario and eventually rolling out to other areas of Canada. We are particularly excited by the eventual reach of the Ocado e-commerce platform and can't wait to showcase our high-quality, local products to many more Canadians.”
Stellarton, Nova Scotia-based Empire Co. specializes in food retailing and related real estate. The company reported C$24.4 billion in annualized sales and C$8.7 billion in assets. The company employs approximately 120,000 workers.