Monday, 15 July 2013

News: Loblaw to Purchase Shoppers Drug Mart in $12.4 Billion Deal

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.