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George Weston and Loblaw to create Canadian retailer giant

Staff writer |
George Weston announced that it will subscribe for 10,515,247 Loblaw Companies common shares valued at $500 million.

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Proceeds from the private placement will be used to finance a portion of the cash consideration to be paid by Loblaw as part of its acquisition of Shoppers Drug Mart Corporation.

The price per share to be paid by Weston will be $47.55, which was Loblaw's closing share price on July 12, 2013 and the same price at which shares are being issued to Shoppers Drug Mart shareholders under the transaction.

Loblaw will acquire all of the outstanding Shoppers Drug Mart common shares for $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 $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.

This strategic union will enhance the companies' competitive positioning in an evolving retail landscape, creating new growth opportunities for shareholders, more and better choices for customers, and greater convenience through Shoppers Drug Mart's footprint in the important and growing small-urban store sector.

Weston is Loblaw's controlling shareholder, with voting ownership of approximately 63% of Loblaw's common shares. Taking into consideration its current holdings and those to be purchased through the private placement, Weston will have voting ownership of approximately 46% of Loblaw's common shares upon completion of the acquisition.

"This investment underscores our strong support of this transaction and the value that can be generated by combining Loblaw, Canada's leading food retailer, and Shoppers Drug Mart, the country's leading pharmacy retailer. By joining forces, the combined company will be uniquely positioned to better serve Canadian consumers and have the means to bring exciting innovations to the Canadian marketplace, leading to even stronger growth and profitability," said W. Galen Weston, executive chairman of Weston.

George Weston Limited is one of North America's largest food processing and distribution groups operating in two segments: baking through Weston Foods, and food and general merchandise distribution through Loblaw Companies Limited.


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