June 13, 2013

Sobeys to acquire Canada Safeway for C$5.69bn

Canadian food retailer Empire Company's wholly owned subsidiary Sobeys is set to acquire supermarket chain Safeway's Canadian business for C$5.8bn ($5.69bn).

By admin-demo

Canadian food retailer Empire Company’s wholly owned subsidiary Sobeys is set to acquire supermarket chain Safeway’s Canadian business for C$5.8bn ($5.69bn).

Canada Safeway has reported annual sales of C$6.7bn and C$513m of adjusted EBITDA for the fiscal year ended 23 March 2013.

The all-cash deal is expected to increase the chain’s turnover to C$24bn.

Empire Company president and CEO Paul Sobey stated that the acquisition is an historic milestone for the 106-year old chain, Sobeys.

"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," added Sobey.

Under the transaction, Sobeys will own 213 Safeway grocery stores in Western Canada, 62 co-located fuel stations, 199 in-store pharmacies, four distribution centres and 12 manufacturing facilities.

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Sobeys is looking to leverage Canada Safeway’s extensive retail presence in Vancouver, Calgary, Edmonton and Winnipeg to create an allied strategy enhancing its positioning in the market.

Sobeys president and CEO Marc Poulin noted that the synergy of both the companies would strengthen Sobeys offerings.

"We anticipate capturing annual cost synergies of approximately $200 million within three years, through integrating and modernizing distribution networks, reducing cost in procurement, administration and marketing, and leveraging Sobeys’ IT infrastructure," Poulin concluded.