Empire to take Sobeys private in $1B deal
Empire Co. announced Thursday thatit will take its Sobeys grocery subsidiary private in a deal worthjust over $1 billion.
Empire is offering $58 in cash for each Sobeys share it doesn't own. Currently, Empire owns 72.1 per cent ofSobeys' stock.
Nova Scotia-based Sobeys is Canada's second-largest grocery chain, after Loblaws. It operates more than 1,300 stores across Canada under the Sobeys, IGA, and Price Chopper names.
"We believe that Empire's shareholders will be best served by 100 per cent ownership of Sobeys," Empire CEOPaul Sobey said in a release.
"Considering the very challenging Canadian retail landscape, this all-cash transaction represents an excellent opportunity for Sobeys' shareholders to realize a significant premium on their shares," he said.
The "challenging retail landscape" Sobey mentioned was created bythe arrival ofgrocery-selling supercentres that Wal-Marthas recently been opening in Canada.
The $58 offer represents a 53.4 per cent premium on Wednesday's $37.80 closing price for Sobeys' stock.
Trading in Sobeys and Empire shares was halted Thursday afternoon for the announcement. When trading resumed, Sobeys shares soared. They closed at $57.30, up $19.30 on the day. Empire's Class A shares rose $1.39 to $41.65.
Stock in other food giants rose. Loblaw shares rose $2.50 to $52.85, whileshares of Metro Inc. —which operates almost 600 stores under the Metro, A&P, Dominion, Loeb, Ultra Food & Drug, The Barn Markets and Food Basics banners —gained $1.85 to reach $39.85.