Sobeys / Safeway
Nova Scotia–based grocer Sobeys Inc. did some shopping of its own in June, ringing up a $5.8 billion deal to buy Safeway Inc.'s Canadian operations. The deal significantly increases Sobeys's footprint in western Canada and strengthens its position as the country's second-largest grocery chain.
The deal, which has been approved by both companies' boards, was the largest M&A transaction in Canada in 2013 when it was announced on June 12. But that distinction was short-lived: On July 14 Ontario-based Loblaws Cos., Canada's largest grocery retailer, responded with a blockbuster, $12.4 billion deal to buy iconic Canadian drugstore giant Shoppers Drug Mart, which has 1,200 stores across the country.
Once the Safeway deal is complete, Sobeys will have 1,538 stores and $24 billion in revenue. Before the Shoppers Drug Mart deal was announced, Loblaws had 1,058 stores and $32 billion in revenue. Both Loblaws and Quebec-based Metro, the other major player in the sector, had coveted the Safeway assets, long viewed as prime for a sale.
Sobeys, owned by Stellarton, Nova Scotia–based Empire Co. Ltd., expects to close the all-cash deal in the fall, subject to regulatory approvals. Some analysts expect Canada's Competition Bureau to force Sobeys to divest some of its stores in western Canada, particularly in Alberta and Manitoba, where Sobeys's concentration is heaviest. Sixty percent of Safeway's properties are in western Canada's four largest cities—Vancouver, Calgary, Edmonton, and Winnipeg.
Empire said it plans to finance the deal with a $1.5 billion equity offering, a $1 billion sale-leaseback of real estate assets it will acquire from Safeway, a $1.83 billion term loan, and issuance of $800 million in unsecured notes by Sobeys, sales of other noncore assets, and available cash on hand. Safeway said it expects about $4 billion in profit from the deal after taxes; half that money will be used to pay down debt and buy back stock.
For acquiror Sobeys Inc. and Empire Company Limited (Stellarton, Nova Scotia)
In-House: The company did not identify the in-house lawyers working on the deal by press time.
Stewart McKelvey: The firm did not identify the lawyers working on the deal by press time.
Stikeman Elliott: Competition: Paul Collins and associates Michael Kilby and Micheal Laskey. Real estate: Ross MacDonald, Greg Plater, and associates Catherine Grygar and Bruce Woolley. (Collins, Kilby, and Laskey are in Toronto. MacDonald and Wooley are in Vancouver. Plater and Grygar are in Calgary.)
McCarthy Tétrault: Tax: Wendy Brousseau and Douglas Cannon. (They are in Toronto.)
Sullivan & Cromwell: M&A: Alexandra Korry. Corporate: Donald Cranshaw. Tax: Ronald Creamer Jr. and Davis Wang. (They are in New York.)
For seller Safeway Inc. (Calgary, Alberta)
In-House: Senior vice-president and general counsel Robert Gordon. (He is in Calgary.)
Latham & Watkins: Corporate: Scott Haber and Thomas Keim Jr. Tax: John Clair. Intellectual property: Roxanne Christ. (Haber is in San Francisco. Keim is in Chicago. Clair and Christ are in Los Angeles.)
Blake, Cassels & Graydon: M&A: David Kruse, Jeffrey Lloyd, and associates Hamza Dawood and Douglas Robertson. Real estate: Silvana D'Alimonte, Joseph Grignano, and associate Brian Wilson. Tax: Jeffrey Trossman and associate Ian Caines. Employment and labor: Brian Thiesson and associate Shaun Parker. Pensions and benefits: Caroline Helbronner and associate Sean Maxwell. Intellectual property: Gary Daniel. Banking: Michael Matheson. Environmental: Paul Cassidy. (All are in Toronto except Thiesson, Parker, and Maxwell, who are in Calgary, and Cassidy, who is in Vancouver.)
