Loblaw to buy Shoppers Drug Mart

The grocery retailer expands its small-format footprint with the acquisition of the drug store company.
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Loblaw has struck a deal to purchase Shoppers Drug Mart for $12.4 billion in cash and stock, merging Canada’s largest grocery and pharmacy companies.

In a conference call with analysts Monday morning, Loblaws executives said the transaction will allow Loblaws to offer its private label brands through Shoppers’ store network. Likewise, Loblaw will begin to offer Shoppers’ wellness brands and pharmacy services in Loblaw stores.

The move also immediately expands Loblaw’s reach with small-format stores, as they gain around 1,200 of the drug stores.

“I have long believed that the next chapter for growth at Loblaw should be based in a vision that combined health, wellness and nutrition. Loblaw combining with Shoppers Drug Mart is the ultimate expression of that vision,” said Galen G. Weston, executive chairman of Loblaw, in a conference call with analysts Monday.

No word yet on how this will affect media buying for the two brands. Aegis handles some media buying for Shoppers Drug Mart.

It was a busy weekend for Loblaws, after it first announced the launch of its new health food store, Nutshell Live Life Well, which will compete against Whole Foods by catering to health-conscious consumers. The first store will be located in downtown Toronto and carry an assortment of prepared, fresh and packaged foods, a pharmacy, natural health and beauty products as well as vitamins and supplements.

The deal is pending approval from the shareholders and the Competition Bureau.