One of Canada’s biggest grocery chains plans to build new hubs to distribute both fresh and frozen foods to its Ontario stores.

Quebec-based Metro Inc. said Wednesday it expects to put up $400 million to modernize and automate its Toronto operations between 2018 and 2023, building two new facilities for fresh and frozen food distribution respectively.

“The new distribution centres will provide improved product assortment and selection accuracy as well as more flexibility which will allow us to improve service to our store network and customers,” Carmen Fortino, the company’s Ontario division head, said in a release. “In addition, they will feature state-of-the-art technology to enhance efficiency.”

Metro said its existing distribution network in Toronto was largely built more than 50 years ago and “no longer meets the evolving needs of the business.”

Its Ontario network today supplies 133 Metro and Metro Plus grocery stores in the province, along with Metro’s discount chain Food Basics, which has 128 Ontario locations.

Metro’s Ontario supply chain today runs through four distribution centres in Toronto and two in Ottawa, with combined staff of over 1,500 employees.

Modernizing and automating parts of that distribution network is expected to lead to cuts of about 180 full-time and 100 part-time jobs starting in 2021, the company said.

Fortino pledged “a range of transition measures” to support laid-off employees, adding that “fortunately, we have some time to plan the transition.”

Metro CEO Eric La Fleche said the planned investment will also enable the company to “continue its growth and expansion in the Ontario market.”

Paying for Coutu

The company’s plan follows its announcement earlier this month that it will buy the Quebec-based pharmacy retail chain Jean Coutu Group in a cash-and-stock deal worth $4.5 billion.

To help finance that deal, Metro on Wednesday also announced plans to sell most of its remaining minority ownership stake in Canada’s biggest convenience store operator, Quebec-based Alimentation Couche-Tard.

Those plans include Metro and its Metro Holdings arm selling almost 11.4 million Class B subordinate shares of Couche-Tard for $57.17 per share, or about $650 million, to dealers led by National Bank Financial and BMO Capital Markets.

Metro will also sell CDP Investissements and CDPQ Marches Boursiers, subsidiaries of Caisse de depot et placements du Quebec, another 11.4 million Class A multiple voting shares of Couche-Tard at $57.17 a share, also about $650 million.

Couche-Tard itself, whose banners in Canada also include Mac’s and Circle K, will buy back 4.4 million of its Class B subordinate voting shares from Metro for cancellation at $57.17 each, or about $250 million.

Once those deals close, Metro Holdings will still have about 5.1 million, or 3.9 per cent, of Couche-Tard’s Class A multiple voting shares.

Metro’s ownership stake in Couche-Tard has sat at almost 22 per cent since 2013, when it sold off about half its previous stake in the convenience store firm for about $479 million. — AGCanada.com Network

 

Tagged automation, Couche-Tard, distribution, Food Basics, Metro, ontario, Toronto