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Tue, 23 Jul 2013 15:00:00 GMT | By Deirdre McMurdy, MSN Money

What do you get when you cross Loblaw with Shoppers?

A hybrid retailer – and a controlling family - that has Bay Street swooning.

Deirdre McMurdy

After more than three years of intermittent corporate flirtation, the relationship between the two companies was successfully kept secret until its formal announcement. It’s also a made-in-Canada response to profoundly shifting retail trends and demographics in a sector dominated by cross-border competition.

And then there’s the seemingly unanimous swoon – by investors, analysts, media pundits and others – about the synergies, benefits and timing of the proposed transaction. It’s not a crowd given to gushing.

But the real marvel of this blockbuster deal – the largest corporate takeover in Canada since the $15.1-billion acquisition of Nexen by China’s national oil company a year ago – is the Weston family.

Having completed a systematic re-structuring of the grocery store chain since he took charge in 2006, Galen Weston Jr. is consolidating that success with a strategic, long-term growth plan. This includes the recent creation of a $7-billion real estate trust which has generated some of the capital required for the Shoppers acquisition.

So much for the rule of “shirt sleeves to shirt sleeves in three generations” for family-controlled enterprises. Grandchildren – let alone great-grandchildren – almost never retain control of the founding assets or the family wealth.

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Canadian business is littered with examples: Eaton, Woodward, Steinberg, Billes (Canadian Tire), Asper (CanWest), Bronfman (Seagram), Birks are just some of the names that leap to mind.

In Canada, even though families own or control about 80 per cent of all businesses, only 30 per cent even survive into the second generation and just 10 per cent remain intact for the third generation to lead.

And then there are the Westons.

George Weston, the company that has and will continue to effectively control Loblaw, was founded in 1882. And although family ownership will be diluted to 46 per cent from a 63 per cent equity stake as a consequence of the Shoppers’ deal, the family will continue to call the shots.

Even more astonishing is the fact that Galen Jr. has established both a credible personal brand and a clear corporate identity for the company, while remaining relatively low-key. At least by billionaire standards.

In addition to his appearances in Loblaw commercials, Galen Weston Jr took an unusual, proactive stand when a garment factory in Bangladesh collapsed earlier this year, killing hundreds of workers. Loblaws’ Joe Fresh clothing subsidiary was among those who had its products manufactured at the factory. No doubt against the advice of corporate lawyers, he voluntarily took responsibility by offering compensation to the victims’ families.

That initiative is consistent with other measures.

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