Canada's Competition Bureau Approves Sale Of Canada Safeway To Sobeys

(RTTNews) - Supermarket chain Safeway Inc. (SWY) said Tuesday that Canada's Competition Bureau has approved the sale of its Canadian operations to Canada-based grocery retail giant Sobeys Inc.

Pleasanton, California-based Safeway said that Canada's Competition Bureau entered into a consent agreement with Sobeys, allowing that company and Safeway to proceed with their deal. Under the deal, Sobeys will acquire the net assets of Canada Safeway.

The two companies now expect to close the transaction in early November 2013. As part of the consent agreement, Sobeys has agreed to divest 23 stores - 13 Canada Safeway stores and 10 Sobeys stores.

Safeway said in mid-June 2013 that it agreed to sell its Canadian division to Sobeys for C$5.8 billion in cash. The acquisition includes 213 grocery stores under the Safeway banner in Western Canada, 199 in-store pharmacies, 62 co-located fuel stations, 10 liquor stores, 4 distribution and 12 manufacturing facilities.

Empire Company Ltd. (EMP_A.TO), the parent company of Sobeys, expects that the deal will be funded with a combination of equity offering, lease-back of purchased real estate assets, debt and cash in hand. Safeway has said it will use the proceeds from the sale to pay down $2 billion of debt, stock repurchases and to invest in growth opportunities.

SWY closed Tuesday's regular trading session at $32.90, down $0.03 or 0.09 percent on a volume of 3.02 million shares. However, in after-hours, the stock gained $1.35 or 4.10 percent to $34.25.