Empire Company Limited and its wholly-owned subsidiary, Sobeys, have announced a definitive agreement to acquire all of the assets of Canada Safeway for C$5.8bn (US$5.7bn).
The deal, which includes 213 full-service grocery stores under the Safeway banner in western Canada, four primary distribution centres and the related wholesale business, is subject to a working capital adjustment, plus the assumption of certain liabilities.
“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,” explained Paul D. Sobey, president and CEO of Empire, in a press release.
“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.
Sobey said Empire is committed to continuing its focus on food retailing, explaining that the group will now be a “stronger food company with excellent growth prospects”.
Canada Safeway generated approximately C$6.6bn in sales during the 52-week period ended 23 March, according to the release.
Canada Safeway has a store network totalling approximately 9m ft2 in sought-after locations of which over 60 per cent is located in Vancouver, Calgary, Edmonton and Winnipeg.
“Sobeys expects to benefit from increased economies of scale,” noted Marc Poulin, president and CEO of Sobeys.
“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.”
