TORONTO – Loblaw Companies Limited announced Monday it has reached a friendly agreement to acquire Shoppers Drug Mart Corporation for $12.4 billion in cash and stock.
Loblaw said the acquisition will enhance the companies’ competitive positioning in an evolving retail landscape.
Retaining its name and brand, Shoppers Drug Mart will operate as a separate division of Loblaw and expand its product offerings to include Loblaw’s private label and convenience food.
“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.”
“This acquisition also will allow us to accelerate our success in driving growth and profitability at Loblaw organically. Our customer proposition continues to deliver results, and I am enthusiastic about the prospect of value creation opportunities on multiple fronts,” said Vicente Trius, President of Loblaw.
The deal will combine the country’s largest grocery retailer with Canada’s largest pharmacy chain and see combined revenue of $42 billion annually.
Loblaw is offering $33.18 in cash plus about six-tenths of a Loblaw common share for each Shoppers Drug Mart common share.
Using the Friday closing price, the offer is worth $61.54 per Shoppers Drug Mart common share.
That’s about 29 per cent above the recent average trading price for the Shoppers stock.
“We are delighted to partner with Loblaw to leverage our combined strengths. For our shareholders, this transaction provides significant and immediate value, as well as the ability to benefit from future upside by virtue of their continued ownership of shares in the combined company,” said Domenic Pilla, President and Chief Executive Officer of Shoppers Drug Mart, in a press release.
“For our customers, it provides more locations with an enhanced mix of products and offerings that contribute to the good health of Canadians.”
The acquisition is still subject to approvals.
–with files from The Canadian Press
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