Retail giant to gain 1,200 locations and increase
urban footprint.
In a deal announced this morning, Loblaw
Companies Limited will be acquiring Shoppers Drug Mart Corporation in a cash
for shares deal that will see the pharmacy chain continue operating as a
separate entity.
This strategic move comes as competitors such
as Target and Walmart are increasingly targeting Loblaw’s core food business,
and just weeks after Sobeys has announced their acquisition of Canadian Safeway
stores.
"This transformational partnership
changes the retail landscape in Canada. With
scale and capability, we will be able to accelerate our momentum and strengthen
our position in the increasingly competitive marketplace," said Galen G.
Weston, Executive Chairman of Loblaw in a press release. "This
combination creates a compelling new blueprint for the future, positioning us
to capitalize on important trends in society, from the emphasis on health,
wellness and nutrition, to the imperatives of value and convenience."
Loblaw, Canada’s largest grocery retailer,
will distribute its private brand food products at Shoppers Drug Mart and sees
the deal as strengthening its urban store network. The combined company generated
revenue of over $42 billion last year, and the deal is expected to result in
$300 million in cost savings in three years.
The deal is subject to regulatory approval.
In a related story, last week Loblaw
announced the launch of a new health and wellness chain called Nutshell with a
Toronto location to open in the fall.
