Metro acquires Jean Coutu pharmacies for $4.5 billion

Metro has formalized its $4.5-billion takeover offer for Jean Coutu pharmacy group, which will operate as a separate division of the grocery company.

Shareholders of Jean Coutu are being offered a combination of cash and shares worth about $24.50 per share.

Quebec's second-largest pharmacy network will operate as a separate division of the grocery company, headed by Francois Coutu, son of the company founder.

Jean Coutu shareholders would own 11% of Metro and the pharmacy chain will appoint two board members.

The chairman and company namesake said the combination would safeguard's Jean Coutu Group's entrepreneurial vision and allow it to grow.

"Bringing together our two highly-respected and long-standing Quebec brands represents an exciting milestone in the history of the Jean Coutu Group," stated Jean Coutu.

Metro chief executive Eric La Fleche said the grocery chain intended to build on the Jean Coutu brand's legacy.

"It is a unique opportunity to bring together each company's expertise to better serve the growing consumer demand for healthier choices, value and convenience," he said in a news release.

The companies announced last week that they were in "exclusive discussions" towards a deal to create a grocery-pharmacy group with more than 1,300 stores -- mostly in Quebec and Ontario.

The combined company will have about $16 billion in annual revenues and $500 million in free cash flow, including $75 million in cost savings within three years.

The transaction requires regulatory approvals and support from two-thirds of the votes cast by Jean Coutu Group shareholders at a special meeting to be held in November. The deal is expected to close in the first half of 2018.

The Coutu family and affiliated entities, which hold 93% of voting rights along with company directors and senior officers, have agreed to vote in favour of the deal.

More to come... Keep checking CanadianGrocer.com for updates