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Loblaw acquires Canada's biggest pharmacy franchise

July 15, 2013

While The Loblaw Companies are collectively the largest grocery franchise in Canada, the business has seen a number of challenges come its way in recent months. The recent acquisition of Safeway, one of its competitors, by Sobey's - a business in the same sector - serves as an example of this. To solidify its position in the industry, Loblaw recently announced it would purchase Shoppers Drug Mart, Canada's biggest retail pharmacy business, for $11.9 billion, according to The New York Times. Many within Canada's retail industry may be making calls using prepaid phone cards to discuss the Loblaw expansion with their colleagues.

The news source reported that Shoppers, under the stewardship of president and CEO Domenic Pilla, will autonomously manage its own operations with little to no interference from Loblaw beyond using the grocer's distribution processes and warehouses and selling Loblaw's store-brand products. All told, the merged companies will bring in $42 billion in revenue.

Loblaw executive chairman Galen G. Weston spoke about the possibilities brought about by the acquisition. In his view, the move will help the grocer "capitalize on important trends in society, from the emphasis on health, wellness and nutrition, to the imperatives of value and convenience."

According to The Wall Street Journal, Shoppers' massive presence in both urban and small-town markets will be beneficial to Loblaw, which is looking to substantially expand its reach. 

The source also stated that Loblaw is not only facing competition from aforementioned domestic players in its sector, but also from international companies within that industry. Whole Foods is well equipped to court the health food and specialty food markets, and Wal-Mart is stepping in to attract grocery shoppers by further emphasizing such provisions within its already-voluminous selection of merchandise. Loblaw, which stated that it aims to complete the acquisition within about six to seven months, may be better prepared to compete through this move.

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