In a deal that will combine Canada’s largest supermarket and pharmacy chain’s, The Loblaw Companies (LBLCF) announced on Monday that it plans to purchase Shoppers Drug Mart (SHDMF).
Loblaw will pay U.S. $59.05 a share in cash and stock for Shoppers Drug Mart, a 29.4% premium over the pharmacy chain’s recent average share price. Shoppers Drug Mart shareholders can opt for either a cash payment for their shares, or Loblaw shares and cash. The deal is valued at U.S. $11.9 billion, the New York Times notes.
Shoppers Drug Mart will continue to operate as a separate division under its current CEO and will maintain its existing brand names. Chain stores will retail Loblaw brands and utilize the supermarket chain’s logistics system.
Financing for the acquisition is being provided by a number of banks including Bank of American (BAC) and Pierce, Fenner & Smith.
Under the transaction, Loblaw’s controlling family will purchase 500 million shares of Loblaw through its George Weston holding company. The family will retain 46% of Loblaw’s share of the combined company.
In June, grocery rival Sobey’s purchased Safeway‘s (SWY) Canadian supermarkets for $5.8 billion.