Sobeys signs strategic partnership with Agropur that includes sale of Western dairy assets and long-term supply agreements

$356 million deal expands Lucerne brand to other Sobeys' banners in West

STELLARTON, NS, July 8th, 2014 /CNW/ - Sobeys Inc., a wholly-owned subsidiary of Empire Company Limited, today announced that an agreement has been entered into with Agropur Cooperative that will see Agropur purchase Sobeys' dairy manufacturing facilities in Western Canada and supply milk, yogurt, and ice cream to Sobeys, Safeway and IGA stores in the West under long-term supply arrangements.

The purchase price of $356 million includes the following:

  • Sale of four manufacturing facilities located in Edmonton, AB; Winnipeg, MB; and Burnaby BC.
  • Licensing of the Lucerne trademarks to Agropur for milk production and distribution.
  • Long-term milk, yogurt and ice cream supply agreements that will come into effect upon transfer of the facilities to Agropur and expiry of current supply agreements. As a consequence, the new agreements will see Agropur supply Lucerne milk, ice cream and yogurt in the company's Sobeys, Safeway and IGA banners in Western Canada.
  • Long-term, national supply agreement for private label natural cheese.

"This agreement maximizes the value for these assets while securing long-term supply agreements that create synergies for our entire Canadian business," said Marc Poulin, President & CEO, Sobeys Inc. "It also ensures that these facilities will continue to produce the very popular Lucerne dairy brand which will not only remain available in our Safeway banner stores, but will be expanded to our network of Sobeys and IGA stores throughout the West."

Sobeys acquired the dairy manufacturing facilities as part of its November 2013 purchase of Canada Safeway.

Sobeys expects this transaction to be neutral to slightly accretive on a net earnings basis. Proceeds will be used for debt repayment.  The sale of assets is subject to approval by the Competition Bureau.

About Sobeys Inc.
Proudly Canadian, with headquarters in Stellarton, Nova Scotia, Sobeys has been serving the food shopping needs of Canadians for 107 years. A wholly-owned subsidiary of Empire Company Limited (TSX:EMP.A), Sobeys owns or franchises approximately 1,500 stores in all 10 provinces under retail banners that include Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, and Lawton's Drug Stores as well as more than 330 retail fuel locations. Sobeys and its franchise affiliates employ more than 125,000 people. The company's purpose is to help Canadians Eat Better, Feel Better and Do Better. More information on Sobeys Inc. can be found at www.sobeyscorporate.com.

About Empire Company Limited
Empire Company Limited (TSX: EMP.A) is a Canadian company headquartered in Stellarton, Nova Scotia.  Empire's key businesses include food retailing and related real estate.  With $21 billion in annual sales and approximately $12.2 billion in assets, Empire and its subsidiaries, including franchisees and affiliates, employ more than 125,000 people.

This news release contains forward-looking information reflecting management's expectations regarding timing and completion of the agreed sale, final use of proceeds, product supply, attainment of synergies and accretion. The forward-looking statements in this news release are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from current expectations, including satisfaction of various closing conditions and closing adjustments, ability of the purchaser post-closing to effectively fulfill its supply obligations and ability to integrate new product lines. The Company does not undertake to update any forward-looking statements that may be made from time to time by them or on their behalf other than as required by applicable securities laws.

 

SOURCE Sobeys Inc.

For further information: Media Contact : Andrew Walker, Senior Vice President, Communications & Corporate Affairs, Sobeys Inc., (905) 214-6711; Investor Contact : Stewart Mahoney, CFA, Senior Vice President, Treasury & Investor Relations, Sobeys Inc., (902) 752-8371ext. 3499