More consolidation is taking place in Canada’s grocery industry as the parent company of Sobeys is buying a controlling stake in Longo’s and the Grocery Gateway delivery service.
Under the terms of the deal, Empire Company Ltd. (TSX:EMP.A), which owns the Sobeys grocery chain, will acquire a 51% stake in Longo’s and Grocery Gateway, with options that could see Empire eventually take full control of the businesses.
Empire will pay $197 million in cash, up to $125 million via the issuance of Class A shares, and also assume $35 million in debt. The deal is subject to approval from Canada’s Competition Bureau.
Grocery Gateway’s will run parallel to Sobey’s existing online grocery service called "Voila." Empire says it will run both brands separately.
Longo’s traces its history back to 1956, and currently runs a network of 36 stores across the Greater Toronto Area. According to a news release, Longo’s sales totaled $1.1 billion in the 12 months ending Feb. 28.
Related Stories
