Independent proxy advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co. LLC have recommended that shareholders of Canadian food retailer Loblaw Cos. Ltd. support the company's proposed spinout of Choice Properties Real Estate Investment Trust to Loblaw's parent, George Weston Ltd.
Under the spin-out deal, George Weston will buy Loblaw's 61.6% stake in Choice Properties, replacing Loblaw as the major shareholder of the real estate investment trust.
ISS said that the transaction "may unlock value creation for Loblaw shareholders and offers shareholders a path to a higher overall dividend," according to an Oct. 4 announcement. The firm added that the deal simplifies Loblaw as a pure-play retailer by spinning out a non-strategic business.
Glass Lewis also supported the move, saying the proposed terms of the deal are fair, reasonable and in the best interests of minority shareholders. "The arrangement is consistent with the typical rationale underpinning business separations, disposals or reorganizations," Glass Lewis said.
Loblaw previously said that its board unanimously recommends an affirmative vote on the proposal.
The Ontario Superior Court of Justice will deliver its final hearing on the arrangement on Oct. 19.