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Mar 16, 2021

Sobeys' parent buying control of Longo's, Grocery Gateway

'Don’t mess it up’: Empire CFO on retaining customer loyalty after Longo’s takeover

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The parent company of Sobeys is bulking up in Ontario with an agreement to buy a controlling stake in Longo’s and the Grocery Gateway delivery service.

Under the terms of the deal announced early Tuesday, Empire Company Ltd. will initially acquire a 51 per cent stake in Longo’s and Grocery Gateway, with options that could see Empire eventually take full control of the businesses. The initial transaction will see Empire pay $197 million in cash, up to $125 million via the issuance of Class A shares, and also assume $35 million in debt.

The Competition Bureau confirmed to BNN Bloomberg via email on Tuesday that it will review the transaction, per standard protocol.

Grocery Gateway’s addition to Empire will run parallel to Sobey’s existing online grocery service, Voila. In an interview, Empire Chief Financial Officer Michael Vels said the company will run both brands separately to not alienate existing customers and but also gain newcomers at a fast rate.

“One of the things we learned when we bought our Farm Boy business is ‘don’t mess it up for customers’ or guests, as the Longo’s family calls them,” Vels said. 

Longo’s traces its history back to 1956, and currently runs a network of 36 stores across the GTA, with plans to open several additional stores over the next half-decade. According to a release Tuesday, the company’s sales totalled $1.1 billion in the 12 months ending Feb. 28.

“Longo's has built one of the most successful and sought-after brands in the Greater Toronto Area (GTA) and Southwestern Ontario. Longo's is a crown jewel of grocery and as a values-driven company, Longo's culture aligns closely with Empire. We couldn't be happier to be partnering with [president and CEO Anthony Longo] and the Longo's team,” said Empire President and Chief Executive Officer Michael Medline in a release.

“With strong alignment to our family values and purpose, we look forward to working together with Empire to bring the Longo's experience to even more Canadian families. The more we learned about Empire, the clearer it became that this was the right team to partner with to support our next chapter of growth,” said Anthony Longo in a release.

Editor’s Note: An earlier version of this story included incomplete information about the transaction’s financing. BNN Bloomberg regrets the error.