Sobeys has announced it is to sell of 30 stores

Sobeys has announced it is to sell of 30 stores

Canadian retailer Sobeys has announced it is to sell off 30 stores in the west of the country in part due to its move to secure regulatory approval for last year's acquisition of Safeway Inc's local business.

Last October, Sobeys agreed to sell 23 stores in order to gain competition clearance for the deal.

On Thursday (13 February), Sobeys said it had struck deals to sell 22 of the outlets to local peers Overwaitea Food Group and Federated Co-operatives Limited. A separate "binding letter of intent" for the 23rd store had been signed with an unnamed buyer.

However, on top of those 23 outlets, Sobeys has also agreed to sell seven other outlets in British Columbia to Overwaitea.

In total, Overwaitea will buy 15 stores, with Co-op buying 14 others. Sobeys said proceeds from those two deals would total C$430m (US$392m).

Overwaitea has acquired ten Safeway stores, two Sobeys outlets and three Thrifty Food stores. Co-Op has agreed to buy eight Safeway stores and six AB Sobey outlets.

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Sobeys Inc. today announced that binding purchase and sale agreements have been entered into with Overwaitea Food Group ("Overwaitea") and Federated Co-operatives Limited on behalf of the Co-operative Retailing System ("Co-op"), that will see Sobeys sell 22 of the 23 stores it is required to divest as part of its October, 2013 Consent Agreement with the Competition Bureau related to its purchase of Canada Safeway. Additionally, Sobeys has signed a binding letter of intent with another retailer for the sale of its Price Chopper location in Winnipeg, which the company is also required to divest as part of its October Consent Agreement.

Through the negotiation of these transactions, Sobeys also agreed to include an additional seven stores in British Columbia in the package to be acquired by Overwaitea. This was done to create a divestiture package that meets the needs of both Sobeys and Overwaitea.

Total proceeds from the Overwaitea and Co-op transactions, including related real estate, will be approximately $430 million, subject to customary closing adjustments. Proceeds will be used to repay bank debt. The total annual sales from these stores are approximately $690 million and they generate EBITDA of approximately $59 million.

Both the Overwaitea and Co-op agreements have received approval from the Competition Bureau and Sobeys anticipates 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.

Overwaitea has agreed to purchase the following 15 store locations:

Safeway 2345 Beacon Avenue, Sidney, BC Safeway 1950 Foul Bay Road, Victoria, BC Safeway 3958 Shelbourne Street, Victoria, BC Safeway 1143 - 56 Street, Tsawwassen, BC Safeway 131 Signal Road, Fort McMurray, AB Sobeys 1000 Railway Avenue, Canmore, AB Sobeys 65 Bow Street, Cochrane, AB Thrifty Foods 270 East Columbia Street, New Westminster, BC

Safeway* 3756 - 10 Avenue, Port Alberni, BC Safeway* 610 - 6th Street, New Westminster, BC Safeway* 181 Trans-Canada Highway, Duncan, BC Safeway* 108 - 3170 Tillicum Road, Victoria, BC Safeway* 370 Trans-Canada Highway, Ladysmith, BC Thrifty Foods* 18888 North Parallel Road, Abbotsford, BC Thrifty Foods* 2000 Island Highway, Nanaimo, BC

  • Additional stores not included in October Consent Agreement

Co-op has agreed to purchase the following 14 store locations:

Safeway 1441 Main Street, Winnipeg, MB Safeway 77 Vermillion Road, Winnipeg, MB Safeway 850 Dakota Street, Winnipeg, MB Safeway 1120 Grant Avenue, Winnipeg, MB Safeway 2331 - 66 Street NW, Edmonton, AB Safeway 3801 Albert Street, Regina, SK Safeway 3310 - 8 Street East, Saskatoon, SK Safeway 4926 - 46 Avenue, Taber, AB Sobeys 10004 - 99 Avenue, Fort Saskatchewan, AB Sobeys 5421 - 50 Street, Leduc, AB Sobeys 4703 - 50 Street, Wetaskiwin, AB Sobeys 18370 Lessard Road, Edmonton, AB Sobeys 5036 - 106 Avenue NW, Edmonton, AB IGA 6204 - 90 Avenue NW, Edmonton, AB 

Original source: Sobey's Inc