TORONTO – Shoppers Drug Mart Corp. shareholders will be voting today on whether to approve a proposed $12.4-billion takeover by Loblaw Companies Ltd.
The board of directors of Shoppers (TSX:SC) has unanimously supported the deal and urged shareholders to vote in favour of it as well.
The proposed merger, announced in July, will keep the Shoppers brand name in place and allow it to operate as separate division of Loblaw (TSX:L).
The deal requires the approval of at least two-thirds of votes cast at the meeting.
The transaction also requires the approval of a majority of Loblaw shareholders as the number of common shares to be issued in the deal exceeds 25 per cent.
However, George Weston Ltd. has already provided written consent in favour of the deal to the Toronto Stock Exchange, which satisfies the approval requirements from Loblaw’s end.
Overall, Loblaw is offering $33.18 in cash plus about six-tenths of a Loblaw share for each Shoppers Drug Mart common share.
The proposal valued Shoppers Drug Mart common shares at $61.54 per share based on Loblaw’s share price before it was announced — a more than a 29 per cent premium to Shoppers’ average trading price prior to the announcement.
Holders of Shoppers stock have the option of receiving $61.54 cash or, alternatively, 1.2941 Loblaw common shares plus one cent cash, subject to caps on the total number of shares and total amount of cash.
The amount of cash is capped at $6.7 billion and the number of shares is capped at 119.9 million, the companies said at the time.
Assuming Shoppers investors opt for the maximum amount of Loblaw equity, they would own about 29 per cent of the combined company.