Safeway in $5 billion dollar deal to sell Canadian stores
Toronto -- Canada’s second-biggest supermarket operator has acquired Safeway’s Canadian portfolio of stores in a $5.7 billion deal that pulls the Pleasanton, Calif., chain completely out of the country.
Sobeys, a unit of Empire Co. Lt., has acquired 213 grocery stores, 62 fuel stations, 10 liquor stores, 12 manufacturing facilities and four DCs, leaving Safeway with 1,400 stores in the U.S. after the deal.
Sobeys’ addition of Safeway’s Canadian assets will nearly double the grocer’s coverage in Canada’s western provinces and cement its No. 2 position behind Loblaw Cos.
The all-cash transaction is slated to close late this year, and will be financed through equity and debt offerings, along with a lease-back deal on some real estate assets being acquired. According to Safeway CEO Robert Edwards, the deal wasn’t solicited and no auction was held. A number of analysts have gone on the record with dubious responses to the announcement, saying that, while the Canadian sale might offer a temporary fix to an ailing balance sheet, Wall Street expects a continued decline in Safeway’s U.S. operations.