Metro Inc. in deal to buy A&P Canada for $1.7B
Shares of Metro Inc. surged more than 13 per cent after the company said it is buying the A&P Canada chain of supermarkets for $1.7 billion in cash and shares.
Metro shares were up $3.75 at $31.25 on the TSX.
Montreal-based Metro is offering $1.2 billion plus $500 million of its class A shares to acquire the Canadian chain from The Great Atlantic & Pacific Tea Co. and its subsidiary A&P Luxembourg.
The deal marks a major move for Metro into the Ontario market. A&P Canada operates 236 food stores throughout Ontario under the A&P, Dominion, Food Basics, The Barn and Ultra Food & Drug banners.
A&P Canada has annual sales of $4.4 billion and more than 32,000 employees. When the deal is complete, Metro said it will have 579 food stores, including 283 outlets in Ontario, with annual sales approaching $11 billion.
Metro already operates stores in Quebec and eastern Ontario under the Metro, Metro Plus, Super C, Loeb and Brunet banners. It has annual sales of $6.1 billion and more than 33,000 employees.
"This is a unique opportunity to transform Metro's strong regional base into a significantly larger platform with increased scale and geographic diversification," said Pierre Lessard, the company's president and CEO.
Metro said the deal, which is scheduled to close in August 2005, is expected to boost its earnings per share in 2006.
Metro will assume some A&P debt.
A&P said the Metro stock will give it a 15.8 per cent stake in the company, and it appoint two members to the Metro board.