Sobeys Buys Canada Safeway for $5.8 Billion

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Sobeys Buys Canada Safeway for $5.8 Billion

by Sobeysfan

Jun 12, 2013

Canadian supermarket chain Sobeys, which owns the Thrifty Foods chain with 29 stores in B.C., is buying Canada Safeway Ltd. for $5.8 billion.

“Our intent is to build on the strength of two great companies and take the best of both worlds to create the most exciting offering possible for our consumers,” Marc Poulin, president and chief executive officer of Sobeys, said in an interview Wednesday.

Empire Co. Ltd., the Nova Scotia-based owner of Sobeys, said the Canada Safeway deal includes $1.8 billion in real estate. Canada Safeway has 213 stores, with four of them in Greater Victoria. About 60 per cent of the properties are in Vancouver, Calgary, Edmonton and Winnipeg.

The sale is expected to close in the fall, after a review by the federal Competition Bureau, Poulin said.

“The retail food industry has always been an industry in continuous movement. It is an extremely competitive industry and there are always changes in the dynamic of its indust...See MoreCanadian supermarket chain Sobeys, which owns the Thrifty Foods chain with 29 stores in B.C., is buying Canada Safeway Ltd. for $5.8 billion.

“Our intent is to build on the strength of two great companies and take the best of both worlds to create the most exciting offering possible for our consumers,” Marc Poulin, president and chief executive officer of Sobeys, said in an interview Wednesday.

Empire Co. Ltd., the Nova Scotia-based owner of Sobeys, said the Canada Safeway deal includes $1.8 billion in real estate. Canada Safeway has 213 stores, with four of them in Greater Victoria. About 60 per cent of the properties are in Vancouver, Calgary, Edmonton and Winnipeg.

The sale is expected to close in the fall, after a review by the federal Competition Bureau, Poulin said.

“The retail food industry has always been an industry in continuous movement. It is an extremely competitive industry and there are always changes in the dynamic of its industry with different players offering different stores and different products to consumers.”

The 106-year-old Sobeys is “always on the prowl for growth” and had talks with Safeway a number of times in past years, Poulin said. “We have not acquired stores with the intent of closing stores.”

The purchase takes place amid competitive pressures from U.S. retailing giants Wal-Mart and Target, the latter of which is rolling out stores across Canada, including on Vancouver Island.

Greater Victoria has a robust supermarket sector including Fairway Markets, Country Grocer, the Market on Yates and the Market on Millstream, and the Red Barn Market. Island- based Quality Foods is moving into the Victoria area, with plans for two stores.

Sobeys owns or franchises more than 1,300 stores across Canada under several banners, including Thrifty Foods, which had its start in Victoria.

David Ian Gray, founder of Vancouver’s Dig360 Consulting Ltd., said the purchase better positions Sobeys to compete with Loblaws Companies, owner of Real Canadian Superstore. Along with stores, the deal gives Sobeys more distribution centres and boosts its presence in the West, Gray said.

It is too soon to say whether any stores will close or consolidate, said Gray, who thinks Sobeys will take a couple of years before making those kind of moves. He expects Sobeys to first concentrate on behind-the-scenes integration of operations, such as logistics, warehousing and information technology.

Ernie Skinner, of the Market on Yates and on Millstream and one of the founders of the Thrifty chain, is confident that his stores’ customers will remain faithful. In fact, Skinner said, he is looking for a third location. The Market stores buy wholesale products from Sobeys and from a Safeway-owned company.

Tammy Averill, marketing manager for Country Grocer, with seven stores on Vancouver Island and Saltspring Island, said it’s too early to say what the implications of the deal will be for the local market. “We don’t know yet because we don’t know what banner they are going to go under.”

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