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Sobeys Inc. has formed an agreement with Shell to purchase about 250 retail gas locations in Canada. Around 200 of the locations are in Québec, with the remainder in the Atlantic provinces.
Bill McEwan, president and CEO of Stellarton, Nova Scotia-based Sobeys, described the deal as “an … opportunity for us to grow our existing retail gas operations while leveraging our significant wholesale and convenience business to better serve our customers and support our affiliates and dealer operations. … Shell’s strong fuel brand, connected to Sobeys’ leading retail formats and banners and the strength of the ‘Air Miles’ program, will be a unique and attractive offering to customers.”
The gas stations to be acquired are expected to include corporate-owned and dealer-operated locations with annual fuel volumes in excess of 1 billion liters (about 264 million gallons). The transaction, subject to regulatory approval and customary conditions, is expected to close by the end of March 2012. Sobeys said that it intends to use existing cash balances to finance the deal.
“By adding fuel retail to our customer offering in Québec, Sobeys becomes a strong partner for independent retailers who will benefit from our experience in collaborating with this type of business,” said Marc Poulin, president Sobeys IGA operations business unit. “In addition, the participation of Shell and IGA in the Air Miles rewards program means we will seek to leverage cross-promotion opportunities to benefit our customers.”
Sobeys currently owns or franchises more than 1,300 locations in Canada under banners that include Sobeys, IGA, Foodland, FreshCo, Thrifty Foods and Lawton’s Drug Stores.