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Co-op, Overwaitea to buy 29 grocery stores in West

Thirty grocery stores across Western Canada are set to change hands in the wake of Sobeys’ takeover of Canada Safeway.

Sobeys Inc. on Thursday announced it has reached separate deals with Overwaitea Food Group and Federated Co-operatives for the sale of 15 and 14 stores respectively.

The stores to be sold include 22 of 23 outlets Sobeys agreed last October to sell, as required by the federal Competition Bureau for approval of the Safeway takeover — a blockbuster deal which has made Sobeys into Canada’s second-biggest grocer. [Related story]

Total proceeds from the sales, which include 18 Safeways, seven Sobeys stores, three Thrifty Foods stores and an IGA store in Edmonton and all “related real estate,” will be about $430 million, Sobeys said.

The stores, in all, generate annual sales of about $690 million and earnings before interest, taxes, depreciation and amortization (EBITDA) or about $59 million, Sobeys said.

Nova Scotia-based Sobeys said Thursday it has also signed a binding letter of intent with another unnamed retailer for the sale of its Price Chopper store in Winnipeg, also required as part of the Competition Bureau agreement.

The 15 stores being sold to Vancouver-based Overwaitea incude seven that weren’t part of the Competition Bureau agreement, but were added to the sale “to create a divestiture package that meets the needs of both Sobeys and Overwaitea,” Sobeys said.

Sobeys said it expects the two deals to close in March or early April, and noted both have already received Competition Bureau approval.

“This acquisition adds significantly to Save-On-Foods’ existing presence in both B.C. and Alberta and positions us for further growth in these provinces and beyond,” Overwaitea president Darrell Jones said Thursday in a separate release.

Overwaitea said it plans to rebrand 14 of the stores as Save-On-Foods locations, and one as a Cooper’s Foods.

Overwaitea, in this deal, will take over Safeway stores in Sidney, Tsawwassen, Port Alberni, New Westminster, Duncan and Ladysmith, B.C., plus three Safeways in Victoria and one in Fort McMurray, Alta. The deal also includes Sobeys stores in Canmore and Cochrane, Alta. and Thrifty Foods stores in New Westminster, Abbotsford and Nanaimo, B.C.

Joining Saskatoon-based Federated’s chain of Co-op stores, meanwhile, will be eight Safeways — four in Winnipeg and one each in Regina, Saskatoon, Edmonton and Taber, Alta. Federated will also get an IGA store and two Sobeys stores in Edmonton, and the Sobeys stores in Fort Saskatchewan, Leduc and Wetaskiwin, Alta. — Network

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