Empire shares jump after it pulls off 'coup of the year'
TORONTO, June 13 (Reuters) - Shares of Empire Co jumped as much as 14 percent in early trading on Thursday, following what was seen as a game-changing deal by the operator of Canadian grocery chain Sobeys to acquire Safeway Inc's assets in Canada.
The C$5.8 billion ($5.7 billion) acquisition, announced late Wednesday, nearly doubles Empire's retail footprint in Canada's western provinces in one fell swoop. It gets control of 213 full-service grocery stores along with a range of other assets.
TD Securities analyst Michael Van Aelst described the deal as the "Strategic Coup of the Year."
Van Aelst argued the acquisition not only bolsters Sobeys' position as the undisputed No. 2 supermarket chain in Canada, but also helps it address a key problem - its under-used distribution network.
"We see Canada Safeway's assets providing Sobeys with critical density to fill in what we felt was a chronically underutilized distribution network, and as result, expect the company to benefit from significant efficiencies," said Van Aelst in a note to clients.
Shares of Empire touched a lifetime high of C$77 in early trading on the Toronto Stock Exchange on Thursday. The stock was up 11 percent at C$75.05 later in the session. ($1 = 1.0183 Canadian dollars) (Reporting by Euan Rocha; Editing by Jeffrey Benkoe)
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