Grocery retailer Loblaw Companies Ltd. said Friday it is buying T&T Supermarket Inc., Canada's largest Asian food retailer, for about $225 million.
Loblaw said the deal is for $191 million in cash, with the rest in preferred shares issued by T&T. The value of the preferred shares will be tied to the future performance of the business.
Launched in 1993, T&T operates 17 stores in British Columbia, Alberta and Ontario, and four distribution centres —three in Vancouver and one in Toronto.
"T&T's talented management team and colleagues have developed what we believe are the best Asian stores in Canada, which will be used to help Loblaw extend its ethnic offering to better serve Canada's largest growing customer segment," Galen G. Weston, executive chairman of Loblaw, said in a release.
Sales at T&T hit roughly $514 million in the 12 months leading up to June 30.
"Some of our customers have a nickname for us — the Asian Loblaw. Today we are proud it has become a reality," said Cindy Lee, CEO of T&T.
The deal is expected to be completed by the end of this year.
Loblaw's store chains already include Zehrs, Fortinos, Real Canadian Superstore, valu-mart, Atlantic Superstore, Maxi, Maxi & Cie, no frills, Provigo and Extra Foods. The company has about 1,000 corporate-owned or franchised stores across the country.
Shortly after announcing the T&T deal, Loblaw told investors its second-quarter earnings jumped by 38 per cent.
The Toronto-based company said it made $193 million, or 70 cents a share, up from $140 million, or 51 cents a share, a year earlier.
Sales in the quarter rose by 2.8 per cent to $7.2 billion on growth in its food and drugstore operations. Same-store sales — which track sales at stores open at least a 12 months — gained 2.5 per cent, topping the one-year rise of 0.7 per cent seen in the same quarter of 2008.
Loblaw stock fell 70 cents to $35.05 in TSX trading.