Metro in talks to acquire Jean Coutu for $3.62 billion
TORONTO: Metro, Canada’s third-biggest food retailer, said it was in talks to buy pharmacy chain Jean Coutu Group in a deal that values the company at C$4.5 billion ($3.62 billion), sending shares of the target surging to multi-year highs.
Jean Coutu operates pharma stores in Quebec, New Brunswick and Ontario, and it acquired a generic drug maker in 2007. Metro operates more than 600 food stores across Canada.
Montreal-based Metro is offering C$24.50 per share for the Varennes, Quebec-based Jean Coutu, the companies said in a statement. That represents a 6.1 per cent premium to Jean Coutu’s price before a trading halt.
Jean Coutu shares jumped as much as 6.8 per cent to their highest level since April 2015 after the announcement. They were trading up 4.9 per cent at C$24.24.
Metro shares advanced as much as 5.8 per cent, their biggest intraday gain since April, to C$42.41.
Metro’s offer consists of 75 per cent in cash and 25 per cent in its shares, the companies said in a statement. The Coutu family has said it will support the deal, according to the statement.
The news comes at a challenging time for both Quebec-based companies, as competition ramps up among food retailers and provincial regulations over drug pricing weigh on pharmaceuticals.
Quebec in July announced a deal with generic drug manufacturers to cut costs for the province that analysts said would hurt the profitability of Jean Coutu’s generic drug manufacturing division.