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Metro Inc. Enters Into $3.6 Billion Deal to Acquire Jean Coutu

Metro Inc. Enters Into $3.6 Billion Deal to Acquire Jean Coutu


MONTREAL, QUEBEC
Monday, October 2nd, 2017

In a move that would see the retailer nearly double its store count and increase revenue by billions, Canadian grocer Metro Inc. announced that it has made a formal offer to acquire the Jean Coutu Group.

In a statement released Monday, October 2nd, Metro announced the proposed acquisition. The transaction would see Metro paying approximately $24.50 per share in a C$4.5 billion ($3.6 billion USD) transaction. Under the terms of the proposal, Jean Coutu Group shareholders will receive an aggregate consideration which will consist of 75 percent in cash and 25 percent in Metro common shares.

Eric R. La Flèche, President and Chief Executive Officer, Metro"We're honored to become the steward of the iconic Jean Coutu Group brand, and we intend to build on this exceptional legacy," said Eric R. La Flèche, President and Chief Executive Officer of Metro, in a press release. "This transaction is attractive and compelling from a financial and commercial perspective. It is a unique opportunity to bring together each company's expertise to better serve the growing consumer demand for healthier choices, value, and convenience. The Jean Coutu Group's extensive retail network and state-of-the-art distribution center will provide us with increased scale and reach, operational efficiencies, and enhanced growth potential. We look forward to having Jean Coutu Group shareholders become important Metro shareholders."

The transaction will bring Metro and Jean Coutu's combined store-count to over 1,300

Under the terms of the agreement, Metro’s combined store count to grow to more than 1,300 stores—combining more than 850 Metro grocery and drug stores in Quebec and Ontario with Jean Coutu’s 419 pharmacies in Quebec, Ontario, and New Brunswick. Jean Coutu also boasts a state-of-the-art distribution center that will provide Metro increased scale and reach, operational efficiencies, and enhanced growth potential.

Jean Coutu, Chairman of the Jean Coutu Group"Bringing together our two highly-respected and longstanding Québec brands represents an exciting milestone in the history of the Jean Coutu Group," said Jean Coutu, Chairman of the Jean Coutu Group. "I am confident that this combination will ensure the safeguard of our entrepreneurial vision and corporate values as well as the perennial strength of the brand and will enable us to pursue our growth plan.”

Over the next three years, the two companies expect the deal to produce $75 million in synergies—with benefits of the merger including shared warehouses, an expanded online presence for each chain, and the eventual cross-selling of products.

Metro noted that its existing pharmacy distribution and franchising activities will be combined with those of the Jean Coutu Group which will operate as a stand-alone division of Metro with its own management team led by François J. Coutu, current President and Chief Executive Officer of the Jean Coutu Group.

Coutu added, "The strategic and commercial fit between the two companies and their retail networks represents an opportunity for continued growth; it will consolidate our position as the leading destination for professional services, health, beauty, and wellness with a network comprised of more than 675 independent stores. This transaction also represents an opportunity for our shareholders to realize significant and immediate value while providing them the opportunity to participate in the future upside through continued ownership in the combined entity."

Metro Storefront

Combined, the two companies expect to generate approximately $16 billion in revenue, over $1.3 billion in EBITDA, and $500 million in free cash flow, including those $75 million in expected synergies within three years. 

For more details, read Metro’s statement in its entirety, here.

Metro Inc.The Jean Coutu Group
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