Grocery chains’ stock jumps on news of $5.8-billion deal between Sobeys, Safeway

TORONTO – Shares of Empire Co. (TSX:EMP.A) and Safeway Inc. (NYSE:SWY) were up sharply in early trading following news that Empire’s Sobeys grocery chain will buy more than 200 Safeway stores in western Canada for $5.8 billion cash.

Safeway shares were up about 15 per cent in the first minutes of trading at the New York Stock Exchange and Empire, based in Stellarton, N.S., advanced about 11 per cent from Wednesday’s close before the announcement.

Sobeys is already the second-largest grocery retailer in Canada after Loblaw Co. (TSX:L) and will solidify that position by adding 213 Safeway stores from Thunder Bay, Ont. to British Columia.

Sobeys currently owns or franchises more than 1,300 stores cross Canada under such banners as Sobeys, IGA, Foodland, FreshCo and Thrifty Foods.I

It has not yet decided if it will keep the Safeway name.

Empire shares jumped $7.79 or 11.52 per cent to $75.40 in early trading on the Toronto Stock Exchange while Safeway shares were up $3.72 at US$26.92 in New York.