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    Canada's Loblaw to Acquire Shoppers Drug Mart

    Deal combines leading Canadian pharmacy and food businesses

    Canadian grocer Loblaw Companies Ltd. said today it will acquire Shoppers Drug Mart Corp., Canada's biggest pharmacy retailer, for $12.4 billion Canadian dollars ($11.9 billion) in a cash-and-stock deal.
     
    Loblaw said the union will enhance the companies' competitive positioning, creating new growth opportunities for shareholders, more and better choices for customers, and greater convenience through Shoppers Drug Mart's footprint in the important and growing small-urban store sector. In total, the combined retail operation will bring in more than C$42 billion in annual revenue.
     
    "This transformational partnership changes the retail landscape in Canada. With scale and capability, we will be able to accelerate our momentum and strengthen our position in the increasingly competitive marketplace," said Galen G. Weston, executive chairman of Loblaw. "This combination creates a compelling new blueprint for the future, positioning us to capitalize on important trends in society, from the emphasis on health, wellness and nutrition, to the imperatives of value and convenience."
     
    Domenic Pilla, president and CEO of Shoppers Drug Mart, said: "We are delighted to partner with Loblaw to leverage our combined strengths. For our shareholders, this transaction provides significant and immediate value, as well as the ability to benefit from future upside by virtue of their continued ownership of shares in the combined company. For our associate-owners and employees, who are a valued part of the equation, it provides the opportunity to pursue rewarding careers as we grow together. And for our customers, it provides more locations with an enhanced mix of products and offerings that contribute to the good health of Canadians."
     
    Shoppers Drug Mart, which owns about 1,300 drug stores and 65 Shoppers Home Health Care stores across Canada, will retain its name and brand, operating as a separate division of Loblaw. The pharmacy retailer plans to expand its product offerings to include Loblaw's private label and convenience food.
     
    Shoppers Drug Mart shareholders will own approximately 29 percent of the combined company.
     
    George Weston Limited, Loblaw's controlling shareholder, has entered into a voting agreement in support of the transaction. To finance a portion of the cash consideration, Weston has agreed to buy C$500 million of additional Loblaw common shares at the company's Friday closing price. After this investment, Weston will own an approximate 46 percent of Loblaw's common shares.
     
    The deal is slated to close in about seven months, subject to regulatory hurdles in Canada.

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