Sobeys operator Empire Company Ltd said Wednesday that it is purchasing the Canadian unit of Safeway Inc. The said acquisition is valued Can$5.8 billion that will double the reach of the company in Western Canada.
According to Empire, the deal is one of the largest to occur in the Canadian retail sector. It will give it control of 213 full service grocery stores under the Safeway banner. The deal will also include 200 in-store pharmacies. Liquor stores, distribution centers and fuel stations are also included in the said deal.
Safeway's Canadian unit made Can$513 million of adjusted earnings. This is before interest, taxes, amortization and depreciation in the past 12 months that ended March 23.
Sobey's CEO Marc Poulin stated that he is expecting to capture about Can$200 million in annual savings within three years after the deal pushes through.
The all-cash transaction will be financed through acquisition of lease-back deal on real estate assets and equity and debt offerings, said the company.
The takeover deal is expected to close later this year after regulatory approval. Morgan Stanley and Scotiabank acted as Empire advisers on said acquisition deal.
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