Empire buys 51% stake in Longo's for $357 million

Empire Company Ltd. has signed a deal to buy a majority stake in specialty grocery store chain Longo's and its Grocery Gateway e-commerce business for $357 million in a bid to expand its reach in Ontario.

The Sobeys parent company said Tuesday the deal adds two high-quality banners to its business and builds on its acquisition of Farm Boy.

READ: Empire completes $800-million Farm Boy purchase

Empire CEO Michael Medline called Longo's "a crown jewel of grocery."

"Longo's has built one of the most successful and sought-after brands in the GTA and southwestern Ontario," he said in a statement, adding that the family-built network is a "values-driven company."

Under the deal, Longo's and Grocery Gateway will continue to be led by CEO Anthony Longo.

"The more we learned about Empire, the clearer it became that this was the right team to partner with to support our next chapter of growth," Longo said in a statement.

Empire said Longo's would be able to benefit from its infrastructure and capabilities, in areas such as sourcing, logistics and real estate.

READ: “It ain’t all COVID,” says Empire CEO of strong Q3 numbers

Longo's has 36 locations in the Greater Toronto Area, while Grocery Gateway serves 70,000 customers.

The acquisition builds on Empire's long-standing grocery retail business in Ontario under banners including Foodland and FreshCo.

The Stellarton, N.S., based grocery retailer acquired Farm Boy in 2018 in a deal the company also said would allow it to speed up its growth in markets such in southwestern Ontario.

The Longo's deal, which will see Empire acquire a 51% stake based on an enterprise value of $700 million, is expected to close in the first quarter of Empire's 2022 financial year.

The acquisition is subject to customary closing conditions.