Retail News Breaks
Loblaws to buy Shoppers Drug Mart
July 15th, 2013
BRAMPTON, Ontario – Loblaw Cos., Canada's largest food retailer, has agreed to acquire Shoppers Drug Mart Corp., the nation's largest drug chain, in a $12.4 billion (Canadian) cash and stock deal.
The companies said Monday that under the agreement, Loblaws will pay $33.18 per share in cash as well as 0.5965 of a Loblaw common share per each SDM common share on a pro-rated basis.
Based on Loblaws' closing share price on July 12, this amounts to $61.54 per SDM common share. The maximum cash outlay to be paid by Loblaws will be around $6.7 billion, to be funded from available cash and debt.
"This transformational partnership changes the retail landscape in Canada," Galen Weston, executive chairman of Loblaws, said in a statement. "With scale and capability, we will be able to accelerate our momentum and strengthen our position in the increasingly competitive marketplace. 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.”
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Based on 2012 pro forma figures, the combined company generated more than $42 billion in revenue; $3 billion in earnings before interest, taxes, depreciation and amortization; and $1 billion in free cash flow. The combination is expected to generate double-digit accretion to earnings, adjusted for intangibles amortization, in the first year.