RETAILERS JOIN FORCES
On the heels of similar takeovers, Quebec’s Metro and Jean Coutu make a deal,
MONTREAL— Two of Quebec’s iconic retail brands are merging to better face industry competition with Metro Inc.’s $4.5-billion takeover offer for the Jean Coutu pharmacy group.
Shareholders of Jean Coutu are being offered a combination of cash and stock worth about $24.50 per share.
Uniting two highly respected brands represents an exciting milestone for the company, said Jean Coutu, the founder of the company that bears his name. “Sometimes you have to forget your ego and try to combine with a real friend,” he said at a news conference on Monday.
Coutu, 90, insisted he’s not emotional about the decision to sell and hang up his white pharmacist’s coat following a period of deep reflection for the family that has run it since 1969. “I think the move we are doing actually is good for both of these companies, it’s good for myself and it’s good for the future because we open up more opportunities than staying what we were.”
After exiting the U.S. market in 2013 with the sale of its stake in the RiteAid pharmacy chain, Jean Coutu Group has had limited opportunities for growth. Meanwhile, the food and pharmacy industries have faced intensifying competition from other food retailers, such as Wal-Mart, Costco and Amazon’s entry in the grocery space with its purchase of Whole Foods.
The merger follows Loblaw Companies Ltd.’s $12.4-billion cash-and- stock deal in 2014 of Shoppers Drug Mart, which operates as Pharmaprix in Quebec.
Metro CEO Eric La Fleche said the combination is a unique opportunity for two of Quebec’s best-known companies to join forces.
“We need this size to have economies of scale and efficiency to fight with the large players that we currently face,” he said.
In addition to increasing food available in pharmacies and health products in Metro stores, La Fleche said the combined company will be better able to extend its reach.
The transaction requires regulatory approvals and support from twothirds of the votes cast by Jean Coutu Group shareholders at a special meeting to be held in November. The deal is expected to close next spring.
The Coutu family and affiliated entities, which hold 93 per cent of voting rights, along with company directors and senior officers, have agreed to vote in favour of the deal.