06/12/13 -- Safeway Inc. (NYSE: SWY) today announced that it has entered into an agreement to sell its Canadian operations through a sale of the net assets of Canada Safeway Limited to Sobeys Inc
PLEASANTON, CA -- (Marketwired) -- 06/12/13 -- Safeway Inc. (NYSE: SWY) today announced that it has entered into an agreement to sell its Canadian operations through a sale of the net assets of Canada Safeway Limited to Sobeys Inc., a Canadian food retailer and wholly-owned subsidiary of Empire Company Limited, for C$5.8 billion in cash (about C$4.0 billion after taxes and expenses), plus the assumption of certain liabilities. The proceeds from this transaction are expected to be used to pay down $2.0 billion of debt, with the majority of the remainder to be used to buy back stock. In addition, some of the proceeds may be used to invest in growth opportunities.
In the trailing twelve months ended March 23, 2013, Canada Safeway's revenues were C$6.7 billion. In addition, Canada Safeway's operating profit was C$428 million and EBITDA was C$544 million, both adjusted for intercompany related transactions. Canada Safeway will be accounted for as discontinued operations beginning in the second quarter of 2013. Safeway Inc. remains responsible for Canada Safeway's C$300 million in public debt due March 2014, which is not included in the transaction, and we will also retain cash and other receivables in a similar amount in Canada.
"We are pleased to enter into this agreement with Sobeys in order to realize the higher multiples attributed to Canadian supermarket companies," said Robert Edwards, President and CEO of Safeway Inc. "The substantial cash proceeds from this transaction will allow us to create value for Safeway stakeholders and contribute to the growth of the ongoing business."
The transaction has been approved by the boards of directors of both companies. The transaction is anticipated to close in the fourth quarter of 2013 and is subject to customary closing conditions, including approval under the Competition Act (Canada).
Safeway Inc. will host a live audio webcast today at 1:30 p.m. PT to discuss this announcement in further detail. The webcast may b