Economy

Metro makes formal $4.5B cash and stock offer for Jean Coutu

Metro makes formal $4.5B cash and stock offer for Jean Coutu”

The grocery giant has announced it will be merging with pharmacy chain Jean Coutu Group.

Metro Inc, which had last week said it was in talks to buy Jean Coutu, offered C$24.50 per share for the Varennes, Québec-based company.

Metro has more than 65,000 employees in Quebec and Ontario. Jean Coutu's earnings have been under pressure because of new provincial regulations on generic drugs, though a compromise was recently found with the government.

They expect annual savings of $75-million within three years of the marriage of "two highly respected and long-standing Quebec brands".

Metro will continue to operate the company as a distinct banner under the terms of the deal, helmed by second-generation CEO François Coutu.

Under the deal unveiled today, Jean Coutu shareholders would receive $24.50 a share, 75 per cent of it in cash and the rest in Metro stock.

Canadian grocers, which were locked in a price war and are just coming out of a prolonged bout of food deflation, now have to get ready for Amazon, which in June agreed to buy Whole Foods Market Inc.

National Bank Financial Inc was the financial adviser for Jean Coutu and Stikeman Elliott LLP was its legal counsel.



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