Empire Company reaches agreement to acquire Farm Boy

Press Release

Empire Company Limited announced today that it has signed an agreement to acquire Farm Boy, one of the most exciting, fastest growing and successful food retailers in the country, with 26 locations in Ontario and many more on the way, for a total enterprise value of $800 million.

Farm Boy’s outstanding fresh format is an excellent fit with Empire’s Sobeys and FreshCo banners in Ontario, a region where Empire is under-penetrated. Farm Boy is a highly scalable platform, with industry leading growth and metrics, and will enable Empire to accelerate growth in urban markets.

Farm Boy’s Founder and co-CEO, Jean-Louis Bellemare, who opened the first Farm Boy grocery store in Ottawa in 1981, and Jeff York, who has been co-CEO of Farm Boy since 2009, will continue in their roles for the long-term, managing the business separately from Empire’s broader operations and reporting directly to Empire President and CEO, Michael Medline. The co-CEOs of Farm Boy will ramp up expansion plans and continue to cultivate Farm Boy’s unique and compelling brand. Although managed separately, Farm Boy will benefit from Empire’s infrastructure and capabilities, in areas such as real estate, sourcing and logistics, providing certain non-customer facing synergies and enabling faster and even more effective store expansion.

Rollout of the Farm Boy concept in the Greater Toronto Area (GTA) and continuing the existing expansion plans in southwestern Ontario will be early priorities, through a combination of new site builds and conversions of some existing Sobeys locations. As well, Farm Boy will boost Empire’s GTA penetration by adding their exceptional private label products to Sobeys’ new Ocado-based e-commerce business, the world’s most advanced online grocery platform, which will launch in 2020 in the GTA.

“Farm Boy is a superb strategic and financial acquisition. It strengthens our reach in the key Ontario and GTA markets, it will be a growth vehicle in urban and suburban markets, and its very strong private label program will bolster our Ocado-driven e-commerce business,” said Michael Medline, president and CEO of Empire. “Farm Boy has a best-in-class brand with stellar customer loyalty. Its fresh, ready-to-eat and private label offerings are particularly appealing to urban and suburban consumers — it truly is ‘all about the food’ at Farm Boy. We believe we will be able to build on their historical industry leading same-store sales growth of 5.3 per cent and five-year EBITDA CAGR of 21 per cent to double the size of the business in the next five years.”

“This is a great addition to our portfolio at a time when we are moving from defence to offence. We believe that with the leadership of our new colleagues, current CEOs Jean-Louis Bellemare and Jeff York, we can turbo-charge Farm Boy’s growth. We intend to enable the leadership team of Farm Boy to do what they do best – grow a highly successful retail format at double digit rates,” added Medline. “As we continue to make excellent progress with Project Sunrise and emerge from the heavy-lifting phase, we are excited to advance our growth agenda with this powerful and proven concept.”

From co-CEO Jean-Louis Bellemare: “As you prepare for the next phase of growth, you don’t just team up with anyone. Empire understands what it will take, shares our vision for the brand, and in President and CEO Michael Medline, and CFO Mike Vels, we have access to executive leadership with deep experience in making acquisitions like this successful. We had many choices, but our trust and confidence in Empire and its dedication to our brand and its growth made this the perfect partnership.”

Farm Boy co-CEO Jeff York commented: “What an extraordinary opportunity for Farm Boy. Together with Empire, an iconic Canadian brand with a national grocery presence, Farm Boy will significantly accelerate its growth agenda. We will strengthen the already strong Farm Boy brand, starting with urban and suburban markets in Ontario and eventually rolling out to other areas of Canada. We are particularly excited by the eventual reach of the Ocado e-commerce platform and can’t wait to showcase our high-quality, local products to many more Canadians.”

Since opening its first store in 1981 in Ottawa, Farm Boy has grown to 26 locations across southeastern Ontario, most recently opening its first stores in the Greater Toronto Area earlier this year. The 27th location is set to open in Oakwoods Centre in Oakville in winter 2018. Farm Boy focuses on a robust private label and fresh food assortment, with an emphasis on local fresh produce, meat and a wide-range of restaurant quality ready-to-eat food prepared in-store.

About Empire Company Limited

Empire Company Limited is a Canadian company headquartered in Stellarton, Nova Scotia. Empire’s key businesses are food retailing and related real estate. With approximately $24.4 billion in annualized sales and $8.7 billion in assets, Empire and its subsidiaries, franchisees and affiliates employ approximately 120,000 people.

About Farm Boy

Farm Boy fresh market stores have been providing a fun and friendly, fresh market shopping experience for over 36 years with legions of loyal fans in Brantford, Cambridge, Cornwall, Hamilton, Kingston, Kitchener, London, Ottawa, Pickering, Toronto (Etobicoke) and Whitby. Farm Boy currently operates 26 stores in Ontario, all of which are brimming with wholesome, healthy, tasty food choices.

 

SOURCE Empire Company Limited

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