Loblaw sharpens its focus

Article Excerpt

LOBLAW COMPANIES $69.27 (Toronto symbol L; Shares outstanding: 374.7 million; Market cap: $26.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.7%; www.loblaw.ca) is transferring its 61.6% interest in CHOICE PROPERTIES REIT $12.38 (Toronto symbol CHP.UN; Units outstanding: 667.2 million; Market cap: $8.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.0%; www.choicereit.ca) to GEORGE WESTON $99.42 (Toronto symbol WN; Shares outstanding: 128.0 million; Market cap: $12.8 billion; TSINetwork Rating: Above Average; Dividend yield: 2.0%; www.weston.ca). Weston owns 50.1% of Loblaw. It also holds 3.8% of Choice, and the deal would boost its ownership stake in the REIT to 65.4%. Loblaw shareholders will get 0.135 of a Weston common share for each L share they hold. They will not have to pay capital gains taxes until they sell their new Weston shares. After the spinoff, Loblaw plans to maintain its current annual dividend rate of $1.18 a share. That yields 1.7%. In addition, Weston will raise its quarterly dividend by 5% to $0.515 per share. The new annual rate of $2.06 yields…