Jul 15, 2013

By Scott Walker

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A major deal is in the works in the Canadian retail scene.

Loblaws is buying Shoppers Drug Mart in a deal worth $12.4-billion.

The deal is subject to approval, but Loblaws is making Shoppers’ shareholders an offer that will be hard to refuse. They’re willing to pay cash and stock worth about 30 per cent more than the stock has been trading at. Two thirds of shareholders need to agree to the offer.

Shoppers will keep its presence and its brand name, but it will begin to stock Loblaws products.

Combining Canada’s largest grocery and pharmacy chains will help the combined conglomerate compete with US giants Walmart and Target. Analysts say it will also help to boost Loblaw’s bottom line as an aging population increases the demand for prescription drugs.

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