Loblaw Buying Canada Safeway No Pipe Dream in Spinoff
From Bloomberg:
Loblaw Cos. (L)’s planned real-estate spinoff is giving Canada’s largest grocery chain leeway to do acquisitions.
Loblaw plans to put more than C$7 billion ($7.1 billion) of property into a real estate investment trust that will be sold through an initial public offering by mid-2013. While Loblaw will still own more than 80 percent of the REIT, it may receive C$670 million from the deal, according to Toronto-Dominion Bank.
Buying Safeway Inc.’s Canadian unit is logical as Loblaw faces more competition from Wal-Mart Stores Inc. and Target Corp., said Veritas Investment Research Corp. Safeway, a grocer that got 15 percent of its $44 billion of sales in 2011 from Canada, is undervalued after falling 14 percent last year, Bank of Montreal said. Safeway trades at the cheapest price relative to revenue and earnings among North American food retailers larger than $1 billion, according to data compiled by Bloomberg. Edward Jones & Co. said closely held Overwaitea Food Group, the western Canadian chain, is another option for Loblaw.
Read more: http://www.bloomberg.com/news/2013-01-03/loblaw-buying-canada-safeway-no-pipe-dream-real-m-a.html
In my honest open opinion, I believe safeway should shut down the starbucks departments, as they don’t really make much profit, at the end of the day they make more of a loss. From what I hear since I visit one regularly at Arbutus Mall, is that they have nothing to sell be it pastries, coffee beans. Their Starbucks manager’s try to seek information by asking their district managers about what’s going on, and from what I hear is that their district managers refuse to answer questions. Perhaps, that may not be true for other locations, but definitely for the Arbutus location. If the company’s employees with high up positions refuse to provide guidance, the company will go nowhere, shutting it down would be easier. Since it’s clear to me that their Starbucks employees aren’t getting much respect anyways.