Metro makes formal $4.5B cash and stock offer for Jean Coutu

Ian Vandaelle, Chase Producer, BNN

Pedestrians walk past a Jean Coutu pharmacy in Montreal , The Canadian Press/Ryan Remiorz

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Metro (MRU.TO) has formalized its $4.5 billion bid for Jean Coutu (PJCa.TO), offering to snap up the pharmacy operator for $24.50 per share in a cash and stock deal. The offer represents about a 15.4 per cent premium to Jean Coutu’s unaffected trading price, and Metro Chief Executive Officer Eric La Flèche says the deal will result in $75 million worth of cost synergies within three years.

"This transaction is attractive and compelling from a financial and commercial perspective,” La Flèche said in a release. “It is a unique opportunity to bring together each company's expertise to better serve the growing consumer demand for healthier choices, value and convenience.”

Metro will continue to operate the company as a distinct banner under the terms of the deal, helmed by second-generation CEO François Coutu. It’s unlikely shareholders of the pharmacy chain will reject the deal, as the company’s founding family controls 92 per cent of the voting rights through a dual-class share structure.

The long-rumoured pact comes at a tumultuous time for Jean Coutu, which is grappling with new regulations governing generic drug sales in Quebec. In January, Coutu said the family was “asking themselves questions” about whether or not to sell due to the regulations imposed by the provincial government.