While it was Loblaw Companies that declared itself Monday the new owner of Shoppers Drug Mart, after announcing its $12.4-billion takeover, the deal only happened after American pharmaceutical and grocery giant Walgreens Co. began scoping out the Shoppers chain, the National Post has learned.
“We really thought it would be a big American company that would come up here and make an offer,” said a senior retail-industry source who was aware of Walgreens’ initial interest in possibly buying Shoppers, Canada’s largest drugstore chain.
A second industry source also confirmed that Walgreens was leading a group that had come to Canada to consider making an offer for Shoppers. A Walgreens spokesman declined to comment on the matter.
Deerfield, Illinois-based Walgreen operates close to 8,000 pharmacies across the United States, with more than US$9-billion in annual revenue.
But in the end, Brampton, Ont.-based Loblaw evidently either moved in on Shoppers more swiftly, or was able to otherwise gain an edge against other prospective suitors, and has potentially raised the stakes in what is becoming a more competitive Canadian retail landscape.
“This just says Loblaws is back in the game,” said Richard Talbot, a retail consultant.
Loblaw’s offer is worth $61.54 for each Shoppers Drug Mart common share. Loblaw is borrowing $5.1-billion to finance the deal, which will see Shoppers’ shareholders emerge with 29% of the combined entity while Loblaw parent George Weston Co. will be left with a 46% stake.
Shoppers chairman Holger Kluge hinted on a call with investment analysts yesterday that the retailer has had more than few buyers knocking at its door.
“We’ve looked at many different combinations over the last few years, both solicited and unsolicited, and in the end, this came together quickly because it was the right time and, for our shareholders, the right solution,” he said.