Invest in Canadian stocks that are cheap and stable compared to their American cousins.
TORONTO - Loblaw Companies Ltd. (TSX: L) has a friendly deal to purchase Shoppers Drug Mart Corp. (TSX: SC) for $12.4 billion in cash and stock — a deal that will combine Canada's largest grocery and pharmacy chains.Using the Friday closing price, the offer is worth $61.54 per Shoppers Drug Mart common share — about 29 per cent above the recent average trading price for the Shoppers stock.Under the terms of the agreement, which is still subject to approvals, Shoppers will keep its brand name and operate as a separate division of Loblaw."This transformational partnership changes the retail landscape in Canada," said Galen G. Weston, executive chairman of Loblaw."With scale and capability, we will be able to accelerate our momentum and strengthen our position in the increasingly competitive marketplace."Canadian retailers have faced increasing competition from large U.S. chains, such as Target, which began to roll out its stores across the country earlier this year. It joins Walmart and Costco and as well as domestic retailers such as Sobeys that offer a combination of merchandise, pharmacy products and groceries.Domenic Pilla, president and CEO of Shoppers Drug Mart, said the deal provides "significant and immediate value" for shareholders."For our Associate-owners and employees, who are a valued part of the equation, it provides the opportunity to pursue rewarding careers as we grow together. And for our customers, it provides more locations with an enhanced mix of products and offerings that contribute to the good health of Canadians."Loblaw is offering $33.18 in cash plus about six-tenths of a Loblaw common share for each Shoppers Drug Mart common share.In a related move, George Weston Ltd. (TSX:WN) will subscribe for 10.5 million additional shares of Loblaw — its main subsidiary — valued at $500 million. Weston will py $47.55, the closing price for Loblaw shares on Friday.Proceeds from the Weston stock purchase will be used to pay a portion of the Shoppers purchase. George Weston will control about 46 per cent of the Loblaw voting rights after the acquisition.W. Galen Weston, executive chairman of Weston and the father of Loblaws executive chairman Galen G. Weston, said the investment "underscores our strong support of this transaction and the value that can be generated by combining Loblaw, Canada's leading food retailer, and Shoppers Drug Mart, the country's leading pharmacy retailer."
Sales at bargain clothing chain – steadfast in its opposition to an online operation – rise 24% to £2bn in six monthsFashion retailer Primark continues to defy the economic gloom that has dogged its rivals by reporting a 24% jump in sales, as its strategy of embracing the high street over the internet pays off.The bargain clothing chain saw sales rise to £2bn in the six months to beginning of March, with operating profits increasing 56% to £238m. The huge leap in turnover is largely due to new shopfloor space but like-for-like sales, which strip out new openings, rose 7%.Primark is steadfast in its opposition to an online operation, preferring to open new and bigger stores at a time when high street rivals focus on multichannel sales, smartphone apps and click-and-collect services to drive sales.Associated British Foods, which owns brands including Silver Spoon sugar and Twinings tea, called the Primark results an "exceptional performance". They contributed to a 10% rise in group sales to £6.3bn with half-year pre-tax profits up 26% from £329m to £415m.Primark's chief executive, George Weston, said: "It's had an absolutely brilliant to the start of the year. We think the stores are looking great and the spring/summer merchandise is doing great and we're just waiting for some warmth to get even more people in."What we attempt to do is sell clothes which are on fashion at lower prices than anyone else in good high street locations with great stores. When we get it right shoppers respond."Primark said it benefitted from a low cotton price, a weaker US dollar and from fewer promotions. Trading was hit slightly by the poor winter weather, one of the coldest on record, but several store openings helped the rise in sales.The retailer has opened 15 new stores in the past six months, including six in Spain, four in the UK, two in Germany, two in Austria and one in the Netherlands. The company is also set to make its first foray into France by the year end.Floor space increased by 1m square feet, up 13% on the same time a year ago, bringing its total portfolio to 257 stores.Weston said: "The weather in the runup to christmas was really good for us because the cold got people buying jumpers earlier than usual. But the new year wasn't great. Who wants to buy a swimsuit when it's 2C outside?"He added that expansion plans will continue at the same speed next year, looking at potential sites across all regions."The UK is slightly different, because we want to improve our stores with upgrades and expansions," he said.Retailers including Debenhams, Tesco and B&Q have all said future stores will be smaller as shoppers turn to online, but Primark will move in the opposite direction.Weston explained: "Our stores have actually been too small and future stores will generally be bigger than they were before."He added that a website was definitely not going to be launched, urging customers to "keep toddling down to Oxford Street"."It is enough for us to have great fashion, in good locations at the right price. That simply works for us. We don't have a problem that needs fixing."Analysts in the City appear to agree, as ABF shares hit an all-time high, up 96p at £19.46, a rise of 5%, by lunchtime.PrimarkRetail industrySimon Nevilleguardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds