Sobeys to purchase Safeway Canada for $5.8 billion; no word yet on what will happen to Neepawa Safeway

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Published on Monday, June 17, 2013

By: Lanny Stewart

myWestman.ca

With the recent announcement of Empire Company Limited and its wholly-owned subsidiary Sobeys Inc. reaching an agreement to acquire all assets of Canada Safeway Ltd. for $5.8 billion, it begs the question: what will happen to the Neepawa Safeway grocery outlet?

At the present time, management at Neepawa Safeway refused comment regarding the impending transaction, which should be given regulatory approval later this year. Meanwhile, spokespeople at Sobeys National and Safeway Canada have yet to return phone calls placed by myWestman.ca.

Blake Roe, who owns and operates Shop Easy Foods in Neepawa, says the deal -- which sees 213 Safeway stores, 199 in-store pharmacies, 62 gas stations and 10 liquor stores included in the transaction -- makes Sobeys Inc. just that much more of a force to be reckoned with when it comes to the grocery retail market in Western Canada.

"I'm the little fish in the pond, so I think it makes it tough because Safeway was always a big enough animal to try and compete against. With Sobeys in the picture, it's going to be even tougher now," said Roe.

He says he is unsure as to whether the acquisition by Sobeys will lead to more grocery stores in the area being sold.

"I don't know whether they (Sobeys) would look at doing any more (purchasing in the area). It's really hard to say. A lot of times, you'll see, especially in the food industry, one company buying another one, it seems to kind of steamroll. I don't know if that will happen or not."

The Safeway/Sobeys deal, which was announced last week, has been approved by the boards of directors of both companies and is expected to close in the fall of 2013 -- subject to approval by the Competition Bureau.

Sobeys will also be receiving four primary distribution centres and a related wholesale business as well as 12 manufacturing facilities and $1.8 billion worth of real estate in the deal.

Sobeys is Canada's second-largest grocery store chain after Loblaws, with sales in the 2012 fiscal year of $16.2 billion. It also owns several other grocery store brands, including FreshCo., Price Chopper, Thrifty and Foodland.

Canada Safeway is the Canadian subsidiary of the California-based Safeway Inc. Sales of approximately $6.7 billion were generated in 52 weeks, ending March 23, 2013.

More than 60 per cent of the Safeway grocery stores are located in Calgary, Vancouver, Edmonton and Winnipeg.

In photo: The Neepawa Safeway, located at Mountain Avenue and Ellen Street.

Photo by Lanny Stewart