MacPherson Leslie & Tyerman: The firm, Safeway's Saskatchewan counsel, did not identify the lawyers working on the deal by press time.
Aikens MacAulay & Thorvaldson: The firm, Safeway's Manitoba counsel, declined to identify the lawyers working on the deal.
Travelers / Dominion
An iconic business founded more than 125 years ago by Canada's first prime minister will fall into American hands when the Dominion of Canada General Insurance Company is acquired by The Travelers Companies Inc. The $1.13 billion deal was announced on June 12 by Toronto-based Dominion's parent firm, E-L Financial Corporation Limited. The deal is expected to close in the fourth quarter of 2013.
For acquiror The Travelers Companies, Inc. (New York)
Skadden, Arps, Slate, Meagher & Flom: Todd Freed, John Meckley, and Christopher Ulery.
Gowling Lafleur Henderson: The firm declined to identify the lawyers working on the deal.
For seller E-L Financial Corporation Limited (Toronto)
In-House: Vice-president, general counsel, and corporate secretary Richard Carty.
McCarthy Tétrault: Business law: Garth Girvan, Andrew Parker, David Randell, Barry Ryan, and associates Jake Irwin and Daniel Saposnik. Intellectual property: Alfred Macchione and counsel Ian Bies. Tax: Lorraine Allard, Gabrielle Richards, and counsel Gregory Winfield. Real property: Bram Costin and Jonathan See. Competition: Donald Houston. Litigation and environmental: counsel Joanna Rosengarten. Labor and employment: Sunil Kapur. Litigation: Erica Baron. (All are in Toronto.) McCarthy Tétrault has represented E-L Financial Corporation since 2010.
Lifelabs/ CML Healthcare
A friendly deal between two leading Canadian medical diagnostics labs will increase their clout in Ontario and provide a launchpad for a larger national retail presence. LifeLabs Medical Laboratory Services announced June 25 that it will acquire CML Healthcare Inc. in a $1.22 billion deal.
Lifelabs will pay $965 million in cash and assume $255 in debt. The cash offer works out to $10.75 a share, a 49.3 percent premium on CML's closing price before the deal was announced. While the deal is subject to the usual federal regulatory approvals, it was unclear whether the Ontario government would also scrutinize it, given that the acquisition would considerably narrow the competitive landscape in Canada's most populous province.
The deal, which is expected to close in September, had the support of the boards of both companies as well as the Ontario Municipal Employees Retirement System, which owns LifeLabs through its Borealis Infrastructure arm. CML has 112 laboratory and diagnostic customer centers in Ontario and 82 imaging centers in Ontario and British Columbia.
For acquiror Borealis Infrastructure (Toronto)
In-House: Vice president–legal Kath Hammond. (She is in Toronto.)
Blake, Cassels & Graydon: M&A: Shlomi Feiner, Jeffrey Lloyd, and associates Adrian Cochrane, Kenneth Prichard, Kevin Rusli, and Jacky Sin. Pensions and employee benefits: Elizabeth Boyd and Jeremy Forgie. Competition and antitrust: Brian Facey, Micah Wood, and associate Kevin MacDonald. Tax: Jeffrey Trossman and associate Jeffrey Shafer. Banking: Peter MacGowan. Health regulatory: Laura Weinrib and associate Wendy Mee. Employment and labor: Holly Reid. (All are in Toronto.)
For target CML Healthcare Inc. (Mississauga, Ontario)
In-House: General counsel and chief privacy officer Peter Brent. (He is in Mississauga.)
Goodmans: Corporate/M&A: Victor Liu, Neill May, Kenneth Wiener, and associates Rob Kallio and Johnny Singh. Competition: counsel Richard Annan. Litigation: Tom Friedland and associate Peter Kolla. Tax: Mitchell Sherman and associate Marisa Wyse. (All are in Toronto.) Goodmans first acted for CML in connection with the initial public offering of its predecessor, CML Medical Laboratories Limited, on the Toronto Stock Exchange in November 1996.
