The firm is in advanced talks over the $4.52 billion deal as it seeks to fend off Amazon’s push
Sandrine Rastello
Canadian grocer Metro Inc. is in advanced talks to buy pharmacy chain Jean Coutu Group Inc. for C$4.52 billion ($3.64 billion) to diversify its business in an industry under increasing threat from Amazon.com Inc.’s food expansion.
Metro is offering C$24.50 a share in cash and stock for Varennes, Quebec-based Jean Coutu, or 6 percent higher than Coutu’s closing price Tuesday in Toronto. The two companies haven’t reached a definitive agreement, according to a joint statement Wednesday.
The acquisition would tie up two giants from the province of Quebec and gives Metro an expanded foothold in the drug business, mirroring rivals Loblaw Cos.’ purchase of Shoppers Drug Mart four years ago. Jean Coutu’s earnings had recently been under pressure due to new provincial regulation on generic drugs, though a compromise was recently found with the government.
Canadian grocers, which were locked in a price war and are just coming out of a prolonged bout of food deflation, now have to get ready for Amazon, which in June agreed to buy Whole Foods Market Inc. The U.S. behemoth is also reported to have plans to roll out its Prime Now delivery service for groceries and other items in Canada this year.
With Coutu, Montreal-based Metro would add 419 stores in Quebec, Ontario and New Brunswick, along with 20,000 employees. Metro already operates more than 250 drug stores, and 600 grocery outlets in Ontario and Quebec.
Jean Coutu is controlled by the Coutu family, which started the drug store chain in 1969. The family supports the deal, which would be paid 75 percent in cash and the remainder in stock, according to the statement.
Metro rose 4.4 percent to C$41.86 at 12.43 p.m. in Toronto, the biggest gain in five months. Coutu jumped 5.9 percent to C$24.46.
Copyright Bloomberg 2017
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Canadian grocer Metro Inc. is in advanced talks to buy pharmacy chain Jean Coutu Group Inc. for C$4.52 billion ($3.64 billion) to diversify its business in an industry under increasing threat from Amazon.com Inc.’s food expansion.
Metro is offering C$24.50 a share in cash and stock for Varennes, Quebec-based Jean Coutu, or 6 percent higher than Coutu’s closing price Tuesday in Toronto. The two companies haven’t reached a definitive agreement, according to a joint statement Wednesday.
The acquisition would tie up two giants from the province of Quebec and gives Metro an expanded foothold in the drug business, mirroring rivals Loblaw Cos.’ purchase of Shoppers Drug Mart four years ago. Jean Coutu’s earnings had recently been under pressure due to new provincial regulation on generic drugs, though a compromise was recently found with the government.
Canadian grocers, which were locked in a price war and are just coming out of a prolonged bout of food deflation, now have to get ready for Amazon, which in June agreed to buy Whole Foods Market Inc. The U.S. behemoth is also reported to have plans to roll out its Prime Now delivery service for groceries and other items in Canada this year.
With Coutu, Montreal-based Metro would add 419 stores in Quebec, Ontario and New Brunswick, along with 20,000 employees. Metro already operates more than 250 drug stores, and 600 grocery outlets in Ontario and Quebec.
Jean Coutu is controlled by the Coutu family, which started the drug store chain in 1969. The family supports the deal, which would be paid 75 percent in cash and the remainder in stock, according to the statement.
Metro rose 4.4 percent to C$41.86 at 12.43 p.m. in Toronto, the biggest gain in five months. Coutu jumped 5.9 percent to C$24.46.
Copyright Bloomberg 2017
Related stories:
Sprott’s former management team launches new firm
Investment group ramps up high net worth offering
