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Sobeys signs strategic partnership with Agropur that includes sale of Western dairy assets and long-term supply agreements
July 9, 2014

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.

 

Source: Sobeys Inc.

 


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