The Successful Investor Hotline – Friday, March 21, 2014

Article Excerpt

LOBLAW COMPANIES LTD., $47.01, Toronto symbol L, has received approval from competition regulators for its acquisition of Shoppers Drug Mart Corp. (Toronto symbol SC), which operates 1,253 drug stores across Canada. To win approval for the purchase, Loblaw has agreed to sell 18 stores and 9 pharmacies. It does not plan to close any of its 1,000 supermarkets. Loblaw will pay roughly $12.4 billion in cash and shares for Shoppers when the deal closes on March 28, 2014. The price is equal to 93% of its $13.3-billion market cap. After the deal closes, Shoppers shareholders will own 29% of the combined company. Big takeovers like this come with many risks. However, Shoppers operates mainly in urban areas, which complement Loblaw’s mainly suburban supermarkets. Shoppers will also help Loblaw profit from rising prescription drug demand as more baby boomers retire. Loblaw is a buy. Please make sure you are logged in to your account to access these articles. Click here if you’ve lost your password. Loblaw was…