STELLARTON, Nova Scotia — Sobeys Inc., Canada’s second-largest supermarket operator, will purchase the Canadian assets of Safeway Inc. for $5.7 billion in cash ($5.8 billion Canadian, or about $4 billion after taxes and expenses) and the assumption of certain liabilities.

Sobeys Inc., Canada’s second-largest supermarket operator, will purchase the Canadian assets of Safeway Inc. for $5.7 billion in cash ($5.8 billion Canadian, or about $4 billion after taxes and expenses) and the assumption of certain liabilities.

The acquisition will dramatically expand Sobeys’ presence in western Canada.

The transaction, which is subject to the customary closing conditions and regulatory approval in Canada, is expected to be finalized during the fourth quarter of 2013. It has been approved by the boards of directors of both retailers.

Canadian analysts hailed the deal as a game changer for Sobeys, which is a wholly owned subsidiary of Empire Co. In addition to 213 supermarkets bearing the Safeway banner, Sobeys will obtain 199 in-store pharmacies, 62 colocated fuel centers, 10 liquor stores, four distribution centers and 12 manufacturing plants.

The stores are situated in the western provinces of Alberta (96 stores, and the leading market share), British Columbia (72 stores), and Winnipeg (55 stores). "The acquisition of Canada Safeway represents an excellent strategic fit, strengthening our presence in western Canada with the addition of great employees, excellent stores and exceptional real estate," said Paul Sobey, president and chief executive officer of Empire. "The acquisition allows us to leverage our existing assets and in turn position Sobeys to compete even more effectively within the changing, and increasingly competitive, grocery retail landscape."

For Safeway, which did not solicit the sale, the deal will provide a hefty cash infusion, which it intends to use mainly to pay down about $2 billion in debt and to fund additional share ­repurchases.

"We are pleased to enter into this agreement with Sobeys in order to realize the higher multiples attributed to Canadian supermarket companies," said Robert Edwards, Safeway’s president and CEO. "The substantial cash proceeds from this transaction will allow us to create value for Safeway stakeholders and contribute to the growth of the ongoing business."

When questioned by analysts during a conference call in what ways the remaining proceeds would be employed to drive growth after debt payment and stock buybacks, Edwards indicated that they would be allocated to current initiatives intended to improve the company’s operating income.

The transaction does not include $300 million in public debt held by Canada Safeway due in March 2014, for which Safeway remains responsible.

One one level, the withdrawal from Canada represents a further contraction in the scale and scope of Safeway’s operations. Earlier this year the company sold most of its Genuardi’s stores in the greater Philadelphia market to Ahold U.S.A. It had acquired Genuardi’s Family Markets Inc. in 2001. In prior years Safeway tried unsuccessfully to sell the Chicago-based Dominick’s chain it had purchased in 1998.

While Safeway’s stock price surged to the highest levels in three months in the days following the announcement, not all analysts were impressed. In a research note, Cantor Fitzgerald analyst Ajay Jain was skeptical. "Now the focus for investors will be the core U.S. operations, which continue to lose market share," he wrote. "Safeway will remain heavily levered and the profitability of U.S. operations will continue to decline."

In fact, while shedding its Canadian operations may improve Safeway’s balance sheet, it is unlikely to burnish its profit and loss statement. The Canadian stores generated about $6.7 billion (Canadian) in sales and $428 million in adjusted operating profit during the trailing 12 months ended March 23. While the 223 Canadian stores represented less than 14% of Safeway’s 1,641 stores, they typically accounted for about one-third of Safeway’s operating income.