Sobeys to acquire Canada Safeway

06/12/2013 05:06:00 PM
Pamela Riemenschneider

Safeway Canada(UPDATED COVERAGE: June 13)Empire Co. Ltd., the parent company of Canada’s second-largest retail chain Sobeys Inc., Stellarton, Nova Scotia, reached an agreement to acquire the assets of Canada Safeway Ltd. for $5.7 billion (US).

The deal includes 213 Safeway stores, four distribution centers and 12 manufacturing facilities in western Canada, according to a news release.

“This is a win-win for both companies, as well as for our customers and employees,” said Marc Poulin, president and chief executive officer of Sobeys, in a news release. “Sobeys expects to benefit from increased economies of scale. 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.”

Robert Edwards, president and chief executive officer of Pleasanton, Calif.-based Safeway Inc. said in a news release the proceeds from the sale will be used to pay down debt and buy back stock.

“The substantial cash proceeds from this transaction will allow us to create value for Safeway stakeholders and contribute to the growth of the ongoing business,” he said.

Canada Safeway generated $6.6 billion (US) in sales over the 52 week period ending March 23.

The sale is expected to close in the fall.

Sobeys, which has 1,300 stores in Canada, cited several areas the acquisition will enhance its business including making it the No. 1 grocer in a fast-growing Alberta market, solidifying the company as the No. 2 grocer in Canada with revenue of $23.5 billion (US) annually, and enhancing the company’s network in key market areas including sought-after locations in Vancouver, British Columbia, Calgary and Edmonton, Alberta, and Winnipeg, Manitoba.



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