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Loblaw becoming a pure-play retailer, will spin out interest in Choice Properties

Loblaw Cos. Ltd. and George Weston Ltd. announced a reorganization under which Loblaw will spin out its 61.6 percent interest in Choice Properties Real Estate Investment Trust. After the spin-out, Loblaw will not retain any equity interest in Choice Properties and will be a pure-play Canadian food and drug retailer.

"The reorganization will result in a more efficient group structure, that strategically benefits both Loblaw and Choice Properties, which in turn strengthens GWL," said Galen G. Weston, chairman and chief executive officer of Loblaw Cos. Ltd. and George Weston Ltd. "Loblaw, Choice Properties and GWL investors will all benefit from the strategic and investment clarity this transaction brings."

"Over the past few years, the strategies of Loblaw and Choice Properties have diverged. Loblaw is focused on strengthening its core retail business and growing in areas such as digital, healthcare, payments and rewards, while Choice Properties is focused on mixed-use development and investments in diversified real estate asset classes," said Sarah Davis, president of Loblaw. "Our retail store network continues to be a key competitive advantage for us, but we don't see ownership of real estate as core to our strategy going forward."

Under the spin-out, Loblaw common shareholders other than GWL, will receive 0.135 of a GWL common share per Loblaw share, which is equivalent to the market value of their pro rata interest in Choice Properties, and GWL will receive Loblaw's 61.6 percent interest in Choice Properties.

The plan will require the approval of at least two-thirds of the votes cast by all the common shareholders of Loblaw, as well as a majority of the votes cast by Loblaw Minority Shareholders. The vote will be conducted at a special meeting of Loblaw shareholders expected to take place in October 2018.