Sobeys Sells Western Dairy Assets

Canadian grocer Sobeys Inc. has entered into an agreement with Agropur Cooperative under which Agropur will purchase Sobeys' dairy-manufacturing facilities in western Canada and supply milk, yogurt and ice cream to Sobeys, Safeway and IGA stores in the West.

The CAN $356 million (US $334.2 million) purchase price includes the sale of four manufacturing facilities; licensing of the Lucerne trademarks to Longueuil, Quebec-based Agropur for milk production and distribution; long-term milk, yogurt and ice cream supply agreements that go into effect upon transfer of the facilities to Agropur and the expiration of current supply agreements; and a long-term national supply agreement for private label natural cheese.

"This agreement maximizes the value for these assets while securing long-term supply agreements that create synergies for our entire Canadian business," noted Marc Poulin, president and CEO of Stellarton, Nova Scotia-based Sobeys. "It also ensures that these facilities will continue to produce the very popular Lucerne dairy brand, which will not only remain available in our Safeway banner stores, but will be expanded to our network of Sobeys and IGA stores throughout the West."

Sobeys acquired the dairy-manufacturing facilities when it purchased Canada Safeway in November 2013. The sale is subject to approval by Canada's Competition Bureau.

A wholly owned subsidiary of Empire Co. Ltd, Sobeys owns or franchises about 1,500 stores in all 10 Canadian provinces under retail banners as Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods and Lawton's Drug Stores, in addition to more than 330 retail fuel locations.