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Metro completes Coutu acquisition

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Company has more than 1,300 stores in three provinces

Eric La Flèche

MONTREAL — Metro Inc. has completed its $4.5 billion ($3.6 billion U.S.) acquisition of the Jean Coutu Group, creating a food and drug retailer with more than  1,300 stores in Quebec, Ontario and New Brunswick. The store count includes Metro’s 600-plus supermarkets, Coutu’s more than 400 drug stores and Metro’s 250-plus drug stores, which include the Brunet pharmacy chain.

“We are very proud to have acquired Quebec’s top player in the pharmacy sector, said Metro president and chief executive officer Eric La Flèche. “The combined entity will develop the full potential of our two banners, Jean Coutu and Brunet, in order to strengthen our market presence and better meet consumers’ needs. Together, we want to create a new retail leader offering consumers a food and pharmacy experience customized to their needs for years to come.”

François Coutu, who will continue to lead Coutu as its president, added: “We showcase popular major brands, known for their commitment to consumer health and well-being. Our operational efficiency will enable us to implement systems and processes, while ensuring that consumers receive high-quality, personalized service from our owner pharmacists.”

As stipulated in the deal inked last fall,  Coutu shareholders collectively received 25% of the acquisition price in the form of Metro shares (and the balance in cash) representing, in the aggregate, an approximate 11% equity interest in the corporation. Shareholders holding 79% of the shares of Coutu elected to receive their consideration in shares of Metro.  Pursuant to the proration mechanism, the Coutu family and its affiliated entities hold an approximate 8% equity interest in Metro following the transaction. François and Michel Coutu have been designated by the Coutu group to sit on Metro’s board of directors.

Metro expects to generate approximately $16 billion in revenues and over $1.3 billion in operating income before depreciation and amortization. Metro also expects that the combination will generate $75 million in annual cost reductions after three years. It expects the combination to contribute positively to earnings per share (adjusted for the amortization of intangibles resulting from the combination).

Each Coutu shareholder who elected to receive his or her consideration in Metro shares will receive approximately 0.19 Metro common shares and $16.70 for each Coutu share that he or she held, and each Coutu shareholder who elected to receive his or her consideration in cash or who did not duly make an election as to consideration will receive $24.50 for each share that he or she held. No fractional shares will be issued, and Metro will settle the fractional shares in accordance with the provisions of the combination agreement.

Coutu has applied to have its class “A” subordinate voting shares delisted from the Toronto Stock Exchange and expects the shares to be delisted in a few days.


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