The Canadian Competition Bureau has approved Sobeys’ proposed acquisition of Canada Safeway, subject to the divestment of 23 stores.
Deal includes grocery stores, distribution centres and manufacturing facilities
Sobeys announced in June that it had reached an agreement to acquire all the assets of Canada Safeway in a deal worth $5.8bn. Net of the divestments, Sobeys will acquire 190 stores which will strengthen its presence in Western Canada and solidify its number two position in the Canadian market. The assets being acquired include grocery stores, in-store pharmacies, co-located fuel stations, distribution centres and manufacturing facilities.
Lessening of competition expected in a small number of local markets
The Competition Bureau noted that in most local markets impacted by the acquisition, a number of national, regional and local competitors will act as effective remaining competitors post-transaction. However, it concluded that the proposed transaction would lead to a substantial lessening or prevention of competition in a number of these markets. Eleven of the 23 stores are located in Alberta, five are in Winnipeg, five in British Columbia and two in Saskatchewan.
Complementary businesses to leverage best practice in prepared foods, private label and loyalty
While no plans have been revealed yet for the store network, Canada Safeway offers a strong asset base, with the majority of stores in enviable locations, and reflecting the retailer’s contemporary Lifestyle format. With both retailers offering a similar customer proposition, there will be opportunities to transfer best practices in the areas of fresh and prepared foods, private label development and loyalty and customer analytics. The deal is expected to be completed in November.