Metro Acquires The Jean Coutu Group
Canadian food and drug retailer Metro Inc. has completed the acquisition of The Jean Coutu Group Inc., a Varennes, Quebec-based company with 419 franchised drug stores in the provinces of New Brunswick, Ontario and Quebec. Under the acquisition, The Jean Coutu Group becomes a wholly owned subsidiary of Metro, combining all of its pharmacy operations.
“We are very proud to have acquired Quebec’s top player in the pharmacy sector,” said Eric La Flèche, president and CEO of Montreal-based Metro. “The combined entity will develop the full potential of our two banners, Jean Coutu and Brunet, in order to strengthen our market presence and better meet consumers’ needs. Together, we want to create a new retail leader offering consumers a food and pharmacy experience customized to their needs for years to come.”
Added François J. Coutu, who will continue as the president of The Jean Coutu Group: “We showcase popular major brands, known for their commitment to consumer health and well-being. Our operational efficiency will enable us to implement systems and processes, while ensuring that consumers receive high-quality, personalized service from our owner pharmacists.”
As stipulated in the definitive combination agreement entered into last fall, The Jean Coutu Group shareholders collectively received 25 percent of the acquisition price in the form of Metro shares, and the balance in cash, representing, in the aggregate, an approximate 11 percent equity interest in the corporation. Shareholders holding 79 percent of The Jean Coutu Group shares elected to receive their consideration in Metro shares, while the Coutu family and its affiliated entities hold an approximate 8 percent equity interest in Metro following the transaction. François J. Coutu and Michel Coutu have been chosen by The Jean Coutu Group to sit on Metro’s board of directors.
As a result of the deal, Metro expects to generate about $16 billion in revenues and more than $1.3 billion in operating income before depreciation and amortization. The retailer also anticipates that the merger will generate $75 million in annual cost reductions after three years, and contribute positively to earnings per share.
Metro operates or is the franchisor of a network of more than 600 food stores in Quebec and eastern Canada under several banners, among them Metro, Metro Plus, Super C and Food Basics, as well as nearly 700 drug stores, primarily under the Jean Coutu, Brunet, Metro Pharmacy and Drug Basics banners, providing employment to 85,000 associates.