STELLARTON, CANADA - Rocking the industry this a.m. is Empire Co Ltd.’s announcement that the Sobeys-parent-company will be acquiring privately-held and Ottawa-based grocer Farm Boy Inc., which is valued at $800 million Canadian dollars, in an effort to boost its presence in Ontario and more.
The newest retailer to join the Empire lineup specializes in farm-to-table wholesale, but it will have to jump through a few hoops before its roots settle. The company will be acquired by Berkshire Partners, following which it will settle as a separate company within Empire’s structure.
“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 Empire President and CEO, Michael Medline, according to a press release. "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."
As part of the deal, 26 Farm Boy locations will strengthen Empire’s stance in markets like Toronto and southwestern Ontario, according to a press release. New sites will pop up and some existing Sobeys locations will convert into the new Empire banner. Medline shares that the company hopes for Farm Boy’s business to double in size.
“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 Medline. “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% and five-year EBITDA CAGR of 21% to double the size of the business in the next five years.”
Further, Farm Boy products will join Sobeys’ Ocado-based e-commerce business that is set to launch in the Toronto area in 2020.
Farm Boy’s current Founder and Co-CEO Jean Louis Bellemare and Co-CEO Jeff York will continue to lead, and they have also agreed to reinvest in the company return for a 12 percent interest of Farm Boy’s continuing business, according to the news source.
At the beginning of 2019, the deal is expected to close, subject to closing terms.
“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,” Bellemare shared.
York shared in this sentiment and looks forward to the prospects with this next move.
“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,” York commented. “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.”
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