UPDATE 3-Sobeys buys Safeway Canada in $5.7 bln 'game-changing' deal
* Deal nearly doubles Empire's footprint in western Canada
* All cash deal to be funded via equity, debt and asset sales
* Safeway to pay down debt, buy back shares with proceeds
By Solarina Ho and Euan Rocha
TORONTO, June 12 (Reuters) - Empire Co Ltd, the operator of Canadian grocery chain Sobeys, said it is acquiring Safeway Inc's assets in Canada for $5.7 billion, in a move that will nearly double its reach in the country's western provinces.
The C$5.8 billion deal, Canada's biggest so far this year, resulted in generous premiums for Safeway, which said it would use the proceeds to pay down debt and buy back shares, and its shares shot up 30 percent in after-hours trade.
Empire will gain control of 213 full-service grocery stores, cementing its position as Canada's No. 2 grocer behind Loblaw Companies Ltd at a time when competition from U.S. retailers Wal-Mart Stores and Target is heating up.
"We think it is a game changing deal for Empire," said Barry Schwartz, a portfolio manager with Baskin Financial, which owns more than 100,000 shares in Empire.
"This is a huge win for (Empire's) shareholders, and we expect a significant uptick in the stock tomorrow" he said. Continued...