This decision to exit the Chicago market was reached after the end of the third quarter of 2013 and will result in a cash tax benefit of $400m to $450m, which can be used to offset the cash tax expense on the sale of Canadian assets.
As part of the deal, Sobeys will acquire Safeway’s 213 full service grocery stores across Western Canada, 199 in-store pharmacies, 10 liquor stores, four distribution centers, 62 co-located fuel stations, and 12 manufacturing facilities.
In the third quarter of 2013, DOMINICK‘s reported losses before income taxes of $13.7m.
Safeway intends to use the cash tax benefit and any other cash proceeds from the sale of Dominick’s properties to buy back stock and invest in growth opportunities.
Empire president and CEO Paul Sobey stated that the deal is a historic event for Sobeys that has been in the market for the last 106 years.
"The acquisition of Canada Safeway represents an excellent strategic fit, strengthening our presence in Western Canada with the addition of great employees, excellent stores and exceptional real estate," added Sobey.
The chain’s profit dropped to $65.8m in the third quater, as against $157m in the corresponding period a year ago. Sales and other revenues for the quarter ended inched up to $8.62bn from $8.53bn a year ago.
Safeway president and CEO Robert Edwards said the decision to sell Canada Safeway and to exit the Chicago market is consistent with Safeway’s priority of maximizing shareholder value.