Shareholders of Shoppers Drug Mart Corp. have voted to approve a takeover by Loblaw Cos. Ltd., a deal that will see Canada’s largest grocery retailer combined with the country’s largest chain of pharmacy stores.
“It’s about growing the business and accelerating our strategy and providing more products and services to Canadians... so it’s very exciting,” said Domenic Pilla, president and chief executive of Shoppers, following the announcement Thursday at the shareholder’s meeting.
The deal, announced in July, will keep the Shoppers brand name in place and allow it to operate as separate division of Loblaw.
It may also see some of the stores that Shoppers owns folded into Loblaw’s real estate investment trust, Choice Properties REIT, said Pilla.
“We will work closely with that REIT where it makes sense,” said Pilla, but he noted that Shoppers leases most of its stores, so only a small number of properties would be involved.
The deal was supported by the boards of both companies but required the approval by two-thirds of Shoppers shareholders.
The transaction also required the approval of a majority of Loblaw shareholders as the number of common shares to be issued in the deal exceeds 25 per cent.
However, George Weston Ltd. has already provided written consent in favour of the deal to the Toronto Stock Exchange, which satisfies the approval requirements from Loblaw’s end.
Overall, Loblaw is offering $33.18 in cash plus about six-tenths of a Loblaw share for each Shoppers Drug Mart common share.
The proposal valued Shoppers Drug Mart common shares at $61.54 per share based on Loblaw’s share price before it was announced – a more than a 29-per-cent premium to Shoppers’ average trading price prior to the announcement.
Holders of Shoppers stock have the option of receiving $61.54 cash or, alternatively, 1.2941 Loblaw common shares plus one cent cash, subject to caps on the total number of shares and total amount of cash.
The amount of cash is capped at $6.7-billion and the number of shares is capped at 119.9 million, the companies said at the time.
Assuming Shoppers investors opt for the maximum amount of Loblaw equity, they would own about 29 per cent of the combined company.