DBRS Places Shoppers Drug Mart ’s Ratings Under Review with Negative Implications

DBRS has today placed the ratings of Shoppers Drug Mart Corporation (Shoppers or the Company) Under Review with Negative Implications following the Company’s announcement of an offer from Loblaw Companies Limited (Loblaw; see separate press release) to acquire all of the outstanding Shoppers shares for approximately $12.4 billion (the Transaction).

The Negative Implications of the Under Review status reflects Loblaw’s potential assumption of approximately $1 billion of Shoppers’ debt should the Transaction close according to terms substantially similar to those proposed. In such case, Shoppers’ debt would likely rank pari passu with Loblaw’s existing senior unsecured indebtedness.

DBRS will proceed with its review as more information becomes available and aims to resolve the Under Review status by the closing of the Transaction.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Companies in the Merchandising Industry, which can be found on our website under Methodologies.