Sobeys has entered into an agreement with Safeway Inc. to purchase virtually all of Canada Safeway’s assets for $5.8 billion in an all-cash transaction.
The transaction brings the store ownership back into Canadian hands and positions Sobeys, a retail chain owned by Empire Co. Ltd. based in Nova Scotia, as a leading grocer in Western Canada.
It also solidifies Sobeys’ number 2 position nationally, with expected annual revenue of $24 billion.
Sobeys president and CEO Marc Poulin says the company is not yet sure if it will re-brand the Safeway stores.
“We just completed the acquisition. We will do proper marketing and research to determine what will be the course on the bannering side.”
These brands across Canada currently include Sobeys, Foodland, FreshCo and Thrifty Foods, as well as IGA stores outside of British Columbia.
The transaction is anticipated to close this fall, following the customary Competition Bureau review period.
Andrew Walker, Sobeys vice-president communications and corporate affairs, says the fate of the current Safeway stores is now up to that federal agency.
“The competition bureau will look and see if there are any that we need to sell. [But] we made this $5.8-billion acquisition because we want to keep as many stores as we can, because of great employees and a great team at Canada Safeway, and great stores.”
The approximately 175 employees in the three Safeway stores across the Cariboo can expect the same compensation from Sobeys as they would have seen under their recently ratified union contract.
United Food and Commercial Workers International Union (UFCW) Local 1518 communications representative Kim Novak says the deal is still in the “very early stages,” but the employer has committed in writing to honouring the agreement.
While legislation to that effect exists under the Successor Law for purchasing unionized companies, she explains in this case, there won’t be any need for a dispute.
“The new employer purchasing Safeway is going to be taking on all of the provisions under the new collective agreement that we just negotiated.”
That 10-year contract will expire in 2023, but Novak notes it has a clause for re-opening salary and benefit negotiations five years down the road.
“We are going to do everything to represent our members with the highest level of representation [and] keep everyone informed as more information becomes available.”
Local Safeway employees and others can visit the website at www.ufcw1518.com and follows links to Featured, Latest News to get ongoing updates on the union status, she adds.
Canada Safeway public affairs did not respond to media requests for comment.
Safeway Inc. president and CEO Robert Edwards, who is based out of California, says the transaction has been approved by the boards of directors of both companies.
“We are pleased to enter into this agreement with Sobeys in order to realize the higher multiples attributed to Canadian supermarket companies.
“The substantial cash proceeds from this transaction will allow us to create value for Safeway stakeholders and contribute to the growth of the ongoing business.”
Sobeys states the corporate strategies of both companies align with complementary retail offerings, for “a great cultural fit” and an “exceptional store network in sought-after locations” that brings along $1.8 billion in real estate holdings.
