Sobeys acquires 213 Safeway stores in Western Canada, strengthening its position as a leading grocery retailer in the country.
STELLARTON - Empire Company Limited and its wholly-owned subsidiary, Sobeys Inc., have announced that Sobeys has reached a definitive agreement with Safeway Inc. to acquire substantially all of the assets of Canada Safeway Limited for a cash purchase price of Cdn. $5.8 billion, subject to a working capital adjustment, plus the assumption of certain liabilities.
"This is a significant and historic event for Sobeys, which has been proudly serving Canadian food shoppers for 106 years," Paul D. Sobey, President and CEO of Empire said. "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.
"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. 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."
The assets to be purchased by Sobeys include the following:
213 full service grocery stores under the Safeway banner in Western Canada;199 in-store pharmacies with market leading productivity;62 co-located fuel stations;10 liquor stores;4 primary distribution centres and related wholesale business; and12 manufacturing facilities.
"We are very excited by this acquisition and the future opportunities it presents," said Marc Poulin, President and CEO of Sobeys. "This is a win-win for both companies, as well as for our customers and employees. Our employees have always been the foundation of our success and, with the addition of the great team at Canada Safeway, our customers can continue to expect a high quality offering with excellence in fresh food supported by great service. Our offering will only get stronger as we share and build upon best practices of two great businesses."
For the 52 week period ended March 23, 2013, Canada Safeway generated approximately $6.7 billion of sales and $513 million of adjusted EBITDA. After giving effect to the full realization of $200 million of expected synergies, the planned Sale-Leaseback described below, and assumed capital leases, management has placed an effective acquisition multiple on the transaction of approximately 7.4 times adjusted EBITDA. Management expects the transaction to be immediately accretive to adjusted net earnings per share and in excess of 25 percent accretive once synergies are fully realized.