Goodbye Canada Safeway

[radiofan]

Sobeys to buy Safeway Canada for $5.8 billion

David Friend and Alexandra Posadzki, The Canadian Press
Published Wednesday, June 12, 2013 4:57PM EDT
Last Updated Wednesday, June 12, 2013 6:30PM EDT

TORONTO -- Supermarket chain Sobeys Inc. is expanding its reach in Western Canada by acquiring the Canadian assets of grocer Safeway for $5.8 billion.

"After the acquisition, Sobeys will be a leading grocer in Western Canada and the largest grocer in Alberta, an attractive, high-growth market," president and chief executive Paul Sobey said Wednesday.

"This acquisition represents a unique and highly strategic opportunity for Sobeys to leverage its existing asset base, effectively creating a new platform for growth."

Empire Co. Ltd. (TSX:EMP.A), the Nova Scotia-based parent of the Sobeys chain, said the cash deal will give it $1.8 billion of real estate.

The transaction to buy Canada Safeway Ltd., which has 213 stores, will be completed through its wholly-owned Sobeys Inc. subsidiary. Included in the transaction are 199 in-store pharmacies and 62 gas stations on the Safeway properties.

Sobey also noted that the acquisition positions the company to compete more effectively within the changing and increasingly competitive grocery retail landscape in Canada.
In addition to traditional rivals like Loblaw (TSX:L) and Metro Inc.(TSX:MRU), major U.S. retail players like Walmart (NYSE:WMT) and Target (NYSE:TGT) have been making inroads in Canada with a broad selection of food items in their stores.

Sobeys owns or franchises more than 1,300 stores across Canada under several banners that include Sobeys, IGA, Foodland, FreshCo, and Thrifty Foods.

Safeway Inc. chief executive Robert Edwards told analysts in a conference call that the offer to buy its Canadian operations came directly from Empire Co.

"An auction process was not run and this was an unsolicited offer," he said.

"We believe that this transaction maximized the value of our Canadian assets."

In its last financial year, Safeway delivered $6.7 billion in sales.

Empire Co. will also own 10 liquor stores, four distribution centres and 12 manufacturing facilities as part of the deal.

About 60 per cent of the properties are in Vancouver, Calgary, Edmonton and Winnipeg.

Empire's spun out Crombie real estate investment trust will have the first opportunity to buy any locations the company intends to sell.

Empire expects the transaction to close in the fourth-quarter and immediately add to adjusted net earnings per share. The companies will have cost synergies of $200 million a year within three years, it said.

Stock in Empire, which made the announcement after markets closed, was down 97 cents, or 1.41 per cent, at $67.61 Wednesday on the Toronto Stock Exchange.


Read more: http://www.ctvnews.ca/business/sobeys-t ... z2W2o9MUNO

[jon]

The PostMedia version of the article includes an interview with Sobey's that says they have not decided whether or not to "bury" the Safeway name in Canada. They may decide to run both stores under their existing names, just as Leon's is doing with The Brick. Or not.

Bad idea in Edmonton, however, as Canada Safeway is still under a 1950's City Bylaw restricting their total retail square footage, with some allowances to population growth. A result of City "punishment" for Safeway having higher prices in poorer neighbourhoods where welfare recipients received Food Coupons only good at Safeway from the Alberta government.

I suspect changing all Edmonton Safeway stores to Sobey's would exempt them from the restrictions.

[freqfreak2]

Another question is whether Safeway's covenant (one not allowing grocery stores to open in former Safeway locations) would still be in effect. There are a number of older neighbourhoods without a supermarket - hopefully the pending sale could signal a change.

Further, Safeway is one of the major participants in Airmiles, while Sobeys went with Aeroplan. Time to book a trip?

[jon]

Stock in Empire, which made the announcement after markets closed, was down 97 cents, or 1.41 per cent, at $67.61 Wednesday on the Toronto Stock Exchange.

And it opened this morning UP by 11%.

[drmusic]

Another question is whether Safeway's covenant (one not allowing grocery stores to open in former Safeway locations) would still be in effect. There are a number of older neighbourhoods without a supermarket - hopefully the pending sale could signal a change.

Interesting. I thought Loblaw was the only one that did that.

I know I'll be sorry if Safeway goes away. It's been around for so long, and even though it may have been American, it really almost feels like an indigenous Western Canadian chain with a lot of nostalgia.

Vintage ad:
http://www.youtube.com/watch?v=jbaChIgOXbM

[Neumann Sennheiser]

Vintage ad:
http://www.youtube.com/watch?v=jbaChIgOXbM

Everything shown in the ad is now either obsolete or redundant; from drop-in film cartridges to flashbulbs to VHS cassettes to the very hairstyle of the clerk. I think, however, Safeway still does film processing though, for the elderly Luddites who will undoubtedly still be paying by personal check, filled out veeeery slowly, in entirety, by hand, still not comprehending the concept of electronic debit.

