A significant Canadian grocery shake-up is on the cards. Nova Scotia-based chain Sobeys’ parent company, Empire, has agreed to buy the 51 per cent majority stake in independent Ontario grocery chain Longo’s in a deal worth $357 million.
The deal, which would also see Empire acquire Longo’s online service Grocery Gateway, will add the business’ 36 Ontario-based stores to Empire’s growing collection of brands, which already includes Farm Boy, Foodland, and FreshCo, as well as Sobeys.
Meanwhile, Voila, Empire’s online grocery delivery service, will continue as a separate brand.
After the deal is completed, Longo’s and Grocery Gateway will continue to be run as separate brands operated by the company’s current management, including CEO Anthony Longo.
Empire CEO Michael Medline said the deal was something of a no-brainer for the company.
“Longo’s has built one of the most successful and sought-after brands in the GTA and Southwestern Ontario. Longo’s is a crown jewel of grocery and as a values-driven company, Longo’s culture aligns closely with Empire,” said Medline. “We couldn’t be happier to be partnering with Anthony and the Longo’s team.”
Longo’s currently operates three-dozen locations across the Greater Toronto Area, with total sales topping $1.1 billion in its most recent fiscal year, per Yahoo! Finance. Empire said it will benefit from the company’s infrastructure and sourcing and logistics capabilities. The deal also gives Empire the ability to buy 100 per cent control of the grocery within 10 years.
The Star notes Longo’s wasn’t formally for sale, but Medline and Longo have developed a friendship since Medline took over as Empire CEO, with the former reportedly leaning on the latter for valuable foodservice industry advice.
“We said ‘what would it look like if we came together?’ ” said Longo, adding talks began in earnest over the last year.
The price of $357 million for 51 per cent is based on an enterprise value of $700 million, said Empire. The deal, subject to customary closing conditions, is expected to close in the first quarter of Empire’s 2022 financial year.