The Loblaw Companies, Canada’s largest food retailer, announced on Monday that it would acquire Shoppers Drug Mart, the country’s biggest pharmacy chain, for $11.9 billion in cash and stock.
The total offer of 61.54 Canadian dollars ($59.05) represents a premium of 27 percent to Shoppers Drug Mart’s closing stock price on Friday on the Toronto Stock Exchange.
Loblaw agreed to pay 33.18 Canadian dollars in cash plus 0.5965 Loblaw share for each share of Shoppers Drug Mart.
“This transformational partnership changes the retail landscape in Canada,†Galen G. Weston, the executive chairman of Loblaw, said in a statement. “With scale and capability, we will be able to accelerate our momentum and strengthen our position in the increasingly competitive marketplace This combination creates a compelling new blueprint for the future, positioning us to capitalize on important trends in society, from the emphasis on health, wellness and nutrition, to the imperatives of value and convenience.â€
Domenic Pilla, the chief executive of Shoppers Drug Mart, said: “We are delighted to partner with Loblaw to leverage our combined strengths. For our shareholders, this transaction provides significant and immediate value, as well as the ability to benefit from future upside by virtue of their continued ownership of shares in the combined company.â€
Bank of America Merrill Lynch acted as financial adviser to Loblaw. RBC Capital Markets advised Shoppers Drug Mart and has provided an opinion to the board of directors of Shoppers Drug Mart. Loblaw retained Torys as its legal counsel and Borden Ladner Gervais in connection with competition matters. Osler, Hoskin & Harcourt acted as legal counsel to Shoppers Drug Mart.
