Pharmacy retailer Jean Coutu Group (PJCa.TO) and grocery chain Metro Inc. (MRU.TO) confirmed advanced talks on possible takeover Wednesday afternoon.

Under the terms currently proposed, Metro would buy Coutu for $24.50 per share in a mix of cash and stock.

The two companies say they agreed to the terms in a non-binding letter of intent on August 22, and that the Coutu family plans to support the deal.

“If you're Metro, this is your obvious choice. This is the obvious company you need," Bruce Winder, co-founder and partner of Retailers Advisors Network, told BNN in an interview. "There really isn't, I don't think, another option." 

The transaction remains subject to further negotiations, and would ultimately require regulatory approval.

Metro and Coutu cautioned in their press release there’s no guarantee a final deal will be reached.

Canada’s retail industry is in the midst of significant upheaval as American giants like Wal-Mart, Costco and Amazon plant their flags in the food sector, leaving incumbents to search for ways to protect their turf.

Metro’s pursuit of Jean Coutu appears to take a page from the playbook of one of its biggest rivals after Loblaw bought Shoppers Drug Mart for $12.4 billion in 2013.  

“The Loblaw acquisition of Shoppers, I think, inspired Metro to think twice about going beyond food and to look at pharmaceuticals and cosmetics,” said Dalhousie University’s management dean Sylvain Charlebois in an interview with BNN.

Canada’s retail industry is in the midst of significant upheaval as American giants like Wal-Mart, Costco and Amazon plant their flags in the food sector, leaving incumbents to search for ways to protect their turf.

Metro’s pursuit of Jean Coutu appears to take a page from the playbook of one of its biggest rivals after Loblaw bought Shoppers Drug Mart for $12.4 billion in 2013.  

“The Loblaw acquisition of Shoppers, I think, inspired Metro to think twice about going beyond food and to look at pharmaceuticals and cosmetics,” said Dalhousie University’s management dean Sylvain Charlebois in an interview with BNN.

Regulators suspended trading for both companies within minutes of each other in early morning trading. 

Jean Coutu has more than 400 stores in Quebec, New Brunswick and Ontario.

Metro has more than 600 stores in Quebec and Ontario.

-- With files from The Canadian Press