Newspaper article The Canadian Press

Sobeys Expanding Reach in Western Canada with Safeway Acquisition

Newspaper article The Canadian Press

Sobeys Expanding Reach in Western Canada with Safeway Acquisition

Article excerpt

Empire Co. to buy Safeway Canada

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TORONTO - Supermarket chain Sobeys Inc. says its $5.8-billion acquisition of Safeway's Canadian assets will give it a foothold in sought-after retail markets in Western Canada.

"After the acquisition, Sobeys will be a leading grocer in Western Canada and the largest grocer in Alberta, an attractive, high-growth market," president and chief executive Paul Sobey said Wednesday.

"This acquisition represents a unique and highly strategic opportunity for Sobeys to leverage its existing asset base, effectively creating a new platform for growth."

Empire Co. Ltd. (TSX:EMP.A), the Nova Scotia-based parent of the Sobeys chain, said the cash deal will give it $1.8 billion of real estate.

The transaction to buy Canada Safeway Ltd., which has 213 stores, will be completed through Empire's wholly-owned Sobeys Inc. subsidiary. Included in the transaction are 199 in-store pharmacies and 62 gas stations on the Safeway properties.

Empire Co. will also own 10 liquor stores, four distribution centres and 12 manufacturing facilities as part of the deal.

Empire said it expects to find cost synergies of about $200 million over three years by integrating the distribution, information technology and procurement divisions of both grocers.

The company also said it will cut its administrative and marketing costs by combining management teams, but would not comment on whether layoffs are expected.

"We have a need for great, talented people," said Sobey. "There's a great cultural fit in regards to the employee basis between the two organizations."

Marc Poulin, president and chief executive of Sobeys Inc., said the company is not sure whether it will be re-branding the Safeway stores.

"It's too early to tell, obviously, at this stage," said Poulin.

"We just completed the acquisition. We will do proper marketing and research to determine what will be the course on the bannering side."

Sobeys owns or franchises more than 1,300 stores across Canada under several banners that include Sobeys, IGA, Foodland, FreshCo, and Thrifty Foods.

The company noted the acquisition positions it to compete more effectively within the changing and increasingly competitive grocery retail landscape in Canada. …

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