DBRS Confirms George Weston’s Ratings Following Review of Loblaw’s Acquisition of Shoppers Drug Mart

DBRS has today confirmed the Issuer Rating and Notes & Debentures rating of George Weston Limited (GWL or the Company) at BBB, its Commercial Paper rating at R-2 (high) and Preferred Shares rating at Pfd-3, all with Stable trends. This action removes the ratings from Under Review with Developing Implications.

On July 15, 2013, GWL’s ratings were placed Under Review with Developing Implications following Loblaw Companies Limited’s (Loblaw or the Company) announcement of an offer to acquire the shares of Shoppers Drug Mart Corporation (Shoppers) for $12.4 billion and the assumption of approximately $1.2 billion of debt (the Transaction).

The confirmation of GWL’s ratings is directly related to DBRS’s confirmation of Loblaw following the conclusion of our review of the Transaction.

The proposed financing, including GWL’s $500 million investment in Loblaw, would effectively reduce GWL’s voting ownership of Loblaw to approximately 45% from 63% at the end of F2012. That said, GWL remains in effective control of Loblaw and intends to subsequently increase its ownership stake to a majority position.

GWL’s ratings reflect its holding in Loblaw as well as its strong bakery brands and efficient operations, balanced by continuing volatility in its input cost environment and the mature nature of the bakery industry.

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.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Rating the Consumer Product Industry, which can be found on our website under Methodologies.