Shareholders of Shoppers Drug Mart voted Thursday to approve a takeover by Loblaw — a deal that will see Canada’s largest grocery retailer combined with the country’s largest chain of pharmacy stores.
The proposed $12.4-billion deal, which was announced in July, will keep the Shoppers brand name in place and allow it to operate as separate division of Loblaw.
The deal was supported by the boards of both companies but required the approval by shareholders.
George Weston Ltd., Loblaw’s parent company, also provided written consent in favour of the deal.
Adding Shoppers will help Loblaw expand its offerings of health products in what it sees as a growing sector of the economy. It’ll also allow Loblaw to increase its presence in urban areas with Shoppers locations.
Overall, Loblaw is offering $33.18 in cash plus about six-tenths of a Loblaw share for each Shoppers Drug Mart common share.
The proposal valued Shoppers Drug Mart common shares at $61.54 per share based on Loblaw’s share price before it was announced — a more than a 29 per cent premium to Shoppers’ average trading price prior to the announcement.
Holders of Shoppers stock have the option of receiving $61.54 cash or, alternatively, 1.2941 Loblaw common shares plus one cent cash, subject to caps on the total number of shares and total amount of cash.
The amount of cash is capped at $6.7-billion and the number of shares is capped at 119.9-million, the companies said at the time.
Assuming Shoppers investors opt for the maximum amount of Loblaw equity, they would own about 29 per cent of the combined company.
The combination has prompted speculation about more consolidation in the Canadian grocery and retail market.
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