Sobeys Increases Clout on the East Coast With Co-Op Atlantic Buy Out
CANADA - Sobeys Inc. has sealed an acquisition deal with Co-op Atlantic for ownership of most of its food and gas retail stores, as well as its wholesale assets.
Stewart Samuel, Program Director for Researcher IGD Services Canada, told The Globe and Mail that he believes the deal could improve some of Co-op’s stores, but not all. “The rationale for most deals in the sector is to not only to increase volumes and reach new customers, but to also deliver improved operating efficiencies and better margins,” he said.
According to a report by The Globe and Mail, this latest business move would pass about ten stores over to Sobeys, which could be enough to swell its influence in the region for product offerings and prices.
"Co-op Atlantic and its member-co-operatives have worked hard to remain viable in the increasingly competitive world of retail food and gas," Adélard Cormier, Co-op Atlantic Board Chair, stated in a press release. "This decision has been a difficult one for management and the board but is, we believe, the best option for the continued viability of the member-owner stores and the co-operative movement in Atlantic Canada."
Co-op Atlantic reportedly operates under the Co-op, Village Mart, Valufoods, and Rite Stop banners that total in more than 150 supermarkets and convenience stores, though the 60 Co-op stores that are individually owned are not included in the sale to Sobeys.
“They can now begin discussions with Sobeys on a potential new wholesale agreement,” Monique Bourque, a Spokeswoman for Co-op, said in the report. She added that while details will not be finalized until the member-owner vote scheduled to take place on May 12, part of the agreement does include the closure of a small number of corporate-owned stores.
After the vote, Co-op Atlantic stated it would be better able to assess the future of its remaining divisions, according to CBC News. Financial details for the agreement have not yet been disclosed.