For the special committee of CML's board
Bennett Jones: Corporate: Barry Reiter and associates Corinne Bordman and Jesslyn Maurier. (They are in Toronto.)
First Quantum Minerals / Inmet Mining
If at first you don't succeed, go hostile. That strategy worked for First Quantum Minerals as it finally acquired Inmet Mining in April for $5.1 billion after failing to convince Inmet's board to enter into friendly negotiations back in December.
The lure for Vancouver-based First Quantum was Inmet's massive Cobre Panama copper development project in Panama. First Quantum made a bet that no other miner would be interested in Cobre Panama, which is considered a cumbersome, low-grade undertaking, and that most potential competitors lacked enough scale to bring cost efficiencies to leverage value.
Toronto-based Inmet declined to negotiate with First Quantum, even when First Quantum hinted that it would sweeten the deal if it could see Inmet's confidential data on Cobre Panama. Inmet refused, hoping to find a white knight. But no competing offer materialized, and by the time Inmet consented to friendly talks in late winter, market conditions had deteriorated and First Quantum saw no need to better its initial offer. First Quantum took its pitch directly to Inmet's shareholders. By April more than 85 percent of Inmet's shares had been tendered, and the deal was done. The deal positions First Quantum to be the world's largest copper producer within five years. In addition to Cobre Panama, it acquired three other Inmet copper mines.
For acquiror First Quantum Minerals Ltd. (Vancouver)
Fasken Martineau DuMoulin: Mining, M&A, and corporate: Daniel Batista, Bradley Freelan, Daye Kaba, Richard Steinberg, John Turner, and associates Jessica Catton, Jeffrey Gebert, Jennifer Mitchell, Susan Newell, Alex Nikolic, Francesco Tallarico, and Andrew Teehan. Competition: Huy Do, Douglas New, and associate Juho Song. Government relations: Thomas Barlow, Daniel Brock, and senior associate Claudia Feldkamp. Tax: Christopher Steeves. Litigation: David Hausman, Brad Moore, Samuel Rickett, and associate Shelley Babin. Labor and employment: Ralph Nero. (All are in Toronto.)
Weil, Gotshal & Manges: Corporate: P.J. Himelfarb and associates Adé Heyliger and Amy Roman. M&A: Jay Tabor. Tax: Kimberly Blanchard, counsel Max Goodman, and associate Sarah Gordon. (Himelfarb, Tabor, Himelfarb, and Roman are in Dallas; the others are in New York.)
For seller Leucadia National Corporation
In-House: Counsel Stephen Jacobs. (He is in New York.) Leucadia is Inmet's largest shareholder.
Goodmans: Corporate/M&A: Jonathan Lampe and Robert Vaux. (Both are in Toronto.)
McCarthy Tétrault: The firm did not identify the lawyers working on the deal by press time.
For target Inmet Mining Corp. (Toronto)
In-House: General counsel and vice president–legal and corporate affairs Steven Astritis, and associate general counsel and director–legal affairs Sheldon Vanderkooy
Torys: M&A: Christopher Fowles, James Scarlett, and associates Ricco Bhasin, Harry Cherniak, Morgan Crockett, Josh Lavine, and Marko Trivun. Competition: Jay Holsten and Omar Wakil. Litigation: James C. Tory and Andrew Gray. Employment: associate Jessica Bullock. Tax: John Unger and associates Cecile Antier and David Mattingly. Securities: Andrew Beck. (All are in Toronto except Mattingly, Antier, and Beck, who are in New York.) Torys has advised Inmet since 1987; it advised Inmet on its initial public offering in the nineties and on several initiatives, including the purchase of the Cobre Las Cruces copper project in Spain.
For the special committee of independent directors of Inmet's board
Osler, Hoskin & Harcourt: Corporate: Jeremy Fraibert, Jean Fraser, and associate Alex Gorka. (They are in Toronto.)