[hagopian]

Safeway has been cruising, with no competition on Davie, and now there is an independent President's Choice, putting the boots to it - with better service etc.
I have been going to the Safeway for over 20 years, and recently gave up....they have few staff and robot check outs and well, the President's Choice beats it.

Sobey's are big time in the Maritimes and should do well - they are smart marketers.

Aeroplan people will be happy - Air Miles collectors - not so much.

[isthisthingon]

Empire/Sobey's offer AirMiles in eastern Canada and are expected to keep the program in the west.

[hagopian]

Thanks for the clarification on Air Miles.

I am glad those folks that collect em, will be ok.

[radiofan]

Vintage ad:
http://www.youtube.com/watch?v=jbaChIgOXbM

The Safeway in that ad appears to be the one at Kingsway and Royal Oak in Burnaby. I think it still has that same facing on it. The voiceover guy sounds like Paul Preston.

[albertaboy4life]

And the jingle sounds like a Tommy Banks/Century II production.

[Eldon-Mr.CFAY]

Hi Everyone,
This came as a bit of a surprise to me on the news yesterday. I thought Safeway would be the last food chain in Western Canada to sell out. I thought Pattison's Save-On Foods in B.C. and Alberta with their high food prices would be first to go. I heard they were going to be sold a couple years ago but Pattison could not get a high enough price for it!!!!! Save-On was a good supermarket once upon a time but in recent years has had high prices and their bookstore selection has gone downhill too!!! I used to shop there all the time for the daily discount on books and magazines which has been discontinued for quite a few years now!!!!

I have friends in Calgary who work for Canada Safeway hqs. and have for quite a long time. I will have to ask Carol how this affects her and her daughter!!!
I know Sobeys bought Thriftys Foods in B.C. on the island a few years ago and has slowly been expanding the stores in the Lower Mainland. In Ontario they have Foodland (in Cobourg) and all through Ontario. Not bad prices but I think Loblaw stores and Wal-Mart is cheaper. However the quality of products at Sobeys seems better on a lot of items. Sobeys owns most of the IGA Food Stores in Canada right up to Alberta. However in British Columbia practically all of the IGA Marketplace Stores are owned by H.Y. Louie which owns London Drugs!!! It will be interesting to see if Sobeys buys IGA Marketplace from H.Y. Louie in B.C. now???? H.Y. Louie has done a pretty good job at most locations with IGA Marketplace locations, some they franchised out!!! I like the IGA Marketplace store on Westwood Plateau Plaza in Coquitlam, beautiful view from up there. The Murrayville IGA Marketplace Store in Langley Township is a nice one too with good service as well! There was one in Langley City at the old mall turned plaza location but it was run poorly and had high prices, I heard it was a franchise, anyway it closed quite a few months ago and later re-opened under Loblaws No Frills Brand which is al through Ontario. I notice Loblaws has brought the No Frills label to B.C. and seems to be replacing their old Extra Foods label stores with it!!!

The third largest supermarket chain in Canada is Metro Foods out of Montreal, they bought Dominion Stores and others in Ontario quite a few years ago now. Metro does have sales but is kind of the higher priced chain in Ontario, however they have a really great discount supermarket chain all through Ontario called Food Basics (I always call it Basic Foods) and they are really great! Like two liter pop for about 50 or 60 cents a bottle among other items. Bread prices at Food Basics is cheap too! Metro is not west of Ontario yet though. My prediction is this: I think Metro will eventually buy Save-On Foods out west unless Pattison keeps too high a price on his chan. In that case with Save-On Food High Prices they will loose more customers and who knows!!! I also heard rumors a few years ago that Pattison was trying to sell Save-On to Albertsons or some other USA Supermarket chain! Ah how interesting, the revolving supermarket scene!!!

Interesting stuff, thanks very much for posting the news story about this RadioFan!!!

Take care everyone, 73s Safety First!!!! Eldon

[former tv guy]

As always Eldon!!!
Thanks very much for the insight into your life!!!
This time your grocery habits???!!!

[Rocky]

Save-On was a good supermarket once upon a time but in recent years has had high prices and their bookstore selection has gone downhill too!!! I used to shop there all the time for the daily discount on books and magazines which has been discontinued for quite a few years now!!!!

Take care everyone, 73s Safety First!!!! Eldon

Wow .. a bookstore within a Grocery Store. Do you and Mrs CAFE look for discounted meat and produce at Chapters nowadays?

Sobey's, Extra Foods and No Frills are the favorite food stores throughout most of Central Alberta. Sobeys did a great job of refurbishing many ratty old IGA stores. In most areas, Safeway and Save On
are not a factor.

I hope Sobey's will eventualluy lose the Safeway name.

[xwdcatvb]

[quote="hagopian"]Safeway has been cruising, with no competition on Davie, and now there is an independent President's Choice, putting the boots to it - with better service etc.

Whaddaya mean, no competition on Davie? The "Independent" store in the 1200-block is simply a re-branded Super-Valu (also part of the Westfair Foods/Loblaw's supply chain) that's been around for decades, as has the now No Frills (formerly Extra Foods, formerly Super-Valu) in Denman Place.