Canadian food and drug retailer Loblaw Cos. has completed its acquisition of Shoppers Drug Mart Corp., which is now a separate operating division of Loblaw.


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Loblaw closes Shoppers Drug Mart acquisition

March 28th, 2014

BRAMPTON, Ontario – Canadian food and drug retailer Loblaw Cos. has completed its acquisition of Shoppers Drug Mart Corp., which is now a separate operating division of Loblaw.

The closing of the $12.4 billion (Canadian) deal came a week after the companies received approval for the transaction from Canada's Competition Bureau.

Loblaw said Friday that the acquisition joins "two iconic Canadian brands." More specifically, the deal unites Canada's largest food retailer with Canada's biggest drug chain.

"The most successful partnerships are grounded in strengths that complement each other," Galen Weston, executive chairman of Loblaw Cos., said in a statement. "Loblaw and Shoppers Drug Mart are perfect partners. We will drive growth and profitability through our unmatched mix of store formats, products and offerings. This is truly a case of the whole being greater than the sum of its parts."

The merged company has 2,348 stores (corporate, franchised and associate-owned) and 1,797 pharmacies, generating 1 billion customer transactions per year.

In 2013, the combined company generated revenue in excess of $43 billion and EBITDA of about $3 billion on a pro forma basis, according to Loblaw. The combination of companies is expected to deliver targeted synergies of about $100 million in the first 12 months and $300 million over three years. First-year synergies are expected to come from the cost of goods sold and purchasing efficiencies in goods not for resale. Planned synergies are not dependent on any store closings.

"Consumers are more focused on health and wellness, and they are demanding more convenient retail locations," stated Vicente Trius, president of Loblaw Cos. "Working together, we will capitalize on these consumer trends and create a compelling new blueprint for future growth and profitability."

Overall, Loblaw now provides Canadians with grocery, pharmacy, health and beauty, apparel, general merchandise, banking, and wireless mobile products and services. Its more than 1,050 supermarkets range from discount to specialty stores, while its full-service pharmacies comprise over 1,250 Shoppers Drug Mart and Pharmaprix stores plus more than 500 Loblaw locations. The merged company's private-label roster includes such prominent brands as Life Brand, noname and President's Choice, and its PC Plus and Shoppers Optimum loyalty programs provide rewards to more than one in every three Canadians.

"I am very excited about our partnership with Loblaw, a company which also has a rich retail legacy of providing Canadians superior choice and value," commented Domenic Pilla, who Loblaw said will remain president of Shoppers Drug Mart. "Together, we can learn from each company's expertise to grow and create exciting opportunities for our two businesses and for Shoppers Drug Mart associate-owners."

In gaining approval from the Competition Bureau, Loblaw agreed to divest 18 stores, including 14 Shoppers Drug Mart drug stores and four Loblaw Cos. supermarkets.

Mark Butler, executive vice president of Loblaws' Conventional Division, was named in late September to lead the integration of Shoppers Drug Mart. He serves as executive vice president of integration and will oversee the planning the integration of the drug chain, as well as lead the team responsible for delivering synergies.

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