Sobeys to acquire Canada Safeway

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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."

Financial Highlights

For the 52 week period ended March 23, 2013Canada 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.

 

Organizations: Sobeys Inc., Canada Safeway, Empire Company

Geographic location: WesternCanada

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Recent comments

  • Uncle Bobby
    June 13, 2013 - 06:50

    Just like many shopping centres, small stores and towns, they were killed by Wal Mart

  • from P.C.
    June 13, 2013 - 01:41

    Hopefully with this purchase of all of the Canadian assets of Safeway, Sobey's in Nova Scotia can leverage their purchasing power and do something about the highway robbery prices they charge in their stores. I am from the Vancouver, B.C. area and the prices I saw in the Stellarton Sobey's compared to the Lower Mainland of B.C. was shocking to say the least. Some of the basic staples such as milk were almost double. Buying Safeway is a smart move on Sobey's part to expand into Western Canada. But if they charge the type of prices I saw in Nova Scotia they won't last too long out in B.C.

    • Reason
      June 13, 2013 - 09:40

      In fairness, the milk prices in NS are largely due to a provincial gov't and milk marketing board that support an industry that apparently can't produce at a reasonable market rate.

  • Laura J. Smith
    June 12, 2013 - 23:37

    ....Well put Mr. Chow. We had a wonderful chain of grocers here on Vancouver Island named Thrifty Food. Just the best ... Not so much now that Sobey's has infiltrated the entire chain. and I am no longer a happy customer so I do not shop there now. And guess what ?? I grew up with Sobeys in Pictou County.

  • Mr. Chow
    June 12, 2013 - 17:44

    Now if they could do something to this sobey's in town and the mall.

  • chief wiggam
    June 12, 2013 - 16:58

    not good.