In an expected outcome, the Canadian Competition Bureau has approved Loblaw Companies Limited acquisition of Shoppers Drug Mart Corporation with the companies announcing the deal is expected to close March 28, 2014.
“We are pleased the Competition Bureau has concluded its review of this transaction, and to have its consent to bring these two great Canadian companies together,” said Galen G. Weston, Executive Chairman of Loblaw in a press release.
Powerhouse Private Brand Portfolio Key to Competitiveness
Loblaw identified private label brand portfolios of the two companies as complimentary and key to strengthening their competitive position. Both retailers have a national presence, operating multiple store formats and both have substantial private brand product ranges. Best known is Loblaw’s President’s Choice and also includes: no name, PC, Blue Menu, Club Pack, PC Organics, PC G.R.E.E.N, Exact and Teddy’s Choice Private Brands. Loblaw’s also owns the Joe Fresh apparel brand.
The scale of this merger first announced in July of 2013 and accepted by shareholders of Shopper’s last September, will enable the company to compete for market share in the food, general merchandise, apparel, pharmacy and beauty categories at both discount and premium segments, while having strong private brand assortments to differentiate from mass merchants, Target and Walmart.
“This merger uniquely positions Loblaw to meet the most important consumer trends in the country, including urbanization and health and wellness. In doing so, we will continue to deliver more choice, more value, and more convenience to Canadians,” said Weston.
Loblaw is Canada’s largest food retailer with revenues of about C$31 billion in over 1,100 outlets in 22 retail formats including: Loblaw, SuperStore, No Frills, The Independent. Joe Fresh, its private label men’s, women’s and children’s apparel, and Joe Fresh Beauty® cosmetics, recently announced an expansion to 23 markets in the Middle East, North Africa, Europe and South Korea.
Shopper’s is Canada’s largest pharmacy and beauty retailer, with over 1,250 retail stores and revenue of about C$10 billion. Shoppers Drug Mart also licenses or owns 56 medical clinic pharmacies, 62 Shoppers Home Health Care stores, and also operates six Murale luxury beauty shops. Shopper’s private brands include: Life for over the counter medications, vitamins, first aid and oral care; Quo color cosmetics and tools, Simply Food frozen foods, healthy consumables and snacks, Balea hair care and skin care, Etival Laboratoire skin care, Amigo pet food.
Significant Loyalty Programs
Shopper’s Optimum is Canada’s leading consumer loyalty program and will offer the new company significant business synergies with the recently introduced PC points and PC Plus loyalty programs and with ties to its President’s Choice financial services.
Conditions of Approval and Supplier Practices Under Review
In the course of its review of the acquisition, the Competition Bureau expressed potential concerns about certain Loblaw supplier practices. Loblaw says it will cooperate with the Competition Bureau in its continued review of these practices, and says it is committed to supplier practices that meet the Bureau’s objectives of maintaining competitive markets. Also, as part of its agreement with the Competition Bureau, Loblaw will sell 18 stores and nine pharmacy operations