Ahead of it’s recently announced $3.6 billion (C$4.5 billion) acquisition of chain Jean Coutu Group, Canadian grocer Metro Inc. has revealed it will be selling off a majority of its stake in Alimentation Couche-Tard Inc. The retailer noted that it will be using earnings from the sale of its c-store stake, estimated at around $1.20 billion (C$1.5 billion), to fund the Jean Coutu purchase.
Metro said in a release that, in total, around 27,112,000 shares will be sold at approximately $45.80 (C$57.17) a share.
About 11.4 million of the Couche-Tard shares will be sold to dealers led by National Bank Financial Inc. and BMO Capital Markets, as bookrunners, and will raise $520,562,000 (C$650 million). An equal number of shares will be sold to CDP Investissements Inc. et CDPQ Marchés Boursiers Inc., two wholly-owned subsidiaries of Caisse de dépôt et placements du Québec, for the same dollar amount. And a third and final deal will see about 4.4 million shares sold back to Couche-Tard for about $200,275,000 (C$250 million).
According to Reuters, Metro is currently the third-biggest food retailer in Canada, and, as we previously reported, the company is looking to get even larger through its $3.6 billion deal to acquire Jean Coutu. Thomson Reuters data placed this value at 24 times forward earnings when the deal was announced, compared with an industry average of 16, which some analysts believed might be an effort to protect against risks facing the retail sector.
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