Sobeys receives approval for Safeway purchase from Competition Bureau

STELLARTON, N.S. – The federal Competition Bureau has approved the $5.8-billion purchase of grocer Safeway Canada by Sobeys, but only on condition that the Nova Scotia-based supermarket operator put 23 stores in Western Canada up for sale.

Sobeys purchased 213 stores under the initial agreement, which included 199 in-store pharmacies and 62 gas stations on the Safeway properties.

The retailer will still come away with a gain of 190 locations overall from the Safeway acquisition.

“I am confident this agreement will ensure that Canadian consumers continue to benefit from competitive prices for a wide selection of grocery products,” Competition Commissioner John Pecman said in a statement Tuesday.

Sobeys, which is owned by Empire Co. Ltd. (TSX:EMP.A), says the stores for sale are under various labels, including Safeway, Sobeys, IGA and Price Chopper. The stores are located in British Columbia, Alberta, Saskatchewan and Manitoba.

“Our focus now turns to closing the deal, which we expect to do in early November,” Sobeys president and CEO Marc Poulin said in a release.

The acquisition marks one of the larger recent transactions by a Canadian grocer, as consolidation sweeps the industry amid the entry and expansion of several U.S. retail giants.

Earlier this year, Loblaw (TSX:L) secured an agreement to buy Shoppers Drug Mart Corp. (TSX:SC) for $12.4 billion in cash and stock, a deal that is still under review by the federal competition agency.

Fellow grocer Metro (TSX:MRU) has yet to make its own strategic acquisition, though its stores are centralized in Ontario and Quebec, with some locations in New Brunswick.

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.