Loblaw's $12 Billion Bid For Shoppers Drug Mart

Canadian mega-retailer Loblaw has agreed to pay $11.9 billion U.S. ($12.4 billion Canadian) to take over Shoppers Drug Mart, making it the second-largest grocery deal in a decade, Bloomberg is reporting. The context for the deal is some major moves into Canada from both Walmart and Target. A month ago, Loblaw rival Sobeys Inc. agreed to buy Safeway's Canadian stores for C$5.8 billion.

Loblaw doesn't expect regulators will require store divestitures in connection with the merger of the country's largest pharmacy chain with its larger grocery chain, Vicente Trius, Loblaw's president, said Monday (July 15) on a conference call with analysts and investors. "This transaction catapults us into a position that would otherwise take decades to reach alone," Trius said. "Teaming with Shoppers Drug Mart immediately puts us further down our strategic path in a single bold step."

Under the agreement, Loblaw will acquire all of the outstanding Shoppers Drug Mart common shares for C$33.18 per share in cash plus 0.5965 Loblaw common shares per each Shoppers Drug Mart common share, on a fully prorated basis. Loblaw and Shoppers Drug Mart anticipate that the transaction will be completed within six to seven months.

For years, Canada's retail scene had been fairly insular, but that all changed within the last year with U.S. based chains deciding now was the time for a major Northern push. Merging major Canadian operations to be able to better fight off chains with the resources of a Walmart or Target is a fine defensive strategy.

Beyond the American incursion, there's another context, reports Reuters, that of the Weston family that owns Loblaw. This acquisition "is just the latest move by the Weston family, Canada's second-richest clan, to expand a food and clothing empire that began 131 years ago with a Toronto bread factory." The Reuters piece added the deal "would add another jewel to a crown that already includes Selfridges and Fortnum & Mason in Britain, upscale retailers like Holt Renfrew in Canada and Brown Thomas in Ireland, and bakeries and groceries across North America."

For more:

- See Bloomberg story
- See Drug Store News story
- See Reuters story

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