The transaction includes 213 full-service grocery stores in Western Canada under the Safeway banner, 199 in-store pharmacies, 62 co-located fuel stations, 10 liquor stores, 4 primary distribution centers and 12 manufacturing facilities.
“The acquisition allows us to leverage our existing assets and in turn position Sobeys to compete even more effectively within the changing, and increasingly competitive, grocery retail landscape,” said Paul Sobey, president and chief executive officer of Empire. “Empire is committed to continuing its focus on food retailing and related real estate assets and will continue to own 100 percent of Sobeys, which will be a stronger food company with excellent growth prospects.”
Founded in 1907, Sobey’s owns or franchises more than 1,300 stores under retail banners that include Sobeys, IGA, Foodland, FreshCo and Thrifty Foods, as well as Lawton’s Drug Stores. The company also operates more than 260 retail fuel locations.
Robert Edwards, president and CEO of Safeway, said the company will use the substantial cash proceeds from the transaction to create value for Safeway stakeholders and contribute to the growth of the ongoing business.
“We are pleased to enter this agreement with Sobeys in order to realize the higher multiples attributed to Canadian supermarket companies,” Edwards said.
Safeway plans to use the proceeds from the divesture to pay down debt, buy back stock and invest in growth opportunities.
For the year ended March 23, Canada Safeway’s revenues were $6.6 billion (C$6.7 billion).
The boards of directors of both companies have approved the transaction, and it is expected to be completed during the fourth quarter of 2013.