Loblaw Companies Limited (L.TO: Quote) agreed to acquire Shoppers Drug Mart Corp. (SC.TO: Quote) for C$33.18 in cash plus 0.5965 Loblaw common shares per each Shoppers Drug Mart common share, on a fully pro rated basis.
Using the Loblaw closing common share price on July 12, 2013, this amounts to C$61.54 per Shoppers Drug Mart common share. This price represents a 29.4% premium to the 20-day VWAP of Shoppers Drug Mart common shares as of July 12, 2013.
As per the deal, the total consideration will consist of approximately 53.9% cash and 46.1% Loblaw common shares. Shoppers Drug Mart shareholders will have the ability to choose whether to receive C$61.54 in cash or 1.29417 Loblaw common shares plus C$0.01 cash for each Shoppers Drug Mart share held, subject to pro ration.
Under the deal, the maximum amount of cash to be paid by Loblaw will be approximately C$6.7 billion and the maximum number of Loblaw common shares to be issued will be approximately 119.9 million, based on the fully diluted number of Shoppers Drug Mart shares outstanding.
Shoppers Drug Mart shareholders will own approximately 29% of the combined company. The transaction is expected to lead to double-digit accretion, adjusted for intangible amortization, in Loblaw earnings per share in the first year.
Both companies' boards of directors have unanimously determined that the proposed combination is in the best interest of their respective companies.
Loblaw and Shoppers Drug Mart anticipate that the transaction will be completed within six to seven months.
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by RTT Staff Writer
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