You are here
Safeway Inc. will sell its Canadian operations to Sobeys Inc. for C$5.8 billion in cash (U.S. $5.39 billion), plus the assumption of certain liabilities, the proceeds of which will pay down $2 billion of debt, with the majority of the remainder to be used to buy back stock.
The transaction has been approved by the boards of directors of both companies and is expected to close in the fourth quarter of 2013, subject to customary closing conditions.
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.
"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 Pleasanton, Calif.-based Safeway. "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."
For the past 12 months ended March 23, 2013, Canada Safeway’s revenues tallied C$6.7 billion, while its operating profit was C$428 million and EBITDA, C$544 million, both adjusted for intercompany related transactions.
Safeway Inc. currently operates 1,415 stores and 20 manufacturing facilities in the United States with 2012 revenues of $37.5 billion and 223 stores and 12 manufacturing facilities in Canada with 2012 revenues of $6.7 billion.