Loblaw Companies Limited (TSE:L) is buying Shoppers Drug Mart Corporation (TSE:SC), the country’s largest pharmacy chain, for 12.4 billion Canadian dollars ($11.9 billion).
“This strategic union will enhance the companies' competitive positioning in an evolving retail landscape,” the company said in announcing the deal on Monday.
The move comes as Canada’s largest food retailer is facing stiff competition from south of the border, especially from Bentonville, Ark.-based Wal-Mart Stores Inc. (NYSE:WMT), the world’s largest retail chain, which has pharmacies inside its outlets.
Minneapolis-based Target Corporation (NYSE:TGT) is also a major contender in the Canadian market after it acquired 220 Brampton, Ontario-based Zeller’s department stores for $1.8 billion in 2011, marking its first venture abroad.
The deal gives Shoppers Drug Mart shareholders the option of taking 61.54 Canadian dollars per share or trading each Shoppers share in for 1.3 Loblaw shares plus a Canadian penny. Shoppers Drug Mart shareholders will end up with about 29 percent of the combined companies that will retain their current brand separation in the marketplace.
Loblaw, based in Brampton, will end up forking out as much as 6.7 billion Canadian dollars in cash.
Angelo Young is a general assignment business reporter who joined IBTimes in April 2012. Much of his career has been behind the scenes as a copy editor, assignment editor and...