STELLARTON, N.S. -- The federal Competition Bureau has approved the $5.8-billion purchase of grocer Safeway Canada by Sobeys, but only on condition that the Nova Scotia-based supermarket operator put 23 stores in Western Canada up for sale.
Sobeys purchased 213 stores under the initial agreement, which included 199 in-store pharmacies and 62 gas stations on the Safeway properties.
The retailer will still come away with a gain of 190 locations overall from the Safeway acquisition.
"I am confident this agreement will ensure that Canadian consumers continue to benefit from competitive prices for a wide selection of grocery products," competition commissioner John Pecman said in a statement Tuesday.
Sobeys, which is owned by Empire Co. Ltd., says the stores for sale are under various labels, including Safeway, Sobeys, IGA and Price Chopper. The stores are located in British Columbia, Alberta, Saskatchewan and Manitoba.
The Manitoba stores that must be sold include the Safeway outlets in the Grant Park and St. Vital shopping centres, at Main and Luxton, and the Southdale store on Vermillion Road. The Price Choppers store at Stafford and Pembina is also on the list.
The president of the union which represents the 300 to 350 workers in the four Safeway stores -- Local 832 of the United Food and Commercial Workers Union -- said if the Safeway stores are sold, the buyers will have to honour the union contract Local 832 has with Safeway. That agreement runs until next March 15, Jeff Traeger added.
Traeger said he expects the St. Vital and Grant Park stores to be snapped up quickly because of their size and location. The union hopes buyers can be found for the other two Safeway outlets.
The staff at the Price Choppers store is not unionized, he added.
"Our focus now turns to closing the deal, which we expect to do in early November," Sobeys president and CEO Marc Poulin said in a release.
The acquisition marks one of the larger recent transactions by a Canadian grocer, as consolidation sweeps the industry amid the entry and expansion of several U.S. retail giants.
Earlier this year, Loblaw secured an agreement to buy Shoppers Drug Mart Corp. for $12.4 billion in cash and stock, a deal that is still under review by the federal competition agency.
-- The Canadian Press with staff files