Sobeys Inc. has signed deals to sell 30 stores in Western Canada for a total of roughly $430 million.
The grocery store chain was required to sell 23 stores as part of an agreement with the Competition Bureau in connection with its purchase of Canada Safeway last year.
READ: Sobeys to sell 23 stores in Safeway deal, says Competition Bureau
Sobeys says Overwaitea Food Group has agreed to buy 15 locations, while Federated Co-operatives Ltd. has agreed to buy 14 stores.
Seven of the stores sold to Overwaitea were not on the list of 23 locations that the Competition Bureau insisted Sobeys sell. The seven include five Safeways and two Thrifty Food stores, all in British Columbia.
Sobeys said in a press release that the seven additional stores were included in the deal "to create a divestiture package that meets the needs of both Sobeys and Overwaitea."
Total annual sales for the 30 stores sold amounts to about $690 million and the stores collectively generated EBITDA of $59 million.
Sobeys has also signed a deal to sell its Price Chopper location in Winnipeg to another, unidentified buyer.
Sobeys said Overwaitea and the Co-op chain have received approval from the Competition Bureau and that it anticipates the deals will close in March or early April.
READ: Overwaitea to convert PriceSmart stores to Save-On-Foods
The sale of the Winnipeg Price Chopper store is subject to finalization of an agreement and approval from the Competition Bureau.
The bureau later issued a release confirming it had approved the sale of 23 stores under the consent agreement and added that its expects the Winnipeg store to be sold in accordance with the agreement.
Darrell Jones, president of Overwaitea, which is based in Vancouver, said it planned to rebrand 14 of the stores it purchased to its Save-On-Foods banner. Another store would carry its Cooper’s Foods banner.
Once the deal closes, privately held Overwaitea will operate 144 stores in B.C. and Alberta.
The acquisition adds significantly to Save-On-Foods' existing presence in both B.C. and Alberta and positions the company for further growth in these provinces and beyond.
Jones told Canadian Grocer that he was very pleased to have purchased these 15 stores. "They're all in markets we're very familiar with. For us to be able to pick up 15 quality stores with quality people, it's a rare opportunity in the food business, and we're delighted."
Overwaitea's takeover date for the first stores is March 18, with all stores to be converted by the first week of May. First up for Jones is to go into the stores and see what works well, taking in feedback from customers and staff.
READ: Federated Co-op sells and shows with new online tool
Jones added the company plans on tailoring the 15 stores to the market they're in. "We believe the point of difference for us is that we understand the markets very well, and we'll do our best to support the wants and needs of the communities we're in." He emphasized Overwaitea doesn't have "the cookie cutter approach of big corporate chains."
A big asset Jones said is the current Safeway team, which will be integrated into Overwaitea. Over 1,500 will be joining the Overwaitea team. "There are lots of cultural similarities between the team members and the stores we're purchasing and us, so it's a natural fit."
To see the complete list of stores Sobeys is selling to Overwaitea and Federated Co-op, click here and scroll down to the bottom of the press release.