STELLARTON – Sobeys will be selling off 22 of its stores to Overwaitea Food Group and Federated Co-operatives Limited in a $430 million dollar deal.
The grocer giant was required to divest almost two dozen stores in Western Canada as part of its October 2013 Consent Agreement with the Competition Bureau related to its purchase of Canada Safeway.
Sobeys also signed a binding letter of intent with another retailer for the sale of its Price Chopper location in Winnipeg, which the company is also required to divest as part of its October Consent Agreement.
Through the negotiation of these transactions, Sobeys also agreed to include an additional seven stores in British Columbia in the package to be acquired by Overwaitea. This was done to create a divestiture package that meets the needs of both Sobeys and Overwaitea.
Total proceeds from the Overwaitea and Co-op transactions, including related real estate, will be approximately $430 million, subject to customary closing adjustments. Proceeds will be used to repay bank debt. The total annual sales from these stores are approximately $690 million and they generate EBITDA of approximately $59 million.
Both the Overwaitea and Co-op agreements have received approval from the Competition Bureau and Sobeys anticipates the deals will close in March or early April. The sale of the Price Chopper location remains subject to finalization of an asset purchase agreement with the purchaser and approval from the Competition Bureau.