Sobeys Inc. has entered into agreements with Overwaitea Food Group and Federated Co-operatives Ltd. on behalf of the Co-operative Retailing System to sell 22 of the 23 stores the grocer is required to divest in relation to its purchase of Canada Safeway. Sobeys also has signed a binding letter of intent with another retailer to sell a Price Chopper location in Winnipeg, Manitoba, as part of the divesture requirement of the Canada Safeway deal, and has agreed to add seven additional stores in British Columbia to those to be purchased by Overwaitea, for a total of 30 stores sold.
The sell-off of the seven British Columbia stores “was done to create a divestiture package that meets the needs of both Sobeys and Overwaitea,” according to Stellarton, Nova Scotia-based Sobeys, which estimated the proceeds from the transactions at CAN $430 million (US $391.9 million), subject to customary closing adjustments. The company said the proceeds would go to repay bank debt.
Vancouver, British Columbia-based Overwaitea has agreed to purchase 15 stores in Alberta and British Columbia, while the Saskatoon, Saskatchewan-based Co-op will buy 14 locations in Alberta, Manitoba and Saskatchewan.
Both the Overwaitea and Co-op agreements have received approval from Canada’s Competition Bureau, and Sobeys expects the deals will close in March or early April. The sale of the Price Chopper location remains subject to finalization of an asset purchase agreement with the purchaser and approval from the Competition Bureau.
Sobey’s purchase of Canada Safeway’s assets was completed late last year. At that time, Paul D. Sobey, president and CEO of Sobeys parent company, Empire Co. Ltd., said, “The addition of Canada Safeway represents a unique and highly strategic opportunity to leverage Sobeys’ modern asset base and provides us with a new and exciting platform for growth as we move forward.”
A wholly owned subsidiary of Empire, Sobeys owns or franchises more than 1,500 stores in all 10 Canadian provinces under the banners of Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, and Lawton’s Drug Stores, in addition to more than 330 retail fuel locations.