Safeway Sells Canadian Operations to Sobey's

[KTrain]

http://www.marketwire.com/press-rele...wy-1801274.htm

Safeway Announces Definitive Agreement to Sell Its Canadian Operations to Sobeys for C$5.8 Billion

PLEASANTON, CA--(Marketwired - Jun 12, 2013) - Safeway Inc. (NYSE: SWY) today announced that it has entered into an agreement to sell its Canadian operations through a sale of the net assets of Canada Safeway Limited to Sobeys Inc., a Canadian food retailer and wholly-owned subsidiary of Empire Company Limited, for C$5.8 billion in cash (about C$4.0 billion after taxes and expenses), plus the assumption of certain liabilities. The proceeds from this transaction are expected to be used to pay down $2.0 billion of debt, with the majority of the remainder to be used to buy back stock. In addition, some of the proceeds may be used to invest in growth opportunities.

In the trailing twelve months ended March 23, 2013, Canada Safeway's revenues were C$6.7 billion. In addition, Canada Safeway's operating profit was C$428 million and EBITDA was C$544 million, both adjusted for intercompany related transactions. Canada Safeway will be accounted for as discontinued operations beginning in the second quarter of 2013. Safeway Inc. remains responsible for Canada Safeway's C$300 million in public debt due March 2014, which is not included in the transaction, and we will also retain cash and other receivables in a similar amount in Canada.

"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, President and CEO of Safeway Inc. "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."

The transaction has been approved by the boards of directors of both companies. The transaction is anticipated to close in the fourth quarter of 2013 and is subject to customary closing conditions, including approval under the Competition Act (Canada).

[Travis Munroe]

Sobeys is right near the bottom of my list for places to grocery shop! Better learn to like em!

[Ace]

Wow. I sure hope this doesn't mean all the safeway's turn to Sobey's, that's my least favorite of all the grocery stores.

[Mango]

Don't you mean, Safeways?

[evman150]

I hope they still call it Safeway.

Sobeys has almost zero name recognition/brand value out here so I'd imagine they will keep the name if they can.

[dammage79]

Living out in the sticks the nearest safeway is an hour away. I miss Safeway. I will miss them more if they all turn into Sobey's.

[Ace]

Originally Posted by evman150

I hope they still call it Safeway.

Sobeys has almost zero name recognition/brand value out here so I'd imagine they will keep the name if they can.

And I hope they keep the store layout, and basically make no changes...

[The Yen Man]

I haven't been in a Safeway in ages. The last time I was in one, it was pretty dead.

[Flabbibulin]

Ya, I would imagine most people hope they stay under the safeway banner with few changes in local operations- I doubt it though. The full press release should give some indication

[TorqueDog]

Co-op and Safeway are my two favourite grocery stores. Sobeys, meh, never lived close enough to one to really do any consistent grocery shopping there.

[GreenLantern]

Costco > Co-Op > all the rest

[REDVAN]

OMG... my life will never be the same!

[GoinAllTheWay]

Wow...is Safeway(s) in financial trouble?

[Flabbibulin]

The press conference has been going on for some time and still no mention of whether they will discontinue the safeway brand in Canada.

[Byrns]

I actually like Sobey's bakery better than Safeway's. I wonder whats going to happen to the Safeway employee union, or if Sobey's is going to become unionized.

[MaDMaN_26]

Typically I find Safeway has the best produce selection/section. Sobey's on the other hand is the extreme opposite and usually terrible.

This is potentially not good... not good at all.

Co-op is over priced.

[nik-]

Maybe Sobey's will make the Safeway in my neighbourhood something other than an absolute pile of trash.

[Minnie]

I wish we had Save-On here. I don't think there's any south of Red Deer, though, is there? And Co-op doesn't go much further north of Red Deer, does it? Edmonton doesn't have any.

I wish our Sobey's was still an IGA - in particular, a Freson IGA. Much prefer those, but they're few and far between.

[Flabbibulin]

Sobeys has said that it is too early to comment on re branding- which means they will likely do some market research and decide what to do later. Its possible that there are no major visible changes in the local stores- that would be cheapest for them after all.

I think Empire left a lot of IGA's and Thrifty Foods alone when they were purchased?

[undercoverbrother]

Originally Posted by Minnie

I wish we had Save-On here. I don't think there's any south of Red Deer, though, is there?.

oh god no. Grey meat, limp veggie/fruit, that place is a nightmare.